Good morning Farmer Family …
US farm markets shot higher on Monday.
Massive gains in wheat prices due fresh concerns about Ukraine’s export potential prompted a rally that pushed some contracts more than 5% higher.
Indeed, CBOT SRW July wheat contract ended the day 5.1% higher, though July was still $1.91 under the LoC high from 5/17.
Kansas City wheat prices closed 49 cents higher on 4.37% gains.
Spring wheat prices recovered 38 3/4 cents on the day with 3.25% gains.
Corn prices followed suit, trending 2.13% higher and staying comfortably ahead of the $7 per bushel benchmark.
Soybean prices wobbled but managed to stay in the green, picking up gains of around 0.09%.
Soymeal went home within 0.2% losses.
Soy oil prices closed mostly red, with July dropping 0.81%.
In energy markets, oil prices edged higher on Tuesday on an expected demand recovery in China, and on doubts that a higher output target by OPEC+ producers would ease tight supply.
Brent crude futures were up 28 cents, or 0.2%, at $119.79 barrel at 06:01 GMT.
It lost fell 21 cents the previous session to $119.51.
U.S. West Texas Intermediate (WTI) crude futures were up 31 cents, or 0.3%, at $118.81 a barrel.
The benchmark hit a three-month high of $120.99 on Monday before to close down US$0.37 per barrel to $118.50.
Beijing and commercial hub Shanghai have been returning to normal in recent days.
Top oil exporter Saudi Arabia raised the July official selling price for its flagship Arab light crude to Asia by $2.10 from June to a $6.50 premium over Oman/Dubai quotes.
Last week OPEC+, decided to boost output for July and August by 648,000 barrels per day, or 50% more than previously planned.
However, the increased target was spread across all OPEC+ members, including Russia, and many members have little room to ramp up output.
Also, U.S. crude inventories likely fell last week, while gasoline and distillate stockpiles were seen up, analists said.
In freight markets, the Baltic Exchange’s main sea freight index edged lower on Monday, pressured by weaker rates for all vessel segments.
The overall index, which factors in rates for capesize, panamax and supramax shipping vessels, indeed, lost 73 points, or 2.8%, to 2,560 points.
Particularly, the capesize index fell 170 points, or about 5.8%, to 2,757 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $1,408 at $22,866.
The panamax index dropped 10 points, or 0.4%, to 2,841 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased by $90 to $25,573.
The supramax index lost 43 points to 2,660 points.
In equity markets, U.S. stock indexes yesterday posted modest gains.
Stocks initially rallied on expectations for global economic activity to improve after China eased pandemic lockdowns.
Also, U.S. stock indexes received a boost from Sunday’s report from Goldman Sachs that predicts the U.S. economy is on a narrow path to a soft landing, as improving inflation figures and other factors suggest the Fed may be able to accomplish its aggressive interest rate hike plan without tipping the economy into recession.
However, after that stocks fell back due the increase in T-note yields.
The 10-year T-note yield indeed jumped to a 3-1/2 week high of 3.045% up from 2.95% late Friday.
T-note yields rose on negative carry-over from a surge in European government bond yields after the 10-year German bund yield Monday rose to a 7-3/4 year high, and the UK 10-year gilt yield rose to a 7-1/2 year high.
The jump in inflation expectations also weighed on stocks after the 10-year breakeven inflation rate Monday rose to a 2-week high.
All that caused a bond sell-off on Wall Street and fueled anxiety about a possible U.S. economic slowdown.
The difference between the short- and long-term Treasury yields, indeed, is narrowing, which is making investors a little nervous, because it suggests a U.S. recession is more likely.
In this context, the S&P 500 rose just 0.3% to 4,121.43 after being up as much as 1.5% during the day.
The index is 13.5% below its Jan. 3 peak.
The Dow Jones Industrial Average edged up less than 0.1%, to 32,915.78.
The Nasdaq composite gained 0.4% to 12,061.37.
Companies in the solar power industry were some of the biggest gainers after President Joe Biden ordered emergency measures to increase U.S. manufacturing of solar panels and exempted panels from Southeast Asia from tariffs for two years.
Twitter slipped 1.5% after Tesla CEO Elon Musk threatened to call off his deal to buy the company, saying Twitter was refusing to hand over data about possible fake accounts.
Shares of Tesla rose 1.6%.
Meantime, Asian stock markets were mixed on Tuesday after the Wall Street bond sell-off and Australia raised interest rates.
Shanghai and Tokyo advanced while Hong Kong and Seoul declined.
Particularly, the Shanghai Composite Index advanced 0.2% to 3,243.17 after Chinese authorities eased anti-virus restrictions that shut down businesses in Shanghai and other major cities.
The Nikkei 225 in Tokyo gained 0.4% to 28,032.94 while the Hang Seng in Hong Kong shed 0.5% to 21,544.06.
Sydney’s S&P-ASX 200 sank 1.4% to 7,110.00 after the Australian central bank raised a key interest rate by 0.5 percentage points, its biggest margin in 22 years, to cool inflation that is at a two-decade high.
The Kospi in Seoul tumbled 1.6% to 2,628.61 and India’s Sensex opened down 1.1% at 55,060.01.
New Zealand and Singapore declined while Jakarta advanced.
In currency markets, the yen fell to 132.89 to the dollar from Monday’s 132.01.
The yen has weakened because Japanese interest rates have stayed near record lows while rates are rising in the United States and Europe.
That helps Japanese exporters but pushes up the prices consumers and manufacturers pay for imported goods and materials.
The euro fell to $1.0673 from $1.0691.
On the weather side, most of the Corn Belt should see another 0.25” to 1” of rainfall between today and Friday, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook expects drier-than-normal conditions to return to most areas south of I-80 between June 13 and June 19, with seasonally warm weather likely for much of the Midwest and Plains during this time.
Meantime, the USDA released its 10th Crop Progress report Monday afternoon.
As of Sunday, the report pegged corn planted at 94%.
That was up from 86% last week, and 2 points above 92% for the previous five-year average.
78% has emerged compared with 81% for the previous five-year average.
The condition of the corn crop was rated 73% good/excellent and 4% poor/very poor.
This compares with the previous-year average of 72% good/excellent and 5% poor/very poor.
Sorghum planting reached 56% complete, up 16% points wk/wk and 1% point ahead of the average pace.
The initial milo conditions were a 46% good/ex.
For soybean, the report has 78% of soybeans planted.
That was up from 66% last week, but down compared with 79% for the previous five-year average.
56% has emerged compared with 59% for the previous five-year average.
Spring wheat planted was reported at 82% compared with 97% for the prior five-year average; 55% has emerged compared with 83% for the previous five-year average.
Winter wheat headed came in at 79% vs the 84% five-year average.
Winter wheat condition was 30% good/excellent and 40% poor/very poor.
This compares with the previous-year average of 50% good/excellent and 18% poor/very poor.
Harvest is under way in AR, CA, MO, NC, OK, and TX, with 36% of Texas wheat out.
Their average pace would be 38% harvested.
National harvest is 5% finished, compared to 6% on average.
Oats planted was reported at 94% vs. the five-year average of 97%, and 80% of oats had emerged as of June 5, compared with 91% for the previous five-year average.
Oat condition was 55% good/excellent and 22% poor/very poor.
This compares to the previous-year average of 46% good/excellent and 18% poor/very poor.
The report also indicated that nationwide, topsoil moisture is rated as 63% adequate and 12% surplus.
The previous year was 56% adequate and 10% surplus.
On the demand side, USDA’s weekly Export Inspections data showed 1.435 MMT of corn was shipped during the week that ended 6/2.
That was up from last week’s 1.4 MMT shipment and from 1.427 MMT during the same week last year.
Accumulated exports reached 43.733 MMT as of 6/2, compared to last year’s 52.61 MMT pace.
As for soybean, data showed 350,416 MT of soybeans were shipped during the week that ended 6/2.
That was down from 403k MT last week but was above the 239k MT from the same week last season.
Mexico was the week’s top destination.
USDA’s weekly data had the MY accumulated shipment total at 49.853 MMT, down 7 MMT yr/yr.
As for wheat, USDA reported 352,779 MT of wheat was exported during the week that ended 6/2.
Starting the new MY, with 225,845 MT through the first 2 days of data.
Hard red spring and hard red winter were each over 100k MT of the total.
Mexico was the week’s top destination.
In other news, the EPA finally released its final rule to set Renewable Fuel Standard blending levels for the past two years.
“The 2022 blending level is in line with Congressional intent and the 2021 number was increased from the earlier proposal”.
“However, in an unprecedented move, the EPA also reopened and reduced the 2020 RFS rule that was finalized in December of 2019.”
In this context, corn basis bids jumped as much as 25 cents higher at an Indiana ethanol plant while tracking 10 cents lower at an Illinois ethanol plant and holding steady at most other Midwestern locations on Monday.
Soybean basis bids were mostly steady across the central U.S. to start the week but did tilt 7 cents higher at an Illinois river terminal and ease a penny lower at an Ohio elevator.
Commodity funds were net buyers of CBOT wheat and corn futures contracts on Monday and net sellers of soybean, soymeal and soyoil contracts, traders said.
In Canada, seeding in Saskatchewan took another jump forward to 75% seeded compared to 97% on average.
In Alberta, spring wheat was 97% seeded, but moisture deficits in the south of Alberta remain worrisome.
Manitoba was only 40% seeded overall last Thursday.
Durum seeding in Saskatchewan reached 91% seeded compared to 98% on average.
In Alberta, durum wheat was 100% seeded, but moisture deficits in the south of Alberta remain a problem.
As we can note, planting progress in Canada were quite good last week, and there does not seem to be an immediate yield threat on the horizon.
Meantime, Canadian wheat exports were small last week (week 43) at 169k mt, advancing year-to-date wheat exports to 9.5 million mt, 7.1 million mt lower (-43%) than last year-to-date.
Durum exports for week 43 were small at 31k mt, for a year-to-date total of 2.1 million mt, compared to 5.4 million mt last year-to-date. This is now 60% behind last year’s pace.
From South America, Brazil was seen starting harvest for their 2nd crop, with Patria Agronegocios reporting 3.3% of the crop pulled in the fastest start to harvest.
Argentina‘s government proposed a bill Monday to tax companies that earn “extraordinary income” from the war in Ukraine.
The measure would particularly affect the country’s grains industry.
The bill aims to levy an additional 15% tax on companies with profits of over 1 billion pesos (about $8.3 million) in 2022 whose profit margin is either more than 10% in real terms or is 20% higher than in 2021.
Sectors like food, energy and agriculture would be most affected.
The proposal will have to be approved by Congress.
The bill is endorsed by the International Monetary Fund (IMF), with whom Argentina recently restructured a $44 billion debt.
Argentina is trying to reduce the fiscal deficit and to deal with galloping inflation, which is on track to exceed 70% this year.
(1 dollar = 121.11 pesos).
In Europe, markets were marked by a clear rebound in prices.
The Pentecost weekend was marked in France by bad weather and rain in several production areas.
The impact of rainfall has yet to be quantified, but significant damage, linked to hail, has nevertheless already been observed.
Meantime, operators are also focused on the development of the Russian-Ukrainian conflict.
Speaking in Brussels last week, Bulgaria’s Prime Minister said that Bulgaria could assist Ukraine for the export of Ukrainian grain via its Black Sea port of Varna.
Also, Bulgaria could supply its grain from own exportable surplus.
Ukrainian President Volodymyr Zelenskyy met with Bulgaria’s Prime Minister Kiril Petkov in early May, and the two governments subsequently reached an agreement on the use of the port of Varna, around 600 kilometres south of Ukraine’s Black Sea port of Odessa, as a logistics hub for the export of Ukrainian grain and sunflowers.
This agreement adds to the one reached in April between Ukraine and Romania for the use of the port of Constanta, also on the Black Sea.
Meantime, disruptions supplies continue to underpin wheat prices, particularly after Russia target Ukrainian port infrastructure and silos.
Ukraine is not ready to agree to a plan to export its grain by rail across Belarus for shipment via the Baltic Sea to bypass Russia’s blockade of its Black Sea ports, President Volodymyr Zelenskiy said on Monday.
Thus, available stocks could reach record levels, 75 Mt of cereals by autumn, if the export flow capacity from the country would not resume soon.
Meantime, the European Commission raised slightly its monthly forecast of usable production of common wheat, or soft wheat, in the European Union in 2022/23, to 130.4 million tonnes from 130.1 million previously, data posted on its website showed.
The latest projection was also slightly above production of 130.1 million tonnes in the current 2021/22 season.
The Commission cut its forecast for EU usable production of barley in 2022/23 to 52.3 million tonnes from 53.5 million a month earlier and lowered its projection for the EU’s 2022/23 maize crop to 72.5 million tonnes from 73.4 million.
In its supply and demand estimates published late last week, the Commission reduced its forecast for EU soft wheat exports next season, to 38 million tonnes from 40 million, while increasing its outlook for EU maize imports in 2022/23 to 13 million tonnes from 9 million previously.
For 2021/22, expected EU soft wheat exports were lowered to 31 million tonnes from 32 million a month earlier and forecast EU maize imports raised to 16 million tonnes from 14 million.
In oilseeds, the Commission trimmed its forecast for the 2022/23 EU rapeseed crop to 18.1 million tonnes from 18.3 million and lowered its EU sunflower seed crop estimate to 10.9 million tonnes from 11.2 million.
For EU sunflower oil imports, the projected 2022/23 volume was increased sharply to 1.5 million tonnes from about 0.9 million and closer to an expected 1.9 million this season.
From North Africa, Egyptian Ministry of Agriculture will begin testing newly derived wheat mutations inside the farms of the Egyptian Atomic Energy Authority in Anshas next August.
The news came from Mohamed Ayyad, a genetics lecturer at the Atomic Energy Authority.
The new boom of wheat that was devised within the nuclear research centres, would contributes to increasing wheat productivity by 33% over the local product, Ayyad said.
The new wheat mutations are characterized by having a different genetic base, which helps in their ability to resist diseases and to tolerate adverse environmental conditions, as well as an increase in productivity per unit area by 33% over the current commercial varieties, and they are completely safe in terms of food safety.
The mutation that was deduced from wheat seeds, one of them bears approximately 400 grains, while the traditional spike of wheat carries between 80 to 100 grains only.
The wheat boom is exposed to a radiation dose using gamma rays, which is completely safe for human health and has no side effects.
The Atomic Energy Authority began working on the strategic project for agricultural crop booms in 2002.
From the Black Sea basin, in Russia, Russian wheat export prices rose last week.
Indeed, according to the IKAR, prices for wheat with 12.5% protein content and for supply from Black Sea ports in June rose $15 to $425 free on board (FOB) at the end of last week.
Prices for domestic 3rd class wheat European part of Russia, excludes delivery were at 15,075 rbls/t ($247.74), down 50 rbls from prior week (Sovecon);
price for sunflower seeds was at 33,700 rbls/t down 1,050 rbls (Sovecon);
price for domestic sunflower oil was at 97,500 rbls/t -3,000 rbls (Sovecon);
price for domestic soybeans was at 44,400 rbls/t -1,300 rbls (Sovecon);
export price for sunflower oil was at $1,860/t -$60 (Sovecon);
export price for sunflower oil was at $1,750/t -$100 (IKAR);
Price of white sugar, Russia’s south was at $933.7/t -$33.3 (IKAR).
($1 = 60.8500 roubles).
Meantime, according to SovEcon, Russia exported 620,000 tonnes of grains last week compared with 360,000 tonnes a week earlier.
On this wake, SovEcon on Friday raised its forecast for Russia’s wheat exports in the new July-June marketing season by 1.3 million tonnes to a record high of 42.3 million tonnes.
Meantime, spring grains were planted on 26.8 million hectares as of June 2 vs 28.4 million hectares a year ago as the planting campaign is still delayed in the European part of Russia, Sovecon said.
Southern Russia got 0 rain and was 2-5C hotter than normal.
Overall weather outlook for the Black Sea is worsening.
In Ukraine, according to Adrey Sizov “Russian troops advance in eastern Ukraine, control 90%+ of Luhansk but still not the whole region.”
“Still no public negotiations”, the analist said .
“Ukraine wants to continue the war with the help of new heavy western weapons; Russia wants to push further into Luhansk and Donetsk.
The issue is both parties lack the resources for achieving something resembling a victory”.
Meantime, Russian troops shelled Nikolaev, on Saturday one of the large grain and oil terminals.
As per several sources it was Nika-Tera; 4-5 mmt of grain turnover caught fire.
Russia and Turkey are to hold talks this week about deblocking of Ukrainian terminals.
Meantime, Ukraine’s grain, oilseed and vegetable oil exports rose 80% in May month on month 1.743 million tonnes but the volumes are still significantly below the exports in May 2021, the agriculture ministry said on Tuesday.
The ministry said corn dominated the shipment with 959,000 tonnes, while exports of sunflower oil totalled 202,650 tonnes.
On the other hand, Ukraine planted 4.6 mln ha of corn, -13% YOY.
Parts of Ukraine got timely rains with 15-30 mm of precipitation.
From Australia, ABARES released their latest crop report with key takeaways.
National area planted to winter crops in 2022–23 is forecast to be the second highest on record at 23.4 million hectares.
Australia is forecast to produce 30.3 million tonnes (Mt) of wheat in 2022-23, with barley forecast at 10.9Mt and canola at 5.6Mt, according to figures released today by ABARES in its Australian Crop Report June 2022 edition.
Both wheat and barley production from the crop now being planted are forecast to be the fourth-largest on record, while canola production at 5.6Mt is the second largest on record, behind only last year’s crop.
Winter-crop production including pulses, oats and other crops is forecast to reach 50.9Mt, the fourth highest on record.
Summer crops production in 2021–22 is estimated to reach a new national record of 5.5 million tonnes.
Particularly, sorghum at 2.7Mt and cotton lint at 1.3Mt.
Meantime, markets began the week quietly.
Current crop bids remained largely unchanged and the buyers remains covered nearby.
New crop cash wheat bids found a little strength over the course of the day to be up $5/t with ASX Jan 23 wheat futures trading up $11/t to $467/t.
On international trade scene, Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 169,250 tonnes of food-quality wheat from the United States, Canada and Australia in regular tenders that will close on Thursday.
Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley.
The deadline for submission of price offers in the tender is June 8.
Shipment in the new tender is sought in a series of possible combinations in 60,000 tonne consignments in the full month of September and/or the full month of October.
That’s all.
To all of you, we wish you a good day.
Author: Sandro F. Puglisi
