Good morning Farmer Family.
US farm markets were mixed but mostly higher to start the week.
Corn prices trended moderately higher closing up 0.96%.
Soybeans, in contrast, suffered a setback that pushed prices more then 1% lower.
Soymeal was 1.72% in the red.
Soybean oil prices were 0.57% weaker.
The wheat complex, traded back higher by double digits after last week’s pullback from the fresh highs.
Winter wheat prices saw the most upside, as traders continued to monitor dismal crop quality in the U.S. and disruptions to fieldwork and exports in Ukraine.
Thus, Chicago wheat prices ended 1.82% higher.
Kansas City HRW closed with 1.9% gains.
MPLS spring wheats went home with 1.52% gains.
In energy markets, oil prices fell on Tuesday.
Multiple threats to the global economy emerged at the annual Davos economic summit, with someone flagging the risk of a worldwide recession.
Particularly, International Monetary Fund Managing Director Kristalina Georgieva said she did not expect a recession for major economies but could not rule one out.
While Shanghai, aims to normalise life from June 1 as its coronavirus caseloads decline, an increase in new COVID-19 cases in Beijing have raised concerns for further curbs.
However, losses were limited by expectations that gasoline demand would remain high amid.
Thus, Brent crude futures for July fell $1.34, or 1.2%, to $112.08 a barrel by 06:06 GMT.
U.S. West Texas Intermediate (WTI) crude futures for July delivery dropped $1.28, or 1.2%, to $109.01 a barrel.
Both benchmarks fell by more than $1 earlier in the session.
Brent gained 0.7% on Monday while WTI settled nearly flat.
In freight markets, the Baltic Exchange’s main sea freight index rose on Monday, hitting its highest in more than five months on gains in the capesize segment.
The overall index, indeed, gained 25 points, or 0.8%, to 3,369 points, its highest since Dec. 8.
Particularly, the capesize index rose 76 points, or 1.7%, to 4,602 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $631 at $38,169.
The panamax index fell 5 points, or 0.2%, at 3,377 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $48 to $30,392.
The supramax index rose 2 points to 2,818 points.
Meantime, on week 20, freight rates in the Azov-Black Sea region began to rise again.
Deals for 3K parcels of wheat from Azov to Marmara Sea ports were concluded at the level of $ 0 per ton, Sea Lines shipbrokers report.
The increase in rates is primarily due to an increase in cargo traffic in the Black Sea, both from Russian ports and from the Ukrainian on the Danube, from where grain is now being exported en masse.
According to Sea Lines, in Izmail and Reni there are huge queues for loading, as a result some cargoes are redirected to the neighboring Romanian and Bulgarian ports.
At the same time, there is no large flow of cargoes in the Sea of Azov.
Among the main nomenclatures of goods are bran and wheat. In addition, on week 20 charterers began to calculate the shipment of grains from the Russian river, primarily to the ports of the Marmara Sea and Mersin.
According to Sea Lines, on week 20, freight rates for wheat parcels from Azov made $38 to the Black Sea, $40 to Marmara, $59 to Mersin and $62 to Egypt.
Freight rates from Rostov AB (after bridge) are $1 above, from Rostov BB (before bridge) the same, from Yeisk and Taganrog $1 below, and from Temryuk $3 below those from the port of Azov.
In the Caspian, freight rates were up $1.
On week 20, freight rates for shipping corn by 3,000 dwt bulkers to Iran make $22 from Aktau, $28 from Makhachkala, and $35 from Astrakhan.
In equity markets, U.S. stock indexes Monday posted moderate gains.
Bank stocks led the overall market higher after JPMorgan Chase CEO Dimon said “storm clouds” over the U.S. economy may dissipate.
Signs of increased M&A activity were also positive for the overall market after Bloomberg News reported that Broadcom is in talks to acquire VMware.
In addition, stocks rallied on the prospects of easing global trade tensions after President Biden said he would reconsider the tariffs on Chinese imports imposed by the Trump administration.
A -4% decline in Autodesk limited gains in the Nasdaq 100 after Deutsche Bank cut its recommendation on the stock.
Concern that the pandemic in China may be spreading was negative for stocks.
Atlanta Fed President Bostic said he’s comfortable with 50 bp interest rate hikes in the next couple of FOMC meetings, but he’s open to moving more aggressively “if inflation on a month-to-month basis is not falling.”
The U.S. Apr Chicago Fed national activity index rose +0.11 to 0.47, weaker than expectations of 0.50.
In this context, Wall Street had an upbeat start to the week after seven weeks of declines that have nearly ended the bull market that began in March 2020.
Particularly, the S&P 500 rose 1.9% to 3,973.75, with technology and financial sector stocks doing much of the heavy lifting for the benchmark index.
The Dow Jones Industrial Average rose 2% to 31,880.24 and the Nasdaq climbed 1.6% to 11,535.27.
Smaller company stocks staged a rally.
The Russell 2000 gained 1.1% to 1,792.76.
Meantime, Asian shares were lower on Tuesday.
Benchmarks fell in Japan, Australia, South Korea and China, although some of the indexes had been higher earlier in the day.
Biden, who announced a new economic and trade initiative with the region while on a visit to Japan, confirmed to reporters that he planned to discuss the issue of punitive tariffs imposed on China during former President Donald Trump’s administration with Treasury Secretary Janet Yellen once he returns to Washington.
The comments raised optimism over the potential for an easing of tensions between the world’s two biggest economies, but not all were convinced.
Thus, investors are keeping an eye on the impact of the war in Ukraine on commodity prices and the possible blow to global economic growth from pandemic lockdowns in China .
In this context, Japan’s benchmark Nikkei 225 declined 0.8% in afternoon trading to 26,793.94.
Australia’s S&P/ASX 200 was little changed, inching down less than 0.1% to 7,144.30, after fluctuating throughout the day.
South Korea’s Kospi sank 1.1% to 2,617.38.
Hong Kong’s Hang Seng shed 1.7% to 20,125.87, while the Shanghai Composite declined 1.2% to 3,109.39.
In currency trading, the U.S. dollar edged down to 127.61 Japanese yen from 127.78 yen.
The euro cost $1.0669, down from $1.0688.
The dollar index on Monday fell by -1.075 (-1.04%), tumbling to a 3-1/2 week low as a sharp rally in stocks reduced the liquidity demand for the dollar.
On the weather side, massive amounts of rain is possible later this week for an area stretching from Kansas down to Texas and through the Mid-South.
Some fields could see 4” to 5” or more between today and Friday, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts more seasonally wet weather for the Corn Belt between May 30 and June 5, with warmer-than-normal conditions likely for the eastern half of the country during that time.
On the supply side, USDA weekly crop progress report covering the week through May 22, showed, all things considered, progress was better than expected for both corn and soybeans
Soybean plantings reached the halfway mark, while more than seven out of every 10 corn acres are now in the ground.
Winter wheat quality ratings improved slightly but remain dismal overall.
Particularly, the NASS Crop Progress report showed corn planting progressed 23% points to 72% complete through Sunday, up from 49% a week ago and four points above the average trade guess of 68%.
However, this year’s progress is still markedly slower than 2021’s pace of 89% and the prior five-year average of 79%.
North Carolina (97%), Tennessee (93%) and Texas (92%) continue to lead the charge, while North Dakota (20%) still has the farthest to go.
Corn emergence moved to 39%, up from 14% a week ago but still substantially behind 2021’s pace of 61% and the prior five-year average of 51%.
North Dakota (1%) and Ohio (6%) are still only seeing single-digit progress in this physiological category.
In Iowa, 47% of the corn crop is up, up from 8% last week but behind their 60% average.
Nebraska emergence was also at 48%, compared to 19% last week and the 56% average.
Soybean plantings reached 50% through Sunday, up from 30% a week ago and slightly besting the average trade guess of 49%.
That still puts this year’s crop well below 2021’s pace of 73% and five points below the prior five-year average of 55%.
Soybean planting in IA was ahead of the average pace by 2% points with 69% in the ground compared to 34% last week and 67% on average.
North Dakota is still well behind pace with NASS showing just 7% planted compared to 47% on average.
MN is also behind pace with 32% planted compared to 68% last week.
Twenty-one percent of the crop is now emerged, up from 9% a week ago.
Last year’s pace was much more swift, at 38%, and the prior five-year average is 26%.
Spring wheat plantings made it to 49%, up from 39% a week ago.
That was well below the average trade guess of 56%.
It’s also well below 2021’s pace of 93% and the prior five-year average of 83%.
Among the top six production states, Minnesota (11%) and North Dakota (27%) are trending significantly below the national average.
National spring wheat emergence was reported at 29% compared to 16% last week and 50% on average.
As for winter wheat, NASS data showed 63% of the crop was headed as of 5/22.
That was up from 48% last week and only 2ppts behind average.
Winter wheat quality ratings improved a point and matched analyst expectations with 28% of the crop rated in good-to-excellent condition, making it among the worst on record.
Another 32% of the crop is rated fair (unchanged from a week ago), with the remaining 40% rated poor or very poor (down a point from last week).
On the demand side, the weekly Export Inspections data showed 1.7 MMT of corn was shipped through the week that ended 5/19.
That was up from 1.06 MMT last week, but just under the 1.746 MMT from the same week last year.
MYTD corn exports were 40.833 MMT according to USDA’s weekly data.
As for soybeans, the report showed 575,781 MT of soybeans were exported during the week that ended 5/19.
That was down 227k MT wk/wk, but was 354k MT above the same week last year.
Accumulated soybean shipments were tallied at 49 MMT as of 5/19, compared to 56.46 MTM at the same point last year.
As for wheat, USDA reported 309,501 MT of wheat shipments for the week that ended 5/19.
That was down 40k MT from the week prior, and was less than half of the same week last year.
Accumulated wheat shipments from the weekly data reached 19.685 MMT, compared to 25.01 MMT at the same point last season.
Meantime, the USDA announced a large export sale this morning as Egyptian buyers booked 130k MT of old crop soybeans.
In this context, corn basis bids were steady to mixed on Monday after dropping 5 cents at an Indiana ethanol plant and firming 2 cents at two other Midwestern locations.
Soybean basis bids were steady to mixed to start the week after dropping 8 to 10 cents at two Midwestern processors while firming 8 to 10 cents higher at three other locations.
The funds were net buyers yesterday for 5,000 lots of corn and 9,000 lots of wheat.
They were net sellers for 8,000 lots of soybeans.
From Canada, Canadian farmers are battling to get their crops in the ground across many parts of the Prairies as heavy rains continue to thump eastern cropping districts, and a continuation of last year’s drought conditions delays the planting program in the western regions.
Midway through last week, Agriculture and Agri-Food Canada (AAFC) reported that practically no spring planting had been completed in much of Manitoba, with more than 90 per cent of the province’s cropping area suffering from excessive moisture.
As of May 17, AAFC reported that just 4pc of the province’s spring crops had been planted, seriously lagging the five-year average of 50pc.
Consequentially, farmers in parts of Manitoba are reportedly swapping some of their intended corn and soybean area into wheat, barley and canola as their growing seasons are shorter.
At the beginning of last week, Saskatchewan Agriculture estimated that 33pc of the province’s crops had been planted, the slowest crop seeding pace since 2017.
This compared to 74pc at the same time last year and a five-year average of 53pc.
Alberta’s Crop Report suggests planting progressed by 26% through the week of 5/17 to 49% complete for all grains.
That trails the 5-yr average of 55% complete.
The report welcomes the upcoming rain, specifically for the South region of the Canadian province.
According to AAFC, less than 40pc of average precipitation fell in southern Alberta last month, exacerbating the arid conditions experienced over the past six months.
An estimated 29pc of the Canadian Prairies is rated as abnormally dry or in moderate to extreme drought, including 63pc of the region’s agricultural areas.
Around 25pc of Alberta’s farming districts, representing 17.8 million hectares (Mha), are experiencing significant drought conditions.
The extreme weather conditions will make it extremely difficult for Canadian farmers to meet the planting intention forecasts released by Statistics Canada late last month.
The total wheat area was forecast to rise by 5.8pc year on year to 10.05Mha.
The spring wheat area is up 6.4pc to 7.12Mha, the durum wheat area is up 9.5pc to 2.45Mha and the winter-wheat area, planted in autumn last year, is projected to be down 13pc to 490,000 hectares.
The area planted to barley is forecast at 3.3Mha, down slightly from 3.36Mha last year.
The oats area is expected to increase from 1.39Mha last year to 1.5Mha in the current campaign. Statistics Canada pegged the lentil area at 1.8Mha, up from 1.74Mha in 2021, and the field pea area at 1.65Mha compared to 1.55Mha last year.
On the summer crop front, Statistics Canada pencilled in corn for 1.42Mha, fractionally above last season, and the forecast soybean plantings came in at 2.3Mha, almost 7pc higher than 2021.
Canadian farmers are expected to plant 8.8Mha of their farmland to canola this year, down from 9.1Mha in 2021 but much higher than 2020 plantings of 8.41Mha.
Meantime, the Canadian Government announced midway through last week that China had lifted the ban on Canadian canola and reinstated market access for the two major grain firms whose exports had been blocked from Chinese ports since March 2019.
Chinese customs officials confirmed that they would allow Richardson International and Viterra to resume canola sales to China.
From South America, COFCO International has committed to making its soy supply chain free of deforestation and land conversion by 2030 in environmentally sensitive regions of Latin America, including the Amazon and Cerrado, the Chinese-owned crop merchant said.
The company generated sales of $48 billion last year, up from $33 billion in 2020, and traded 133 million tonnes of crops against 131 million the previous year, it also said in a sustainability report published on Monday.
In Europe, grain prices started the week on a higher note.
The weather conditions in Western Europe indeed remain worrying.
Fears that French production would be down sharply compared to last year, pushed up grain prices.
In addition recent storms were also accompanied by hailstones in places, causing some damage to the crops.
Lowering the harvest and may prevent the country from exporting more than 10.5 million tonnes of soft wheat outside the EU next season, well below potential demand, Agritel added.
On the physical market, French wheat premiums were positive for the new crop, partly reflecting a slowdown in farmer selling amid harvest risks.
Vessel loadings for Egypt and Algeria, following sales in tenders in recent months, were maintaining port activity in an otherwise quite end-of-season period.
Rapeseed prices, in contrast, lost ground yesterday in a market that remains volatile depending on the decisions taken in terms of exports to Asia.
The rapid strengthening of the euro against the dollar also pushed rapeseed prices into the red.
Meantime, the European Union’s crop monitoring service, MARS, on Monday trimmed its yield forecasts for this year’s EU wheat, barley and rapeseed harvests due to dryness and said significant rain was needed to avoid further yield losses.
In its monthly report, indeed, MARS lowered its forecast of the EU’s 2022 yield for soft wheat to 5.89 tonnes per hectare (t/ha) from 5.95 t/ha projected last month.
That is now 2.5% below the 2021 level although 0.9% higher than the average of the past five years, it said.
Ditto for durum, now seen at 3.55 tonnes per hectare from 3.61 projected last month.
However, it is now +2.1% above the 2021 level and +2.7% higher than the average of the past five years.
For barley, MARS cut the overall projected yield to 4.89 t/ha from 4.97 t/ha last month, reflecting a drop in the forecast spring barley yield to 4.18 t/ha from 4.31 t/ha and a slight reduction to the winter barley projection, to 5.78 t/ha from 5.79 t/ha.
For rapeseed, the EU’s main oilseed crop, MARS revised down its outlook for this year’s yield to 3.17 t/ha from 3.19 t/ha forecast in April.
Forecast yields for spring crops were mostly increased slightly, with grain maize pegged at 7.92 t/ha against 7.91 t/ha last month, sugar beet nudged up to 78.0 t/ha from 77.8 t/ha and sunflower seed raised to 2.39 t/ha from 2.38 t/ha.
However, “substantial rainfall in the coming weeks will be necessary to sustain the yield potential,” MARS said.
Weather forecasts for the week to May 28 showed fewer than three days with precipitation above 5 mm (0.2 inch) across Europe and the longer-range outlook for June-August suggested warmer- and drier-than-usual conditions were likely in most of the region, “potentially exacerbating the negative climatic water balance.”
In Russia, Russian wheat export prices rose last week.
Particularly, prices for wheat with 12.5% protein content from Black Sea ports were at $395-405 free on board (FOB) at the end of last week, up $10 from a week earlier, the Sovecon agriculture consultancy said.
IKAR said that the price rose by $20 to $410 per tonne, but there were no deals signed.
Meantime, in the domestic market, prices fell due to the stronger rouble currency, muted demand from exporters and domestic consumers, as well as rising supply from farmers who liquidate their grain stocks ahead of the new crop.
Indeed, prices for domestic 3rd class wheat, European part of Russia, excludes delivery were at 15,375 rbls/t ($258.40), down 500 rbls from prior week, according to Sovecon;
Prices for sunflower seeds were at 39,175 rbls/t, down 1,475 rbls from prior week (Sovecon);
Prices for domestic sunflower oil were at 106,025 rbls/t -5,675 rbls (Sovecon);
Prices for domestic soybeans were at 50,500 rbls/t unchanged (Sovecon);
Prices for export sunflower oil were at $1,950-2,050/t +$50 (Sovecon);
Price for export sunflower oil were at $1,890/t -$50 (IKAR);
Price for white sugar, Russia’s south was at $988.8/t +$28 (IKAR).
($1 = 59.5000 roubles).
Russia exports continued to slow down due to seasonal factors last week.
Particularly, Russia exported 300,000 tonnes of grains last week compared with 330,000 tonnes a week earlier.
Sovecon expects Russia’s May wheat exports at 800,000 tonnes, down from 2.2 million tonnes in April as the state export quota is being depleted.
Meantime, the Kremlin said on Monday that the West had triggered a global food crisis by imposing the severest sanctions in modern history on Russia over the war in Ukraine.
The war – and the West’s attempt to isolate Russia as punishment – have sent the price of grain, cooking oil, fertiliser and energy soaring.
“Russia has always been a rather reliable grain exporter,” Kremlin spokesperson Dmitry Peskov said.
“The source of the problem that leads to world hunger are those who imposed sanctions against us, and the sanctions themselves.” he added.
The Kremlin said Ukraine had made commercial shipping impossible by mining its waters.
Lots of political statements, in contrast, said Russia is using grain exports as weapon.
According to some Russian analysts, it hasn’t so far and the world should really hope that it won’t.
SovEcon publicly released its new Russian wheat crop forecast of 88.6 mmt (+1.2 mmt).
Russian consultancy IKAR said that the crop could reach 85.0 mmt.
SovEcon estimates Russian 22/23 wheat exports at 41 mmt, 20% of global trade.
If it’s taken out from the global S&D wheat prices could skyroket to$20/bu or $800/mt or more, Sovecon added.
Also, Peskov said Russia had not prevented Ukraine exporting grain to Poland by rail – a far slower method – despite the fact that the West was sending in weapons in the opposite direction.
Meantime, spring grains were planted on 16.8 million hectares as of May 17 vs 17.0 million hectares a year ago.
On the weather side, ample rains are expected in many wheat producing regions of Russia this week, including the southern Rostov region which has been dry recently.
In Ukraine, corn seeding go fast – 4.2 mln ha (-14% YOY), way better than the majority of forecasters were predicting.
Ukrainian export data showed 643k MT of grains were shipped MTD in May, down from 1.8 MMT during May 2021.
Of that, just 16k MT were wheat.
Meantime, according to APK-Inform, the indicative forward export prices of Ukrainian wheat increased again last week.
The indicative offer prices of new-crop 12.5%, 11.5% and feed wheat increased by 15-20 USD/t to 365-390, 360-385 and 325-345 USD/t FOB (July-August) last week.
Also the bid prices for corn increased slightly in the Ukrainian ports of the Danube (Reni and Izmail) last week.
Particularly, the bid prices of corn increased by 5-10 USD/t to 235-255 USD/t CPT-port.
The bid prices of corn for delivery to the port of Constanta remained steady at 285-305 USD/t or 275-290 EUR/t.
The prices for delivery to port of Giurgiulești totaled 240-255 USD/t.
APK-Inform said in a statement that Ukraine could harvest 48.3 million tonnes of grain in 2022, including almost 17.1 million tonnes of wheat and 25.2 million tonnes of corn.
Also, APK-Inform said 2022/23 exports could also rise to 39.4 million tonnes versus the previous outlook of 33.2 million tonnes.
At the sametime, the consultancy revised down its forecast for Ukraine’s 2022/23 sunflower oil output by around 7% to 5.3 million tonnes despite the unchanged outlook of the 2022 sunflower harvest at 9.2 million tonnes.
2022 sowing area for sunflowers may fall its lowest in 13 years, to about 4.2 million hectares, down 38% versus 2021 levels.
Ukraine may export 4.85 million tonnes of sunoil in the 2022/23 September-August season.
Meanwhile, the agency also sees the harvest of rapeseed at 2.5 million tonnes against 3.1 million tonnes in 2021.
Soybean production is likely to total 2.69 million tonnes.
From the Middle East, Malaysian palm oil futures rose on Monday, buoyed by expected weak output in May, while traders assessed the impact of Indonesia’s domestic sales policy on global supplies.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange extended gains into a second session.
The contract rose by 159 ringgit, or 2.6%, to 6,268 ringgit ($1,428.77) a tonne.
Top producer Indonesia’s three-week ban on exports of crude palm oil and some derivatives ended yesterday, but it restored local sales requirements aimed at ensuring domestic supply.
Indonesia’s Trade Ministry will require companies to secure export permits for their crude palm oil and olein shipments, with approval granted to those with proof they have met requirements on domestic sales volumes, a regulation document showed.
Meantime, palm oil exports from Malaysia over May 1-20 rose between 28% and 32.6% from the same week in April, cargo surveyors said last week.
Production over May 1-20 was expected to be down 15% from the previous month, traders said, citing data from the Southern Peninsula Palm Oil Millers’ Association.
On this wake, Refinitiv Agriculture Research said it expects the palm oil price to rise towards resistance levels of 6,363-6,383 ringgit this week, with support at 5,900 ringgit, underpinned by firm fundamentals.
From Australia, showers are expected to continue this week throughout the winter cropping belt with the highest rainfall totals expected in South Australia, Victoria and south-east New South Wales.
Meantime, domestic bids relaxed after the offshore sell off last week, and some additional weight of sellers entering the market.
Freight is still the biggest hurdle, with delivered bids, if you can get the freight, holding a $10-15/t premium over ex-farm equivalent.
On international trade scene, Bangladesh in tis tender got from Agrocorp an offer for 50k mt of wheat at $548.38 per tonne.
To all of you, we wish you a good day.
Author: Sandro F. Puglisi