US farm markets were mixed but mostly higher to start the week.
Concerns on potential Black Sea export disruptions, helped corn and wheat prices to stay up.
Meanwhile, new weather forecasts for South America for the next few days, which see more rains arrive, have triggered some technical sales, weighing on soybean prices.
Particularly, corn prices were up 0.73%%.
Both soybean and soymeal closed off their lows, but were still red to the bell.
Indeed, soybean was down 0.82%, while soymeal closed out 1.8% lower.
Soybean oil, bounced during the afternoon and ended the day 0.14% higher.
The wheat complex, after trading mostly down through midday, ended the session modestly higher.
In fact, CBOT SRW ended the day up 0.19%.
KC HRW prices were 0.52% higher.
MPLS spring wheat ended the day 0.47% stronger.
In energy market, oil prices eased on this morning as investors scooped up profits from the previous day’s rally to seven-year highs.
Thus, Brent crude futures were at $96.04 a barrel by 05:40 GMT, down 44 cents, or 0.5%, after rising $2.04 on Monday.
U.S. West Texas Intermediate (WTI) crude dropped 52 cents, or 0.5%, to $94.94 a barrel, after gaining $2.36 the previous day.
Both benchmarks hit their highest since September 2014 on Monday, with Brent touching $96.78 and WTI reaching $95.82.
Prices have already risen by more than 30% in less than three months.
In the freight market, the Baltic Exchange’s dry bulk sea freight index rose for a fifth straight session yesterday supported by strong demand for panamax vessels, which hit a one-month high.
The overall index, which factors in rates for capesize, panamax and supramax vessels, indeed was up 7 points, or 0.4%, at 1,984, its highest since Jan. 12.
Particularly, the panamax index gained for an eighth straight session, up 15 points, or 0.6%, at 2,418, a one-month high.
Average daily earnings for panamaxes, which ferry 60,000-70,000 tonne coal or grain cargoes, rose by $140 to $21,763.
The capesize index, in contraxt, fell 62 points, or 3.3%, to 1,795.
Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, fell by $509 to $14,888.
The supramax index climbed 70 points to 2,228.
In equities markets, U.S. stock indexes on Monday settled mixed, with the S&P 500 and Dow Jones Industrials falling to 2-week lows.
St. Louis Fed President Bullard said that “we need to front load more of our planned removal of accommodation than we would have previously as inflation is much higher than we would have expected six months ago”.
Covid vaccine makers retreated as the pandemic continues to improve.
Indeed, Moderna closed down more than -11% to lead losers in the S&P 500 and Nasdaq 100.
Novavax closed down more than -11%, BioNTech closed down more than -9%, and Pfizer closed down more than -2%.
Energy stocks and energy service providers also retreated Monday.
Particularly, Marathon Oil and Occidental Petroleum closed down more than -4%, and Devon Energy, Schlumberger, Diamondback Energy, and Haliburton closed down more than -3%.
Meantime, strength in mega-cap technology stocks was supportive for the overall market.
Tesla, Netflix, Nvidia and Amazon.com indeed, all closed more than +1% higher.
Splunk closed up more than +9% to lead gainers in the Nasdaq 100 on reports that said Cisco Systems held discussions about acquiring the company.
Expedia Group closed up more than +2% to lead gainers in the S&P 500 after Susquehanna Financial raised its price target on the stock to $210 from $190.
In this context, on Wall Street, the S&P 500 fell 0.4% to 4,401.67 after falling as much as 1.2% shortly after the U.S. said it was closing its embassy in Ukraine and moving all remaining staffers there to a city near the Polish border.
The Dow Jones Industrial Average fell 0.5% to 34,566.17 and the Nasdaq composite ended essentially flat, at 13,790.92, after having been up 1% in the early going.
Smaller company stocks, which had been on pace for gains, also fell. Indeed, the Russell 2000 slid 0.5%, to 2,020.79.
Meantime, Asian shares were mostly lower on this morning, echoing the decline on Wall Street.
Indeed, Japan’s benchmark Nikkei 225 shed 0.8% to finish at 26,865.19.
Australia’s S&P/ASX 200 sank 0.5% to 7,206.90.
South Korea’s Kospi lost 1.0% to 22,676.54.
Hong Kong’s Hang Seng declined 0.8% to 24,355.71, while the Shanghai Composite rose 0.5% to 3,446.09.
On the weather side, a winter storm moving through the Midwest later this week will dump another round of rain, ice and snow in a band stretching through the Texas panhandle all the way through the Northeast.
Next week, NOAA’s 8-to-14-day outlook predicts warmer-than-normal conditions for the eastern half of the United States between February 21 and February 27, with seasonally wet weather for the entire Midwest and Plains.
On the demand side, Weekly Export Inspections data showed 1.455 MMT of corn was shipped during the week that ended 2/10.
That was 390,088 MT above last week and 140k MT above the same week last year.
China was the top destination with 413,562 MT shipped.
USDA reported the season’s exports reached 20.064 MMT through 2/10, which is 12.5% behind last year’s pace.
As for milo, report showed milo exports totaled 182,310 MT during the week that ended 2/10.
That was above last week and the same week last year.
Accumulated sorghum exports are still 21.7% behind last year’s pace with 2.616 MMT shipped.
As for soybean, data showed soybean exports totaled 1.155 MMT for the week that ended 2/10.
That was 85.5k MT under last week’s shipments but was up 25% from the same week last year.
China was the week’s top destination with 507k MT of the total.
USDA’s weekly data had the MY soy export at 38.82 MMT, compared to 50.3 MMT at the same time last year.
As for wheat, report showed 435,188 MT of wheat was shipped during the week that ended 2/10.
That was up 2k wk/wk an 10k yr/yr.
Mexico was the week’s top destination, with 16.4% of the total.
Accumulated wheat exports were marked at 14.484 MMT as of 2/10, which trails last year’s 17.48 MMT pace.
Meantime, analysts estimate NOPA members processed 186.68 mbu of soybeans in January.
The full range is to see between 183.68 and 188.5 mbu reported, with a soyoil stockpile of 2.03b lbs.
The report will be release tomorrow.
In this context, corn basis bids were mostly steady to start the week but did firm 2 cents at an Iowa processor while dropping 3 to 4 cents lower at two other Midwestern locations.
Soybean basis bids were mostly steady, but did tilt 3 cents higher at an Illinois river terminal and 5 cents lower at an Iowa processor.
The funds were net sellers yesterday for 8,000 lots of soybeans but net buyers for 4,000 lots of corn and 1,500 lots of wheat.
From Canada, StatsCan (STC) reported that Canada exported 824k mt of non-durum wheat during the month of December.
Aug-Dec exports are now 5.3 million mt, down 40% (-3.5 million mt) from last year.
Exports to all major destinations are down, with the largest decrease being China who has imported just 24% (-1.0 million mt) of last year’s amount.
As we know the largest surprise in Stats Canada’s stock numbers was in wheat.
Wheat stocks were put at 15.6 million mt, 1.7 million mt below expectations and 38% (9.4 million mt) less than last year.
Wheat stocks, excludes durum, were at 13.5 million mt (down 34% y/y) compared to trade’s 15.3 million mt expectations.
Meantime, Canadian shipping week 27 exports were 240k mt for a season total of 6.1 million mt, down 43% (-4.5 million mt) from last year.
Weekly exports needed to meet AAFC’s projection are 317k mt.
Likely, movement will pick up in the second half of the marketing year.
Meantime, Canadian farmers has already been 80% sold old crop and 20% sold new crop at $10.50 or better.
As for durum, Canadian December exports, according to Stats Canada, were at 99.8k mt for an Aug-Dec total of 1.2 million mt, just over half of last year’s amount.
Italy was the top buyer, importing 27.5k mt of Canadian durum.
Exports to all major importers are down from last year with a notable exception being the US who has imported more than two times (+100k mt) last year’s volume.
StatsCan put Canadian December durum stocks right at expectations at 2.1 million mt.
That was 56% less than last year, however.
Meantime, week 27 durum exports were 42.5k mt for a seasonal total of 1.3 million mt.
That was down 56% (-1.7) from last year.
They are continuing to export the minimum weekly amount needed to reach the AAFC’s 2.3 million mt number.
Meantime, Canadian farmers are sold out for most old crop stocks.
Low stocks mean that prices will remain volatile, meanwhile the sales window is shrinking, as new crop durum will be available for sale in the next 5 weeks, after the planting season is over.
From South America, Safras and Mercado reported Brazil’s bean harvest at 25.6% complete through 2/11.
That compares to 17.1% last year and the 5-yr average of 16.2%.
According to AgRural, 24% of the soy areas in Brazil are now harvested.
That’s up from 16% a week ago and well above last season’s pace of 9%.
It should be noted that in Mato grosso 50% of the surfaces would now be harvested.
Meantime, Brazilian consultancy AgRural estimates that the country’s second corn planting progress has reached 42% in the Center-South, up from 24% a week earlier and substantially ahead of last season’s pace of 11%.
The consultancy estimates soybean production will come in around 128.51 MMT, while corn production is at 110.9 MMT.
Meantime, another Brazilian consultancy – Pátria AgroNegócios – has served up major cuts to its latest estimates for 2021/22 soybean production.
Pátria lowered its prior projection by more than 10% to land at 121.98 MMT, which is one of the lowest estimates currently in the mix.
In Europe, market remained under tension on Monday, as negotiations between Russia and West, although still ongoing, are struggling to come up with a real scenario for ending the crisis.
Also, a new wheat purchase tender issued by important EU customer Algeria was welcomed.
Thus, wheat and corn extended their rally, with wheat that on Euronext unoffically closed with a gain of 5.75 euros, or 2.1%, at 274.50 euros ($310.32) a tonne.
That was the highest since Jan. 31 after gaining about 3% last Friday.
Meantime, standard 12% protein wheat for delivery February onwards in Hamburg was offered for sale at about 12 euros over Euronext March, with purchase interest around 10 euros over.
Rapeseed prices in contrast were lower, on the wake of Canola which lost some ground yesterday in Canada.
Meantime, the weather conditions throughout Europe are considered satisfactory for the moment, allowing us to remain confident about the condition of the next crops.
From the Black Sea basin, Russian consultancy Sovecon estimates that the country’s wheat exports will reach 2.6 million tonnes in February, a month-over-month increase of 8.3%, if realized.
Meantime, according to data from the State Customs Service, as of February 14 and since the start of the 2021/22 campaign (July 1), Ukraine exported 40.9 Mt of cereals and pulses, which is 10.5 Mt more than a year earlier on the same date.
In detail, from July 1 to February 14, 17.5 Mt of wheat (+4.3 Mt vs last year), 5.5 Mt of barley (+1.6 Mt) and 17.4 Mt of corn (+4.682 Mt) were exported.
From the Middle Kingdom, last week China sold another 520.000 t of its state wheat reserves on auction.
That was 99.3% of the total available for sale.
This is the fourth such auction held so far in 2022 as an attempt to soften the blow of rising feed costs.
From Australia, light showers appear on the eight-day forecast for parts of northern New South Wales and southern Queensland, and these could cause some short minor delays for the sorghum harvest.
A front bringing 15-25 millimetres for South Australia’s Eyre Peninsula is also on the forecast.
Meantime, the market was very active yesterday, with Clear Grain Exchange trading a touch over 100,000t for the day which saw wheat trade in WA, feed wheat in NSW, an canola and protein wheat in South Australia.
Consequentially, in Monday trading, wheat rose A$5-$6/t, barley was a touch firmer on the offer side and canola values were higher in South Australia, while the east coast market was relatively unchanged.
On the international trade scene, Taiwan issued an international tender to purchase 54.000 t of grade 1 milling wheat, sourced from the United States, that closes on February 18.
The grain is for shipment in April.
Algeria issued an international tender to purchase a nominal 50.000 t of milling wheat from optional origins that closes on Wednesday.
Algeria often purchases significantly more than the amount listed.
The Philippines issued a tender to purchase 46.000 t of animal feed wheat from optional origins that closes tomorrow.
The grain is for shipment in June and July.
Turkey is also purchasing 255,000 t of feed barley.
That’s all.
To all of you I wish you a good day.
Author: Sandro F. Puglisi
