US farm markets showed price levels rarely seen, since 2022 started.
Thus, after they have rose enough the day before, yesterday have attracted a round of technical selling and profit-taking.
Corn prices, indeed, faded 1.14%.
Soybeans finished the session with narrowly mixed results.
May held on to a 0.1% gain, while July beans and the fall delivery contracts closed fractionally to 3 cents in the red.
Soymeal prices ended the session 0.34% down.
Soy oil turned around for the bell and ended the day with gains of as much as 0.28%.
Wheat prices saw the most downside.
May Chicago SRW wheat prices, indeed, lost 1.92%, May Kansas City HRW wheat prices dropped 1.14%, and May MGEX spring wheat prices eased 0.49%.
In energy markets, oil prices rebounded on Wednesday from sharp losses in the previous session.
Concerns about tighter supplies from Russia and Libya dominated.
Also, industry data showed a drop in U.S. crude inventories last week.
Thus, Brent crude futures rose 66 cents, or 0.6%, to $107.91 a barrel by 06:23 GMT while the front-month WTI crude futures contract, which expires on Wednesday, rose 46 cents, or 0.5%, to $103.02 a barrel.
The second-month contract gained 64 cents to $102.69 a barrel.
Both benchmarks fell 5.2% in volatile trading on Tuesday after the International Monetary Fund (IMF) on Tuesday slashed its forecast for global growth by nearly a full percentage point.
The sell-off yesterday on the back of the IMF revisions was probably overdone.
However, risks are still skewed to the upside.
A tighter supply outlook following sanctions on Russia.
The OPEC+, produced 1.45 million barrels per day (bpd) below its production targets in March.
Russia produced about 300,000 bpd below its target in March at 10.018 million bpd.
Other outages added to the concerns about supply as Libya’s National Oil Corporation declared force majeure at the Brega oil port on Tuesday, saying it was unable to fulfill its commitments towards the oil market.
In addition, US crude stocks fell 4.5 million barrels last week, against expectations of an increase in inventories.
The Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy, will release its weekly data at 10:30 a.m. EDT (1430 GMT) on Wednesday.
On the other hand, a softer global economic outlook and ongoing COVID-19 lockdowns in China have hurt demand and weighing on prices.
In freight markets, the Baltic Dry Index yesterday climbed by 47 points, reaching 2115 points.
The overall index, however, decreased 102 points or 4.60% since the beginning of 2022.
In equity markets, Wall Street had on Tuesday its best day in nearly five weeks.
U.S. stock indexes, indeed, staged a broad-based rally, with the S&P 500 posting a 1-week high and the Dow Jones Industrials posting a 2-week high.
Small-cap and growth stocks rallied after JPMorgan Chase said, “both sentiment and positioning are now too bearish,” and the time is right to buy growth and value stocks.
Stocks opened higher on signs of strength in Q1 earnings results.
Microsoft rose 1.7%.
ISignature Bank jumped 8.1% after beating analysts’ expectations.
Railroad giant CSX will report earnings on Wednesday, along with Tesla.
American Airlines and Union Pacific will report their results on Thursday.
Unexpected strength in U.S. housing data was also supportive as U.S. Mar housing starts unexpectedly rose +0.3% m/m to a 15-3/4 year high of 1.793 million, stronger than expectations of a decline to 1.740 million.
Mar building permits, a proxy for future construction, unexpectedly rose +0.4% to 1.873 million, stronger than expectations of a decline to 1.820 million.
Also Wednesday, the National Association of Realtors releases its home sales report for March.
On the other hand, Netflix sank 26% in after-hours trading after the video streaming giant reported its first loss in worldwide subscribers in its history.
Netflix said it expects to lose another 2 million subscribers in April-June.
As of Tuesday’s close, Netflix had already lost half its value since hitting an all-time high last November.
Higher T-note yields, meantime, were bearish for stocks after the 10-year T-note yield climbed to a 3-1/4 year high of 2.926% on hawkish comments from St. Louis Fed President Bullard, who said the Fed needs to move quickly to raise interest rates to around 3.5% this year and that it shouldn’t rule out rate increases of 75 bp.
Treasury yields continued their climb, which allows banks to charge higher interest rates on loans.
The yield on the 10-year Treasury note rose to 2.94% from 2.85% late Monday.
Global economic concerns has been also bearish for stocks after the IMF cut its 2022 global growth estimate to 3.6% from a January estimate of 4.4% and raised its 2022 CPI estimate for advanced economies to 5.7% from a Jan estimate of 1.8%.
In this context, the S&P 500 rose 1.6% to 4,462.21 and the Dow Jones Industrial Average rose 1.5%, to 34,911.20.
The tech-heavy Nasdaq shook off an early loss and added 2.2%, closing at 13,619.66.
The Russell 2000 of small-caps rose 2% to 2,030.77.
Meantime, stocks were mixed in Asia on Wednesday after the rally on Wall Street.
Japan reported its trade deficit p ersisted in March as imports surged 31% thanks to soaring oil prices and a weakening yen.
The deficit of 412 billion yen ($3.2 billion) for March was lower than the previous month’s 670 billion yen but was quadruple analysts’ estimates and a reversal from a surplus of 615 billion yen in March 2021.
Data for the fiscal year that ended in March showed exports jumped almost 24% but were outpaced by imports, which climbed 33%.
The fiscal year deficit of 5.4 trillion yen (nearly $42 billion) was the highest in seven years.
“Seemingly, the global supply chain disruptions due to the ongoing war and China lockdowns are weighing on regional trade activity” some analysts said.
Thus, Tokyo’s Nikkei 225 index gained 0.8% to 27,198.13 while the Kospi in South Korea edged less than 0.1% higher to 2,720.21.
The Hang Seng index in Hong Kong advanced 0.1% to 21,059.52 and the Shanghai Composite index slipped 0.6% to 3,174.35.
In Sydney, the S&P/ASX 200 picked up 0.1% to 7,569.50.
India’s Sensex gained 0.8% while the SET in Bangkok rose 0.4%.
In currency trade, the euro rose to $1.0819 from $1.0789.
The dollar remained at a 20-year high against the Japanese yen, at 128.59 to the dollar.
The weaker yen reflects a divergence between rising interest rates in the U.S. and unchanged rates in Japan, where the central bank has kept its key rate at minus 0.1% for years.
The weaker yen helps make Japanese exports more competitive overseas and fattens profits when they are converted from dollars to yen, but it also raises costs both for consumers and businesses.
On the weather side, the snow continues to fall across the northern US belt and throughout the Canadian Prairies.
More rains are coming to the Midwest later this week, with large portions of Arkansas, Missouri, Iowa, Illinois and Indiana likely to see 0.75” or more between today and Saturday, per the latest 72-hour cumulative precipitation map from NOAA.
Further out, NOAA’s 8-to-14-day outlook predicts a return to seasonally dry conditions across large portions of the Midwest and Plains between April 26 and May 2.
Cooler-than-normal weather is also likely for most of the country during this time.
On the supply side, the old timers would suggest 50pc of the US corn crop needs to be in the ground by 10 May to achieve trend yields, something the global corn balance sheets desperately needs.
On the demand side, private exporters reported to the USDA sold 123,650 metric tons of soybeans for delivery to unknown destinations during the 2021/2022 marketing year.
In this context, corn basis bids were steady to mixed on Tuesday after sliding 2 to 4 cents lower at two ethanol plants while firming 1 to 9 cents higher at three other Midwestern locations.
Soybean basis bids were mostly steady across the central U.S., but did move 2 cents higher at an Ohio elevator and 5 cents higher at an Illinois river terminal.
The funds were net buyers yesterday for 1,000 lots of soybeans but net sellers for 7,000 lots of corn and 8,500 lots of wheat.
From South America, high temperatures and a lack of rain in the center and south of Brazil are raising fears about the vegetative state of corn.
Meantime, Brazil’s Anec is only expecting the country to export 851.000 t of corn in April.
Anec is also estimating the country will export 11.98 MMT of soybeans in April, which is slightly below its prior projection a week ago.
Anec also anticipates Brazilian soymeal exports will reach 1.956 million metric tons this month.
Brazilian wheat exports will reach 155.000 t this month, according to Anec.
In Europe, Euronext wheat prices ended in negative territory.
Old-crop May Paris-based milling wheat prices settled down 0.4% at 399.50 euros ($431.26) a tonne, after earlier climbing to 411.00 euros.
New-crop December wheat settled down 0.6% at 361.25 euros, consolidating after earlier reaching a fresh contract high at 369.25 euros.
Traders were still assessing the impact of India’s addition on Egypt’s state buyer GASC’s list of origins.
Rapeseed, in contrast, is still showing a clear increase, in particular on the last deadline of the 2021 harvest on Euronext, i.e. the May 2022 deadline.
It should be noted that the options closed yesterday on this deadline.
Meantime, European Union corn imports for the 2021/22 marketing year are trending slightly higher than last year’s pace, reaching 12.77 million tonnes through April 17, per the latest data from the European Commission.
European Union soybean imports during the 2021/22 marketing year have reached 11.24 MMT through April 17, which is slightly below last year’s pace so far.
EU soymeal imports are also trending slightly lower year-over-year, at 13.02 million metric tons.
Rapeseed imports stand at 4.20 million tonnes against 5.45 million last year.
European Union soft wheat exports during the 2021/22 marketing year reached 21.26 million tonnes against 22.08 last year to date, That is a year-over-year decline of 4.6% so far.
EU barley exports are also tracking slightly below last year’s pace, with 6.35 million tonnes.
From North Africa, Tunisia’s grain purchases in the coming period of 2022 will be 1.185 million tons, bringing its total required grain imports in the whole of the year to 2.680 million tons, a document seen by Reuters showed.
Tunisia’s purchases during the next period of the year include 600,000 tons of soft wheat, 100,000 tons of durum wheat and 485,000 tons of barley.
The country, which is suffering a deep financial crisis, was badly affected by the rise in global wheat prices resulting from the war in Ukraine.
The impact of grain and oil price rises on Tunisia’s budget will be slightly less than $1.7 billion this year, economy minister Samir Saied told Reuters last month.
The value of Tunisia’s 2022 grain imports is estimated at nearly $1 billion.
The country, which in the last decade has an average grain harvest of about 1.5 million tonnes, consumes around 3.4 million tons per year.
Tunisia raised this month the purchase price of wheat and barley from local farmers to encourage production and achieve food security.
The agriculture minister Mhamoud Elyess Hamza said Tunisia seeks to achieve self-sufficiency in durum wheat production from next season.
Tunisia will plant an additional 800,000 hectares dedicated to durum wheat and will focus on providing seeds that increase productivity.
From Levant, with improved weather conditions, wheat, barley, and rice production in Turkey are forecast to increase in MY 2022/23.
USDA’s Ag Attache showed a preliminary output boost for Turkish wheat, to 17 MMT for 22/23.
Russia would maintain a key contributor, but that Turkey would source more wheat from Romania and Moldova.
In contrast, corn production is forecast down as farmers switch to other more profitable crops.
Overall grain production in MY 2022/23 will be influenced by rising input costs, which the Turkish government is trying to offset with higher support payments for fertilizer and diesel.
With the exception of barley, imports of other major grains are all forecast to increase in response to strong domestic and re-export demand.
Amid rising food inflation, the government may take additional steps to restrict certain agricultural exports to stabilize the domestic market.
From the Black Sea basin, Russian forces have started the battle for Donbas in eastern Ukraine, Ukrainian President Volodymyr Zelensky said Monday as he underscored that the country will continue to fight.
Meantime, Ukraine has insufficient storage capacity even for its reduced 2022 grain harvest, the United Nations’ World Food Programme said on Tuesday.
Jakob Kern, the World Food Programme’s emergency coordinator in Ukraine, cited estimates that 20% of planted areas in Ukraine will not be harvested in July and that the spring planting area will be about a third smaller than usual.
An estimated 15 million tonnes of grains will not have space in the silos around the country.
If Ukraine cannot export its current stocks, farmers may not be able afford harvesting costs, let alone plant the next year’s crop.
The lack of Ukrainian grain on world markets has been pushing up food prices around the world.
The World Food Programme is spending $70 million more a month to buy the same amount of food as last year, Kern said.
From the Middle Kingdom, China’s soybean output is set to increase by 25.8% in 2022, an agriculture ministry official said on Wednesday, amid major efforts to boost oilseed production.
The land planted with soybeans will expand by 16.7% this year.
That would bring China’s soybean output this year to about 20.63 million tonnes this year, based on the 2021 level at 16.4 million tonnes, according to data from the agriculture ministry.
China plans to produce about 23 million tonnes of soybeans by the end of 2025, part of a pledge to secure food security.
Rising domestic output would help push soybean imports in the new year down to 95.07 million tonnes.
China brought in 96.52 million tonnes of soybeans in 2021, down 3.8% from a year ago.
Meantime, China’s soybean imports from the United States plunged in March from a year earlier, customs data showed on Wednesday.
China, indeed, brought in 3.37 million tonnes last month from the U.S., down from 7.18 million a year earlier, data from the General Administration of Customs showed.
The trend for the year in U.S. shipments was lower, with imports during the first three months of 2022 falling 30% from a year earlier to 13.4 million tonnes, according to the data.
However, the data on Wednesday showed that soybean imports from Brazil in March were 2.87 million tonnes, up from 315,334 tonnes a year earlier.
China brought in 6.37 million tonnes of the oilseed from Brazil in the first quarter, up 370% from 1.35 million tonnes a year earlier.
So, Chinese buyers, cut imports from the U.S. and waited for the Brazilian harvest.
The drought which hit Brazil’s new crop this year, cutting output and delaying some shipments, however, pushed Chinese buyers to turn to U.S. soybeans again.
Meantime, Dalian Corn Prices were just a ~100 yuan from the contract high set in late march closing yesterday at 2,868 yuan/MT (~ $11.39/bu).
Dalian Soybean Prices were higher on 4/18, up 9 yuan to 6,155/MT (~ $26.20/bu).
Dalian N2 Soybean Prices were at a new high for the month for 5,149 yuan/MT (~ $21.92/bu).
However, it should to note, poor crush margins, hit by weak hog margins, continue to weigh on purchases of soybeans.
Farmers in the major southwestern producing province of Sichuan, indeed, now lose about 240 yuan ($37.51) on each pig raised.
China’s hog margins have hovered mostly in negative territory since the middle of last year.
On this wake, China will buy 40,000 tonnes of frozen pork for its state reserves on April 22, the China Merchandise Reserve Management Center said in a notice on Tuesday.
This is the fifth batch of such stockpiling in 2022, according to the notice, as pork prices in the world’s top producer and consumer have hovered at low levels in recent months amid surging production and cool demand.
($1=6.3988 yuan).
From Australia, local markets yesterday again were firmer across the board.
Current crop wheat bids were up another $5/t and Kwinana zone ASW1 was bids up $10/t by COB, finishing at $390 FIS.
New crop wheat bids were also firmer by $5-10/t.
South Australian bid was $430/t, reflecting a basis around minus A$126/t.
Sorghum harvest is nearing the halfway mark.
Wet conditions have caused some discolouration and sprouting issues, but the crop is certainly delivering in terms of yield.
Growers are now turning their focus to the winter plant with good moisture.
Rainfall totals for Tuesday across southern NSW and Vic ranged from 10 to 50mm with lighter showers across southern SA and WA.
Sowing is now well and truly underway and for most into a great moisture profile.
The latest BOM outlook indicates that May to July rainfall is likely to be above median for most of Qld, SA (excluding the south), NSW and northern Victoria.
The possibility of a third bumper crop’s is starting to look more realistic.
On the international scene, Jordan has once again canceled its initially planned tender for 120,000 t of feed barley.
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 27,320 tonnes of food-quality wheat from Australia in regular tenders that will close on Thursday.
