US farm markets were mixed yesterday.
Operators finished squaring their positions ahead of today’s World Agricultural Supply and Demand Estimates report released by USDA.
Corn prices for old crop rose just 0.17%, but new crop corn prices were up 0.6%.
Soybeans prices, turned in the strongest performance, rising between 1.47% for the new crop and by 1.61% for the old crop.
Soy meal futures broke in the afternoon and closed 0.35% lower.
Soy oil closed 1.66% higher.
The wheat complex failed to follow suit and was double digits weaker by the close.
May Chicago SRW wheat prices, indeed, lost 1.76%.
May Kansas City HRW wheat prices fell 1.31%.
May MGEX spring wheat dropped 0.83%.
In energy markets, oil prices drifted lower early in the morning, although they reversed the trend afterwards.
Indeed, Brent crude futures advanced by 16 cents, or 0.2% to $100.77 a barrel at 0736 GMT. U.S. West Texas Intermediate (WTI) crude futures gained 35 cents, or 4%, to $96.37a barrel.
However they were set to drop around 3% for the week as consuming countries’ planned release of 240 million barrels from emergency stocks offset some concerns over reduced supplies from Russia.
Particularly, both contracts are set to fall for a second week, with Brent set to drop 3.4% while WTI is set to decline 2.8%.
Brent crude oil slid by 0.48%, while WTI fell by 0.2% on Thursday.
Investors are assessing the fundamentals in the oil market amid uncertainties over slowing demand in China, where cities have been locked down due to the latest wave of coronavirus infections, and the loss of supplies from Russia.
Analysts, indeed, warned the emergency oil release, amounting to about 1 million barrels per day from May to the end of the year, might cap price rises in the short term, but would not fully cover volumes lost if more countries impose sanctions against Russia.
If the EU sanctions Russian oil, we could see Brent crude at $120 in a heartbeat.
At the same time, the European Union’s consideration of a ban on Russian oil, following its plan to embargo Russian coal, will limit any drop in oil prices in the near term.
Also, the release may deter producers, including the Organization of the Petroleum Exporting Countries (OPEC) and U.S. shale producers, from accelerating output increases.
Meantime, China’s second-quarter oil demand could fell by 180,000 bpd from its previous estimate due to the lockdowns there.
In the freight markets, the Baltic Exchange’s dry bulk sea freight index hit its lowest in over five weeks yesterday, dragged down by declining rates across all vessel segments.
The overall index, which factors in rates for capesize, panamax and supramax shipping vessels, indeed, fell 67 points, or 3.2%, to 2,061 points.
Particularly, the capesize index fell 73 points, or 4.9%, to 1,417 points, touching its lowest in seven weeks.
Average daily earnings for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, declined by $602 to $11,753.
The panamax index dipped 90 points, or 3.1%, to 2,778 points, hitting its lowest since March 4.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, fell $806 to $25,003.
The supramax index dropped 58 points to 2,547 points.
In equity markets, U.S. stock indexes closed moderately higher yesterday.
The Dow Jones Industrials rebounded from a 3- week low and the Nasdaq 100 recovered from a 2-1/2 week low.
Better-than-expected U.S. economic data were showed on Thursday.
Weekly initial unemployment claims unexpectedly fell -5,000 to match the Mar 18 record low of 166,000, showing a stronger labor market than an expected increase to 200,000.
Also, Feb consumer credit surged a record +$41.82 billion (data from 1905), stronger than expectations of +$18.10 billion.
The central bank, however, is reversing course from low interest rates and the extraordinary support it began providing for the economy two years ago.
Fed, indeed, may need to raise the fed funds rate to about 3.5%.
Thus, according to this calculation, the current policy rate is too low by about 300 basis points, and by that measure, the Fed is behind the curve.
That, helped push T-note yields higher and weighed on stocks early after the 10-year T-note yield rose to a 3-year high of 2.671%.
Also, the minutes of the ECB’s March 9-10 policy meeting were bearish for stocks as they signaled the ECB might begin to raise interest rates as soon as Q3 of this year.
In this context, on Wall Street, a late-afternoon rebound was led by technology companies.
Particularly, computer and printer maker HP surged 14.8% for the biggest gain in the S&P 500 after Warren Buffett’s Berkshire Hathaway disclosed an 11% stake in the company.
However, communication services stocks were among the biggest weights on the market.
Twitter fell 5.4%.
Thus, the S&P 500 closed up 0.4% to 4,500.21.
Its first gain after a two-day slump.
The benchmark index is still on pace for its first weekly loss in four weeks.
The Dow Jones Industrial Average gained 0.3% to 34,583.57.
The Nasdaq composite added 0.1%, to 13,897.30.
Meantime, Asian shares reversed this morning’s course to finish mostly higher by the close.
Benchmarks fell in morning trading but rose later in the afternoon in Tokyo, Seoul and Sydney.
In China, shares fell in Hong Kong but rose in Shanghai.
The global appetite for risk in the short-term, indeed, is still uncertain.
Particularly, Japan’s benchmark Nikkei 225 declined in morning trading but finished 0.4% higher at 26,985.80.
South Korea’s Kospi rose 0.2% to 2,700.19.
Australia’s S&P/ASX 200 added 0.5% to 7,478.00.
Hong Kong’s Hang Seng shed 0.4% to 21,726.57, while the Shanghai Composite recouped earlier losses to rise 0.3% to 3,246.91.
In currency trading, the dollar was unchanged at 123.97 Japanese yen.
The euro rose to $1.0882 from $1.0861.
The dollar index on Thursday rose by +0.159 (+0.16%).
On the weather side, some light rains will be possible across most of the Plains and Midwest between today and Monday, per the latest 72-hour cumulative precipitation map from NOAA.
Very few places will gather more than 0.25” during this time, however. NOAA’s 8-to-14-day outlook predicts seasonally dry weather returning to the Central Plains between April 14 and April 16, with cooler-than-normal conditions likely for the entire central U.S.
On the demand side, FAS data showed 782,434 MT of old crop corn was sold for export during the week that ended 3/31.
That was up 22% on the week, and 3% yr/yr.
New crop sales were near the low end of estimates, with 145,235 MT booked.
Weekly export shipments were tallied at 1.633 MMT – which brought the season’s total to 33.8 MMT.
There were still 20.6 MMT on the books as of 3/31, a volume 32% less than the same point last season.
As for soybean, the report showed 800,746 MT of old crop beans were sold during the week of 3/31.
New crop soybean sales were reported as 298,500 MT, which brought the forward book to 8.46 MMT, or 50% above the same point coming into this season.
Export shipments were tallied as 832,798 MT, for a 44.38 MMT total program through the first 31 weeks.
USDA had 11.765 MMT of old crop on the books, a volume more than double last year’s.
For products, USDA reported 66,226 MT of soymeal was sold for export during the week that ended 3/31.
Meal exports were reported at 237,761 MT for the week and 6.306 MMT for the year.
For bean oil, FAS data had 6,248 MT of old crop sales from the week of 3/31.
Soy oil shipments were 50,200 MT, which was a 56-week high.
Accumulated soy oil exports reached 497,460 MT.
As for wheat, data from the week that ended 3/31 showed 156,255 MT of old crop wheat was sold.
That was up 64% on the week and up by 90% from the same week last year.
New crop wheat bookings were at the high end of estimates with 223k MT sold.
USDA also reported 309,754 MT of wheat was shipped during the week that ended 3/31.
That left the season’s export at 15.806 MMT.
In other news, the Trump administration had lifted a ban on selling E15 during the summer months in the US but was quickly shut down by the Federal Appeals Court.
The Renewable Fuels Association is pushing the idea that E15 would reduce the cost of gasoline to the consumer but would need an executive order from the Biden administration and an EPA waiver–no mean feat.
Meantime, after reviewing materials including more than a decade of RFS market data, the EPA said it concluded that none of the 36 petitions demonstrated hardship caused by compliance with the RFS program.
U.S. renewable fuel credit prices that had risen on Thursday ahead of the announcement fell back toward levels seen on Wednesday.
Renewable fuel (D6) credits traded at $1.15 each after the news, down from $1.21 earlier, traders said. The credits traded at $1.155 on Wednesday.
A U.S. appeals court dealing with the SRE issue had given EPA an April 7 deadline to decide on the waivers.
The EPA is still considering petitions from other refineries for compliance years in the 2016-2021 range, the agency said.
The EPA had accumulated a backlog of more than 60 SRE requests for those years, according to the agency’s website.
SREs have always been a hotly debated topic between the oil refining industry and the ethanol and corn industries.
Biofuel producers and corn growers argue that the waivers undercut demand for their products, while the refining industry refutes that and says the exemptions are needed to keep small fuel producers in business.
In this context, corn basis bids were mostly steady to weak, after dropping 3 cents at two Midwestern ethanol plants and 12 cents at an Iowa river terminal.
Soybean basis bids tumbled 12 cents lower at an Iowa river terminal, but held steady elsewhere across the central U.S..
The funds were net buyers yesterday for 2,500 lots of corn and 10,000 lots of soybeans.
They were net sellers for 6,500 lots of wheat.
From Canada, according USDA attaché, canola ending stocks are forecast to close marketing year (MY) 2021/22 at just 15% of the five-year average, driven by reduced yield due to drought and strong global demand for oilseeds.
Assuming a return to average yields, canola exports are forecast to nearly double in MY 2022/23, driven by strong global demand for oilseeds and a rebuilding of exportable supplies.
Six crush plant expansions and new builds are projected to bump canola crush capacity from 11 million metric tons (MT) in 2021 to at least 17 million MT by 2025.
In marketing year (MY) 2022/23, Canada’s total production of oilseeds (canola, soybean, and sunflower seeds) is expected to increase 35% over the previous year to 25.7 million metric tons (MT) based on expectations of improved canola yields.
From South America, according to StoneX, future wheat acreage in Brazil should grow sharply by +20.2% to reach production of around 10 million tonnes.
A record if realized.
Meantime, CONAB reported Brazilian corn as 115.6 MMT, or a 3.26 MMT increase from last month’s forecast.
That rapresent a 2.9% increase.
First crop was upped by 451,000 MT on a 1.1 bpa yield boost.
2nd crop output was called 2.48 MMT higher, on a 1.01 bpa yield boost, to 88.53 MMT and 87.9 bpa respectively.
Meantime, corn export estimates in 2021/22 also improved 5.7% to 37 MMT.
Also, CONAB reported Brazilian soy output as 122.43 MMT, cutting it by another 2.4%.
That is down 3 MMT from March’s 125.5 MMT, and came on a 1.35 bpa yield cut to 44.62 bpa.
If realized, that would be a year-over-year reduction of 11.4%.
Last year’s yield was 52.4 bpa for soybeans.
Conab also lowered its estimates for 2021/22 soybean exports by 3.9% to 77 MMT.
Argentina’s 2021/22 soybean production could fall below the current estimate of 42 million tonnes due to the impact of new early frosts in farming areas over the last week, the Buenos Aires Grains Exchange (BdeC) said on Thursday.
Meantime farmers have harvested 8.8% of the area planted with the oilseed.
The frosts, which happened only a few weeks before the end of the southern summer, also hit Argentina’s corn, however the Exchange did not warn of a possible changes in its harvest forecast, currently of 49 million tonnes.
Until Wednesday, producers had threshed 17% of corn area.
The grains exchange also said that the sunflower harvest would end in the next two weeks, with a final production of 3.3 million tonnes if suitable weather conditions were registered.
International relevance of Argentinian production of sunflower seeds and its oil and meal has grown due to a fall in the global supply of the oilseed, caused by Russia’s invasion of Ukraine.
In Europe, new rise in wheat prices for the 2022 harvest.
War in Ukraine seems set to settle in a relatively long period.
Also, the sharp rise in production costs, the result of the rise in the prices of fertilizers, fuels and mechanization costs in particular, pressured commodities ag.
Rapeseed prices rose again yesterday, despite the decline in oil, in the wake of canola where end-of-season stocks are expected at a historically low level.
Market is also marked by the sudden drying up of sunflower oil supplies.
Meantime, shipping on the Rhine in Germany has returned to normal, with cargo vessels able to take on full loads along the entire river after rain raised its level, traders said on Friday.
The river had fallen below normal levels in mid-March after dry weather, with vessels only able to sail partly loaded.
But rain in river catchment areas in south and central Germany in past days had on Friday raised water to normal levels.
Meantime, according to farm office FranceAgriMer, an estimated 92% of French soft wheat crops were in good or excellent condition in the week to April 4, unchanged from the previous week and above a year-earlier score of 87%.
Ditto for winter and spring barley rated respectively at 88% and 92% in Good/Excellent conditions.
In contrast, durum wheat conditions decreased from 87% prior’s week, to this week 85%.
Meantime, some 4% of the expected grain corn area had been planted, below the 8% progress seen a year ago.
From the Black Sea basin, Ukrainian Prime Minister Denys Shmyhal said on Friday this year’s grain harvest is likely to be 20% less than last year because of a reduced sowing area following war with Russia.
There is a shortage of fuel for farmers but Ukraine know how to keep them supplied.
He also said Ukraine had large stocks of grain, cereals and vegetable oil, and could feed its population.
Meantime, as of April 7, Ukraine planted spring crops throughout the areas of 1.074 mln ha or 6.3% of the forecast, including 853 thsd ha planted with spring grains (1.4%), declared the Ministry of Agrarian Policy.
In particular, farmers planted spring wheat throughout 113.5 thsd ha (59.1%), spring barley – 550.8 thsd ha (41.2%), oats – 81 thsd ha (45.5%), peas – 82.5 thsd ha (34%), corn – 13.6 thsd ha (0.2%), buckwheat and millet – 0.2 thsd ha each (0.2% and 0.3% correspondingly).
Farmers planted sunflower seed throughout 108.1 thsd ha (1.7%), soybeans – 14.1 thsd ha (1.1%), spring rapeseed – 11.6 thsd ha (34.9%).
Additionally, farmers planted sugar beet throughout 55.2 thsd ha (24.6%).
Agrarians of all oblasts except Luhansk have already started spring planting campaign.
Meantime, according to Svetlana Malysh by Refinitv, April delivery Ukraine corn prices, drifted to €240-245 per tonne DAP Constanta compared to €300-310 per tonne a week before.
Ukraine corn export prices lost €25 per tonne during the week and dropped to €245-255 per tonne on DAP Poland/Hungary border, she added.
Black Sea grain prices dropped on slow foreign demand, while new 2022 crop already in focus, she said.
Weak demand also weighed on Russian 12.5% wheat offers, as fell by $6-15 to $384-390 per tonne FOB Novorossiysk for April delivery.
Buyers were interested in buying new crop wheat, but there were no offers of Russian new crop wheat in the market yet due to unclear market situation, she added.
Meantime, Romania corn quotes also fell to €330-335 per tonne FOB Constanta compared to €340-350 per tonne last week for May-June delivery.
In Russia, the share of Russian plant protection products has increased from 45% up to 70% in five years.
By the end of 2021, two-thirds of the plant protection products used in Russia were of domestic production.
Since the beginning of the year, the positive dynamics of their output has also been maintained, and farmers will be provided with the plant protection products in full, the Ministry of Agriculture said.
According to the agricultural department, for seasonal field work in 2022, the provision of the plant protection products is about 207 thousand tons — at the level of the average long-term values.
According to the Ministry of Agriculture, this will allow processing more than 100 million hectares of crops in terms of single processing.
At the same time, the frequency of treatments and the need for drugs will be determined in accordance with the conditions in each region.
Some southern regions of Kazakhstan have already started the planting campaign.
Farmers have already planted 181.2 thsd ha with crops.
In the key grain producing regions, the mas planting will start in May, informed the Ministry of Agriculture.
The overall planted area will reach 23.1 mln ha in 2022.
The area under social as well as feed crops will be extended sizably to 3.6 mln ha.
Meantime, as of March 1, Kazakhstan exported 4.5 mln tonnes of grain and flour in grain equivalent, declared Alexander Malov, General Director at VKZ-Agro LLP within Asia Grains&Oils Conference 2022 on April 7.
Grain stocks in Kazakhstan, including imports from Russia, are estiamted at 6.2 mln tonnes as of March 1.
Thus, the export potential of wheat and flour is at 3 mln tonnes.
The exports accelerated after the information about the imposition of the quotas from April 15.
It’s estimate exports to reach 1.1 mln tonnes of grain and flour in March – first half of April.
In April-June, they will have 1 mln tonnes of wheat and 300 thsd tonnes of flour determined for export by the state.
Central Asia would show traditionally weak demand for Kazakh grain in summer.
The current unusually strong exports will fill the market.
Thus, it will be difficult for Kazakh grain to find demand in the Central Asia in summer.
From the Middle Kingdom, China has sold 533,449 tonnes of wheat, or 97.29% of total on offer, at an auction of state reserves, according to the National Food and Strategic Reserves Administration.
The average selling price was 2,857 yuan ($449.47) per tonne, the agency said in a statement.
($1 = 6.3564 Chinese yuan renminbi)
Meantime, China’s General Administration of Customs has suspended imports from two Brazilian beef plants and one poultry producer, according to a statement on its website.
The suspensions will last one week and are effective from April 8, GACC said, without giving a reason for the move.
The ban concerns a JBS SA beef plant in Goias, a Marfrig beef unit in Mato Grosso, and a chicken plant in Sao Paulo owned by Zanchetta, which is not listed.
From Australia, local markets are rounding out the trading week fairly steady again.
Themes have not changed and values remain largely unchanged.
Some buying interest popped up for prompt wheat into Melbourne/Geelong homes which saw the bid side stronger by $5/mt.
It’s the same old story of tight logistics causing the issues.
Barley markets remain thin as offers are hard to come by.
Eastern and South Australian canola bids were $10/t lower yesterday.
WA values remain strong with new crop bid $1105/mt for non-GM.
Port Kembla’s rail nightmare continues to cause export execution headaches.
A wet weather induced landslide on the Port Kembla rail line will see the line restricted to one line for all rail, expected for some 4-6 months and will most likely halve the rail capacity into Port Kembla terminals.
The 8-10 day weather maps continue to improve for southern NSW, Vic and SA.
Early planted crops in southern NSW are looking for that next drink while growers in Victoria and South Australia now getting ready to ramp planting up with a wide spread 15-25mm forecast.
On the international trade scene, Japan purchased 139.000 t of food-quality wheat from the United States, Canada and Australia in a regular tender that closed yesterday.
Of the total, 44% was sourced from the U.S. The grain is for shipment in June.
The Philippines purchased 55.000t of animal feed wheat, likely sourced from India, in an international tender that closed on Wednesday.
The grain is for shipment in August.
World food prices jumped nearly 13% in March
to a new record high
War in Ukraine caused turmoil in markets for staple grains and edible oils, the U.N. food agency said on Friday.
Indeed, the Food and Agriculture Organization’s (FAO) food price index, which tracks the most globally traded food commodities, averaged 159.3 points last month versus an upwardly revised 141.4 for February.
The February figure was previously put at 140.7, which was a record at the time.
Particularly, the agency’s cereal price index climbed 17% in March to a record level while its vegetable oil index surged 23%, also registering its highest reading yet.
Sugar and dairy prices also rose sharply last month.
The FAO last month said food and feed prices could rise by up to 20% as a result of the conflict in Ukraine, raising the risk of increased malnutrition.
Disruption to supplies of crops from the Black Sea region has exacerbated price rises in food commodities, which were already running at 10-year highs before the war in Ukraine due to global harvest issues.
In separate cereal supply and demand estimates on Friday, the FAO cut its projection of world wheat production in 2022 to 784 million tonnes, from 790 million last month, as it factored in the possibility that at least 20% of Ukraine’s winter crop area would not be harvested.
The revised global wheat output estimate was nonetheless 1% above the previous year’s level, it said.
The agency lowered its projection of global cereals trade in the 2021/22 marketing year as increased exports from Argentina, India, the European Union and the United States were expected to only offset some of the disruption to Black Sea exports.
Thus, total cereal trade in 2021/22 was revised down by 14.6 million tonnes from the previous monthly outlook to 469 million tonnes, now 2% below the 2020/21 level.
Meantime, projected world cereal stocks at the end of 2021/22 were revised up by 15 million tonnes to nearly 851 million tonnes, mainly because of expectations that export disruption will lead to bigger stockpiles in Ukraine and Russia, the FAO added.
