Good morning Farmer Family …
US Farm markets were closed yesterday.
In pre-opening, all commodities are losing ground.
Corn lost 1.4%.
Soybeans gave up 1.1%.
Chicago wheat prices slid nearly 2% on Tuesday, with prices dropping to their lowest since early April.
Harvest pressure in parts of Europe and North America weighed on the market.
High temperatures and the absence of rain over the next 15 days could nevertheless limit the downside potential.
In energy markets, oil prices rose on Tuesday.
Particularly, Brent crude futures rose 81 cents, or 0.7%, to $114.94 a barrel at 07:03 GMT, adding to a 0.9% gain on Monday.
The benchmark contract fell 7.3% last week in its first weekly fall in five.
U.S. West Texas Intermediate (WTI) crude futures for July, which expire later on Tuesday, rose to $111.19 a barrel, up $1.63, or 1.5%, from Friday’s close.
The more-active WTI contract for August was up $1.84 at $109.83 a barrel.
There was no settlement on Monday, due the U.S. public holiday.
WTI dropped 9.2% last week.
Weekly U.S. petroleum inventory data will be delayed by a day this week, with the American Petroleum Institute industry data for the week ending June 17 due on Wednesday and U.S. Energy Information Administration data on Thursday.
In freight markets, the Baltic Exchange’s main sea freight index gained to its highest in nearly three weeks on Monday, helped by an uptick in capesize and panamax vessel rates.
The overall index, indeed, added 18 points, or 0.7%, to 2,596, a peak since June 1.
Particularly, the capesize index gained 44 points, or 1.47%, to 3,031, the highest since May 26.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, rose by $362 to $25,138.
The panamax index added 10 points, or 0.4%, to 2,872 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000-70,000 tonnes, increased by $89 to $25,846.
The supramax index edged up 3 points to 2,470.
Global port congestion is set to continue until at least early 2023 and keep spot freight rates elevated, logistics executives said last week, urging charterers to switch to long-term contracts to manage shipping costs.
In equity markets, Asian stocks rebounded Tuesday.
Shanghai, Tokyo, Hong Kong and Sydney gained.
The Nikkei 225 in Tokyo added 1.8% to 26,246.31 while the Shanghai Composite Index lost 0.8% to 3,288.12.
Hong Kong’s Hang Seng advanced 1.2% to 21,420.76.
The Kospi in Seoul was 0.7% higher at 2,407.62 and Sydney’s S&P-ASX 200 rose 1.3% to 6,514.80.
India’s Sensex opened up 1.7% at 52,460.17.
New Zealand and Southeast Asian markets gained.
Japan and China, have avoided joining in rate hikes.
On Monday, China’s central bank left its benchmark rates unchanged.
The Bank of Japan stuck to its policy of near-zero interest rates last week despite concern that is weakening the yen’s exchange rate.
On Monday, European stock markets advanced.
Shanghai, Tokyo and Seoul declined.
In currency trading, the dollar held steady at 135 to the yen.
The euro gained to $1.0529 from $1.0491.
On the weather side, severe thunderstorms are expected across the northern Plains and Upper Mississippi Valley early Tuesday.
Monsoonal moisture will support widespread showers and thunderstorms across parts of the Southwest and southern Rockies, posing the risk for flash flooding.
The extensive dome of heat and humidity across the Plains and Midwest will gradually shift off to the east by the middle of the week to include the Great Lakes, Ohio Valley, and Mid-South.
US temperatures turned much hotter in mid-June with record high temperatures across the Corn Belt, after a relatively cool and wet corn planting season.
According to data from WeatherTrends360, the second full week of June 2022, week-ending June 18, was the second hottest and ninth driest in 30+ years for the Corn Belt as a whole.
Since the season is still early, the burst of hot weather wasn’t overly concerning initially, however, if this pattern continues, complications for the corn crop may begin to unfold quickly.
On the supply side, according to the Kansas Wheat Harvest Reports, Monday’s harvest report is a tale of the widely-varying growing conditions across the state, from abandoned acres in drought-afflicted southwest Kansas to ample moisture and good yields in the southeast.
In Meade County, the quality of harvested wheat is good, but the bushels just aren’t there.
Test weight is averaging just under 62 pounds per bushel, moisture at 9 to 10 percent and protein at 12 to 12.5 percent.
For fields that are being harvested, many producers are making 10 to 20 bushels per acre with top yields coming in the 40 bushel-per-acre range.
In central Kansas, yields are coming in a little better, ranging from 25 to 55 bushels per acre.
Soft red winter (SRW) wheat harvest is just getting started in Crawford County with combines starting to roll in the middle of last week. It’s too early to report many yields and quality thus far is a bit hit-and-miss.
Early yields are coming in between 80 to 100 bushels an acre, not a chart-topper, but good results.
Average test weight is 60.8 pounds per bushel and moisture is 12.3 percent.
In Europe, after a super hot cycle the wheat growing belt is going to receive well over 1.5 inches over the next 2 weeks.
The debate will be whether the rainfall is too late to help a mature crop.
The water deficit and the high temperatures had a very heterogeneous impact.
The yield differences will therefore be very significant.
On this wake, according to the European organization MARS, soft wheat yields in the EU should be 5.76 t/ha this year against 5.89 estimated last month, and down – 4.7% compared to last year.
MARS made its sharpest yield revision to durum wheat, for which the EU yield was now seen at 3.44 t/ha against 3.61 t/ha a month earlier, reflecting a deterioration in southern Europe.
The durum forecast was now 2.3% below the five-year average.
In rapeseed, the yield is estimated at 3.12 t/ha against 3.17 posted last month, and down -2.4% compared to last year.
Yields for all barley combined are at 4.88 t/ha against 4.89 estimated last month.
The projected grain maize yield was cut to 7.87 t/ha from 7.92 t/ha last month, while the forecast sunflower seed yield was trimmed to 2.37 t/ha from 2.39 t/ha.
In spite of that, the week begun under the sign of economic fears, with a monetary policy, both in Europe and in the USA, which is clearly oriented towards a rise in rates in order to fight against inflation.
This impacted not only stock markets but also all commodities due fears of economic recession.
The pressure of particularly early harvests, drove down winter grains.
The rapid cooling of temperatures and favorable rainy episodes also eased market tension, although violent storms were still observed in several production areas.
Thus, Euronext wheat edged lower on Monday.
Rapeseed dropped to its weakest in nearly three months as oilseed markets were sapped by a plunge in palm oil futures and recent weakness in crude oil.
Corn edged up just 0.5 €/ton.
The situation in Ukraine does not seem likely to improve, and despite appeals from the UN and many countries, nothing seems to be changing Putin’s policy.
Logistics remains at the center of concerns for the agricultural sector in Ukraine, with a maximum export capacity of 2 million tonnes/month for all grains combined, compared to the usual 6 to 7 million tonnes.
In this context, Hungary has offered its territory as a possible route for Ukrainian grain exports, Hungarian Foreign Minister Peter Szijjarto said on Monday.
From North Africa, Egypt’s wheat imports from Russia surged 84% year-on-year (YoY) during the period from March until May.
The North African country received 1.056 million tons of wheat from Russia in the March-May period, compared to 573,213 tons in the same period a year earlier.
During the period from January until May, Egypt’s total wheat imports declined by 24% YoY to 3.3 million tons, while wheat imports from Russia decreased by 30% YoY in the same period to 1.66 million tons.
On June 16th, Egyptian Minister of Trade and Industry Nevine Gamea revealed that trade exchange between Egypt and Russia amounted to $4.7 billion in 2021, increasing by 5.1% YoY from $4.5 billion.
Meantime, Egypt and Italy are jointly establishing six field silos in cooperation with the Italian government with up to EGP 367 million in investment, according to an official statement by the Egyptian Ministry of Supply and Internal Trade on June 15th.
Four of the silos are being built in the governorate of El-Sharqia, while one is being established in El-Minya governorate and another in El-Menofia.
Each field silo is being set up with a capacity of 5,000 tons under the Italian-Egyptian Debt for Development Swap (IEDS) Program.
From the Black Sea basin, Bulgaria expects a good wheat crop in 2022, almost matching last year’s record harvest, that will allow for ample exports, a senior agriculture ministry official said on Monday.
Its expect the wheat crop to be close to last year’s.
Whether it would be 6.5 million tonnes or 6.7 million will depend on the condition of the sowings in different parts of the country.
The Black Sea country is among Europe’s largest wheat exporters and reaped a record-high wheat crop of 7.1 million tonnes last year, up from 4.7 million tonnes in 2020, a particularly poor year, and 6.1 million tonnes in 2019.
With an annual domestic consumption of about 1.5 million tonnes, Bulgaria has exported close to 5 million tonnes of its 2021 wheat crop so far, Kirovski said.
“Given the expected good harvest this year, there will be more than enough surplus grains for exports. Over 4 million tonnes can definitely be shipped abroad,” he said.
The Balkan country’s barley sowings were also in good condition and the expected crop will be close to last year’s, when farmers took in over 680,000 tonnes of barley, he said.
In Russia, Russian export prices for the new wheat crop, which farmers will start harvesting within days, fell last week.
Prices for the new wheat crop with 12.5% protein content and for supply from Black Sea ports, indeed, fell by $5 to $420 free on board (FOB) at the end of last week, the IKAR agriculture consultancy said, adding that the number of sales was still small.
According to Sovecon, prices for Russian wheat for supply in July were assessed at $403-410 per tonne.
That was unchanged from a week ago.
Meantime, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 14,675 rbls/t ($259.73) -300 rbls w/w (Sovecon).
Price for sunflower seeds was at 29,675 rbls/t -3,025 rbls (Sovecon). Price for domestic sunflower oil was at 87,675 rbls/t -6,000 rbls (Sovecon).
Price for domestic soybeans was at 38,200 rbls/t -5,300 rbls (Sovecon).
Export price for sunflower oil was at $1,810/t -$10 (Sovecon).
Export price for sunflower oil was at $1,570/t -$80 (IKAR).
Price for white sugar, Russia’s south was at $914.4/t -$19 (IKAR).
($1 = 56.5000 roubles)
In the domestic market, wheat prices fell due to low demand, higher supply and a stronger rouble.
Russia exported only 220,000 tonnes of grain last week compared with 340,000 tonnes a week earlier.
Meantime, spring grains were planted on 28.6 million hectares as of June 10 vs 29.4 million hectares a year ago.
However, the weather conditions are worsening for the new crop due to dry weather and hot spell in most parts of Russia’s southern regions, its breadbasket.
Ukraine, will soon receive the first temporary storages from abroad, the agriculture ministry said on Monday.
It did not specify which storage facilities Ukraine would receive.
Earlier, the ministry said that it could be either special big plastic bags or temporary silos.
Ukraine has said its harvest could fall to around 65 million tonnes of grain and oilseeds this year from 106 million tonnes in 2021.
Meantime, according to APK-Inform, the indicative export prices of Ukrainian barley remained quite stable last week.
Low stocks, expected decline of Ukrainian production in 2022 and no progress as to the unblocking of Ukrainian seaports, supported prices.
However, the bullish factors were offset by very low export and seasonal factor.
Thus, the indicative offer prices of old-crop and new-crop barley stayed at 370-390 USD/t FOB (June) and 360-385 USD/t FOB (July-August) correspondingly in the ports of the Black Sea.
Meanwhile, the export prices of Ukrainian old-crop wheat decreased slightly last week.
Ditto for the prices of new-crop grain.
Wheat prices decreased due to the weak export, progress of harvesting campaign in the Northern Hemisphere and the need to empty storing facilities.
In this context, the indicative offer prices of old-crop 12.5%, 11.5% and feed wheat totaled 420-435, 415-430 and 370-390 USD/t FOB deep-sea ports (June – early July) at thje end of last week.
Meanwhile, the indicative offer prices of new-crop 12.5%, 11.5% and feed wheat increased to 420-435, 415-430 and 385-400 USD/t FOB (July-August).
As for the export prices of Ukrainian corn, they were quite stable at the western borders last week.
At the same time, there was some upward price trend for certain export directions.
Particularly, the bid prices of Ukrainian corn for delivery in July-August stayed at 220-235 USD/t DAP Poland, and 215-230 USD/t DAP Hungary.
The bid prices increased by average 10 USD/t to 250-265 USD/t DAP Slovakia.
From Kazakhstan, Kazakhstan will supply 1 mln tonnes of grain to Iran, as to a memorandum signed by the agricultural ministers of both countries.
According to the document, the supplies will involve the grain of 2022 and 2023 harvests.
Additionally, the ministers signed a memorandum on cooperation in trade and transit of agricultural products.
Under the agreement, Kazakhstan will supply wheat, barley, corn, flaxseed sunflower oil, confectionary, meat and meat products to Iran.
From its side, Iran will supply Kazakhstan with vegetables, fruit, dairy and aquatic products.
From the Middle Kingdom, China’s corn imports from Ukraine in May plunged compared with a year ago, customs data showed on Monday, after the conflict between Russia and Ukraine cut shipments.
China, indeed, brought home in 126,727 tonnes of the yellow grain from Ukraine, down sharply from 1.26 million tonnes a year ago, according to data from the General Administration of Customs.
China imported 695,585 tonnes of corn from Ukraine in April.
From Australia, local cash markets relaxed after the sell off from Friday night but saw limited liquidity throughout the day.
Spot demand has eroded as better weather is providing a good run in execution of deliveries, for now.
More rain on the horizon late next week may provide more headaches for guys that are playing catch-up on sowing.
Urea price dipping below $1200/t drove plenty of action as the first round application is spent on canola.
Port congestion is still a major issue with delays in most major ports increasing this week.
Wait times increased in Kwinana from 27 days last week to 28 days this week and in Newcastle it increased from 23 days last week to 26 days this week.
There are currently 30 vessels anchored at Australian ports with only 3 vessels loading.
Qantas and Airbus joint investment in locally sourced sustainable aviation fuel is likely to provide ongoing support for Australian oilseeds in brassica crops such as canola, mustard and carinata which can all be processed into high quality aviation fuels.
On international trade scene, Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 168,330 tonnes of food-quality wheat from the United States, Canada and Australia in regular tenders that will close on Thursday.
Bangladesh’s state grain buyer will issue an international tender to import 50,000 tonnes of milling wheat to replenish reserves, an official at the country’s grain purchasing agency said on Tuesday.
The deadline for submission of price offers is July 5, the official said, adding the tender will be uploaded on its website later on Tuesday.
The Saudi Agricultural and Livestock Investment Company (SALIC) said it won the tender for the second batch introduced by the Saudi Grains Organization (SAGO) to supply 300 thousand tons.
SALIC added that the specified quantity will reach through five shipments to local ports where two shipments are scheduled to arrive in November and the same in December this year and the fifth shipment will arrive in January next year.
SALIC said the amount it will import from its foreign investments is part of a program to encourage and support Saudi investors abroad as a program to diversify wheat purchasing sources, enhance food security in the Kingdom and support strategic stocks of basic food commodities.
It is noteworthy that the company “SALIC” won the tender for the first batch earlier this month from the Saudi Grains Organization to supply 240 thousand tons of wheat by four shipments.
Last year, it received 355,000 tons of wheat through its foreign investments, with 6 shipments reaching four local ports, accounting for 10% of the Kingdom’s annual purchases.
That’s all, thank you.
To all of you, we wish you a good day …
Author: Sandro F. Puglisi