Good morning Farmer Family …
US farm markets were mostly lower yesterday.
Corn prices went home mixed but mostly red, as old crop’s July contract gained just 0.06% for the day, while losses were limited to 2 1/4 cents in the nearby contracts.
Corn market, however, had flashed double digit losses early in the session.
Soybeans incurred the biggest losses, at around 0.7%.
Soymeal also closed off the days’ lows with losses limited to 0.68% for the front months.
Soy oil prices ended the midweek session 1.5% weaker.
After sharp losses through midday, the wheat complex ended the session with winter wheat contracts suffered more modest setbacks compared Tuesday’s session, while spring wheat prices bucked the overall trend, picking up modest gains by the close.
Particularly, CBOT SRW ended Wednesday down by 0.56%.
Kansas City wheats bounced back from the earlier weakness but closed the day 0.36% in the red, nevertheless.
Spring wheat prices closed black 0.25% on the day, after being down by nearly 40 cents earlier in the session.
In energy markets, oil prices rose on Thursday, extending a cautious rally this week.
A bigger-than-expected drawdown in U.S. crude inventories in the week to May 20, following soaring exports, buoyed the market on Wednesday.
Analysts said the inventory draw and the prospect of an EU embargo on Russian oil, were pushing prices higher.
Even without a formal ban, much less Russian oil is available to the market as buyers and trading houses avoid dealing with crude and fuel suppliers from the country.
A forecast increase in oil output to a record high of 5.2 million barrels per day (bpd) in the Permian Basin of the United States is unlikely to plug the 2 million to 3 million bpd gap from lost Russian supply, analysts said.
Thus, Brent crude futures for July settlement gained 40 cents, or 0.35%, to $114.43 a barrel at 04:12 GMT.
U.S. West Texas Intermediate (WTI) crude futures for July delivery climbed 55 cents, or 0.5%, to $110.88 a barrel.
Yesterday benchmark U.S. crude added 56 cents to close at $110.33 per barrel on the New York Mercantile Exchange, while Brent crude, gained 47 cents closing at $114.03 per barrel in London.
Note, this week’s rise in oil markets has been tempered by strict COVID-19 lockdowns in China and worries about inflation leading to slower global growth.
In freigth markets, the Baltic Exchange Dry Index fell 126 points, or 3.9% to 3,127 points on Wednesday, the lowest in a week.
The capesize index, which tracks iron ore and coal cargos of 150,000-tonnes, slumped 7% to 3,987 points.
The panamax index which tracks cargoes of about 60,000 to 70,000 tonnes of coal and grains, decreased 3.1% to 3,218 points.
Among smaller vessels, the supramax index rose 5 points to 2,833 points.
In equity markets, U.S. stocks initially moved lower on global growth concerns.
Chinese Premier Li Keqiang said that “economic indicators in China have fallen significantly, and difficulties in some aspects and to a certain extent are greater than when the epidemic hit us severely in 2020.”
U.S. Apr capital goods new orders nondefense ex-aircraft rose +0.3% m/m, slightly weaker than expectations of +0.5% m/m.
All that, weighed on U.S. stock indexes early in the session, however, they rose moderately by the close.
A +13% jump in Nordstrom boosted the overall market after it raised its 2023 revenue forecast and eased concerns about a slowdown in consumer spending.
Energy stocks gained Wednesday as the price of natural gas jumped to a 14-year high.
Stock indexes extended their gains Wednesday afternoon after the minutes of the May 3-4 FOMC meeting gave no signals that the Fed will turn more hawkish to fight inflation.
In this context, the benchmark S&P 500 index rose 0.9% to 3,978.73.
The Dow Dow Jones Industrial Average gained 0.6% to 32,120.28.
The Nasdaq composite climbed 1.5% to 11,434.74.
Meantime, Asian stock markets were mostly lower on Thursday.
Tokyo, Hong Kong and Sydney fell while Shanghai and Southeast Asian markets gained.
Particularly, the Shanghai Composite Index gained 0.6% to 3,125.40 while the Nikkei 225 in Tokyo lost 0.2% to 26,639.04.
The Hang Seng in Hong Kong sank 0.6% to 20,043.93.
The Kospi in Seoul declined 0.3% to 2,610.30.
The Bank of Korea, as expected, raised its benchmark interest rate by 25 basis points to 1.75%.
Sydney’s S&P-ASX 200 was 0.5% lower at 7,116.70.
India’s Sensex opened down 0.4% at 53,514.81.
New Zealand declined while Southeast Asian markets rose.
In currency trading, the dollar rose to 127.40 yen from 127.32 yen.
The euro declined to $1.0678 from $1.0688.
The dollar index on Wednesday rose by +0.175 (+0.17%) founding support from weakness in the yuan after Chinese Premier Li Keqiang statement on China’s economic difficulties.
The minutes of the May 3-4 FOMC meeting were also supportive of the dollar.
On the weather side, later this week, most areas east of the Mississippi River will see at least some measurable moisture between today and Sunday, per the latest 72-hour cumulative precipitation map from NOAA.
The Mid-South and Mid Atlantic regions are likely to see the largest totals during this time. Meanwhile, NOAA’s 8-to-14-day outlook predicts drier-than-normal conditions will return to the Great Lakes region between June 1 and June 7, with seasonally cool weather likely in the Northern Plains and upper Midwest.
On the demand side, EIA data showed ethanol production averaged over a million barrels per day through the week that ended 5/20. At 1.014m bpd, that was the most since March.
Ethanol stocks drew down another 79k barrels to 23.712 million.
Going into the weekly Export Sales report analysts surveyed expect old crop corn sales from the week that ended 5/19 to be reported between 150k and 500k MT.
New crop business is estimated to come in between 200,000 MT and 800,000 MT.
As for soybean, analysts surveyed anticipate USDA to report between 200k and 800k MT of old crop soybeans were sold from the week that ended 5/19.
New crop soybean bookings are estimated between 100k and 600k MT.
Analysts also expect between 100k and 400k MT of soymeal was sold, with soyoil bookings anticipated below 20k MT.
As for wheat, analysts expect old crop wheat business was between 50k MT of net cancelations and 100k MT of net new sales from the week that ended 5/19.
New crop wheat sales are estimated between 100,000 MT and 400,000 MT.
In this context, corn basis bids were steady to firm after climbing 3 to 16 cents higher across seven Midwestern locations on Wednesday.
Soybean basis bids were steady to firm after rising 5 to 13 cents higher across half a dozen Midwestern locations.
From South America, Brazilian corn exports to China require an agreement about genetic modified grains before effectively beginning, local corn growers association Abramilho said on Wednesday as most Brazil’s corn production is transgenic.
Abramilho’s comments come in the wake of China’s customs authority announcing an agreement with Brazilian authorities regarding a protocol to allow imports of Brazilian corn.
Brazil plants larges swathes of land with GM soybeans and corn.
Genetically modified corn has accounted for about 90% of the total corn area in Brazil since the 2015/2016 season, according to academic research.
Brazil is poised to harvest a record corn crop in 2021/2022, meaning the country has a surplus to export around 30 million tonnes in the current cycle to destinations including China, Abramilho said.
Beijing and Brasilia signed a protocol of phytosanitary requirements for exporting corn from Brazil to China in 2014 but little trade has happened due to complex inspection requirements.
The revised agreement, concluded during high-level talks on Monday, is expected to be signed in coming weeks, opening the way to more substantial trade.
In Europe, the prospect of a resumption of maritime traffic in the Black Sea caused Euronext prices to plunge.
Meantime, non-commercial market participants cut their net long positions in Euronext’s milling wheat futures and options in the week to May 20, data published by Euronext on Wednesday showed.
Non-commercial participants, which include investment funds and financial institutions, lowered their net long position to 184,315 contracts from 186,215 a week earlier, the data showed.
Commercial participants similarly reduced their net short position to 206,530 contracts from 210,394 a week earlier.
In Euronext’s rapeseed futures and options, non-commercial market participants extended their net short position to 8,839 contracts from 4,965 a week earlier.
Commercial participants increased their net short position in rapeseed to 9,593 contracts from 5,775 a week earlier.
From Africa, the International Centre for Agricultural Research in Dry Areas (ICARDA) Morocco Genebank was officially opened last week to safely store one of the world’s most unique and extensive collections of wheat, barley, chickpea, faba bean, and lentil.
The facility has been developed by ICARDA with support from The Kingdom of Morocco, INRA, and the Global Crop Diversity Trust, and supplements ICARDA’s existing genebanks at Svalbard in Sweden and Beirut in Lebanon.
ICARDA genebanks hold material deemed to be International Public Goods, which makes it accessible to all including breeders and researchers across the world.
The ICARDA Morocco genebank alone conserves and researches a collection of 95,000 accessions, or groups of plant genetic resources, collected from the region.
The International Islamic Trade Finance Corporation (ITFC) has doubled the total financing granted to Egypt to cover the country’s imports of wheat to $6 billion, Minister of Supply and Internal Trade Ali El-Moselhi said in an interview with MBC Masr TV channel on May 23rd.
The additional $3 billion amount will help Egypt in dealing with the increasing prices of wheat amid the ongoing Russian-Ukrainian war, El-Moselhi highlighted.
Egypt’s purchases of wheat from abroad do not represent any pressure on the Central Bank of Egypt (CBE) as the ITFC pays and covers the country’s wheat imports, he remarked.
Zimbabwe will import 400,000 tonnes of white maize from Zambia and Malawi, the Grain Millers Association of Zimbabwe (GMAZ) said, as the country faces a reduced harvest this year blamed on erratic rains.
The government has forecast maize production for the 2021/22 season at 1.56 million tonnes, down from the previous season’s multi-year record of 2.72 million tonnes.
The country requires 2.2 million tonnes annually for human and livestock consumption and the government has encouraged private millers and producers of livestock feed to import some grain to plug the deficit.
Zimbabwe expects to start receiving the maize from the end of June.
Zimbabwe’s millers have been increasing prices, citing higher import and production costs.
In March, millers increased maize meal and wheat flour prices by 15%, followed by further hikes of 52% and 31% for maize meal and wheat flour, respectively, in April.
Zimbabwe, is experiencing another phase of rapid price increases, with year-on-year inflation rising to 131.7% in May, up from 60.6% in January.
From the Black Sea basin, a statement from the Russian Defense Ministry issued after the close of market sessions mentioned that Russia has acknowledged two specified corridors through the Black Sea Blockade for Ukrainian food and grain exports by sea, in exchange for reduced sanctions by NATO allies. Terms under which this would be allowed are not yet public.
Also, Russia’s defence ministry said the port of Mariupol, city on the shallow-water Azov Sea which was taken by Russia after a long siege, was operating normally after Russian forces finished removing mines from there.
On face value, this would provide welcome relief to an extremely tight global balance sheet.
However, this may not be a simple process as a shipping corridor is only part of the problem – cleaning up the port, not endangering locals that would be operating the port, and physically getting grain to port all have a huge question mark over them.
Russian Deputy Foreign Minister Andrei Rudenko, quoted by Interfax, said that any escort by Western ships of Ukrainian vessels carrying grain would “seriously exacerbate the situation in the Black Sea”.
Britain, on its part, said on Tuesday it had no plans to send its warships to help get food exports out of Odesa.
Ultimately, market direction will be dictated by those who believe Russia is committed to the humanitarian element, and global pressure to help, and those who simply believe this is propaganda in what will be a long, drawn-out war.
Meantime, a senior United Nations official is due to visit Moscow in the coming days to “discuss the scheme by which we can export out fertilizers,” Russia’s U.N. Ambassador Vassily Nebenzia said on Wednesday.
Nebenzia said that “formally fertilizers and grain are not under sanctions, but there are logistical, transport, insurance, bank transfer problems” created by Western sanctions imposed on Russia that “prevent us from exporting freely.”
“We are prepared to export fertilizers and grain from our ports to the world market,” he said, adding that when it came to Ukrainian grain exports – “I think that should be negotiated with the Ukrainians, not with Russians.”
On Thursday, according a senior Turkish official Ankara is in negotiations with Moscow and Kyiv to open a corridor via Turkey for grain exports from Ukraine.
From the Middle Kingdom, demand edible oils in China is expected to drop by 8.45% from a year ago to 39.02 million tonnes, due to the lockdowns, high soybean prices and substitution with animals fats.
That is the first decline this century, according to the National Grain & Oils Information Center, a government think-tank.
Soyoil consumption in March fell 11% and by 15% in April from the same periods in 2019, before the COVID pandemic, according to estimates by Mysteel, a China-based commodity consultancy.
Overall soyoil usage will be 16.74 million tonnes in 2022, down about 500,000 tonnes from 2019.
For the 2021/22 crop year, the U.S. Department of Agriculture (USDA) estimates China will consume 17.4 million tonnes of soyoil, down from 17.6 million tonnes in the 2020/21 period.
The USDA predicts consumption to rebound in the 2022/23 crop year to a record of 18.05 million tonnes.
Meantime, the slump in soyoil demand is expected to impact China’s overall bean imports.
According to two China-based traders at international trading companies, the country has only covered about 30% of its monthly soybean import demand for July and only 20% for August.
The weak edible oil demand comes as soybean crushers already face poor demand for soymeal, the protein-rich animal feed ingredient also produced during the crushing process.
China’s industrial animal feed output in April slid nearly 11% from the previous year to 22.49 million tonnes, with pig feed down 15.2%, because of expensive raw materials and weak hog production margins, according to the China Feed Industry Association.
Soymeal inventories for the week ending May 20 have doubled since the end of March, with consumption in the week falling by 5.67% from a year earlier, according to Maysteel.
Soybean crush margins in the eastern province of Shandong, a main processing hub for the oilseed, have plunged nearly 1,700 yuan since early March, to minus 218 yuan (minus $32.68) per tonne as of Monday.
“The reasons were simple, strong international prices and weak domestic demand” analysts said.
($1 = 6.6713 Chinese yuan renminbi).
From South East Asia, India has no immediate plans to lift a ban on wheat exports, but will continue with deals which are done directly with other governments, Commerce Minister Piyush Goyal said.
“Currently there’s instability in the world, if we were to do that (lift the ban), it would only help black marketeers, hoarders and speculators.
Neither will it help the really vulnerable and needy countries,” Goyal said.
Meantime, according the USDA attaché, “heat stress resulting from an unprecedented spike in temperatures beginning in the mid-March 2022 has had a marked impact on India’s wheat crop. Yields are 10-15 percent down, driving India’s forecasted market year (MY) 2022/23 (April-March) wheat production down from 110 million metric tons (MMT) to 99 MMT. … Under the current market supply situation, India’s wheat exports in MY 2022/23 would barely touch upon 6 MMT, compared to MY 2021/22’s volume of 8.5 MMT and MY 2022/23’s initial projection of 10 MMT.”
From Australia, logistics issues in the northern market have held prices aloft this week while in southern markets, signs of softening in global pricing as well as improved road-freight ability have allowed wheat prices to drift lower.
The market for H2 wheat delivered Brisbane consumer breached $600 per tonne, making the Brisbane wheat market the dearest in the country, and putting it ahead of even Adelaide.
It reflects the squeeze on truck availability in southern Queensland, and ongoing rain delays affecting grain movements on farm and at ports, storage sites and mills.
Meantime, local markets again were a touch softer on the bid side yesterday.
Liquidity in depot stores has slowed as the trade is now starting to get more inquiry from the grower on delivered parcels for June.
New crop markets were a tad softer over the day on wheat, barley and canola
On the supply side, the Western Australian grain-belt is off to a near perfect start with most regions having reserves of sub-soil moisture from autumn rainfall and with a few top-ups that could not have been timed better.
Planting is pretty much done and the vast majority of the crop will be in the ground and up by the end of May or early June.
The start in South Australia has not been quite as good but planting has progressed well with plenty of dry-sowing activity ahead of the rainfall event forecast for the coming week, and roughly 65-75pc of the SA crop already planted.
Conditions in New South Wales are mixed, with most canola that is going to get planted in the ground and cereal crops nearly done; the exception is areas that have been too wet to plant through parts of the central west and north.
Parts of Queensland are in the same boat as NSW – plenty of potential but too wet to plant .
On the weather side, showers are expected to continue this week throughout the winter cropping belt with the highest rainfall totals expected to build from Sunday into next week in SA, Victoria and the southern half of NSW.
On international trade scene, the lowest price offered in a tender being held by Pakistan to purchase 500,000 tonnes of wheat was believed to be $515.49 a tonne, cost and freight (c&f) included.
All offers were:
FalconBridge: 110 kmt at $515.49;
Bunge: 110 kmt at $526.00;
Cargill: 116 kmt at $532.40;
Agrocorp: 110 kmt at $534.38;
LDC: 100 kmt at $534.90;
Vittera: 120 kmt at $537.00.
The Trading Corporation of Pakistan (TCP) is still considering the offers and no purchase has been reported.
Jordan has boutght from Ameropa 60k barley at $452 CFR Aqaba for shipment between 16/30 August 2022.
Other offers were Cargill at $463 and Bunge at $484.
There was another offer from Viterra but with no price.
The next barley tender is expect for 1st June 2022 and shipment in September &/or October.
To all of you, we wish you a good day.
Author: Sandro F. Puglisi