US farm markets suffered significant cuts yesterday.
Surging coronavirus concerns, which brought to fresh lockdowns in Shanghai, trigghered a broad commodity selloff.
Ongoing negotiations between Russia and Ukraine created an additional bearish pressure.
Thus corn prices dropped more then 0.7%.
Soybean prices slumped nearly 2.7% lower.
Chicago wheat contracts were slashed more than 4%.
Kansas wheat prices were down 3.62%.
Minneapolis wheat was 2.24% weaker.
In energy markets, oil prices dropped on this morning, extending losses from the previous day.
Brent crude futures were down 60 cents, or 0.5%, at $111.88 a barrel at 0649 GMT, having fallen as low as $109.97.
U.S. West Texas Intermediate (WTI) crude futures were down 59 cents, or 0.6%, at $105.37after hitting a low of $103.46.
Both benchmark contracts lost around 7% yesterday.
Ukraine and Russia should meet in Istanbul on Tuesday for their first peace talks in over two weeks.
Shanghai’s two-stage lockdown over nine days is expected to hit fuel demand in China.
Shanghai accounts for about 4% of China’s oil consumption.
The market is also waiting on a planned meeting on Thursday by the OPEC+.
The group will likely stick to plans for a modest increase in oil output in May.
Meantime, the United Arab Emirates’ energy minister doubled down Monday on an oil alliance with Russia , saying that nation, with its 10 million barrels of oil a day, is an important member of the global OPEC+ energy alliance.
Thus, oil prices, remain very volatile.
In the freight market, the Baltic Exchange’s dry bulk sea freight index edged lower yesterday as the capesize segment dipped for a ninth consecutive session.
The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels, indeed, dipped 60 points to 2,484 points.
The capesize index dipped 153 points, or 8.1%, to 1,734.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $1,268 at $14,380.
The panamax index gained 3 points to 3,416 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased by $33 to $30,746.
The supramax index fell 29 points to 2,991 points.
In equity markets, the Nasdaq 100 index rallied sharply by +1.58%, pushing the broad market higher.
Tesla jumped 8%
Plantronics jumped 52.6% after HP said it will buy the headset maker.
Stocks also saw support as the 10-year T-note yield closed mildly lower after earlier posting a 2-3/4 year high.
The yield on the 10-year Treasury, indeed, fell to 2.46% from 2.49% late Friday.
Plunge in crude oil prices pushed energy stocks lower but was positive for transportation stocks.
Monday’s U.S. economic data was bearish for stocks.
U.S. Feb wholesale inventories rose +2.1% m/m, a bigger increase than expectations of +1.0% m/m.
Also, the Mar Dallas Fed manufacturing outlook level of general business activity fell -5.3 to 8.7, weaker than expectations of 11.0.
In this context, on Wall Street the S&P 500 rose 0.7% to 4,575.52.
The Dow Jones Industrial Average eked out a 0.3% gain, closing at 34,995.89.
The tech-heavy Nasdaq composite closed 1.3% higher, at 14,354.90.
Smaller company stocks were little changed.
The Russell 2000 index inched up less than 0.1% to 2,078.06.
Meantime, Asian shares were mostly higher this morning in a muted trading.
Trading has remained choppy as investors try to gauge what’s next for inflation and the global economy as the repercussions of Russia-Ukraine war continue to play out.
Thus, Tokyo’s Nikkei 225 rose 1.1% to 28,252.42 and the Kospi in Seoul added 0.4% to 2,740.13.
The Hang Seng in Hong Kong picked up 0.8% to 21,864.68, while the Shanghai Composite index lost 0.2% to 3,207.96 as the city entered a second day of a lockdown to combat a COVID-19 outbreak.
Australia’s S&P/ASX 200 surged 0.7% to 7,464.30.
Australian government plans to increase spending on national security while reducing costs for households, in part by reducing a tax on gasoline, Treasurer Josh Frydenberg said before presenting a budget proposal Tuesday.
In currency trading, the dollar slipped to 123.47 Japanese yen from 123.77 yen.
The euro rose to $1.0990 from $1.0983.
The dollar index on Monday rose by +0.364 (+0.37%) and posted a 3-week high.
On the weather side, between today and Thursday, nearly all of the Midwest and Plains will receive at least some measurable moisture, per the latest 72-hour cumulative precipitation map from NOAA.
Some parts of the Mid-South and eastern Corn Belt could gather 1.5” or more during this time.
NOAA’s new 8-to-14-day outlook predicts near-normal precipitation amounts for the central U.S. between April 4 and April 10, with seasonally cool weather likely for most areas east of the Mississippi River next week.
Meantime, the U.S. Department of Agriculture’s (USDA) National Agricultural Statistics Service in its weekly crop report, on Monday rated 32% of the winter wheat in top producer Kansas in good-to-excellent condition, up from 25% a week earlier.
For Oklahoma, the USDA rated 18% of the winter wheat crop as good-to-excellent, down from 21% a week earlier.
For Texas, the No. 2 winter wheat state by planted area, the USDA rated 7% of the crop as good, up from 6% the previous week.
None of the Texas crop was rated excellent in either week.
For Colorado, the USDA rated 11% of the winter wheat in good condition, a drop from 19% a week earlier.
As in Texas, none of the Colorado wheat was rated excellent in either week.
For Montana, the USDA in a monthly report rated 11% of the wheat crop in good condition, down from 21% at the end of February.
None of the Montana wheat was rated excellent.
For Nebraska, the USDA in a monthly report rated 27% of the state’s wheat as good-to-excellent, down from 36% at the end of February.
For South Dakota, the USDA in a monthly report rated 26% of the state’s wheat as good-to-excellent, up from 24% at the end of February.
In Illinois, where farmers grow soft red winter wheat used to make cookies and snack foods, the USDA in a monthly report rated 59% of the crop as good-to-excellent, steady with the end of February.
In North Carolina, another soft wheat producer, the USDA in a monthly report rated 80% of the state’s wheat as good-to-excellent, up from 74% in late February.
The USDA rated 76% of the Louisiana winter wheat crop, 67% of Mississippi’s wheat and 72% of Arkansas’ wheat as good-to-excellent.
Meantime, the Texas corn crop was 51% planted, ahead of the state’s five-year average of 46%.
Milo was 32% planted in Texas.
Corn planting was 51% complete in Louisiana, 5% complete in Mississippi and 2% complete in Arkansas.
Corn planting began also in Kansas, with 1% of expected area planted as of 3/27.
On the demand side, Weekly Inspections data showed corn export inspections improved 7% from the prior week to 1.606 MMT during the week that ended 3/24.
That was up from 1.5 MMT last week but compared to 1.789 MMT from the same week last year.
China was the week’s top destination with 457k MT of the total, followed by Japan with 370k MT.
For the season through 3/24, U.S. corn exports totaled 29.03 MMT, compared to 34 MMT at the same point last year.
Soybean export inspections firmed 14% higher from a week ago reaching 628,819 MT during the week that ended 3/24.
That was up 75k MT wk/wk and up by 178k MT from the same week last year.
Soybean exports for the season had reached 43.43 MMT as of 3/24, compared to 54.27 MMT at the same point last year.
As for wheat, the report showed that 341,191 MT of wheat was shipped during the week that ended 3/24.
Mexico and Japan led all destinations.
Last week’s shipments were 333,970 MT, and the same week last year shipped 307,167 MT.
MYTD accumulated wheat shipments were reported as 16.89 MMT through 3/24, compared to 20.35 MMT at the same time last season.
Meantime, private exporters reported to the USDA sales of 132,000 metric tons of soybeans for delivery to China during the 2021/2022 marketing year and sales of 127,920 metric tons of corn for delivery to unknown destinations.
Of the total corn sale, 77,120 metric tons is for delivery during the 2021/2022 marketing year and 50,800 metric tons is for delivery during the 2022/2023 marketing year.
In this context, corn basis bids were lightly mixed at two interior river terminals, but held steady elsewhere across the central U.S..
Soybean basis bids trended 5 cents higher at a Nebraska processor and 2 cents lower at an Iowa river terminal while holding steady elsewhere across the central U.S..
The funds were net sellers yesterday for 8,000 lots of corn, 17,500 lots of soybeans and 17,500 lots of wheat.
From Canada, according to Mercantile Consulting Venture Inc., at 3.3 million mt, Canadian wheat ending stocks as currently forecast by AAFC, are higher than they should be given the situation.
Indeed, Just 154.6k mt of wheat was exported during week 33.
The total year-to-date commitment of 7.5 million mt means that Canada’s current shipping pace has been 226.5k mt per week compared to the weekly average of 301.3k mt needed to even meet AAFC’s 13.2 million mt total export number.
As for durum, 15.5k mt was exported, vs 37.8k prior week.
From South America, Argentina is getting a break from the rain, creating an opportunity for harvest.
Meantime, Brazilian soybean crusher group Abiove on Monday lowered projections for the country’s 2021/2022 crop to 125.3 million tonnes, a 7.7% drop from the end of January.
Despite a reduction of 10.5 million tonnes from the previous output forecast, Abiove, which represents companies such as Cargill and Bunge, still believes local crushers will process a record 48 million tonnes.
The country, on the other hand, is poised to export 9.2 million fewer tonnes of the oilseed this season, or 77.7 million tonnes in total, which would be down from 81.6 MMT last year and compares to USDA’s official 85.5 MMT forecast.
Abiove also said Brazilian exports of soybeans, soymeal and soyoil would total $51.4 billion in 2022, down from the $56.3 billion forecast in January.
Abiove estimates record soymeal exports at 18.3 million tonnes this season, and soyoil exports at 1.7 million tonnes, virtually the same as the record high of 1.756 million tonnes registered 10 years ago.
If Abiove’s soybean and domestic crushing projections are confirmed, Brazil’s carryover stocks at the end of 2022 would drop to an estimated 1.9 million tonnes, the lowest level in more than a decade, according to Abiove figures.
In Europe, sharp drop in grain prices yesterday.
In France, the loading schedule at ports was lighter after an upturn earlier this month, with traders watching to see if recent reported demand for French wheat would translate into more shipments to replace Ukrainian grain.
With rain forecast this week in France and elsewhere in Europe after a dry end to winter were also tempering crop concerns.
Rapeseed, on the other hand, changed little meantime.
The situation will remain tense in the coming months for this product, with import requirements for the EU appearing according to Agritel firm estimates at between 4.5 and 5 million tonnes.
Greece’s agriculture ministry said on Monday that sunflower oil production could be increased if needed by producing more for household consumption rather than for biofuels.
So far, Greece has no food product shortages.
However, Greece imports sunflower oil from Ukraine.
Also, it estimates its imports of soft wheat from Ukraine and Russia at roughly 250,000 tonnes, about 30% of its total wheat imports.
The agriculture minister also noted that there is always a possibility of increasing domestic production, without providing further details.
Greece has asked the European Union to approve grants for soft wheat and corn crops for the 2023-2027 period as an incentive for Greek farmers.
Meantime, the government has asked suppliers, such as supermarkets and other food retailers, to declare stockpiles of products including flour, grains, fertilisers, animal food, sunflower and other vegetable oils.
Consumers, indeed, hoarded over supply concerns in the wake of the war in Ukraine.
Greece’s annual consumer inflation accelerated to 7.2% in February, its highest level in 25 years because of surging costs for energy, housing and transportation, official data showed.
From North Africa, Egypt’s Prime Minister Moustafa Madbouly said on Monday that Egypt is “counting on its strategic relations with France to secure some supplies of basic commodities, like wheat” if the Russian-Ukrainian war drags on.
During an official trip to Cairo, French Finance Minister Bruno Le Maire said France would ensure Egypt would get the wheat it needed in coming months.
Meantime, according the USDA Attaché Cairo forecasts Egypt’s wheat imports in MY 2022/23 (July–June) could drop at 11 MMT (million metric tons), down by 8.3 percent from MY 2021/22 import estimate figure of 12 MMT.
Wheat production in MY 2022/23 is up by 8.9 percent from the previous marketing year.
Egypt has sufficient wheat stocks for its bread subsidy program until the end of calendar year 2022.
Corn and rice production in MY 2022/23 (Oct–Sept) are forecast to be similar to the previous marketing year.
In MY 2021/22 (Oct–Sept) Corn imports are expected to decline by 5.1 percent.
From South Africa, South African farmers are expected to harvest 10% less maize in the 2021/2022 season compared with the previous season, the government’s Crop Estimates Committee (CEC) said on Monday.
The CEC’s second summer crop forecast estimates the 2022 harvest at 14.684 million tonnes, down from the 16.315 million tonnes harvested last season.
The harvest is expected to consist of 7.570 million tonnes of white maize, used for human consumption, and 7.115 million tonnes of yellow maize, used mainly in animal feed.
Thus, total Maize production is now at 14,68 MMT.
Sunflower Seed production is seen at 959.450 t.
Soybeans production is at 1,89 MMT
Sorghum production is at 137.220 t.
Dry beans production is at 59.690 t.
From the Black Sea basin, the Government of Ukraine has set a quota for export of nitrogen fertilizers for April-June with a total volume of 210 thsd tonnes.
The quota will apply to exports of “mineral or chemical nitrogen fertilizers”.
Also, for the specified period (until July 1, 2022), the licensing of export of specified fertilizers is imposed.
Issuance of licenses for export of these goods is carried out through an application within the quota in the volume of 70 thsd tonnes per month.
According to APK-Inform, the prices of corn have decreased significantly in Ukraine since the start of the war.
The downward trend is based on the surplus of corn supply amidst low demand from traders, as the export through ports is blocked.
Also, the Ukrainian grain is vulnerable for fungus diseases that reduces its storing period to 2 months.
Therefore, many farmers are trying to sell their corn as soon as possible and are ready to reduce their offer prices.
Since the end of February, indeed, the bid prices of processors have decreased by average 200-700 UAH/t, and by 900 UAH/t in southern region.
As of March 28, the bid prices are set at 7300-8000 UAH/t CPT.
However, high logistics costs and lack of transport limit the price reduction.
On the other hand, despite paralyzed logistics, Ukraine keeps on exporting organic products, although the volume are 5 times lower, director of Organic Standard certification agency Sergey Galashevsky said.
Russia kept its wheat exports steady via its Black Sea ports last week.
According to Sovecon, Russia exported 400,000 tonnes of grains last week, compared with 520,000 tonnes a week earlier.
Sovecon estimates that the country will still export 2.2 MMT of wheat in March, despite the ongoing geopolitical turmoil in the Black Sea region.
Export flow continues as a combination of old and newly signed contracts according to IKAR.
Azov Sea routes remain restricted, while domestic prices for the grain continued to rally.
Western sanctions imposed on Russia, have complicated trade logistics and transactions in foreign banks for many Russian firms in the last four weeks.
Buyers do not want to buy at FOB basis, that carry delivery risk.
Thus, traders mainly sell, Russian wheat, C&F basis, according to Sovecon.
In the domestic market, prices for wheat in roubles continued to rally to reflect earlier depreciation of the Russian currency against the dollar, Sovecon said.
However, the rouble strengthened in Moscow trade on this morning, heading back towards a near four-week high against the dollar.
Meantime, Russia’s southern regions have started spring grains sowing amid favourable weather.
As of March 18, spring grains were planted on 222,000 hectares compared with 178,000 hectares on the same date a year ago, Sovecon said.
From the Middle Kingdom, China will sell 500,000 tonnes of imported soybeans from its reserves at an auction on April 1, the National Grain Trade Center said in a notice on its website on Monday.
The move was aimed at alleviating tight supply of the oilseed in the world’s top soybean buyer.
Meantime, Chinese pork processing giant WH Group Ltd, said yesterday that 2021 profits were up 7.2% to $ 1.043 billion thanks to higher sales in the US and Europe.
China’s hog prices plummeted in 2021 after farmers rebuilt their herd due to the African swine fever outbreak, occurred in 2018.
Lower Chinese pork prices have resulted in increased sales in both the US and the EU, while also boosting profits.
Many analysts expect low prices for the rest of the year.
From South East Asia, Malaysian palm oil futures slipped on Monday, hurt by the slump in crude prices, while weaker March exports also weighed on sentiment.
Exports of Malaysian palm oil products for Mar. 1-25, indeed, fell 5% to 1,030,943 tonnes from the same week in February, cargo surveyor Societe Generale de Surveillance said on Sunday.
The Malaysian Palm Oil Council (MPOC) forecast a small rise in 2022 global palm oil production, with Malaysia’s output seen at 18.9 million tonnes and Indonesia’s at 47.1 million tonnes.
The Malaysian Palm Oil Board (MPOB) revised upwards its outlook for 2022 crude palm oil price to an average of 4,250 ringgit ($1,008.78) a tonne.
India has contracted 45,000 tonnes of Russian sunflower oil at a record high price for shipments in April, of which, Gemini Edibles & Fats India Pvt. Ltd, contracted 12,000 tonnes.
Refiners bought crude sunflower oil at a record price of $2,150 a tonne, including cost, insurance and freight (CIF), in India for April shipments, compared with $1,630 before Russia-Ukraine war.
Shipments of more than 300,000 tonnes of sunflower oil from Ukraine to India are stuck.
India monthly consumes around 200,000 tonnes of sunflower oil but currently refiners can import around 80,000 tonnes only.
From Australia, Australian buyers were only interested in covering nearby shorts for export pathway or domestic.
Rain and continued flooding in the northern NSW and Southern Queensland cut access to grain driving nearby markets firmer.
WA growers continued to see a positive weather outlook.
Some cropping areas already have received an inch of rain.
On the international scene, Algeria is launching a 50.000 t wheat tender for June shipments.
Jordan’s state grain buyer has issued an international tender to buy 120,000 tonnes of milling wheat which can be sourced from optional origins.
The deadline for submission of price offers in the tender is March 31.
Shipment in the new tender is sought in a series of possible combinations in 60,000 tonne consignments in May, June and July.
Turkish grain board TMO booked about 100,000 tonnes of corn in an international tender for imported supplies on Monday, scaling back an initial volume of 300,000 tonnes.
The tender sought about 325,000 tonnes for shipment from optional origins to a series of Turkish ports between April 8 and May 5.
TMO had provisionally purchased 300,000 tonnes but later gave final approval for 100,000 tonnes, comprising one 50,000 tonne consignment for Mersin port at a price of $400.87 a tonne, cost and freight (c&f) included, and another 50,000 tonnes for Iskenderun at $407.87 a tonne c&f.
The approved sales represented the cheapest offers in the tender.
That’s all.
To all of you I wish you a good day.
Author: Sandro F. Puglisi
