A lackluster set of export sales gave to US farm markets an easy excuse to trimme grain prices yesterday.
Corn prices, indeed, fell 2,02%.
Soybeans prices managed to scrape together some marginally gains, meantime, closing from unchange just up.
Soymeal spent most of the mixed day in the red, and missed out on the late strength as prices went home 0.53% weaker.
Soy oil prices were mostly higher, meantime, and ended the session up by 0.85% after setting new highs.
Wheat prices ended the Thursday session weaker again.
CBOT prices closed off their lows for the day, but still down by 1.84%.
KC wheat was the weak link having missed 2.19%.
MPLS HRS prices faded by 1.52% on the day.
May options expire today.
In energy markets, oil prices fell on Friday, heading for a drop of nearly 4% for the week, burdened by the prospect of rate hikes, weaker global growth and COVID-19 lockdowns in China hurting demand, even as the European Union weighed a ban on Russian oil.
Concerns about the Ukraine conflict stoking inflation and denting economic growth dominated trading in the second half of the week, with the International Monetary Fund slashing its global growth forecast by nearly a full percentage point.
China’s central bank governor Yi Gang said on Friday that the world’s second-largest economy was not immune to external shocks, and also faced pressure from COVID outbreaks.
Thus, Brent crude futures slid $2.18, or 2.01%, to $106.15 a barrel at 10:30 GMT, while U.S. West Texas Intermediate (WTI) crude futures declined $2.22, or 2.14%, to $101.57 a barrel.
Thus, both benchmark contracts were headed for weekly declines of around 5%.
Brent crude, gained 1.43% on Thursday, while U.S. crude rose 1.57%, as all of that comes in a tight market, which could face even shorter supply if the European Union goes ahead with a ban on Russian oil.
In freight markets, the Baltic Exchange’s dry bulk sea freight index, which tracks rates for ships ferrying dry bulk commodities, rose to a more than two-week high on Thursday, driven by gains in the capesize segment.
The overall index, indeed, rose 97 points, or 4.53%, to 2,239 points, the highest since April 4.
Particularly, the capesize index jumped 273 points, or 20%, to 1,636 points, also a peak since April 4.
Average daily earnings for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, increased by $2,266 to $13,571.
The panamax index fell 40 points, or about 1.3%, to 3,047 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, fell by $361 to $27,419.
The supramax index gained 50 points to 2,646 points.
In equity markets, the broader market has had a choppy week as investors review the latest round of corporate earnings amid lingering concerns about rising inflation and the Fed’s shift away from an ultra-low interest rate policy.
The Fed has already announced a quarter-percentage point rate hike and Wall Street expects a half-percentage rate hike at its next meeting in two weeks.
Other central banks have also moved to raise interest rates to try and temper the impact of rising prices on businesses and consumers.
During the panel discussion Thursday, Powell suggested that “there’s something in the idea of front-loading” aggressive rate hikes as the Fed grapples with inflation that has reached a four-decade high.
That suggests a half-point rate increase could be on the table when Fed officials hold their next interest rate and economic policy meetings May 3-4, Powell said.
Thus, U.S. stock indexes erased an early rally and settled moderately lower on Thursday.
Fed comments pushed T-note yields higher Thursday and weighed on stocks after the 10-year T-note yield rose +8.1 bp to 2.913%, just below Wednesday’s 3-1/2 year high of 2.977%.
Meantime, U.S. weekly initial unemployment claims fell -2,000 to 184,000, showing a slightly weaker labor market than expectations of a decline to 180,000.
The U.S. Apr Philadelphia Fed business outlook survey fell -9.8 to 17.6, weaker than expectations of 21.4.
In this context, on Wall Street the S&P 500 closed 1.5% lower at 4,393.66 after having been up 1.2% in the early going.
The Dow Jones Industrial Average fell 1% to 34,792.76 and the Nasdaq slid 2.1% to 13,174.65.
Smaller company stocks fell more than the broader market.
The Russell 2000 gave up 2.3% to 1,991.46.
As stocks to note, Microsoft fell 1.9% and chipmaker Nvidia slid 6%.
American Airlines gained 3.8%.
Tesla rose 3.2%.
Meantime, Asian shares mostly fell on Friday, tracking losses on Wall Street.
Major indexes cascaded downward.
Japan’s consumer price index data showed an increase for the seventh consecutive month, although the results were within market expectations.
Thus, Japan’s benchmark Nikkei 225 dipped 1.6% in afternoon trading to 27,106.56.
Australia’s S&P/ASX 200 dropped 1.6% to 7,473.30.
South Korea’s Kospi shed 0.7% to 2,707.96.
Hong Kong’s Hang Seng slipped 0.2% to 20,638.33, while the Shanghai Composite recouped earlier losses to edge up 0.4% to 3,091.79.
In currency trade, the U.S. dollar fell to 127.91 Japanese yen early Friday from 128.36 yen.
The euro cost $1.0850, inching up from $1.0840.
The dollar index on Thursday rose by +0.173 (+0.17%).
On the weather side, NOAA’s latest 72-hour cumulative precipitation map shows plenty of wet weather likely for the Midwest and Plains until Sunday.
Parts of Iowa, Missouri and the Dakotas could see the highest accumulations as the week winds down, with a few areas even bracing for 2” or more.
NOAA’s 8-to-14-day outlook predicts some more seasonally wet conditions for the Northern Plains between April 28 and May 4, with widespread seasonally cool weather likely for much of the central U.S. during that time.
On the demand side, USDA’s FAS reported 879,212 MT of corn was sold during the week that ended 4/14.
That was below the range of expectations, and down 34% from week to week.
China was the top buyer with 675k MT during the week – though the business was previously announced.
China also added 340k MT of new crop corn, also previously announced in the daily system, and the majority of the 389.6k MT total.
As for corn exports, USDA reported 1.196 MMT was shipped through the week of 4/14.
That set the MY total as 36.57 MMT, or 1.44 bbu, or 50.5% of the USDA forecast.
As for soybean, the report showed 460,244 MT of soybeans were booked during the week of 4/14.
Of that, nearly 430k MT were previously announced via the daily announcement system.
Traders had expected 300k to 800k MT going in.
New crop bean bookings were reported as 1.24 MMT, with China’s 554k MT previously announced sale as the majority.
Unknown destinations booked 351k MT of the total.
USDA had old crop commitments as 57.1 MMT, or 2.098 bbu, or 99.2% of USDA’s forecast.
Accumulated shipments, at 1.69 bbu, were 79.9% of the forecasted total.
As for wheat, weekly export sales were shown as 26,347 MT for the week of 4/14, as Nigeria canceled 131k MT.
Estimates going in were for below 350k MT.
USDA reported 504,002 MT of wheat were shipped during the week, setting the MY total as 16.65 MMT through 4/14.
For new crop wheat sales, the FAS update showed 238,370 MT were booked which left forward bookings at 2.14 MMT.
Meantime, the EPA reported yesterday that the U.S. generated 1.27 billion ethanol blending credits in March, which was moderately above February’s total of 1.07 billion.
The U.S. also generated 490 million biodiesel blending credits last month, versus 396 million in February.
In this context, corn basis bids were steady to mixed across several Midwestern locations on Thursday, moving as much as 6 cents higher at an Ohio elevator and as much as 6 cents lower at an Iowa processor.
Soybean basis bids were mostly steady to firm across the central U.S., after rising 5 to 10 cents higher at four Midwestern locations.
An Illinois river terminal bucked the overall trend after sliding 2 cents lower.
The funds were net sellers yesterday for 13,500 lots of corn and 10,500 lots of wheat. They were net buyers for 1,500 lots of soybeans.
From Canada, while the EPA ruled that fuels derived from canola oil qualify as “advanced biofuels” under the RFS program, the Canola Council of Canada’s President suggests that could boost biofuel as a use for Canadian canola from the ~5-8% current rate to 20% before the end of the decade.
The Canola Council of Canada’s goal is to reap 26 MMT of canola by 2025 – up from 12.6 MMT in 21/22 and up 43% from the 4-yr average.
From the Caribbean islands, Russia on Thursday donated nearly 20,000 tonnes of wheat to political ally Cuba, a welcome gift to the Caribbean island nation beginning to feel the pain of soaring global prices for grains.
Russian ambassador to Cuba Andrei Guskov said at a ceremony that his country´s government had agreed last year to send the grains to Cuba.
But the ship transporting the wheat, Guskov said, was stalled off the island for a month by Western sanctions imposed on Russia.
Banking-related restrictions had complicated Russia´s payments to the shipper, he said, making it impossible for the boat to offload and “convert the wheat to bread for Cubans.”
Cuba and Russia have a long history of economic and military collaboration since Fidel Castro’s 1959 revolution, though in recent decades those ties have faded.
From South America, Argentina’s Rosario grains exchange raised its forecast for the country’s 2021/22 soy and corn harvests on Thursday, citing better-than-expected soy yields and an adjustment in its estimate for the corn planting area.
The Exchange raised its soy harvest forecast to 41.2 million tonnes from its previous estimate of 40 million tonnes, and lifted its prediction for corn to 49.2 million tonnes from its previous estimate of 47.7 million tonnes.
The exchange said in its monthly crop report, that farmers have already threshed 27% of the soybeans planted area.
In the case of corn, the Rosario exchange hiked its estimate for the area planted with the grain to 8.42 million hectares, up from 7.96 million hectares previously, allowing a production forecast increase despite the negative impact of recent frosts.
The improved numbers are still well down from the Rosario exchange’s forecasts at the start of the 2021/22 season, when it predicted the soybean harvest at 45 million tonnes and the corn harvest at 56 million tonnes.
The Buenos Aires Grains Exchange also reported 23% of the corn crop in Argentina was harvested.
In Europe, divergences on the prices between the last expiry of the 2021 harvest in wheat and rapeseed on Euronext, posted still on the rise, and those of the 2022 harvest which gave ground in the wake of Chicago.
Euronext new-crop wheat futures indeed, fell, pulling back further from contract highs this week as an improved weather outlook for US crops fuelled selling.
Thus, new-crop December wheat settled down 1.3% at 351.75 euros ($381.33) a tonne.
The contract earlier dropped to its lowest in over a week, 351.00 euros as it filled a chart gap.
December futures had struck a contract high of 370 euros on Tuesday.
In rapeseed, May futures rose as much as 2% to a new record for Euronext at 1,065.00 euros a tonne, as the run-up to the contract’s expiry next week added to volatility linked to tight oilseed supply
Meantime, an estimated 91% of the French soft wheat crop was in good or excellent condition in the week to April 18, down from 92% the previous week but above the 85% at the same point last year, farm office FranceAgriMer said on Friday.
Ditto for durum, now seen at 83% in good or excellent condition vs 84% last week.
Winter and spring barleys were unchanged from last week at 87% and 92% respectvely.
Meantime, some 32% of the expected grain maize area had been planted, compared with 8% a week earlier and 37% a year ago, the office said in a weekly cereal crop report.
From North Africa, the Normalized Difference Vegetation Index chart by region as of March 10, 2022, shows a normal vegetation index on the Mediterranean coast and a below normal NDVI in the high lands.
The Algerian government again increased domestic procurement prices of grains from farmers to encourage production and grain collection.
Meantime, the Algerian Office of Cereals (OAIC) assured that the war between Russia and Ukraine will not affect the country’s grain imports.
On March 13, 2022, Algeria banned exports of foodstuffs made from imported ingredients.
From Central Africa, wheat production in Ethiopia for 2022/23 projected at a record level of 5.7 million MT while corn forecasted to 10.2 million MT.
The Government of Ethiopia (GOE) has identified top priorities that can increase production and productivity of cereals through small and large-scale irrigation development, financing agricultural inputs, encouraging cluster farming, and reducing post-harvest loss.
The ethnic conflict and security situation which has extended from Tigray down to Amhara and Afar has made farming activities very challenging.
Russia’s war in Ukraine may also affect wheat supplies in Ethiopia that depend on those two nations for commercial wheat purchase.
From the Black Sea basin, Russia is on course for a record 2022 wheat crop of 87.4 million tonnes, Russian consultancy Sovecon said on Thursday, raising its previous forecast of 86.5 million tonnes.
The forecast for Russia, was raised due to excellent crop conditions and good availability of crop nutrients, Sovecon added.
That, fully offsets a substantial 5% decrease in the area planted last autumn, Andrey Sizov, the head of Sovecon, said in a statement.
Meantime, Sovecon estimates Russia’s wheat exports in the July-June 2022/23 marketing season will reach at 41.0 million tonnes, up compared to 33.9 million tonnes in the current season.
This, Provided that, no Western sanctions will be on food exports from Russia and no substantial escalation of the military activity, will be in the Black Sea region.
Russia’s current exports could be higher if it was not for the state export quota which limits them until June 30.
Sovecon estimates that Russia still has 3 million tonnes of wheat to export in May-June within the quota.
Meantime, it expects that Russian government will set grain export quotas again in the second half of the 2022/23 season and their size to be close to export potential.
Russia, indeed, will be able to increase exports in the new July-June season thanks to high carry-over stocks in the south of the country and a record crop forecast.
Russian exporters, on its part, have largely managed to resolve problems with logistics and the transfer of payments caused by Western sanctions imposed on Moscow since late February and are exporting wheat from the Russian side of the Black Sea and sporadically from the Azov Sea.
Also, Sovecon said if a ceasefire agreement is reached by the summer, Ukraine will boost wheat exports from its southern ports quickly as Kyiv needs to sell its high stocks and obtain foreign currency to finance imports.
Ukraine, may export 20 million tonnes of wheat in the 2022/23 season if its ports are open again.
Both scenarios could help to ease global concerns over food security and to cool global prices.
Meanwhile insurance for vessels entering Russian ports has risen by $4-6 per tonne since Feb. 24, this has been absorbed relatively easily due to high wheat prices, Sovecon said.
Meantime, the Russian Ag. Min has amended the export tax for wheat, barley and corn for the week of April 27 – May 05, 2022.
Particularly, the export duty will be $119.1 on wheat, $73.3 on barley and $54.9 on corn.
Indicative prices will be $370.2 for wheat, $289.8 for barley and $263.5 for corn.
That is compared, with prior week (April 20-26) when the tax was $110.7 for wheat, $76.0 for barley and $66.1 for corn, while indicative price were $358.2 for wheat, $293.6 for barley and $279.5 for corn.
From Kazakhstan, according to the USDA attaché in Nur-Sultan, forecasts no significant change to wheat planted area for MY2022/23.
Kazakhstan introduced wheat and wheat flour exports restrictions until June 15, 2022, however the government has made public assurances that it plans to supply regional markets given high wheat prices and production challenges in Ukraine and Russia.
The lack of wheat imports from Russia has caused many Kazakhstani flour millers to cease operations.
Producer contacts planned to maintain their original planting plans although they remained pessimistic about the upcoming planting season due to supply chain disruptions, last year’s dry conditions, and this winter’s reduced snow cover in several grain producing areas.
Despite financial transaction challenges, wheat and wheat flour exports to Iran increased five-fold to more than 370,000 metric tons (MT) from September 2021 to February 2022, compared to the same period in 2020-2021.
From the Middle East, Saudi Arabian barley imports totaled approximately 2.63 million metric tons (MMT) during the eight months of the marketing year (MY) 2021/2022, which is a decrease of approximately 41 percent compared to the same time period last year.
Since the start of the war in Ukraine, Australia has become the exclusive barley supplier to Saudi Arabia and many traders anticipate that trend will continue over the next year.
From Australia, local wheat bids have softened a touch in the last trading day, with the exception of H2, which was up $5/t.
Offers remain sticky in the market.
Barley markets remain quiet, although we did see a small volume of malt trade yesterday through Victoria.
New-crop canola was down $5-10/t.
With good early opening rains through the country, feedback on the ground is we are seeing a good strong early canola plant.
Seed sales are tight through southern regions ahead of the traditional Anzac Day opening of the sowing window.
The sentiment is positive for a strong start to the winter cropping season.
The 8-day forecast is pretty wet for Queensland, New South Wales, Victoria and South Australia, which may slow sowing activity.
On the international scene, there was little activity yesterday with a purchase of only 47,120 t of American wheat by Taiwan and 27,320 t of Australian wheat by Japan.
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.
April IGC global S&D
The International Grains Council raised estimated global corn output by 3 MMT to 1.210 billion.
Trade was raised by 2, with another 4 increase to domestic consumption which reduced carryout to 286 MMT.
Their preliminary forecast for 22/23 is to see 1.197 MMT of corn output, which would be down 13 MMT yr/yr reflecting smaller crops in Ukraine and the United States.
The inter-governmental body, in its first full assessment of the 2022/23 season, forecast Ukraine’s corn crop falling to 18.6 million tonnes, down from the prior season’s 41.9 million.
The United States, was forecast to see a decline in output to 376.6 million from the prior season’s 383.9 million.
Larger crops were, however, anticipated in Brazil (123.1 million versus 114.6 million) and Argentina (63.7 million vs 57.0 million).
Carryout is forecasted to shrink 21 MMT to 265.
The April IGC global S&D forecasts for soybeans showed a 1 MMT lighter output to 349 MMT.
Stocks, however, were upped by 2 to 44 MMT.
Their initial 22/23 forecasts are to see record 383 MMT production, and for stocks build by 10 MMT, to 54 MMT.
That would still be below 20/21’s carryout if realized.
International Grains Council forecasted their 22/23 wheat output to be 780 MMT, down 1 yr/yr, with a smaller crop in Ukraine (19.4 million vs 33.0 million) largely offset by larger crops elsewhere, including Russia (82.5 million vs 75.0 million) and Canada (31.6 mln vs 21.7 mln).
Trade matched 21/22 with 193 MMT, though stocks were to shrink by 5 MMT to 277 on increased domestic use.
