The hope of a cesefire in Ukraine early in the day, though later reports suggested no agreement was made, has plumpted grain prices both in Chicago and Paris yesterday.
Ukraine and Russia are both major grain exporters and a withdrawal of Russian troops could reopen the flow of grain from the Black Sea region, easing concerns on global supplies.
Thus, US farm markets have seen corn prices took a big hit, as fell around 3.7%.
Soybeans only suffered a moderate setback, meantime, fading 0.57%.
Soymeal has sheded by 1.24%.
Soyoil, was down 0.18%.
The wheat complex tumbled sharply, closing with limit-down losses.
CBOT wheat May contract, indeed, was locked limit, down 7.36%.
KBOT wheat May contracts also did ultimately end the day with the limit down of 85 cents weaker, down 7.34%.
The May wheat contract on MGE, has closed by 5.4% in the red.
The other new crop futures went home 6.2% to 7.5% weaker in SRW, 5.9% to 7% lower in HRW, and 4.1% to 4.5% lower in spring wheat.
From now on, the amplitude of variation for today’s session on the CME will automatically be widened to 1.30 $/b.
In energy markets, oil prices climbed about 3% on this morning after the International Energy Agency (IEA) said markets could lose three million barrels a day (bpd) of Russian crude and refined products from April.
The supply loss, indeed, would be far greater than an expected drop in demand of one million bpd triggered by higher fuel prices, the IEA said in a report on Wednesday.
Thus, benchmark Brent crude futures gained $3, or 3.1%, to $101.09 a barrel by 08:44 GMT, after falling for three consecutive trading sessions.
U.S.West Texas Intermediate (WTI) crude was up $2.8, or 3%, to $97.84 a barrel.
Both contracts settled around 2% lower the previous day, following an unexpected jump in U.S. crude stockpiles and signs of progress in Russia-Ukraine peace talks.
Oil inventories in the United States, indeed, climbed by 4.3 million barrels in the week to March 11 to 415.9 million barrels, according to the U.S. Energy Information Administration, surpassing analysts’ expectations for a decline of 1.4 million barrels.
In the freight market, the Baltic Exchange’s dry bulk sea freight index dipped on Wednesday as rates dropped across all the vessel segments.
The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels, indeed, fell 98 points to 2,591 points.
Particularly, the capesize index fell 191 points to 2,632 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, decreased $1,583 to $21,830.
The panamax index was down 99 points at 2,847 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased $886 to $25,626.
The supramax index slipped 25 points to 2,876 points.
In equity markets, U.S. stock indexes on Wednesday climbed to 1-1/2 week highs and closed sharply higher.
Positive developments in talks between Russia and Ukraine and a positive carry-over from a surge in Chinese stocks after China vowed policies to spur economic growth, have boosted financial markets.
The Fed, as expected, raised the federal funds target range by 25 bp to 0.25% to 0.50% and said it “anticipates that ongoing increases in the target range will be appropriate”.
Forecasters expect as many as seven U.S. interest rate hikes this year.
Meantime, the 10-year T-note yield increased to a 2-3/4 year high of 2.242%.
The FOMC cut its U.S. 2022 GDP estimate to 2.5%-3.0% from a December estimate of 3.6%-4.5% and raised its U.S. 2022 core PCE estimate to 3.9%-4.4% from a December forecast of 2.5%-3.0%.
U.S. Feb retail sales rose +0.3% m/m and +0.2% m/m ex-autos, weaker than expectations of +0.4% m/m and +0.9% m/m ex-autos.
The U.S. import price index ex-petroleum rose +0.7% m/m, weaker than expectations of +0.8% m/m.
The U.S. Mar NAHB housing market index fell -2 to a 6-month low of 79, weaker than expectations of 81.
However, Wednesday afternoon Fed Chair Powell said the U.S. economy can withstand Fed tightening and that the probability of a recession is “not particularly elevated.”
In this context, on Wall Street the S&P 500 rose 2.2% to 4,357.86.
The Dow Jones Industrial Average added 1.4% to 34,063.10.
The Nasdaq composite gained 3.8% to 13,436.55 for its biggest daily gain in 16 months.
Meantime, Asian stock prices surged for a second day in a row on this morning.
Asian markets were buoyed by Wednesday’s promise by the Chinese government that it would “invigorate the economy” by supporting the struggling real estate industry, internet companies and entrepreneurs who want to raise capital abroad.
Thus, the Hang Seng in Hong Kong rose 6.2% to 21,330.72, adding to the previous day’s explosive 9.1% gain.
The Nikkei 225 in Tokyo surged 3.5% to 26,508.77 and the Shanghai Composite Index advanced 2.6% to 3,252.97.
The Kospi in Seoul was 1.8% higher at 2,705.94 and Sydney’s S&P-ASX 200 added 1.1% to 7,257.30.
India’s Sensex opened up 1.8% at 57,811.37.
New Zealand and Southeast Asian markets also gained.
In currency markets, the dollar index on Wednesday fell -0.44%.
The Euro rose +0.55%, while Yen rose +0.25%.
On the weather side, we can expect more rainy weather for parts of the Midwest and Plains between today and Saturday, per the latest 72-hour cumulative precipitation map from NOAA.
A band stretching from eastern Kansas through northwest Indiana could gather another 1” during this time.
NOAA’s new 8-to-14-day outlook predicts seasonally dry weather for much of the Plains and western Corn Belt between March 23 and March 29, with warmer-than-normal conditions prevalent throughout the Great Plains.
On the supply side, the sharp rise in prices for the new spring crops logically leads producers to review their intentions to sow especially regards corn rotations.
The figures for sowing intentions will be communicated by the USDA at the end of the month.
As for corn, areas will be monitored very closely even if they should be below last year’s levels and the record years of 2012 and 2013.
Soybean areas could also be confirmed on the rise and even higher than last year but without exceeding the 2017 record.
Meantime, U.S. farmers are expected to plant 92.421 million acres of corn in 2022 and 89.281 million acres of soybeans, according to an annual survey conducted by commodity brokerage and analytical firm Allendale Inc and released on Wednesday.
Projected corn plantings would be above the U.S. Department of Agriculture’s Outlook Forum forecast for 92.0 million acres but below the 93.357 million acres planted in 2021.
Projected soybean plantings would top the latest USDA forecast for 88.0 million acres and exceed the 87.195 million acres planted to soy in 2021.
Allendale’s survey of farmers in 27 states was conducted from Feb. 28 through March 11.
Allendale projected all U.S. wheat plantings at 48.892 million acres, above the USDA’s forecast for 48.0 million and above the 2021 planted area of 46.703 million acres.
Allendale estimated U.S. winter wheat seedings at 34.620 million acres.
“Other spring” wheat acreage was seen at 12.450 million and durum plantings were seen at 1.822 million acres.
On the demand side, ethanol production shifted slightly lower for the week ending March 11, with a daily average of 1.026 million barrels, per the latest data from the U.S. Energy Information Administration.
That was 2k bpd lighter on the week.
Despite the modest move lower, weekly production remained near the best levels since late January.
Stocks, indeed, increased another 674k barrels or 3% to 25.945 million, and are at the highest level in nearly two years.
Particularly, in the PADD 2 Midwest stocks remain at record levels, with 10.43m reported compared to the all time record 10.79m in Feb.
However, ethanol stocks in all PADD districts are still down from the Covid record of 27m barrels in April of 2020.
Meantime, ahead of weekly export sales, estimates for corn from the week that ended 3/10 are to see between 700k MT and 1.4 MMT of old crop reported.
New crop bookings are estimated to be below 200k MT.
As for soybean, are estimated has been sold between 900k MT and 1.8 MMT.
New crop bean sales are estimated to be reported between 500k MT and 1.2 MMT.
For meal, the trade is looking for USDA to report between 100-300k MT sold.
Soyoil bookings are estimated between 5k and 45k MT.
As for wheat, pre-report estimates anticipate between 250k and 600k MT of old crop wheat was sold during the week that ended 3/10.
New crop wheat sales are expected to be below 100k MT.
In this context, corn basis bids dipped a penny lower at an Ohio river terminal and dropped 8 cents at an Ohio elevator while holding steady at other Midwestern locations.
Soybean basis bids fell 4 cents at an Ohio elevator but held steady elsewhere across the central U.S..
On Tuesday, commodity funds were net buyers of corn (+2,500) and CBOT wheat (+19,000) contracts but were net sellers of soybeans (-7,500), soymeal (-1,000) and soyoil (-1,500).
From South America, Brazil, one of the world’s biggest wheat importers, could sharply reduce its dependence on foreign crops as record export demand provides farmers with the funds to expand their planting areas.
The country exported around 2.5 million tonnes of wheat from December to March.
It was an unprecedented volume.
That is likely to encourage more planting in Brazil, with analysts saying there is room to double the current 2.74 million hectare sown area in coming years and eventually meet domestic consumption needs of some 12.7 million tonnes a year.
The state’s planted area could expand by around 30% this year, considering that nearly 600,000 tonnes have already been sold in advance.
More than 6 million hectares are planted with soybeans in the summer, but just 1.16 million hectares of that area is sown with wheat in the winter.
Brazil currently imports more than 50% of its domestic wheat consumption, mostly from Argentine.
Wheat from Rio Grande do Sul could also enter export markets before Argentine crops given idle capacity at the Rio Grande port.
Meantime, private firm Anec had Brazilian soy shipments at 12.9 MMT for March, which is down from their prior forecast of 13.77 MMT.
Brazilian export data showed 55k MT of corn was shipped last week, up from 0 MT the week prior.
In Europe, with a slightest improvement in the framework of the talks between Ukraine and Russia the wheat market recorded a sharp decline at the end of the day.
However, on the physical market, demand is still present, in particular for coverage of spring needs both for the European outlet and for third countries in wheat.
Export demand in Germany remained brisk.
“Wheat from north Germany is being extensively shipped out and wheat in south German regions is also being sucked out quickly,” one German trader said.
“So supplies are being brought in on a large scale from countries like the Czech Republic, Slovakia, Poland, the Baltic region and there is even talk of land shipments from Romania.”
Sellers of standard 12% protein wheat for March onwards delivery in Hamburg were offering around 29 euros a tonne over the Euronext May contract, with buyers seeking about 27 euros over.
In corn, prices also experienced a pullback yesterday.
Demand for American corn nevertheless remains strong given the volumes and export capacities of the USA in the face of close global needs and the impossibility to access Ukraine stoks.
Oilseed prices on the close quarter, despite yesterday’s slight decline, are still trying to stabilize at high levels for the 2021 rapeseed harvest.
The firmness of sunflower seed prices is also still important in the face of the unknown on the return of Ukrainian export volumes of sunflower oil and real fears about sowing for the new harvest.
Meantime, French producers of livestock feed have asked the government to guarantee a certain volume of grain is available for their sector in the face of rising export demand linked to the war in Ukraine, the head of feed makers’ association SNIA said.
Feed makers, indeed, have requested that the French government ensure 800,000 to 1 million tonnes of cereals are available each month to cover their needs during the crisis.
To help absorb spiralling costs, feed makers have also asked the government to provide direct aid to livestock farmers and to raise limits on grain loads transported by trucks on smaller routes.
The EU is also collectively looking at the idea of letting farmers cultivate fallow land to boost local production, notably to offset a loss of protein-rich sunflower meal imports from Ukraine.
On the other hand, Italy’s agriculture minister said on Wednesday that imports of some agricultural commodities to the country from Ukraine were small enough to be compensated for with a shift in the supply market.
During a parliamentary hearing, Stefano Patuanelli said that Ukraine supplied 3% of imports of common wheat and 13% of corn to Italy.
On the supply side, Germany’s 2022 wheat crop will increase 5.8% on the year to 22.61 million tonnes, the country’s association of farm cooperatives said in its first harvest estimate on Thursday.
The association forecast Germany’s 2022 winter rapeseed crop will rise 11.6% from last summer’s crop to 3.90 million tonnes.
Meantime, non-commercial market participants reduced their net long position in Euronext milling wheat futures and options in the week to March 11, data published by the exchange showed.
Particularly, non-commercial participants, which include investment funds and financial institutions, cut their net long position to 176,064 contracts from 190,000 a week earlier, the data showed.
Commercial participants trimmed their net short position to 196,636 contracts from 208,505 a week earlier.
Commercials’ short positions accounted for 66.8% of the total short position in wheat, while commercial long positions accounted for 34.9% of total long positions.
Non-commercial short positions represented 33.2% of total short positions, while non-commercial net long positions accounted for 65.1% of the total longs.
In Euronext’s rapeseed futures and options, non-commercial market participants expanded their net long position to 3,448 contracts from 3,158 a week earlier.
Commercial participants increased their net short position in rapeseed to 6,167 contracts from 4,720 a week earlier.
From North Africa, one of the world’s biggest fertiliser companies, Morocco’s OCP, aims to raise output by more than 10% this year to meet higher demand despite the loss of Russian ammonia from its supply chain, a senior company official told Reuters.
The state-controlled company aims to increase production to 11.9 million tonnes in 2022 from 10.8 million tonnes last year and then plans to add another 3 million tonnes of annual output capacity in 2023, Nada Elmajdoub.
The firm sees added demand for its products in 2022 coming from India, the Americas and Africa.
However, OCP’s planned expansion comes amid uncertainties in the fertilisers market .
OCP annually imports some 1.8 million tonnes of ammonia, from suppliers including Russia and Ukraine.
However, longer term, it aims to start importing ammonia from U.S. producers and expects to start ammonia output at a plant in Nigeria in 2025.
Egypt’s cabinet on Wednesday agreed to add 65 Egyptian pounds ($4.15) per ardeb (150 kilograms) to its procurement price of local wheat as an incentive for farmers to sell more of the local crop to the government ahead of the harvest.
The government will now pay 865-885 Egyptian pounds per ardeb depending on purity levels, the cabinet said.
The government has also asked the supply minister to set a pricing mechanism for unsubsidised bread, following orders from Egypt’s president Abdel Fattah al-Sisi to control the price after it surged.
($1 = 15.6800 Egyptian pounds).
Meantime, as the global price of wheat is surging, the Egyptian government has ordered farmers to deliver a minimum ratio of the grain to the government to participate in the country’s bread-subsidy program.
Thus, farmers will not be allowed to sell the rest of their crops outside the official procurement system without a license.
Egyptian government is seeking to maintain price stability and secure reserves of basic foodstuffs.
Meanwhile, the African Development Bank, the biggest lender in the continent, is planning to host an investment forum aimed at raising $1 billion to help 40 million African farmers utilize climate-resilient technologies and increase their output of heat-tolerant wheat varieties and other crops, according to Akinwumi Adesina, the bank’s president.
From the Black Sea basin, according to APK-Inform, the prices of soybean have decreased this week, due the possible decline of the Chinese demand, amid new COVD-19 outbreaks.
The bid/offer prices of soybean decreased by 5-20 USD/t and totaled 540-570 and 590-610 USD/t DAP correspondingly as of March 16.
At the same time, high logistics costs and lack of transport limited the weakening of the prices.
Ukraine exported 18 mln tonnes of wheat in 2021/22 MY.
In the country 15 mln tonnes of wheat left, declared Mykola Gorbachev the president of Ukrainian Grain Association on March 15.
Thus, “Ukraine still have stocks sufficient for 3 years”.
“Ukraine planted winter wheat throughout 6.5 mln ha. It is average level.”
Its expect the crop to reach 28-30 mln tonnes, down from 33 mln tonnes last years.
However, it is difficult to provide any exact forecasts, as many depends on spring weather.
As of February 1, 46% of the overall sunflower seed stocks in Ukraine was located in oblasts with ongoing military operations.
Taking into account large damage to the infrastructure, some part of these stocks can be lost.
At the same time, the volume of sunflower seed stocks in calm regions should be enough to cover domestic demand for sunflower oil this season and even to provide some exports.
Roughly speaking, there are about 130-160 thsd tonnes of sunflower oil that is more than enough for domestic needs.
Meantime, the Ministry of Agrarian Policy and Food of Ukraine forecasts that Ukrainian farmers will plant 50% of planned spring area for sure, other 20% are questionable and 30% will not be planted.
80% of farms are covered with fertilizers for spring planting campaign.
The volume of fertilizers available in Ukraine will be enough, as the planted area will be decreased.
Seeds availability, both produced in Ukraine and imported, will allow planting of 70% of the area.
So, this volume is sufficient for spring planting campaign as well.
The situation with herbicides is worse, as only 50% of farmers have volumes required.
Fuel is most critical, as there is a deficit.
Ukraine, indeed, is almost out of fuel.
On the weather side, the Ministry of Agrarian Policy and Food of Ukraine together with Hydrometcenter suppose that the weather provides Ukrainian farmers with a good time space.
Farmers would not be able to start mass planting campaign at the current moment due to the soil freezing.
Thus, the mass planting could start in late March, in some oblasts or in early April.
Thus, weather has allowing to accumulate resources, organizing works and still meeting the optimal planting window.
As to the winter crops, crops remain in dormancy with no risks of winterkilling.
From the Middle Kingdom, Dalian’s most-active soyoil contract rose 1.1%, while its palm oil contract was up 1.5%.
The spread of the highly infectious Omicron COVID-19 variant this month has led to movement controls across the country, raising concerns over demand for the edible oil.
The queues of container ships outside major Chinese ports are lengthening by the day as COVID-19 outbreaks in manufacturing export hubs threaten to unleash a fresh wave of global supply chain shocks, ship owners, logistics firms and analysts said.
From South East Asia, Malaysian palm oil futures climbed on Wednesday to end a four-session losing streak, as upbeat exports in the first half of March and a recovery in broader markets supported prices.
Exports of Malaysian palm oil products for March 1 to 15, indeed, rose between 13.2% and 15.6% from the same period in February, cargo surveyors data showed on Tuesday.
Thus, the benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange ended 259 ringgit higher, or 4.46%, at 6,064 ringgit ($1,445.36) a tonne.
However, gains were capped by higher production outlook after the Southern Peninsula Palm Oil Millers’ Association estimated March 1 to 15 output to rise 33% from the month before.
From Australia, prices for all feedgrains have risen in the past week on tight logistics and the global market’s ongoing rally.
Barley prices have risen $10-$12 per tonne as its discount to wheat and sorghum narrows.
Domestic consumers are extending their coverage as the likelihood of a softening in prices appears unlikely in the near term, and looking for inputs close to home as the impact of rising diesel prices adds considerable cost to transport.
A domestic market for rain-affected chickpeas has developed in the past week or two, with piggeries the main customer, and inclusion rates for cottonseed are on the up in feedlots.
Meantime, local wheat markets were bid a touch stronger yesterday.
Barley and canola values remained relatively unchanged.
The April shipping program is filling in, with 50pc of the March volumes already showing up.
Barley looks to be gaining some ground back in April with 700,000t already on the stem compared with 710,000t in March.
Canola has 470,000t on the stem, a big month normally, but when we compare to 1Mt in March, maybe there is more to come.
On the weather side, more thunderstorm activity through Victoria over the past 2 days.
Some areas in the Wimmera received 40-100mm. Growers are pleased to see a storm at this time of year but making access to on-farm grain stocks becomes an issue.
More rain are forecasted along the east coast with another 15-25mm forecast for coastal regions over the next 8 days.
On the international trade scene, the Philippines issued a series of tenders to purchase a total of 270,000 t of animal feed wheat from optional origins that closes yesterday.
The grain is comprised of four consignments and is for shipment starting in early May.
The lowest price in the first round of offers in Thursday’s tender by Turkey’s state grain board TMO to purchase and import 270,000 tonnes of milling wheat was believed to be $450.00 a tonne C&F.
No purchase has yet been made and initial results of the tender are expected later in the day.
The lowest price offered in Thursday’s tender was for two consignments each of 25,000 tonnes of 12.5% protein wheat for shipment to the ports of Tekirdag and Samsun.
Both were made by trading house Marmara, they added.
Algerian state agency OAIC is believed to have purchased animal feed barley from optional origins in an international tender which closed on Wednesday.
The volume purchased was unclear.
The tender had sought a nominal 50,000 tonnes for shipment in two periods: April 1-15 and April 16-30.
It was thought to have been purchased at around $470 a tonne c&f, according to trader estimates.
Although optional origin, its expected the barley to be sourced from France, Romania and Bulgaria.
The Korea Feed Association (KFA) has issued on this morning an international tender to purchase up to 138,000 tonnes of animal feed corn to be sourced from optional origins.
The deadline for submission of price offers in the tender is also Thursday, March 17.
The KFA’s Busan section seeks the corn in two consignments of 50,000 to 69,000 tonnes with the seller free to decide the volume offered in this range.
The first consignment is for arrival in South Korea around June 10.
Shipment is sought for May 7-May 26 if the corn is sourced from the U.S. Pacific Northwest coast, between April 17 and May 6 if from the U.S. Gulf or Black Sea region/east Europe, for April 12-May 1 if from South America and for April 22-May 11 if from South Africa.
The second consignment is for arrival in South Korea around June 15.
Shipment is sought for May 12-May 31 if the corn is sourced from the U.S. Pacific Northwest coast, for April 22-May 11 if from the U.S. Gulf or Black Sea region/east Europe, April 17-May 6 if from South America and April 27-May 16 if from South Africa.
Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley.
The deadline for submission of price offers in the tender is March 23.
Shipment is sought in a series of possible combinations in 60,000 tonne consignments.
Possible shipment combinations are between July 16-31, Aug. 1-15, Aug. 16-31 and Sept. 1-15.
Jordan had issued another tender for 120,000 tonnes of milling wheat which closed yesterday.
MIT got 2 companies participating CHS and a new company, without disclosing its name.
MIT cancelled the tender to be issued next Thursday 24/3/2022.
That’s all.
To all of you I wish you a good day.
Author: Sandro F. Puglisi
