US farm markets, awaited the planting progress report yesterday, hoping USDA would to show some decent progress despite fieldwork delays due to rain in some areas.
That put corn prices down, sinking they by 1.23% lower.
Soybean oil continued to fade after the historic runup through April, ending the session 4.86% in the red.
That pulled the other front month meal futures and soybean futures lower.
Soybeans indeed, were down 2.34% in the red, while soymeal was down 0.32%.
Wheat prices were mixed but mostly lower, pressured by precipitation across the Great Plains that could help this season’s drought-stressed winter wheat acres.
Thus, CBOT SRW futures were fractionally lower down 0.02%.
Kansas City HRW ended red, with losses limited to 0.7%.
Spring wheat firmed up, gaining 0.15% by the bell.
In energy markets, oil prices slipped on Tuesday in a second day of thin trading in Asia, pulled in opposite directions by China’s COVID-19 lockdowns, which could weigh on fuel demand, and prospects for a supply hit from a possible European oil embargo on Russia.
Beijing, reporting dozens of new cases daily in an outbreak that has entered its second week, is mass-testing residents to avert a lockdown similar to Shanghai’s over the past month.
Meantime, the European Commission is expected to finalise work on Tuesday on a sixth package of European Union (EU) sanctions against Russia over its actions in Ukraine, which would include a ban on buying Russian oil.
Thus, Brent crude futures fell 23 cents, or 0.2%, to $107.35 a barrel at 05:32 GMT, wiping out gains earlier in the day in trading thinned by holidays in China, Japan and parts of Southeast Asia.
U.S. West Texas Intermediate (WTI) crude futures similarly dropped 24 cents, or 0.2%, to $104.94 a barrel, after hitting an intraday high of $105.80.
Traders, however, will be closely watching U.S. inventory data.
Both benchmark contracts rose more than 40 cents on Monday and extended those gains modestly in early trade on Tuesday.
Analysts expects U.S. crude inventories fell by 1.2 million barrels in the week to April 29.
They also forecast distillate inventories, which include diesel and heating oil, declined by 1.2 million barrels, while gasoline stockpiles fell by 300,000 barrels.
As for freights, the market reopened on this morning after the long weekend in both the east and west.
In equity markets, U.S. stock indexes Monday recovered from early losses and settled moderately higher.
A rebound in technology stocks sparked an afternoon rally in the overall market.
Stock indexes to start the week initially sold off, with the S&P 500 falling to an 11-1/2 month low, the Dow Jones falling to a 2-1/2 month low, and the Nasdaq 100 tumbling to a 14-month low.
The jump in T-note yields was a bearish factor.
It rose, indeed, to a 3-1/4 year high of 3.008% on expectations for the Fed to raise the fed funds target range by 50 bp at the conclusion of Wednesdays’ 2-day FOMC meeting.
Concern about a slowdown in global manufacturing activity also weighed on stocks after China and U.S. manufacturing indexes slowed more than expected last month.
The U.S. Apr ISM manufacturing index unexpectedly fell -1.7 to a 1-3/4 year low of 55.4, weaker than expectations of an increase to 57.6.
U.S. Mar construction spending rose +0.1% m/m, weaker than expectations of +0.8% m/m.
The China Apr manufacturing PMI fell -2.1 to 47.4, the weakest report in 2 years.
However, a late-afternoon turnaround led by technology stocks left major indexes moderately higher.
Thus, the S&P 500 rose 0.6% to 4,155.38, while the Dow Jones gained 0.3% to 33,061.50.
The Nasdaq climbed 1.6% to 12,536.02.
Smaller company stocks also reversed course after spending much of the day in the red.
The Russell 2000 index rose 1% to 1,882.91.
Meantime, Asian shares were mixed Tuesday after Australia’s central bank raised its benchmark interest rate to 0.35% from 0.1%.
Trading, however, was light with markets in mainland China, Japan and some other countries closed for holidays.
Thus, Australia’s S&P/ASX 200 fell 0.5% to 7,307.50 and stocks also fell in Thailand and Taiwan.
Hong Kong’s Hang Seng rose 0.9% to 21,278.11 and the Kospi in South Korea rose 0.2% to 2,691.37.
In currency trading, the dollar was at 130.11 Japanese yen, down from 130.15 yen on Monday.
The euro rose to $1.0512 from $1.0505.
The dollar index on Monday rose by +0.661 (+0.64%), supported by the jump in T-note yields.
On the weather side, ample rains are expected across the central U.S. over the next seven days, according to the latest NOAA forecasts.
A large portion of the Corn Belt is expected to gather 1.5” or more through May 10.
NOAA’s 8-to-14-day outlook predicts more seasonally wet weather for the Plains and western Corn Belt between May 9 and May 15, with warmer-than-normal conditions returning to the central U.S. during this time.
Meantime, USDA’s latest crop progress report, out Monday afternoon and covering the week through May 1, showed further evidence that the 2022 season is already facing a variety of challenges.
Rainy weather that has plagued the Midwest in recent weeks has slowed corn and soybean plantings noticeably.
Both crops made some progress this past week but remain well below historical averages.
Meanwhile, in spite rains in the Plains have landed on drought-parched soils there, they failed to move winter wheat crop quality higher in yesterday’s report.
Particularly, corn plantings reached 14% completion through Sunday, up from 7% a week ago, but slower than last year’s pace of 41% and the prior five-year average of 33%. .
Analysts were expecting to see more progress and had offered an average trade guess of 16%.
Two of the top 18 production states have still yet to see any measurable progress, according to USDA – Minnesota and North Dakota.
Corn emergence reached 3%, up from 2% a week ago but behind last year’s pace of 7% and the prior five-year average of 6%.
Southern states Texas (62%), North Carolina (56%) and Tennessee (10%) continue to lead the charge in this category.
Milo planting only progressed 1% point on the national scale from last week, to 20% completed.
The average pace is to be 23% planted.
Soybean plantings made it to 8%, up from 3% a week ago and matching analyst expectations.
Progress is still sluggish compared to last year’s pace of 22% and the prior five-year average of 13%, however.
As with corn plantings, Minnesota and North Dakota are not yet officially “on the board” for USDA’s progress updates.
Louisiana (59%) and Mississippi (48%) are the furthest along so far.
Analysts had hoped USDA would increase winter wheat crop quality a point higher this week, but the agency held ratings steady at 27% in good-to-excellent condition.
Another 30% is rated fair (down four points from a week ago), with the remaining 43% rated poor or very poor (up four points from last week).
The last time crop quality was this low in early May was 1989.
Physiologically, 23% of the crop is now headed, up from 11% a week ago.
That’s lower both 2021’s pace of 26% and the prior five-year average of 29%.
Meantime, spring wheat plantings reached 19% through Sunday, up from 13% a week ago.
That’s much slower than last year’s pace of 46% and moderately behind the prior five-year average of 28%.
Five percent of the crop is emerged.
On the demand side, the U.S. Environmental Protection Agency has sent a rule on U.S. biofuel blending mandates to the White House for final review, according to a notice posted by the Office of Management and Budget.
The oil and biofuel industries, which have in the past been at odds over the requirements, have been eagerly waiting for the EPA to finalize the mandates.
The EPA, which administers the U.S. Renewable Fuel Standard (RFS), released a proposed rule in December on the blending volumes, which cover the years 2020, 2021 and 2022.
It is unclear whether the volumes sent are at the same levels as the proposal from December.
The OMB received the rule on Friday, according to the notice.
In the proposed rule in December, the EPA would retroactively set total renewable fuel volumes at 17.13 billion gallons for 2020.
That was down from a previously finalized rule for the year of 20.09 billion gallons, set before the onset of the pandemic.
It set volumes at 18.52 billion gallons for 2021 and 20.77 billion gallons for 2022.
Both the 2020 and 2021 figures mark a reduction from 2019, when the EPA had required refiners to blend 19.92 billion gallons of biofuels in the nation’s fuel mix, but the 2022 proposal marks an increase.
Meantime, USDA’s weekly Export Inspections data showed 1.684 MMT of corn was shipped during the week of 4/28.
That was up from 1.665 MMT last week, but under the 2.2 MMT shipped during the same week last year.
MYTD corn shipments were 36.577 MMT, down 16% from last year’s pace as the April WASDE projected a full year 9.2% lag.
As for soybeans data reported 601,282 MT of beans were shipped during the week that ended 4/28.
That was 4k MT lighter wk/wk, but compares to just 155k MT during the same week last year.
China and Egypt were the top destinations.
For the season, USDA showed 47.206 MMT of soybeans were shipped.
That trails last year’s pace by 15.2% through 4/28, compared to the April WASDE forecast of a 6.5% drop off from 20/21.
As for wheat, USDA reported wheat shipments were 384,460 MT during the week that ended 4/28.
That was down from 533,203 MT during the same week last year.
HRW made up 184k MT of the total, with the remainder split (mostly) evenly amongst white, HRS, and SRW.
In this context, corn basis bids were steady to firm after rising 2 to 7 cents higher across six Midwestern locations.
Soybean basis bids were steady to mixed to start the week after jumping 5 to 30 cents higher at three Midwestern processors and fading as much as 7 cents lower at an Illinois river terminal.
Commodity funds were net sellers of Chicago Board of Trade soybean, corn, soyoil, wheat and soymeal futures contracts on Monday.
From South America, drought conditions in Brazil escalated dramatically in April, leading to the collapse of this year’s monsoon around two weeks earlier than usual.
This will seriously impact safrinha corn production, especially in the later-planted regions, as yield potential falls due to lack of moisture.
Mato Grosso faced its driest April in 17 years, according to a recent report issued by weather service EarthDaily Agro.
April rainfall for the state is expected to be just 30 millimetres, 70pc below the average for the last decade.
In the neighbouring states of Goiás and Minas Gerais, April rainfall is expected to be just 15pc of the 10-year average.
The situation in Mato Grosso is very similar to 2016, when the safrinha corn yields finished that season around 30pc below average after the dry continued through May and June.
Mato Grosso is Brazil’s biggest safrinha corn production state.
Production is currently forecast at 40 million tonnes (Mt), 45pc of the most recent national safrinha corn production estimate from Conab, the government’s food supply and statistics agency.
Combined with Goiás and Minas Gerais, the three states produce around 60pc of the nation’s safrinha corn output.
Brazil is the world’s third-largest corn producer after the United States and China.
The most recent World Agricultural Supply and Demand Estimates (WASDE) put total 2021-22 production at 116Mt, around 75pc of which will be from the safrinha or second corn crop.
In his latest update, crop consultant Dr Michael Cordonnier left his Brazilian corn crop estimate unchanged at 112Mt.
In the export stakes, the United States Department of Agriculture has Brazil in second place with 44.5Mt, behind the US with 63.5Mt and just ahead of Argentina on 39Mt.
Some analysts expect downward production revisions to hit the wires in the next week, with a lower forecast even possible in this month’s WASDE report, due for release May 12.
In Europe, the week started showing a sharp correction in rapeseed prices.
Driven by discussions on the possible reduction of biodiesel incorporation mandates in Germany, the rapeseed market recorded a sharp correction in the new harvest.
Meantime, Strategie Grains has increased its forecast for this year’s sunflower crop in the European Union to take account of a rise in area as farmers use an EU authorisation to use fallow land to compensate for potential shortages in Black Sea supplies.
The consultancy expects the EU-27 2022 sunflower seed harvest to be 10.7 million tonnes, up from the 10.2 million tonnes seen last month and now 2.9% above 2021’s output, it said in a monthly report.
The analyst expects vegetable oil prices for the current season ending on June 30 to remain high due to tight rapeseed and sunflower seed markets.
EU sunflower oil stocks were forecast at a historically low level at the end of the current 2021/22 season despite a slight rise in projected sunflower seed imports to take account of recent flows, it said.
In rapeseed, Strategie Grains kept its 2022 EU production forecast at 18.2 million tonnes, up 6.8% from last year.
The next few weeks will be crucial for the rapeseed yield after dry weather in April in France and central Europe.
In grain prices, the end of the season is near and demand is down sharply.
European wheat fell on Monday as traders were reassured by welcome rainfall in the United States.
Operators, however, are reporting a worse situation than expetcted.
Thus, in spite new season is aproaching and new crops have been finalized or are about to be finalized by buyers, prices remain at historically high levels.
From the Black Sea basin, according to APK-Inform, the indicative export prices of Ukrainian wheat increased slightly last week, after more than a month of declining.
The indicative offer prices of 12.5%, 11.5% and feed wheat increased by 5-10 USD/t to 370-395, 365-390 and 335-355 USD/t FOB correspondingly.
At the same time, the forward prices of wheat remained stable pressured by the weak demand, good condition of winter crops, progress of spring planting in Ukraine and expected high production in Russia.
The offer prices of 12.5% and 11.5% new-crop wheat totaled 300-320 and 295-315 USD/t FOB (July-August).
Prices of Ukrainian corn remained quite stable on land border last week, however, slight downward trend was observed.
Limited number of the EU’s importers, overloaded logistics, high supply and declining prices of corn in the domestic market put the pressure on the export prices.
Lower demand from European processors and poultry breeders amid the spread of the bird flu weighted on the Ukrainian market as well.
Thus, the bid prices declined by average 5 USD/t to 235-250 USD/t DAP Izov (May-June).
The prices stayed at 230-235 USD/t DAP Yahodyn.
The bid/offer prices of corn were mainly stable at 250-260/255-265 USD/t DAP Chop and 245-250/250-260 USD/t DAP Mohyliv-Podilskyi.
In contrast, purchasing prices of corn increased last week in Ukrainian ports of Reni and Izmail.
Decrease of the prices at the land borders and other bearish factors were offset by higher demand from importers, including Turkish buyers.
Thus, the bid prices of importers totaled 295-290 USD/t in ports of Reni and Izmail, while traders were ready to buy corn in these ports at 220-240 USD/t CPT-port, up 10 USD/t compared to the previous week.
Meantime, Ukraine has formally closed its four Black and Azov sea ports, which Russian forces have captured, the Ukrainian agriculture ministry said on Monday.
Export prices of Russian sunflower oil were mainly declining in April, APK-Inform said.
By the end of April, the offer prices of crude sunflower oil had decreased by more than 20 USD/t the agency said.
As of May 2, the prices totaled 1959-2010 USD/t FOB (May).
The bid prices decreased by 90-100 USD/t to 1870-1915 USD/t FOB.
From South East Asia, India’s wheat output looks likely to fall in 2022, as a sharp, sudden rise in temperatures in mid-March cut crop yields in the world’s second-biggest producer of the grain.
The drop could curb Indian exports of the staple.
India exported a record 7.85 million tonnes in the fiscal year to March – up 275% from the previous year.
Expecting another record crop, traders and government officials saw an opportunity to export 12 million tonnes in the current 2022-23 fiscal year.
In mid-February, nearly a month before the recent hot spell, the government said India was on course to harvest an all-time high 111.32 million tonnes of the grain, up from the previous year’s 109.59 million tonnes
The government is yet to formally revise its production estimates, but an official note, said the output could fall to 105 million tonnes this year.
“Loss of production of wheat, all India basis, more or less stands around 6%, on account of shrivelling of wheat grains around 20% due to terminal heat and heat waves,” the note said.
In 2022, India recorded its warmest March in 122 years with the maximum temperature across the country rising to 33.1 degrees Celsius, nearly 1.86 degrees above normal, according to data compiled by the state-run India Meteorological Department.
Based on the production estimates issued by the government in February, India could have easily exported much more than 12 million tonnes, but it now looks like India could be exporting around 10 million tonnes.
Some traders more pessimistic, with some projecting as much as a 10% drop in output.
If production could be down 10% to around 100 million tonnes, India’s government could restrict exports.
Thailand’s commerce ministry proposed new measures on Monday to boost imports of animal feed ingredients for a three-month period, a move aimed at shoring up domestic supplies following disruption caused by the war in Ukraine.
Thai feed mills have complained for months of a shortage of grains used in animal feed mix, such as wheat and corn, urging the government to ease import controls designed to protect local farmers.
Thai commerce minister, Jurin Laksanawisit, told a news conference one measure proposed was to temporarily suspend controls on wheat imports from May to July.
At present, feed mills must source their corn with a ratio of 3-1 in favour of domestic suppliers to earn a quota to import wheat.
Another planned measure ease controls on corn imports, allowing up to 600,000 tonnes to be brought in, free of the 20% duty, over the same period.
That would be up from 54,700 tonnes, added Jurin, who is also a deputy prime minister.
The ministry also proposed to the cabinet that up to 1.2 million tonnes of animal feed ingredients, including corn, wheat and barley, be allowed over the three-month period, Jurin said.
Thailand’s cabinet on Tuesday approved those new measures.
From Australia, following offshore markets, current and new-crop wheat values fell about A$5/t.
Port congestion has increased this week with delays increasing in Albany, Esperance, Geraldton, Kwinana and Port Lincoln. Of 30 anchored vessels, only 13 are currently loading.
Clear skies over recent days are forecast to come to an end, with a cold Antarctic blast expected to move over southern Australia later this week causing a mix of snow, hail, rain and blustery winds.
It will move through South Australia next Tuesday, before sweeping across Victoria and New South Wales on Wednesday and Thursday.
On international trade scene, a group of South Korean flour mills has issued a tender to purchase about 50,000 tonnes of milling wheat to be sourced from the United States.
The deadline for submission of price offers in the tender is Wednesday, May 4.
The tender seeks a range of different wheat types for shipment between June 16 and July 15.
