U.S. farm markets were mixed but mostly higher yesterday.
However, we are in a weather market and this we should not forget.
Widespread rainy weather over the next several days, indeed, is expected to slow spring fieldwork more.
That helped push up corn and soybean prices higher in midweek trading.
Corn prices, indeed, captured gains more then 1.45%.
Soybeans firmed 1.76%.
Meal prices were 1.51% higher on the day.
Soy oil prices closed with 0.75% gains.
The wheat complex, meantime, was mixed, as has been subject to profit taking by the funds, despite crop conditions deemed unsatisfactory at the moment and fears about the production potential of the future harvest.
Thus, winter wheat prices were trimmed, while spring wheat contracts managed to close unchanged.
Particularly, May Chicago SRW wheat prices fell 1% to $10.88.
May Kansas City HRW contracts dropped 0.7% to $11.6320.
May MGEX spring wheat prices were unchanged to $11.6920.
In energy markets, oil prices firmed in choppy trade on Thursday.
Concerns rose about supply due to a potential European Union (EU) ban on Russian oil.
Also, diminished supplies from Libya rocked the market, as on Wednesday said the country was losing more than 550,000 barrels per day of oil output due to blockades at major fields and export terminals.
The demand outlook in China continues to weigh on the market, as the country slowly eases strict COVID-19 curbs that have hit manufacturing activity and global supply chains.
Thus, Brent crude futures rose $1.32, or 1.24%, to $108.12 a barrel at 0636 GMT.
U.S. West Texas Intermediate (WTI) crude futures gained $1.26, or 1.23%, to 103.45 a barrel, adding to a 19 cent gain in the previous session.
Meanwhile, the Caspian Pipeline Consortium’s Black Sea terminal could return to full capacity this week, Kazakh Energy Minister Bolat Akchulakov said on Wednesday, although the oil market remains tight with the OPEC+, that struggling to meet their production targets and with U.S. crude stockpiles down sharply in the week ended April 15.
Thus, analysts warned market volatility is likely to pick up again soon.
In freight markets, the Baltic Exchange’s dry bulk sea freight index, tracking rates for ships ferrying dry bulk commodities, rose on Wednesday led by gains across vessel segments.
The overall index, which factors in rates for capesize, panamax and supramax shipping vessels, indeed, rose 27 points, or 1.3%, to 2,142 points, the highest in more than two weeks.
The capesize index jumped 21 points, or 1.6%, to 1,363 points.
Average daily earnings for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, increased by $178 to $11,305.
The panamax index climbed 8 points, or about 0.3%, to 3,087 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, rose by $65 to $27,780.
The supramax index gained 55 points to 2,596 points, the highest in two weeks.
In equity markets, U.S. stock indexes Wednesday settled mixed.
The Dow Jones Industrials closed at a 3-week high, having received a bump from IBM, which added 7.1% as reported quarterly results beat analysts’ estimates.
A rally in chip stocks has been also positive for the overall market as ASML Holding NV, the world’s largest semiconductor equipment maker, forecasted strong demand for its chip-making machines.
Lower T-note yields Wednesday were also bullish for stocks as the 10-year T-note yield fell back from a 3-1/4 year high of 2.977% and dropped -9.6 bp to 2.840%.
T-note yields fell after Bank of America said, “its forecasts point to inflation peaking this quarter and falling steadily into 2023 and that this will reduce the panic level around inflation and allow rates to decline.”
The Nasdaq 100, meantime, was under pressure from a -35% plunge in Netflix.
The stock is now down 67% from the all-time high it reached in November.
Technology stocks, retailers and other companies that rely on consumer spending also weighed on the market.
Chipmaker Nvidia fell 3.2% and Amazon dropped 2.6%.
The skid in Netflix, weighed heavily also on the S&P 500, hitting the communication services sector, pulling it 4.1% lower.
Another negative for stocks was Wednesday’s Fed Beige book that said the U.S. economy grew at a moderate pace through mid-April, and inflationary pressures remained strong, but the “outlook for future growth was clouded by the uncertainty created by recent geopolitical developments and rising prices.”
The National Association of Realtors reported Wednesday that U.S. March existing home sales fell -by 2.7% m/m to a 21-month low of 5.77 million, right on expectations.
That is the slowest pace in nearly two years.
Higher bond yields have been pushing up mortgage rates and increasing pressure on an already tight housing market, with record-high prices discouraged would-be homebuyers.
Health care stocks, in contrast, made some of the biggest gains.
CVS rose 2.7% and medical device maker Boston Scientific added 3%.
Banks and household product makers also bucked the market’s overall decline.
JPMorgan Chase rose 0.4%, while Charmin- and Dawn-maker Procter & Gamble rose 2.7% after beating analysts’ quarterly earnings forecasts.
Tesla rose 4% in after-hours trading after reporting first-quarter net earnings that were over seven times greater than a year earlier .
Thus, all told, the S&P 500 slipped 0.1% or 2.76 points to 4,459.45, and the Nasdaq fell 1.2% or 166.59 points to 13,453.07.
The Dow rose 0.7% or 249.59 points to 35,160.79.
Smaller company stocks held up better than the broader market.
The Russell 2000 added 7.42 points, or 0.4%, to 2,038.19.
Meantime, Asian shares were mixed in choppy trading Thursday.
Benchmarks rose in Japan, South Korea and Australia, boosted by the overnight rally in Europe and in the Dow in the U.S..
Investors were also watching South Korean trade numbers for April, which showed a trade deficit, although both imports and exports rose.
Chinese President Xi Jinping, speaking at a forum of Asian leaders, said his government supports talks to resolve international disputes, but opposes the use of sanctions.
What central banks may indicate on interest rates and inflation was also of concern, analysts said.
New Zealand’s inflation rate hit a 30-year high of 6.9%, driven by rapidly increasing costs for housing and gas.
Statistics New Zealand reported that the cost of building new homes was up 18% when compared with a year ago, while gas prices were up 32%.
The annual increase in prices was the highest since 1990.
Thus, “market focus will remain on inflation and the Ukraine-Russia situation ” ahead of the Thursday IMF panel discussion with U.S. Federal Reserve Chair Jerome Powell and European Central Bank President Christine Lagarde.
Meantime, the IMF warns of price inflation at the global level, with the consequence of the risk of famine in the poorest countries.
The World Bank thus encourages countries that have the possibility to put goods back on the market from their national stocks.
In this context, Japan’s benchmark Nikkei 225 jumped 1.2% to finish at 27,553.06.
Australia’s S&P/ASX 200 added 0.3% to 7,592.80.
South Korea’s Kospi surged 0.4% to 2,728.21.
Hong Kong’s Hang Seng slipped 1.3% to 20,682.22, while the Shanghai Composite fell 2.3% to 3,079.81.
In currency trading, the U.S. dollar rose to 128.36 Japanese yen from 127.93 yen.
The euro cost $1.0832, inching down from $1.0853.
The dollar index fell by -0.582 (-0.58%).
On the weather side, as we said, more wet, cold weather is blowing across the central U.S. later this week.
Parts of the Northern Plains could gather another 1.5” or more between Thursday and Sunday, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts more seasonally cool weather for the Corn Belt between April 27 and May 3, with drier-than-normal conditions finally making a return.
On the supply side, corn planting in IA / IL / MO may be delayed in next week’s Crop Progress report, as the 7-day QPF from NOAA shows the states getting at least 1 3/4” rain accumulation.
S.W. MO is expected to top out near 5” through the coming week, benefiting the >4% of corn already planted, but delaying the other fields which were already behind the >12% average pace.
As for wheat, the 7-day QPF from NOAA shows rain where needed for 22/23 wheat crops.
From mid TX through IL wheat fields can expect 1” – 5” through the next week.
The majority of the accumulated rain will be along the 4-state corner of KS / MO / AR / OK.
Northern Plains are also forecasted to receive 1 1/2” to 2 1/2”. NE and W.
KS will miss out with just a tenth of an inch in the forecast.
On the demand side, weekly EIA data showed ethanol producers averaged 947,000 barrels of output per day during the week that ended 4/15, against 995,000 last week.
That was another 48k barrels per day drop off wk/wk, for an accumulated 2.66m fewer barrels of output since the week that ended 3/18.
Stocks got tighter by 461k barrels compared to last week, and by 1.8m barrels compared to the week ending 3/18 with 24.342m barrels of ethanol supplies as of 4/15.
Ahead of Thursday afternoon’s export report from USDA, analysts expect the agency to show another big round of corn sales, with trade guesses ranging between 950k and 1.5 MMT of old crop corn was sold during the week that ended 4/14.
New crop sales are estimated to be between 400k and 800k MT. .
As for soybean, analysts estimate soy bookings were between 300k MT and 800k MT during the week that ended 4/14.
New crop beans are expected to be 400k to 950k MT.
Soymeal sales were estimated between 75k and 250k MT.
Traders surveyed expect fewer than 15k MT of soy oil was booked.
As for wheat, analysts surveyed anticipate fewer than 350k MT of old crop wheat sales were made during the week of 4/14.
New crop wheat bookings are expected to be between 150k and 400k MT in today’s Export Sales report.
In this context, corn basis bids were mostly steady to weak after trending 3 to 7 cents lower at three Midwestern locations on Wednesday.
An Ohio elevator bucked the overall trend, firming 7 cents higher.
Soybean basis bids were mostly steady to firm, after jumping 11 to 15 cents higher at three Midwestern locations.
An Ohio river terminal bucked the overall trend after dropping 5 cents lower.
The funds were net sellers yesterday for 6,000 lots of wheat, but net buyers for 7,500 lots of soybeans and 9,500 lots of corn.
From South America, ports in one of Brazil’s biggest farming states are handling an unusual amount of fertilizer after importers rushed to secure supplies amid fears that sanctions on Belarus and Russia would curtail trade, the Parana port authority said.
Meantime, drier forecasts in Brazil are starting to increase concern to global balances, particularly corn, where the safrinha corn belt remained dry, especially in central and southern Mato Grosso state. Luckily temperatures have been mild but there is a definite watch on how the forecast develops.
Meantime, Abiove made no changes to its prior estimate for the country’s 2021/22 soybean production potential, which remains at 4.604 billion bushels.
Ending stocks are estimated at 88.9 million bushels, rising 27% above March totals.
Also, Abiove estimates that soymeal exports will climb to a record 18.3 million metric tons this season, with revenue from the entire soybean complex also expected to reset the record books, with $55.9 billion.
Argentine farmers may plant around 6.5 million hectares of wheat during the 2022/23 season against 6.7 previously, per the Buenos Aires Grain Exchange.
That’s a slight decline from a year ago, with an uptick in barley hectares expected to fill the gap.
That makes it somewhat unlikely for Argentina to repeat its 2021/22 wheat production of 21.8 MMT.
In Europe, grain prices lost ground yesterday in the 2022 harvest, mainly due to a notable rebound in the euro-dollar parity.
While prices continued to progress in the 2023 season.
The session was particularly poor in terms of information and thus lacked the fuel to relaunch the extremely sustained upward pace.
Rapeseed market, meantime, remains under strong tension with a shift in demand for sunflower oil to rapeseed and .
However, though was changing without a clear trend had a slight withdrawal from the August 2022 contract, but more distant maturities up slightly.
Meantime, non-commercial market participants increased their net long position in Euronext’s milling wheat futures and options in the week to April 14, data published by Euronext on Wednesday showed.
Non-commercial participants, which include investment funds and financial institutions, lifted their net long position to 194,355 contracts from 184,165 a week earlier, the data showed.
Commercial participants lowered their net short position to 196,187 contracts from 206,703 a week earlier.
Commercials’ short positions accounted for 65.9% of the total short position, while commercial long positions accounted for 34.7% of total long positions.
Non-commercial short positions represented 34.1% of total short positions, while non-commercial net long positions accounted for 65.3% of the total longs.
In Euronext’s rapeseed futures and options, non-commercial market participants lowered their net short position to 3,767 contracts from 5,143 a week earlier.
Commercial participants similarly decreased their net short position in rapeseed to 2,880 contracts from 3,423 a week earlier.
From North Africa, Indian wheat could offer a cheaper option for top importer Egypt but will have to overcome quality controls set by the country’s agriculture ministry as well as higher freight costs.
Last week, Egypt’s agriculture ministry announced it had approved India as a wheat import origin but has placed several conditions including inspection for pests prior to export and the use of only a specific pesticide, according to a ministry document.
Quality concerns linked to the fungal disease Karnal Bunt and the overuse of pesticides have previously plagued wheat exports from India, with some suppliers receiving complaints a few years ago.
Traders and government officials in India, however, have said it had not received any complaints when exporting large quantities this year to countries such as Bangladesh, South Korea, Sri Lanka, Oman and Qatar and others.
Traders also said freight costs would be a challenge for Indian suppliers, adding that the lowest freight cost on Tuesday stood at $70 a tonne, against $30-$40 a tonne for the supplies from the Black Sea region.
India’s wheat exports hit 7.85 million tonnes in the fiscal year to March, an all-time high and a sharp increase from 2.1 million tonnes in the previous year.
News of India’s addition as an approved import origin by Egypt has been welcomed by both countries.
India is trying to cash in on its production surplus and Egypt is looking for lower prices.
Recent export deals from India have been signed at between $330 and $335 a tonne free-on-board, more than $100 cheaper than European offers purchased by state grains buyer the General Authority for Supply Commodities (GASC) in its latest tender.
From Balkans, Serbian government said on Wednesday it has restricted the quantities of wheat, corn, flour and cooking oil slated for export to confront risks of market disturbances caused by the rise of demand on the international and local markets.
Last month, Serbia banned exports of basic food staples to counter price increases, but then gradually started to make exceptions under pressure from the Serbian trade chamber and wheat producers, who complained they could lose traditional markets.
The government said it has introduced temporary export restrictions on a monthly basis and for the certain period of time.
It did not provide detail in a statement.
Serbia, balancing its ambition to join the European Union with its historical ties to Russia, has not introduced sanctions against Moscow despite pressure to harmonise its foreign policy with the EU as a candidate country.
From the Black Sea basin, wheat regions particularly in Russia look amazing.
Timely rainfall and good subsoil moisture should skew production estimates to the upper end of the range.
Meantime, Russian President Vladimir Putin said on Wednesday that “illegal” restrictions on Russian companies by Western states ran counter to World Trade Organization rules and told his government to update Russia’s strategy in the WTO by June 1.
Particularly, Putin said that Western countries had banned Russia from buying components needed to produce rolled metal, steel sheets and other products.
In Ukraine, Ukrainian farmers have sown 2.5 million hectares of spring crops so far in 2022, 20% of the expected area, the agriculture ministry said on Thursday, adding that areas of intense conflict could see a drop of 70% of the sowing area.
Ukraine has said the 2022 spring sowing area could fall 20% due to the conflict.
The ministry said the decrease could reach 30% to 40% in the northern regions as they will need to be de-mined.
From the Middle Kingdom, Refinitiv Commodities Research estimates that China’s corn production could reach a record 276 MMT during the 2022/23 season, based on acreage and yield trends.
That would best this season’s record-breaking crop by 1.2%, if realized.
“This season, Chinese farmers will continue to favor corn plantings amid profitable prices and past farming practice,” according to Refinitiv.
From Australia, moves have been mixed and moderate in the past week as supply-side pressure weighs on the northern market, and demand from bulk and containerised exporters and the domestic sector supports values in the south.
Widespread rain across Victoria and southern New South Wales over the Easter weekend has reduced growers’ interest in selling to a minimum as they concentrate on paddock preparation and the planting of winter crops.
In the north, the sorghum harvest and out-turn to export has resumed in most districts following a reasonably dry week.
The rainfall forecast for next week is looking promising for all states, particularly SA.
On the other hand, NSW and Victoria both have scrapped their remaining COVID rules as of Friday.
Household contacts of positive cases no longer are required to isolate for 7 days.
This major change comes as both states believe they have passed the peak of the latest Omicron surges.
Whether this provides any relief for the major logistics problems still being experienced is yet to be seen.
Meantime, local markets were firmer again yesterday.
Wheat H2 grade is up $10/t for the week to $490/t and ASW1 up $7/t to $415/t.
SA bids were up $5-10/t for wheat and $15/t for canola.
New crop canola Kwinana bid was up $11/t to $1166/t.
On international trade scene, the Taiwan Flour Millers’ Association purchased an estimated 47,120 tonnes of milling wheat to be sourced from the United States in a tender which closed on Thursday.
The wheat was bought in one consignment comprising various wheat types for shipment from the U.S. Pacific Northwest coast between June 7 and June 21.
The purchase involved 32,950 tonnes of U.S. dark northern spring wheat of 14.5% protein content bought at $475.80 a tonne FOB U.S. Pacific Northwest coast.
The purchase also involved hard red winter wheat of 12.5% protein bought at $511.56 a tonne FOB and soft white wheat of 10.5% protein bought at $424.57 a tonne FOB.
The consignment has an additional freight charge of $60.75 per tonne for ocean shipping from the U.S. Pacific Northwest coast to Taiwan.
Seller of the dark northern spring was said to be trading house Bunge, the hard red winter and soft white was said to have been sold by trading house CHS.
