The war in Ukraine, a sluggish in spring planting pace in the USA and Indonesia’s export ban for CPO, stunshed U.S. farm markets, yesterday.
Corn prices rallied, with the most-active contract hitting its highest in nearly a decade.
The weather outlook showed little relief from the cold and wet weather that was keeping growers around the U.S. Midwest out of the fields past the ideal window, which could cause harvest prospects to fall in a year when global grain supplies are already tight.
Thus, CBOT May corn rose by 1.53% to $8.154/bu, July corn ended up 1.34% higher at $8.122 a bushel, and the most-active contract hit its highest since August 2012.
Soyoil pricres led the oilseed complex, surging to a record high on Wednesday after Indonesia broadened its export ban on raw materials for cooking oil to fight food inflation.
Indeed, Chicago Board of Trade May soyoil prices jumped by 2.94% to 87.80 cents per lb and July soyoil prices settled up 2.77% at 84.72 cents per lb.
The contract peaked at its all-time high of 85.77 earlier.
CBOT May soybeans also were 1.25% or 21.2 cents higher to $17.264 a bushel, whiel July contract, was up 1.26% or 21 cents higher at $16.92-3/4 a bushel.
Soymeal, ended the day for May deadline 1.39% higher on the board, while the July contract closed 0.92% strongher.
The wheat complex, in contrast, was mostly lower.
Winter wheat prices fell, pressured by a round of profit taking and technical selling after the most-active soft red winter wheat contract rose 2.1% on Tuesday.
The benchmark Chicago Board of Trade May soft red winter wheat prices contract, indeed, ended down 0.3% at $10.8 a bushel, while the contract was down 0.34% at $10.912 a bushel.
Kansas City hard red winter wheat for May delivery was 0.82% lower at $11.482 a bushel, while July delivery was down 0.9% at $11.54 a bushel.
However, planting delays in the northern U.S. Plains pushed spring wheat higher for the fourth day in a row.
Thus, MGEX May spring wheat rose 1.05% at $11.986 a bushel, and July spring wheat was up 0.57% at $11.946 a bushel.
The front-month spring wheat contract failed to top the nearly 14-year high of $11.99-1/2 it hit on Tuesday.
In energy markets, oil prices dropped on Thursday as investor remained cautious about dwindling fuel demand in China, due to COVID-19 restrictions.
However, Asia’s biggest oil refiner, Sinopec Corp, expects China’s demand for refined oil products to recover in the second quarter as COVID-19 outbreaks in the country are gradually controlled.
Analysts also pointed out that a slowdown in global growth due to higher commodity prices and an escalation in the Russia-Ukraine conflict could further exacerbate worries on oil demand.
Thus, Brent crude futures had fallen 62 cents, or 0.59%, to $104.70 a barrel by 07:12 GMT.
U.S. West Texas Intermediate crude futures slipped 48 cents, or 0.47%, to $101.54 a barrel.
Both contracts settled over 30 cents higher in the previous session due to ongoing concerns about tight worldwide supply, and another drawdown in U.S. distillate and gasoline stocks.
The U.S. Energy Information Administration, indeed, said crude stocks rose by just 692,000 barrels last week, short of expectations, while distillate inventories, which include diesel and jet fuel, fell to their lowest since May 2008.
Natural gas prices surged as much as 24% over the last day in Europe after Russia said it would cut off supplies to Poland and Bulgaria.
Natural gas and oil prices already were rising as the pandemic eased and demand increased, but the war has added to price increases.
Crude oil and and natural gas prices have jumped in 2022, pushing up costs for gasoline and heating.
Sinopec, however, expects its total liquefied natural gas (LNG) imports to stay steady in 2022.
The firm incurred a loss of 1.6 billion yuan ($243.58 million) from its 4.8 million tonnes of LNG imports in the first quarter, 1.2 billion yuan more than a year earlier due to high import costs.
Sinopec officials said the firm is reducing purchase of spot LNG cargos and will focus more on term-contracts in the coming months.
($1 = 6.5686 Chinese yuan renminbi)
In freight markets, the Baltic Exchange’s main sea freight index extended gains to a sixth day, hitting a near one-month high on Wednesday, supported by strong rates in the capesize segment.
The overall index, indeed, was up 21 points, or 0.9%, at 2,425 points, a peak since March 28.
The capesize index gained 57 points, or 2.6%, to 2,226 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $469 at $18,460.
The panamax index was down 15 points, or 0.5%, at 2,904 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $134 to $26,139.
The supramax index rose 22 points to 2,736 points.
In equity markets, U.S. stock indexes Wednesday settled mixed, with the Nasdaq 100 falling to a 1-year low.
Stronger-than-expected quarterly earnings results from Microsoft, Visa, and Enphase Energy lifted the overall market.
Facebook’s parent company, Meta Platforms, jumped 14.6% in after-hours trading, Visa jumped 6.5%, Microsoft rose 4.8%, Chipotle rose 2.6%.
Also, U.S. stocks have positive carry-over from a rebound in China’s Shanghai Composite from a 1-3/4 year low after Chinese President Xi Jinping on Wednesday called for an “all-out” infrastructure push to boost the economy.
However, gains in stocks were limited on uneven quarterly earnings results.
Disappointing earnings from Alphabet, Boeing, and Texas Instruments, ramped-up geopolitical risks in Europe and higher T-note yields were bearish, along with weaker than expected U.S. economic data.
U.S. Mar wholesale inventories, indeed, rose +2.3% m/m, higher than expectations of +1.5% m/m.
Also, Mar retail inventories rose +2.0% m/m, higher than expectations of +1.4% m/m.
U.S. Mar pending home sales fell -1.2% m/m, weaker than expectations of -1.0% m/m, and the fifth consecutive month sales have declined.
In this context, the S&P 500 saw most of a midday rally evaporate and wound up with a gain of just 0.2%, at 4,183.96.
The Dow Jones Industrial Average also added 0.2%, to 33,301.93.
The Nasdaq was barely changed at 12,488.93, while the Russell 2000 fell 0.3% to 1,884.04.
They are all down 1.5% or more so far this week.
Meantime, Asian shares were mostly higher on Thursday.
Tokyo’s Nikkei 225 rose 1.75% to 26,847.90 as the Japanese central bank downgraded its outlook to take into account rising energy costs and uncertainties raised by Russia-Ukraine war.
Chinese benchmarks were higher after sinking Wednesday despite a flurry of official commentary highlighting efforts to counter the impact of pandemic shutdowns in many cities.
The Shanghai Composite index gained 0.2% to 2,963.54 and Hong Kong’s Hang Seng jumped 0.8% to 20,105.99.
Elsewhere, the Kospi in Seoul added 1.1% to 2,667.49.
Australia’s S&P/ASX 200 surged 1.3% to 7,356.90.
In currencies trading, the dollar was trading at 128.43 yen late Wednesday and Thursday rose to 130 yen.
It started the year at about 115 yen.
The euro slipped to $1.0540 from $1.0560.
The dollar index on Wednesday rose by +0.645 (+0.63%) to 102.963, ralling to a 5-1/4 year high.
On the weather side, another round of wet weather will arrive in parts of the Plains and Midwest between today and Sunday, per the latest 72-hour cumulative precipitation map from NOAA.
The Dakotas, Nebraska, Illinois, Iowa and Missouri are likely to see the largest totals during this time.
NOAA’s 8-to-14-day outlook predicts more seasonally wet weather for the central U.S. between May 4 and May 10, with seasonally cool weather likely for the Great Plains region.
On the demand side, weekly EIA data from the week of 4/22 showed a 16k barrel per day increase to 963k barrels per day.
That was still the second, to last week, lowest in 30+ weeks.
Ethanol stocks from the EIA report were down another 377k barrels to 23.965 million.
Ahead of this afternoon’s weekly export report from USDA, analysts expect the agency to show corn sales ranging between 1.59 million and 2.66 million tonnes for the week ending April 21.
As for soybean, analysts think the agency will show soybean sales ranging between 500.762 t and 1.55 million tonnes.
Analysts also anticipate seeing soymeal sales come in between 100,000 and 300,000 metric tons, plus up to 34,000 MT of soyoil sales.
As for wheat, analysts expect the agency to show wheat sales ranging between 150.000 t and 575.000 t.
In this context, corn basis bids were steady to firm after rising 2 cents higher at an Ohio elevator and 3 cents higher at an Iowa ethanol plant.
Soybean basis bids were mostly steady across the central U.S. on Wednesday but did firm 2 cents higher at an Ohio elevator.
The funds were net buyers yesterday for 8,500 lots of corn and 10,500 lots of soybeans.
They were net sellers for 1,500 lots of wheat.
From South America, Brazil’s top grain-producing state is facing its driest April in 17 years, threatening a key second corn crop in the agricultural powerhouse, weather service EarthDaily Agro predicts.
Accumulated April rainfall in Mato Grosso state is likely to total 30 millimeters (1.18 inches), 70% below the average for the last decade, EarthDaily Agro, which monitors agricultural areas via satellite images, estimates.
Mato Grosso is expected to produce around 40 million tonnes in its second corn crop, nearly half Brazil’s total output of 88.5 million tonnes, the government’s food supply and statistics agency Conab estimates.
A setback for Brazil’s corn crop, expected to total a record of more than 115 million tonnes this year including the first planting, could hurt exports and domestic supplies, driving up prices that are already at historically high levels.
In Europe, corn and wheat prices rose sharply yesterday.
Wheat prices particularly continued to push higher, despite the high levels already reached, and knowing that transactions on the physical market for the 2021 harvest are becoming extremely reduced.
A factor of support for prices on Euronext, the sharp decline in the euro against the dollar, posted this morning at 1.0510, a level strengthening Europe’s competitiveness on the international scene, in add to geopolitical tensions and delayed spring planting in the USA.
Rapeseed, meantime, fell back into negative territory, but prices should remain firm, as a consequence of Indonesia extending its ban on palm oil exports to crude oils, and therefore not only to olein.
The European Commission proposed on Wednesday a one-year suspension of import duties on all Ukrainian goods not covered by an existing free trade deal to help the country’s economy during the war with Russia.
The measures will apply in particular to fruit and vegetables, subject to minimum price requirements, agricultural products facing quotas, and certain industrial goods, tariffs on which were only due to be phased out by the end of 2022.
On the weather side, in France some frost damage would have had an impact on the most advanced wheat.
In addition, it is now the lack of rain that is beginning to raise concerns about the future harvest.
Meantime, non-commercial market participants added to their net long position in Euronext’s milling wheat futures and options in the week to April 22, data published by Euronext on Wednesday showed.
Non-commercial participants, which include investment funds and financial institutions, lifted their net long position to 195,357 contracts from 194,355 a week earlier, the data showed.
Commercial participants expanded their net short position to 209,818 contracts from 196,187 a week earlier.
Commercials’ short positions accounted for 70.9% of the total short position, while commercial long positions accounted for 32.4% of total long positions.
Non-commercial short positions represented 29.1% of total short positions, while non-commercial net long positions accounted for 67.5% of the total longs.
In Euronext’s rapeseed futures and options, non-commercial market participants increased their net short position to 4,142 contracts from 3,767 a week earlier.
Commercial participants lifted their net long position in rapeseed to 4,566 contracts from 2,880 a week earlier.
From North Africa, Egypt is set to receive a 55,000-ton wheat cargo from India, UK’s Angus Media reported on April 25th.
The Indian wheat cargo will be the first to Egypt, after the North African country approved its phytosanitary – a measurement to ensure agricultural corps are free of diseases.
Earlier in April, Egypt added India among its approved wheat suppliers.
A delegation from the Egyptian Ministry of Agriculture has visited India and inspected Indian systems for plant health and control of grain exports.
Egypt aims to supply around six million tons of local wheat at a value of over $1bln (EGP 36bln) in 2022.
From the Black Sea basin, Russia launched two missile strikes and damaged a strategic bridge in Ukraine’s Odesa region, state railways and local officials said on Wednesday, an event that could affect Ukrainian plans to expand exports through Danube ports.
The bridge links mainland Ukraine with part of the Odessa region near the mouth of Danube.
The bridge across the Dniester Estuary is a part of the only fully Ukrainian-controlled railway route to Ukraine’s ports on Danube, which Kyiv regarded as a promising route for exports in a situation where Black Sea ports are blocked.
The state-run Ukrzaliznytsia railways declined to comment.
The railways data showed that around 1,000 wagons with various cargoes as of mid-April, including 238 wagons with grain, were at Izmail station, Ukraine’s major Danube port.
Ukrainian agriculture and transport officials have said the country is seeking to boost the export capacity of Danube river ports which allow grain to be shipped through the Danube to Romanian Black Sea ports.
Meantime, the Ukraine’s UkrAgroConsult reported grain storage concerns.
True for all of 22/23 output, but specifically applicable to corn, the report mentioned limited space in storage and on-farm silos as the war interrupted the export markets.
Some corn fields may need to go unharvested this season as in-field storage until the backlog is worked through.
Additionally, UkrAgroConsult also mentioned over 5% of grain elevators have suffered collateral damage, with an additional 15% unable to be accessed due to destroyed infrastructure.
From the Middle Kingdom, China has recorded its first human infection with the H3N8 strain of bird flu, but the risk of its spread among people is low, the health authority said.
The variant was found in a four-year-old boy from the central province of Henan province who showed fever and other symptoms on April 5, the National Health Commission said in a statement on Tuesday.
The child had been in contact with chickens and crows raised at his home, it added in a statement.
Last year, China reported the first human case of H10N3.
The health commission said an initial study showed the variant did not yet have the ability to effectively infect humans, and the risk of a large-scale epidemic was low.
Though rare, infections in humans can lead to adaptive mutations that potentially allow these viruses to more easily spread in mammals.
From South East Asia, on Wednesday Indonesia’s trade ministry, released a regulation on the palm oil export ban which said exporters who have secured customs declaration by April 27 at the latest can still ship their products.
The regulation said the export ban of crude palm oil and its refined products, which takes effect at midnight local time (17:00 GMT), will be reviewed monthly or as necessary.
Previously, the restriction only included refined, bleached and deodorised palm olein.
From Australia, prices for feed wheat and barley in the northern market have increased in the past week to what some are calling the top of the curve.
In the south, barley has closed the gap on ASW wheat, and is meeting renewed export demand from the Middle East.
The barley surge is pushing consumer interest more towards SFW wheat, which is priced most attractively at NSW sites a long way from port.
Recent rain has growers across Australia planting winter crops, and trade sources say grower interest in selling cereals has fallen away substantially as a result.
This, coupled with the Australian dollar dropping to US71 cents, down from 74c one week ago, has firmed prices for all quoted wheat and barley markets bar SFW wheat delivered Melbourne, unchanged since last Thursday.
Meantime, local markets continued to firm yesterday.
Wheat was stronger through NSW on SFW by $5/t and protein wheat also gained more interest through Victoria and South Australia, with values up another $5-10/t range.
Canola continues to rally with more strength in new crop values up $20/t east to west coast bids, with new crop east coast track being bid around $1110/t.
Liquidity has picked up on the trading front this week with more in depot stock being let go, there has been talk this week that truck freight rates have softened a little but truck availability still very tight.
Rainfall totals are making for pretty heavy going for spraying and sowing in parts of NSW which is likely to influence some planting decisions if the forecast for more rain in the next week.
On internatonal trade scene, the lowest price offered in the tender from Turkey’s state grain board TMO on Thursday to purchase and import about 18,000 tonnes of crude sunflower oil was estimated at $2,010 a tonne c&f.
The offer was believed to have been placed by trading house Prime for 6,000 tonnes for shipment to the port of Tekirdag.
No purchase has yet been reported with price negotiations continuing and provisional results expected later on Thursday.
Shipment is sought between May 16 and June 16 to the ports of Tekirdag and Mersin.
Some sunoil supplies already in Turkey can be offered for delivery to Mersin.
In a previous tender on March 31, the TMO purchased about 18,000 tonnes of sunflower oil at the lowest price of $1,896.90 a tonne c&f for a 6,000 tonne consignment.
