US farm markets were mixed but mostly lower yesterday.
Traders, indeed, while are squarring their positions ahead April WASDE report, that will out tomorrow, were engaged in some technical selling and profit-taking, after prices jumped substantially higher earlier in the week.
Thus, front month corn prices faded 0.43%, with Dec and the other new crop corn prices, that remained above the $7/bu mark, nevertheless.
Soybeans were down 0.71%, with old crop prices still held above the $16/bu mark, save for the August contract which hasn’t been above the $16 mark since the 31st.
Soymeal closed with 0.88% losses.
Front month soy oil ended the day 0.8% weaker.
May Chicago SRW wheat prices and MGEX spring wheat prices also shifted 0.67% and 0.27 lower respectively.
Kansas City HRW wheat prices, meantime, has been buck with the overall trend, though fighted only for modest gains as closed up 0.21%.
In energy markets, oil prices rose this morning from a three-week low touched in yesterday session.
International Energy Agency member countries on Wednesday, indeed, agreed to release 60 million barrels on top of a 180 million-barrel release announced by the United States last week to help drive down prices in a tight market.
Consequentially, both benchmarks plunged more than 5% on Wedsneday and hit their lowest closing levels since March 16.
However, analysts and traders said even with the emergency oil stocks release, supply remaine tight.
National Australia Bank analyst Baden Moore said the latest release plus the IEA’s coordinated release announced on March 1 equates to 1 million barrels per day in extra supply from May to the end of 2022, which would cap prices only in the near-term.
In a world devoid of inventory buffers, only demand destruction and recession could currently the only price-lowering mechanism in the long term, according to some analysts.
The oil release from the IEA members reflects strong political determination against Russia oil, but it’s not enough to fill the actual supply shortage.
Thus, worries over tight supplies, once again clouded the market outlook and Brent crude futures climbed $1.42 or 1.4%, to $102.52 a barrel at 06:51 GMT, while U.S. West Texas Intermediate (WTI) crude futures rose $1.55, or 1.6%, to $97.78 a barrel.
Measntime, state refiners in China, are honouring existing Russian oil contracts but avoiding new ones despite steep discounts, heeding a call for caution by Beijing.
In the freight markets, the Baltic Exchange’s dry bulk sea freight index hit its lowest level in more a month on Wednesday, as rates declined across all vessel segments.
The overall index, which factors in rates for capesize, panamax and supramax shipping vessels, indeed, fell 85 points, or 3.8%, to 2,128 points.
The capesize index fell 134 points, or 8.3%, to 1,490 points.
Average daily earnings for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, declined by $1,114 to $12,355.
The panamax index dipped 83 points, or 2.8%, to 2,868 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, fell $753 to $25,809.
The supramax index dropped 55 points to 2,605 points.
In equity markets, U.S. stock indexes Wednesday closed lower, with the S&P 500 and the Nasdaq 100 falling to 2-week lows, the Dow Jones Industrials dropping to a 2-1/2 week low.
The 10-year T-note yield climbed to a 3-year high at 2.656% up from 2.54% late Tuesday following hawkish comments from Fed Governor Brainard.
Soaring T-note yields undercut technology stocks and led U.S. stock indexes lower as higher rates tend to reduce the price-to-earnings ratio of stocks, a key valuation barometer.
Such a scenario can particularly hurt stocks that are seen as the priciest, which includes big technology companies.
Thus Apple fell 1.8% and Microsoft shed 3.7%.
Amazon fell 3.2% and Facebook parent Meta fell 3.7%.
Stocks maintained losses also after the release of the hawkish minutes of the March 15-16 FOMC meeting as the minutes stated that “many” Fed officials said one or more 50+ bp rate hikes might be warranted and that it should reduce the holdings in its balance sheet by $95 billion a month.
Negative carry-over Wednesday from a -2.38% decline in the Euro Stoxx 50 to a 3-week low also weighed on U.S. stocks.
Weak Eurozone economic data were bearish for European stocks after Eurozone Feb PPI rose a record +31.4% y/y (data from 1982), and German Feb factory orders fell -2.2% m/m, weaker than expectations of -0.3% m/m.
Also, the war in Ukraine shows no signs of ending and is weighing on European stocks.
NATO foreign ministers are meeting in Brussels as the U.S. and its allies coordinate a new round of sanctions against Russia.
In this context, the S&P 500 fell 1% to 4,481.15, adding to its losses from a day earlier.
The Dow Jones Industrial Average dropped 0.4% to 34,496.51 and the tech-heavy Nasdaq lost 2.2% to 13,888.82.
Smaller company stocks also fell, sending the Russell 2000 index down 1.4% to 2,016.94.
Inflation is running at a four-decade high and threatens to crimp economic growth.
Higher prices on everything from food to clothing have raised concerns that consumers will eventually pull back on spending.
Russia-Ukraine war has added to those worries, pushing energy and commodity prices , including wheat, even higher.
Treasury Secretary Janet Yellen warned a House panel Wednesday that the conflict will have “enormous economic repercussions in Ukraine and beyond.”
Meantime, the U.S. Treasury said President Vladimir Putin’s government will be blocked from paying debts with dollars from American financial institutions, potentially increasing the risk of a default.
European governments have resisted appeals to boycott Russian gas, Putin’s biggest export earner, due to the possible impact on their economies.
Meantime, Asian shares tracked the retreat of Wall Street.
Tokyo’s Nikkei 225 index lost 1.5% to 26,933.04 while the Hang Seng in Hong Kong lost 1% to 21,862.49.
The Shanghai composite index shed 1.3% to 3,243.45.
South Korea’s Kospi declined 1.3% to 2,700.94 and Australia’s S&P/ASX 200 gave up 0.7% to 7,440.30
In currency trade, the dollar fell to 123.64 Japanese yen from 123.81 yen.
The euro rose to $1.0897 from $1.0985.
The dollar index on Wednesday rose by +0.099 (+0.10%).
On the weather side, between today and Sunday, not much moisture is expected across the Northern and Central Plains, but some additional rains could land on the eastern Corn Belt during that time, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts more seasonally wet weather in store for the eastern Corn Belt between April 13 and April 19, with seasonally cool weather returning to the central U.S. later this month.
On the supply side, prices for anhydrous ammonia are over US$1,500 per ton currently, the highest they have ever been, according USDA data.
Facing a global shortage of commercial fertilizers, more U.S. growers are seeking old-fashioned animal manure.
Some livestock and dairy farmers, including those who previously paid to have their animals’ waste removed, have found a fertile side business selling it to grain growers.
Meantime, equipment firms that make manure spreading equipment are also benefiting.
However, although manure can replace some of the nutrient shortfall, it’s no panacea, agriculture specialists say.
There’s not enough supply to swap out all the commercial fertilizer used in the United States.
Even in states where large livestock herds generate massive quantities of manure, there’s not enough to replace commercial fertilizer completely.
Iowa, for exemple, the top U.S. producer of pork and corn, already applies all of its manure on land covering about 25% of its corn acres each year.
On average, Iowa uses about 14 billion gallons of manure annually.
He expects Iowa growers may suck out an extra billion gallons this year from storage in tanks on farms to substitute pricey commercial fertilizer.
Also, transporting it is expensive.
Consequentially, prices for animal waste, too, are rising on strong demand.
Prices for good-quality solid manure in Nebraska alone have reached $11 to $14 per ton, up from a typical price of $5 to $8 per ton.
A dry winter helped drive up prices by leaving manure with less water in it, making it more concentrated, and thus more valuable.
In addition, manure could become even more precious later this year, as U.S. livestock herds and poultry flocks shrink.
The number of hogs in the United States has dropped to its lowest level in about five years, as producers grapple with swine diseases and rising costs for feed and other inputs.
Bird flu, meanwhile, has wiped out more than 22 million chickens and turkeys on commercial U.S. farms since February.
However, dead birds can be composted and applied as fertilizer, according to the Iowa Department of Agriculture and Land Stewardship.
Manure is also highly regulated by state and federal authorities, in part due to concerns about impacts on water systems.
It can cause serious problems if it contaminates nearby streams, lakes and groundwater.
Livestock farmers say it’s a heavy lift to meet all the government rules and track how manure is applied.
However, sky-high prices for industrial fertilizer are projected to reduce American farmers’ corn and wheat plantings this spring, according to U.S. government data.
That further threatens global food supplies as US domestic wheat inventories are the lowest in 14 years.
On the demand side, EIA reported 1.003 million barrels of ethanol against was produced on average each day through the week that ended 4/1.
That was a 33k bpd drop from the week prior .
Ethanol stocks dipped by 626k barrels to 25.903 million.
The stock were 26.5 thousand barrels last week.
Meantime, the US Environmental Protection Agency (EPA) will announce a decision as early as Thursday on numerous pending applications from small fuel producers seeking to be excused from biofuel blending mandates, according to two sources familiar with the matter.
The EPA has accumulated a backlog of more than 60 requests for the so-called Small Refinery Exemptions, sought by refineries that argue the cost of blending biofuels like ethanol into their fuel could put them out of business.
A 2020 court decision narrowed the criteria for what facilities should be eligible for the relief.
Thus, as we can understand, there is a continuation of the debate raging between the two largely inelastic demand points, food and energy.
It is a question of whether corn and vegetable oils should be pointed to the energy space or the food sector.
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.
Going into the weekly Export Sales report out this afternoon, analysts surveyed anticipate seeing between 475k and 1 MMT of old crop corn sold.
New crop bookings are expected between 100k and 400k MT.
As for soybean, the trade is looking for between 500,000 MT and 1.15 MMT of old crop bean business.
New crop sales are estimated form 100k and 400k MT for the week ending March 31.
As for wheat export bookings are estimated between 50k and 500k MT for old crop and 50k to 250k MT for new crop going into the Thursday weekly FAS report.
Tomorrow we will have the USDA WASDE report, with the trade expecting to see a 25 mbu cut in projected US ending stocks to 1.415 bbu.
Global corn stocks are estimated at 300.2 MMT on average, which would be an 800k MT trim from March if realized.
As for South American production, the trade expects USDA to go with 114.7 MMT for Brazil and 51.7 MMT for Argentina.
As for soybeans, the trade is expecting the US soybean balance sheet 23 mbu tighter than in March to 262 mbu.
World carryout is expected to be 1.5 MMT tighter on average to 88.5 MMT.
Traders surveyed anticipate USDA to report Brazilian output at 125.1 MMT on average, compared to 127 MMT in the March WASDE.
As for wheat, expectations are for minimal changes to the US carryout, with analysts’ average trade estimate at 656 mbu, unchanged vs. March.
In this context, corn basis bids were steady to mixed on Wednesday, especially at interior river terminals, which fell as much as 6 cents at an Ohio location while firming as much as 10 cents at an Illinois location.
Soybean basis bids were steady to mixed after sliding a penny lower at an Illinois river terminal while firming 2 to 5 cents higher at two other Midwestern locations.
The funds were net sellers yesterday for 3,500 lots of corn, 6,000 lots of soybeans and 2,000 lots of wheat.
From South America, Brazil accelerated fertilizer imports in the first three months of the year, shipping data showed on Wednesday, as Western sanctions on major suppliers like Russia will likely disrupt that trade from April.
According to data from Cargonave, Brazilian fertilizer imports in the year through March indeed rose by 27.4%.
Imports reached 10.43 million tonnes, compared with 8.19 million tonnes in the same year-ago period, with Russia, China and Canada among Brazil’s top three suppliers, Cargonave data showed.
Argentina’s government has raised the domestic price of biodiesel on Wednesday for its mandatory mixture with diesel in the domestic market, according to a resolution in the official Gazette.
The energy secretariat said the price of biodiesel will be lifted as of Wednesday to 179,451 pesos ($1,608) per tonne, will rise further to 182,143 pesos in May and to 185,785 pesos in June.
It will rise to 198,143 pesos per tonne by August, it added.
The price had been 143,265 pesos per ton up until March.
A day earlier, the government hiked domestic prices for bioethanol, which is mandatory for mixing with gasoline in the South American country.
($1 = 111.5900 Argentine pesos).
In Europe, we had a mixed session, yesterday.
Grain prices maintained a small upward pace over the new crops, while old-crop prices fell back into the red in the wake of the US market.
Concerns about the 2022 harvest remain strong, indeed, with in particular a still worrying US climate and Ukrainian harvests expected to decline very sharply.
Thus, wheat prices on Euronext yesterday posted a new high for December 2022 at 342.75 €/t before closing at 337.00 €/t.
Farmers’ pre-harvest sales commitments should be around 40%, a relatively high figure at this stage of the future campaign.
The oilseed complex and the ethanol sector, meantime, were dragged down by a rapid drop in crude oil prices.
Also, the risk linked to Covid-19 made more additional pressures.
The health situation in China, indeed, continues to deteriorate and movement restrictions are once again threatening consumption in the country.
Logistical problems in the port of Shanghai are particularly reported.
In addition, the European Commission has also announced a rapeseed harvest of 18.1 Mt this year, compared to 17 Mt in 2021.
Thus, Euronext rapeseed prices fell back into negative territory on Wednesday mid-session.
Meantime, non-commercial market participants added to their net long position in Euronext’s milling wheat futures and options in the week to Apr. 1, data published by Euronext on Wednesday showed.
Non-commercial participants, which include investment funds and financial institutions, edged up their net long position to 176,175 contracts from 175,478 a week earlier, the data showed.
Commercial participants lowered their net short position to 191,261 contracts from 196,499 a week earlier.
Commercials’ short positions accounted for 65.2% of the total short position, while commercial long positions accounted for 34.2% of total long positions.
Non-commercial short positions represented 33.9% of total short positions, while non-commercial net long positions accounted for 65.8% of the total longs.
The report covered 99.1% of the open short positions and nearly all of the open long positions in the wheat derivatives.
In Euronext’s rapeseed futures and options, non-commercial market participants switched to a net short position, going to a net short of 1,830 contracts from a net long of 10,228 a week earlier.
Commercial participants raised their net short position in rapeseed to 12,439 contracts from 12,052 a week earlier.
From the Black Sea basin , UkrAgroConsult assumes a 55% smaller corn crop in 22/23 on a 40% smaller area.
Thus corn production would fall to 19 Mt!
Also, UkrAgroConsult assumes a 38% smaller wheat crop in 22/23 on a 27% smaller area and a 16% reduced yield.
Thus the consultancy announced Ukrainian wheat production at 19.8 Mt, against 32.1 Mt this year.
They cited the war for fuel and fertilizer shortages.
Meantime, corn exports are forecasted to grow back to 28.5 MMT from 19.3 MMT this year, again citing a backlog from war closed ports.
Wheat exports are forecasted to dip by 2.7 MMT to 16.3, again citing a backlog from war closed ports.
The consultancy averaged best and worst case scenarios for these numbers.
The carryover stock swollen by the stoppage of port loadings since the beginning of the war would make it possible to resume a relatively normal export program, as long as the country has then regained its capacity to operate its infrastructures.
Meantime, from Russia, in March 2022, the KSK grain terminal, part of DeloPorts, the stevedoring asset of Delo Group, broke several records related to the transshipment of grain cargo through its capacities.
Compared to the March record of last year, cargo turnover via the terminal in March this year made almost 500 thousand tons growing by 47%.
All in all, more than 12 thousand trucks with grain were unloaded in March this year compared to 3.5 thousand trucks in March 2021. Accordingly, the volume of grain delivered increased amounting to 324 thousand tons compared to 91.4 thousand tons last year.
In March 2022, a record-breaking 27 grain carriers called at the terminal, 25 of them were loaded and left this month, two more are about to finish loading.
Commenting the achievement, Alexander Trukhanovich, CEO of KSK, said: “The current difficult geopolitical situation has changed the grain supply logistics chain in the South of Russia and shifted a part of additional cargo flow to our terminal. But we took this increase easily – the capacity of the terminal is designed for such large loads or even more”.
From the Middle East, Iraq’s Agriculture Minister Muhammad Karim al-Khafaji said on Wednesday that Iraq has managed to secure three million tonnes of wheat, adding food security has been ensured until the end of the year.
On Tuesday, the country’s trade ministry said it is working to allocate two million tonnes of wheat for strategic reserves, which would be sufficient for six months.
From the Middle Kingdom, the USDA attaché in China estimates maize imports for the country at 24 million tonnes for this campaign against 26 million displayed during the last report and at 20 million for the next campaign.
The attaché forecasts overall feed demand to decline by 2% in MY (marketing year) 2022/23 as prices rise and additional contraction of the swine industry is anticipated.
Corn for feed consumption in MY2022/23 is forecast up 2.8%, or 6 million metric tons (MMT).
MY2022/23 corn, wheat, and rice production are all forecast down due to the push to increase oilseed production and weather conditions in major wheat growing areas.
Production, consumption, and imports of both barley and sorghum are expected to remain robust in MY2022/23.
The attaché revised the import estimate for MY2021/22 to 24 MMT, which is 2 MMT below the USDA official estimate as delivery into China for contracted corn could be problematic owing to Russia’s invasion of Ukraine.
Feed wheat consumption is forecast down as feed mills a return to traditional levels of corn in feed rations.
From South East Asia, USDA’s Seoul attaché projects Korea’s corn imports and consumption to increase in 2022/23 to support anticipated growth in animal inventories, following an expected decrease in corn imports in 2021/22 due to the war in Ukraine.
Korean wheat consumption in 2022/23 is forecast to decline 15 percent due to reduced feed wheat supply.
From Bangladesh USDA attaché forecasts MY 2022/2023 wheat at 7.5 million MT and corn imports at 2.3 million MT.
Local prices of rice, wheat, and corn hit record highs in March 2022 and the Russian-Ukraine war has increased volatility.
India’s oilseeds production in marketing year (MY) 2022/23 (October-September) is expected to extend its momentum and reach 42.1 million metric tons (MMT), a one percent increase over the MY 2021/22 crop.
Both rising animal feed demand and the anticipated growth in oilseed supply will further increase oil meal production by two percent to 20.7 million metric tons.
Oil meal exports are forecast to rise 13 percent to 3.7 MMT.
Notwithstanding current market disruptions, India is expected to continue its reliance on imported edible oils to meet domestic demand, and imports are forecast at 14.5 MMT, an increase of six percent over the current year estimate.
From Australia, wheat and barley prices in the northern market have traded steady to $2 per tonne dearer in the past week, while southern prices have jumped again on the transport squeeze exacerbated by the extended closure of the main grain line into Port Kembla.
This is the last five-day working week ahead of three short weeks which include Good Friday, Easter Monday and Anzac Day, and a number of consumers and export accumulators are covering last-minute needs ahead of the holiday period.
Trade sources say consumers booked adequate coverage some time ago, but COVID’s impact on the workforce coupled with rain delays and additional carting demands caused by the Riverina rice harvest, as well as the Port Kembla situation, have created some shorts.
Meantime, yesterday local markets showed some life early then tapered off as the day went on.
We saw early trading and bid activity on wheat in Victoria and some interest for prompt delivery next week.
Wheat values were firmer by a buck or 2 and the delivered Geelong Melbourne ASW1 SFW1 spread is now into evens for April plus.
Up country domestic homes have also crunched in with Bendigo and St Arnaud homes pricing 10 under Geelong Melbourne SFW1.
Canola markets continued to firm on new and old crop.
New crop values again pushed up over the $1000/mt in VIC, SA and WA as small parcels were let go into the market at those values for new crop.
On the weather side, weather maps continue to look positive over the next 8-10 days with east coast rain continuing.
The question remains now will growers be able to get on paddocks to plant in NSW.
Scattered showers are increasing through South Australia which will help for that traditional Anzac Day start.
On international trade scene, 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 said to be April 13.
Shipment in new tender is sought in a series of possible combinations in 60,000 tonne consignments.
Possible shipment combinations are between May 16-31, June 16-30, July 1-15 and July 16-31.
A new announcement had been expected after Jordan made no purchase in its previous tender for 120,000 tonnes of wheat on Wednesday.
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 April 12.
Shipment in the new tender is sought in a series of possible combinations in 60,000 tonne consignments in the full month of August and/or the full month of September.
A new announcement had been expected by traders after Jordan made no purchase in its previous tender for barley on Tuesday.
An importer group in the Philippines is believed to have bought around 55,000 tonnes of animal feed wheat expected to be sourced from India in an international tender which closed on Wednesday.
Traders estimated the purchase was made about $365 to $370 a tonne c&f for shipment in August.
Large volumes of low-cost Indian wheat are currently being offered in Asian markets.
Offers of Australian wheat in the tender were considerably higher at around $400 a tonne c&f.
The tender had sought between 50,000 to 55,000 tonnes of wheat for shipment in each month between July to December, but traders had not expected every shipment position to be purchased.
