US farm markets were mixed but mostly higher on Tuesday.
USDA unexpectedly docked winter wheat quality ratings three points lower, and that, pushed up wheat prices, taking solid gains.
Chicago wheat prices, indeed, shot up 2%.
Kansas City wheat contracts were up more than 1%.
Minneapolis wheat contracts rose almost 0.8% higher.
In this context, corn prices benefited from some of that spillover strength, firming 0.37% by the close.
Soybeans complex, in contrast, were narrowly mixed, as traders searched for clearer supply and demand clues.
Indeed, soybean prices spent time on both sides of unchanged, and closed the day mixed.
May and new crop gained 0.1% and 0.57% respectively, while July ended 0.21% in the red.
Soymeal prices ended the session 1.68% weaker, lefting the May contract at the lowest print since Feb 25th.
Soybean oil prices continued to set new all time highs, meantime, with May having added another 3.08% to the upside.
In energy markets, oil prices extended yesterday gains.
Geopolitical tensions in Europe are simmering.
Poland’s state-owned PGNiG has said supplies from Russia’s energy giant Gazprom – which covers about 50% of its national consumption – would be cut at 8 a.m. (06:00 GMT), but said it was still supplying its own clients as needed, as its gas storage was 76% full..
Gazprom confirmed on Wednesday it had halted gas supplies to Bulgaria and Poland for failing to pay for gas in roubles.
Thus, rise fears that Russia may turn off, the European’s gas taps.
The European Union network of gas transmission operators, however, said gas to Poland was only cut briefly, and later restored, and edged up after dropping to zero.
Russian gas supplies to Bulgaria were flowing for the time being, normally.
As well as Bulgaria, Hungary and Austria said gas supplies were normal.
Meantime, the International Monetary Fund (IMF) warned on Tuesday that Asia faces a “stagflationary” outlook with the Ukraine war, a spike in commodity costs and a slowdown in China creating significant uncertainty.
On this wake, China’s central bank said on Tuesday it will step up prudent monetary policy support to its economy as Beijing races to stamp out a nascent COVID-19 outbreak in the capital and avert the same debilitating city-wide lockdown that has shrouded Shanghai for a month.
Any stimulus would boost oil demand.
Also, despite extended lockdowns in Asia’s biggest aviation market, China’s domestic flight demand has rebounded, pushing global airline capacity to its highest level in 2022 this week, travel data firm OAG said on Tuesday.
In supply side, U.S. government data on crude inventories is due later on Wednesday.
Industry data on Tuesday showed U.S. crude and distillate stocks rose last week while gasoline inventories fell.
Thus, Brent crude futures rose 67 cents, or 0.6%, to $105.66 a barrel by 06:36 GMT. U.S. West Texas Intermediate crude futures gained 44 cents, or 0.4%, to $102.14 a barrel.
Crude prices settled about 3% higher on Tuesday in a very volatile trade.
The row sent NYMEX ultra-low-sulfur diesel futures up more than 9% on Tuesday to settle at $4.47 a gallon, a record close.
In freight markets, the Baltic Exchange’s main sea freight index rose to a four-week high on Tuesday, boosted by gains in the capesize segment, while panamax fell for a fourth straight session.
The overall index, indeed, was up 48 points, or 2.04%, at 2,404 points, its highest since March 29.
Particularly, the capesize index gained 166 points, or 8.3%, to 2,169 points, the highest in more than a month.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $1,382 at $17,991.
The panamax index was down 48 points, or 1.6%, at 2,919 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $430 to $26,273.
The supramax index rose 15 points to 2,714 points.
In equity markets, U.S. stock indexes sold off sharply yesterday, with the S&P 500, the Down Jines Industrials, and the Nasdaq 100 falling to 6-week lows.
A sell-off in technology stocks weighed on the overall market.
With the Federal Reserve set to aggressively raise interest rates as it steps up its fight against inflation, traders are less and less willing to endure the lofty prices they had been paying for Microsoft, Facebook’s parent company and other tech giants.
Microsoft fell 3.7%.
Google’s parent company, Alphabet, fell 3.6% in regular trading and lost another 6% in after-hours trading after reporting results that fell short of analysts’ estimates.
More big technology companies are on deck to report earnings this week, including Facebook parent’s company, Meta, on Wednesday, and Apple on Thursday.
Tesla slumped 12.2% over concerns that CEO Elon Musk will be distracted and less engaged in running the electric vehicle maker as he buys social media company Twitter , which fell 3.9%.
Retailers and other companies that rely on direct consumer spending also fell broadly.
General Motors fell 4.5% while Nike slipped 5.8%.
General Electric fell 10.3% for one of the sharpest losses in the market after telling investors that inflation and other pressures are weighing on its profit forecast for the year.
However, Tuesday’s U.S economic data was mixed for stocks.
U.S. Mar capital goods orders nondefense ex-aircraft & parts, a proxy for capital spending, rose +1.0% m/m, stronger than expectations of +0.5% m/m.
The U.S. Feb S&P CoreLogic composite-20 home price index rose a record +20.2% y/y, stronger than expectations of +19.2% y/y
Meanwhile, the Conference Board U.S. Apr consumer confidence index unexpectedly fell -0.3 to 107.3, weaker than expectations of an increase to 108.2, but remains high.
Also, U.S. Mar new home sales fell -8.6% m/m to a 4-month low of 763,000, weaker than expectations of a decline to 768,000.
On Friday the Commerce Department releases its personal income and spending report for March.
Economists and investors are concerned that the U.S. economy might slow sharply or even fall into a recession because of the big interest-rate increases the Fed is expected to push through.
Also, ramped up geopolitical risks in Europe, with Russian Foreign Minister Lavrov warned that there’s a “serious” risk of nuclear war over Ukraine.
Meantime, bond yields fell yesterday.
The yield on the 10-year Treasury fell to 2.73% from 2.82% late Monday.
In this context, the tech-heavy Nasdaq bore the brunt of the day’s losses and it tumbled by 4%, to 12,490.74.
That was its worst drop since Sept. 8, 2020.
The index is now down 20% this year.
The S&P 500 fell 2.8% to 4,175.20.
The benchmark index closed the day with 95% of its stocks losing ground and has fallen for three straight weeks.
The Dow Jones Industrial Average shed 2.4% to 33,240.18.
Thus, earnings for industrial and retail companies are a key focus for the rest of the week with Airplane maker Boeing reports its results on Wednesday; Caterpillar announces earnings on Thursday, along with McDonald’s and Amazon.
Meantime, Asian shares mostly retreated on Wednesday, echoing a broad decline on Wall Street.
Tokyo’s benchmark fell after Prime Minister Fumio Kishida announced measures to help poor families and small businesses as Japan copes with rising prices and a weakening currency.
The central bank has sent a clear message about keeping interest rates ultra-low to help encourage spending and investment and has bought Japanese government bonds periodically, aiming to keep 10-year-bond yields within a range of plus or minus 0.25%.
Worries over restrictions on movement and business activity in Beijing, Shanghai and other Chinese cities to combat a rise in coronavirus cases are weighing on investor sentiment.
Thus, the Nikkei 225 dropped 1.2% in afternoon trading to 26,375.56.
Elsewhere in the region, South Korea’s Kospi slipped 1.4% to 2,632.27. Australia’s S&P/ASX 200 shed 0.9% to 7,253.00.
Hong Kong’s Hang Seng recouped earlier losses and gained 0.5% to 20,036.47, while the Shanghai Composite index jumped 1.9% to 2,941.44.
In currency trading, the U.S. dollar edged up to 127.46 Japanese yen from 127.23 yen.
The USD/JPY on Tuesday, indeed, fell by -0.53 (-0.41%).
The yen strengthened Tuesday on a decline in T-note yields.
The yen also found support on signs of strength in Japan’s labor market after Tuesday’s data showed the Japan Mar jobless rate unexpectedly fell -0.1 to a 2-year low of 2.6%, showing a stronger labor market than expectations of 2.7%.
The euro cost $1.0650, up from $1.0639.
The EUR/USD on Tuesday indeed fell by -0.0071 (-0.66%), dropping to a new 2-year low on rising tensions with Russia, despite comments from ECB Governing Council member Kazaks were hawkish for ECB policy and supportive of EUR/USD when he said the ECB should raise interest rates soon and it has room for as many as three 25 bp rate hikes this year.
Thus, the dollar index on Tuesday rose by +0.553 (+0.54%).
The dollar Tuesday extended Monday’s gains up to a new 2-year high.
The slump in the S&P 500 to a 1-1/4 month low Tuesday boosted liquidity demand for the dollar.
On the weather side, rain will be spotty across the central U.S. between today and Saturday, with the Northern and Central Plains and Missouri likely to see the largest totals, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts seasonally wet weather for much of the Midwest and Plains between May 3 and May 9, with cooler-than-normal conditions probable for the upper Midwest and Great Lakes region.
On the supply side, the delays in sowing corn due to abundant rainfall raise fears of a loss of yield potential.
On the demand side, private exporters reported to the USDA, having sold 132,000 metric tons of soybeans for delivery to China during the 2022/2023 marketing year.
They also reported sales of 133,000 metric tons of soybeans for delivery to unknown destinations.
Of the total, 78,000 metric tons is for delivery during the 2021/2022 marketing year and 55,000 metric tons is for delivery during the 2022/2023 marketing year.
Last Wednesday, EIA reported ethanol production was a 30-week low 947k bpd.
An RFA written testimony suggested that storage capacity and limited railcar availability has been the root cause of reduced ethanol production.
In this context, corn basis bids were steady to firm across the central U.S. on Wednesday after rising 3 to 6 cents higher at three Midwestern locations.
Soybean basis bids were steady to firm after jumping 13 cents higher at an Ohio elevator and improving 2 cents at two interior river terminals.
The funds were net buyers yesterday for 2,000 lots of corn, 2,000 lots of soybeans and 10,000 lots of wheat.
From Canada, Canadian farmers intend to plant fewer canola acres this spring, a move that could further tighten global supplies of edible oils at a time of already reduced availability, a government report showed on Tuesday.
The report, indeed, indicated a shift to increased wheat, corn, lentil and soybean plantings.
Particularly, canola plantings are expected to fall to 20.897 million acres, down 7.04% from 2021, Statistics Canada reported.
The estimate was below the average trade guess of 22.11 million acres.
Canada is the world’s biggest exporter of canola, used in food products as well as diesel fuel and animal feed.
Thus, ICE Canada November canola futures firmed after the report, jumping $10.20 to $1,092.00 per tonne.
Meantime, StatsCan acreage intentions data shows Canadian producers are planning 3.357m acres for ‘22 soybeans.
That is up 362k acres, or 0.68%, yr/yr.
All wheat plantings could reach 25.031 million acres, up 7.17% from last year, the agency said, beating analyst expectations of 24.15 million acres.
As for for durum, planting could reach 6.224 million acres, up from 5.530 million acres a year ago.
That is an 12.55% increase from last year.
To see some acres shift to wheat makes sense, as it is a lower production cost and slightly less risk.
Plantings of oats are expected to reach 3.992 million acres, up 16.62% from a year ago and above the 3.75 million acres anticipated by analysts.
The StatsCan acreage intentions report showed 22/23 corn area is forecasted at 3.715m acres.
That was above the average 3.41m expected and up 223k acres yr/yr.
Finally, barley areas would drop from 8.295 million acres to 7.491 million acres.
Separately, StatsCan reported March canola crush at 740k MT.
That is down 22.8% from March ’21, with MYTD crush trailing last season’s pace by 17.3% through March with 5.823 MMT.
Canola oil output in March was 308k MT according to StatsCan data.
From South America, according to Anec, Brazil could export 12.09 million tons of soybeans in April against 11.98 million last year in the same month and up slightly from its last forecast a week earlier.
Anec also estimates Brazil will export 793.000 t of corn and 155.000 t of wheat this month.
Argentina‘s farmers are on track for relatively flat corn sales in the current cycle while the soybean harvest dips, according to official data released on Tuesday, with both crops providing crucial export revenues for the country’s battered economy.
Indeed, some 22.6 million tonnes of corn from the current 2021/22 harvesting season have been sold so far, the agriculture ministry said on Tuesday, noting that 880,000 tonnes were traded in the week through April 20.
The weekly volume rose when compared to the same period last year, when 703,000 tonnes were sold.
However, the overall volume of Argentine corn sold so far is about the same as during the same period last year.
Meantime, the 2021/22 corn crop is seen reaching 49 million tonnes, according to the Buenos Aires grains exchange (BdeC), while the previous cycle totaled 52.5 million tonnes.
Through last week, Argentina’s farmers have harvested about 23% of the planted area for 2021/22, according to the BdeC.
Late last year, the government set a corn export limit of 41.6 million tonnes during the current season, in an attempt to rein in high domestic food prices.
Meanwhile, about 13.6 million tonnes of soybeans have been sold so far, the official data showed, down from 15.5 million tonnes at the same time last year.
The 2021/22 harvest for soybeans is still in its early stages, and the BdeC expects production of the oilseed to reach 42 million tonnes this season.
In Europe, markets continue to show extreme volatility, with Euronext accelerated in the green on 2022 production fears and logistics disruptions.
The European organization MARS, indeed, is revising its estimate of 2022 harvest yields of soft wheat for the EU downwards to 5.95 t/Ha against 6.02 estimated last month.
Ditto for rapeseed with an estimated yield to come at 3.19 t/ha against 3.22 posted in March.
In winter barley, the yield is estimated at 5.79 t/ha against 5.83 last month, and in spring barley the first yield estimate is 4.31 t/ha.
And, despite some countries including Russia will probably have an abundant 2022 harvest, logistic is very likely to fail, there.
Adverse weather in the US and shrinking Canadian canola acreage made an additional pressure.
Meantime, according to the European Union, exports of soft wheat are displayed on April 24 at 21.61 million tonnes against 22.41 last year to date.
That is a year-over-year decline of 3.6%.
In barley, exports stand at 6.37 million tonnes against 6.62 million and corn imports at 13.12 million tonnes against 12.68 million last year to date.
That is tracking 3.5% above last year’s pace so far.
European Union soybean imports during the 2021/22 marketing year reached 11,47 MMT through April 24, which is a year-over-year decrease of 5.6%.
EU soymeal imports are also down from year-ago results, with 13.32 million metric tons over the same period.
From the Black Sea basin, Romania has issued a tender to rehabilitate a Soviet-era train line connecting its port of Galati on the Danube river to Ukraine to help boost grain exports, its transport minister said on Tuesday, adding he expected the work to take two months.
Ukraine’s railway network uses a Russian gauge measuring roughly 1.5 metres, or some 10 centimetres wider than the tracks used in most of Europe, which has caused delays.
Galati has a disused Soviet-era rail line to Ukraine via Moldova with the wider gauge that would allow Ukrainian goods to be shipped easily to the Romanian port.
Transport Minister Sorin Grindeanu said the deadline for the tender to rehabilitate the line was May 19.
Work could then take two months, he said.
“This rail line will enable the transporting of goods to and from Ukraine,” he said.
“This Danube port will become, alongside the port of Constanta, one of the key places in the region for transporting goods and raw materials.”
Ukraine has sent around 80,000 tonnes of grain to the Romanian Black Sea port of Constanta so far, with more expected to arrive.
Constanta is the biggest Romanian port.
The port, which has a storage capacity of around 2 millions tones handled exports of some 24 million tonnes last year.
From South Africa, South African farmers are expected to harvest 9.8% less maize in the 2021/2022 season compared with the previous season, the government’s Crop Estimates Committee (CEC) said on Tuesday.
The CEC’s second summer crop forecast estimates the 2022 harvest at 14.723 million tonnes, down from the 16.315 million tonnes harvested last season.
The harvest is expected to consist of 7.553 million tonnes of white maize, used for human consumption, and 7.170 million tonnes of yellow maize, used mainly in animal feed.
From the Middle Kingdom, China will buy 40,000 tonnes of local pork for its state reserves on April 29, according to a notice issued by the reserves management centre on Wednesday, in its sixth round of stockpiling so far this year.
The country is buying up pork to support prices in the world’s top producer of the meat.
From Australia, liquidity in local markets picked up yesterday with stronger values across the board for current crop.
There is more trading activity in depots across the country for wheat, barley and canola.
Sowing activity is ramping up across most areas into good moisture.
According to growers through the Victorian region, a large percentage of the canola is in the ground and they are now moving onto pulses and early wheat varieties.
Congestion, weather and short-weeks all are causing some delays on Mar-April shipments, although congestion is starting to get back under control in some ports.
Port Lincoln has dropped from 13 days to 3, with most SA ports back in the range of normal.
Wallaroo has jumped from 1 day to 13 days, but it is a small port.
WA ports remain pretty steady; Kwinana 13 days, Albany 5 and Esperance 7 days.
Victorian ports are running at around 10 days and NSW two weeks.
On international trade scene, Jordan had 2 participants in its yesterday barley tender :
Viterra and Bunge – same agent one envelope.
MIT cancelled its tender to be issued again for May 10, 2022.
Envelope not opened.
Turkey’s state grain board TMO has issued two import tenders to buy a total of around 480,000 tonnes of milling wheat.
The deadline for offers is on Friday.
One tender sought about 210,000 tonnes of supplies already in warehouses in Turkey and the other about 270,000 tonnes for shipment to Turkey, according to traders.
Delivery was requested between May 17 and Aug. 10 to various ports, traders said, adding offers could be made in Turkish lira or U.S. dollars.
Algeria’s state grains agency OAIC is believed to have purchased between 230,000 to 250,000 tonnes of durum wheat in a tender which closed on Tuesday.
Mexico expected to be a main origin.
Traders initially estimated prices at around $570 a tonne c&f for shipment in large panama bulk carriers and about $590 a tonne for shipment in smaller handysized vessels.
Shipment was sought in three periods between May 16-31, June 1-15 and June 16-30.
