Good morning Farmer Family …
US farm markets, yesterday had a bad start after the Juneteenth holiday.
Favorable weather forecasts and harvest progress for wheat spurred plenty of technical selling yesterday.
Corn prices moved significantly lower, eroding more than 3% lower.
Soybeans were relative spared but still fell more than 1.2%.
Meal prices also faded, going home 1.55% lower in the front months.
Soybean oil prices ended with 0.5% to 0.9% losses of as much as 67 points for the front months.
Wheat prices were hit the hardest, with hard +5% losses for the winter wheat market.
Particularly, Kansas City HRW was down the most as prices got to within 2 cents of the limit loss and prices went home 5.77% in the red.
CBOT SRW also closed 5.7% weaker, with the July and September contracts got below the $10/bu mark for the first time since March.
Spring wheat pricres settled 4.42% lower.
In energy markets, oil prices dived more than $4 a barrel on Wednesday amid a push by U.S. President Joe Biden to bring down soaring fuel costs, including pressure on the country’s major energy firms to help ease the pain for drivers during peak summer consumption.
Thus, by 0425 GMT U.S. West Texas Intermediate (WTI) crude futures were off lows but still down $4.04, or 3.7%, to $105.48 a barrel.
Similarly Brent crude futures dropped $3.87, or 3.4%, to $110.78 a barrel.
President Joe Biden is expected on Wednesday to call for temporarily suspending the 18.4-cents a gallon federal tax on gasoline.
Seven oil companies are set to meet Biden on Thursday, under pressure from the White House to drive down fuel prices as they make record profits.
In Europe, Russian gas producer Gazprom said its supply of gas to Europe through Ukraine via the Sudzha entry point was seen at 41.9 million cubic metres (mcm) on Wednesday versus 41.2 mcm on Tuesday.
An application to supply gas via another major entry point, Sokhranovka, was rejected by Ukraine, Gazprom said.
In freight markets, the Baltic Exchange’s main sea freight index fell on Tuesday, snapping a five-day winning streak, pressured by a fall in the capesize and panamax segments.
The overall index, which factors in rates for capesize, panamax and supramax vessels, indeed, dipped 112 points, or 4.3%, to 2,484.
Particularly, the capesize index lost 321 points, or 10.6%, to 2,710.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, decreased by $2,661 to $22,477.
The panamax index dropped 21 points, or 0.7%, to 2,851 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000-70,000 tonnes, decreased by $190 to $25,656.
The supramax index edged up 1 point to 2,471.
In equity markets, U.S. markets were closed Monday.
Yesterday the S&P 500 rose 2.4% to 3,764.79, recouping about 40% of its losses last week.
The Dow Jones Industrial Average rose 2.1% to 30,530.25 and the Nasdaq climbed 2.5% to 11,069.30.
Smaller company stocks also gained ground.
The Russell 2000 rose 1.8% to 1,694.03.
Strength in mega-cap technology stocks lifted the overall market.
Apple, Alphabet, Qualcomm, and Nvidia all rose at least +3%.
Microsoft rose 2.5%.
Retailers, health care companies and banks also made solid gains.
Kellogg rose 2% after the maker of Frosted Flakes and Rice Krispies said it would split into three companies.
Spirit Airlines jumped 7.9% after JetBlue sweetened its buyout offer for the budget airline.
However, Tuesday’s U.S. economic data was bearish for stocks.
The May Chicago Fed national activity index fell -0.39 to an 8-month low of 0.01, weaker than expectations of unchanged at 0.47.
Also, May existing home sales fell -3.4% m/m to a 2-year low of 5.41 million, although that was slightly stronger than expectations of 5.40 million.
Goldman Sachs and Morgan Stanley warned of more losses for stocks.
Morgan Stanley said the S&P 500 Index needs to drop another 15% to 20% to about 3,000 for the market to fully reflect the scale of economic contraction.
Also, Goldman Sachs said stocks were only pricing in a mild recession, “leaving them exposed to a further deterioration in expectations.”
Meantime, Asian shares declined Wednesday.
Japan’s benchmark Nikkei 225 shed 0.4% to finish at 26,149.55. Australia’s S&P/ASX 200 lost 0.2% to 6,508.50.
South Korea’s Kospi tumbled 2.7% to 2,342.81.
Hong Kong’s Hang Seng dropped nearly 2.0% to 21,132.42, while the Shanghai Composite sank 1.1% to 3,269.63.
In currency trading, the U.S. dollar inched down to 136.33 Japanese yen from 136.64 yen.
The euro cost $1.0474, down from $1.0537.
On the weather side, not much rain is expected to fall on Midwest and Plains until Friday, although a few places could gather 0.25” or more during that time, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts seasonally dry weather could remain in effect for the eastern Corn Belt between June 28 and July 4, with warmer-than-normal conditions likely for most of the central U.S..
Meantime, abundant hot, dry weather this past week did a bit of damage to corn, soybeans and winter wheat, per the latest Crop Progress report from USDA, out Tuesday afternoon and covering the week through June 19.
Corn and soybean ratings each spilled two points lower, while winter wheat quality easing a point lower.
Particularly, corn conditions dropped two points as USDA marked 70% of the crop in good-to-excellent condition.
Another 24% was rated fair (up a point from last week), with the remaining 6% rated poor or very poor (also up a point from last week).
Physiologically, 95% of the crop is now emerged, up from 88% a week ago and mirroring the prior five-year average.
Crop Progress data had sorghum planting at 80% complete as of 6/19.
That is up from 66% last week, but still behind the 85% average pace.
The crop was rated 46% good/ex by NASS.
Soybean planting progress moved from 88% complete a week ago up to 94% through Sunday, which was one point lower than trade expectations.
It’s also behind 2021’s pace of 97% but slightly ahead of the prior five-year average of 93%.
And 83% of the crop is now emerged, up from 70% a week ago and slightly behind the prior five-year average of 84%.
Soybean crop conditions fell two points, with 68% of the crop now rated in good-to-excellent condition.
Another 26% is rated fair (up a point from last week), with the remaining 6% rated poor or very poor (also up a point from last week).
Spring wheat plantings are nearly complete, reaching 98% through Sunday.
89% of the crop is now emerged, versus the prior five-year average of 97%.
Spring wheat quality ratings took a big step forward, moving from 54% rated in good-to-excellent condition a week ago up to 59% as of June 19.
Another 35% is rated fair (down two points from a week ago), with the remaining 6% rated poor or very poor (down three points from last week).
Winter wheat quality ratings didn’t fare as well, meantime.
Thirty percent of the crop is now rated in good-to-excellent condition, sliding a point lower from last week.
Another 27% is rated fair (unchanged from last week), with the remaining 43% rated poor or very poor (up a point from last week).
Winter wheat harvest progress moved from 10% last week to 25% as of Sunday.
That means this season’s harvest is progressing more quickly than 2021’s pace of 15% and the prior five-year average of 22%.
But only 9 of the top 18 production states have made measurable progress so far, per USDA.
On the demand side, USDA reported corn shipments were 1.184 MMT during the week of 6/16.
That was down from 1.22 MMT during the prior week and compared to 1.775 MMT inspected during the same week last year.
MYTD corn shipments were pegged at 46.16 MMT down from 56 MMT last season.
As for soybean, the report had 427,344 MT of soybean shipments from the week of 6/16.
That was down from 608k MT the previous week, but was more than double the same week last year.
USDA had the season’s pace at 50.9 MMT through 6/16, compared to 57.25k MT during the same week last year.
As for wheat, USDA Export Inspections for the week ending 6/16 showed 331,328 MT of wheat.
That was down from 412k MT last week and from 555k MT during the same week last year.
HRS exports led the complex with 136,256 MT of the total.
White made up 90k MT with another 18k MT of durum.
The winter wheats made up the remaining 87k MT.
USDA also added 23k MT to past reports taking the MYTD total to 969,953 MT.
Last year’s pace was 1.25 MMT.
In this context, corn basis bids were steady to mixed, especially across several Midwestern processors, where bids climbed 10 cents higher at a Nebraska location while tumbling 15 cents lower at an Illinois location.
Soybean basis bids were steady to mixed across the central U.S. trending as much as 10 cents higher at an Iowa processor and falling as much as 10 cents lower at an Indiana processor.
The funds were net sellers for 21,000 lots of corn, 12,000 lots of soybeans and 15,500 lots of wheat.
From Canada, at 93k mt, Canadian wheat exports decreased last week (wk. 45) from 234k mt the prior week.
Thus, year-to-date wheat exports totalled 9.84 million mt, compared 17.41 million tonnes last year to date.
Durum exports for week 45 were down at 31,6k mt compared 73k mt the prior week.
That means, a year-to-date total of 2.254 million mt, compared to 5.4 million mt last year-to-date.
Meantime, Canada’s AAFC expects a 13% increase to durum area compared to 2021/22, that helps boost all wheat area to 6% higher yr/yr.
From South America, Agroconsult estimated the Brazilian 2nd crop corn output at 89.3 MMT, up from 87.6 MMT.
This leads the analyst to estimate the global corn harvest at 114.8 million tonnes and exports at 43 million, more than the 37 million tonnes in the most recent government forecast.
Agroconsult also raised its estimate for the country’s soybean crop this year, to 126.9 million tonnes, from the previous 124.6 million tonnes forecast, citing an upward revision of planted area.
In Europe, grain and oilseed prices tumbled, dragged down by fears of recession, which directly affect medium-term global demand projections.
The early harvests in Western Europe are also putting strong pressure both on the grain and oilseed markets.
Meantime, the European Commission reported that EU corn imports during the 2021/22 marketing year are trending moderately above last year’s pace after reaching 16.05 MMT through June 19.
As for soybean, imports have reached 14.12 MMT, which is slightly below last year’s pace so far.
EU soymeal imports are also lower year-over-year, with 16.04 million metric tons.
Rapeseed imports within the EU stood at 5.20 million tonnes on June 19 against 6.25 million last year to date.
EU soft wheat exports during the 2021/22 marketing year are trending a bit above last year’s pace, reaching 26.68 MMT.
EU barley exports are down slightly year-over-year, with 6.85 MMT over the same period.
From Russia, crop conditions are clearly deteriorating in the South of country, according to Sovecon.
Southern Russia have been drier than needed with temperatures 1-3C above normal, the consultancy reported.
The planting campaign is almost over.
Russia seeded 12.6 mln ha of spring wheat (-0.5 mln ha YOY).
However, the first cuts confirm good production potential for this year.
On this wake, SovEcon, upped the Russian wheat crop estimate from 88.6 mmt to 89.2 mmt.
Likely Russia will have a smaller winter wheat crop on dryness in the South and a bigger spring wheat crop.
Meantime, President Putin said that Russia would continue to ship grain actively in the new season, predicting total grain exports to rise to 50 mmt (42 mmt in 2021/22).
The focus is now on the Russian export tax with rumours Russia may “tweak” the calculation to ensure the export path remains full.
No matter which way you cut it, the Russian crop is going to be a bin buster and, if Russia was not at war, the crop size would have weighed flat price significantly.
Thus, it makes sense that the market remains sensitive to Russian availability.
It is impossible to view this in isolation however.
Indeed, there was news overnight that Lithuania will ban the passage of goods across its territory into Kaliningrad, a Russian exclave on the Baltic coast.
While this seems innocuous in the context of the war, the fact that Lithuania is part of NATO makes this bun fight significant.
On this wake, Nikolai Patrushev, secretary of the Security Council of the Russian Federation, said, “Russia will certainly respond to such hostile actions. Measures are being worked out in an interdepartmental format and will be taken in the near future. Their consequences will have a serious negative impact on the Lithuanian population,” according to Russia’s RIA Novosti state-owned news agency.
In Ukraine, Ukrainian grain exports in the first 22 days of June fell by 48% from a year earlier to 907,000 tonnes, agriculture ministry data showed on Wednesday.
The volumes included 803,000 tonnes of corn, 78,000 tonnes of wheat and 21,000 tonnes of barley, the data showed.
May export volumes fell to about 1.7 million tonnes.
Meantime, an Ankara’s military delegation will travel to Russia this week to discuss details of a possible safe sea corridor in the Black Sea to export Ukrainian grain, Turkish presidency sources said on Tuesday.
Russia’s TASS agency confirmed plans for the talks, citing Kremlin spokesman Dmitry Peskov.
The United Nations has appealed to both sides, as well as their maritime neighbour and NATO member Turkey, to agree a corridor.
Ankara has so far held talks with Moscow and the United Nations on the planned corridor, but has said any final agreement would require all parties to meet in Istanbul, where Turkey says the plan’s implementation would be monitored.
The sources said a four-way meeting between Turkey, Ukraine, Russia and the United Nations would be held in Istanbul in the coming weeks, possibly with the participation of Turkish President Tayyip Erdogan and U.N. Secretary General Antonio Guterres.
Turkish broadcaster Haberturk also earlier reported about the planned meeting.
The plan envisaged creating three corridors from Ukraine’s Black Sea port city of Odesa under Kyiv’s supervision, and that both Ukrainian and Russian food products would be shipped from there.
They said 30-35 million tonnes of grain could be shipped from there in the next six to eight months.
Both Ukraine and Russia have set out a series of conditions to agree the plan.
Moscow wants some Western sanctions lifted to help facilitate its grain and fertiliser exports, while Kyiv seeks security guarantees for its ports.
“Sticking point is we gave guarantees at the highest possible level and now it’s up to Ukrainians to decide,” Russia’s U.N. Ambassador Vassily Nebenzia said on Tuesday of the talks.”
(Russian) President (Vladimir) Putin said that we will not use Ukrainian grain exports for military purposes.”
Also, Nebenzia said Ukraine had to de-mine the coastal waters, or if it can navigate through the mined waters “let them steer those ships out to the safe passage”.
From the Middle Kingdom, a desperate developer in China’s softening property market is coming up with a novel promotion to attract buyers, recently offering to take wheat and garlic as down payments.
One advertisement of Henan-based Central China Real Estate that had “swap wheat for house” in the title says buyers can use the crop, priced at 2 yuan per catty, a Chinese unit of mass equal to roughly 500 grams, to offset as much as 160,000 yuan ($23,900.22) of down payment in one of its developments.
The promotion, aimed mainly at farmers in the region, started on Monday and will end on July 10.
The development in the central province of Henan offers houses for around 600,000 to 900,000 yuan.
Late last month, another Central China advertisement had said buyers of houses in another development could make down payments in garlic at 5 yuan per catty.
The garlic promotion attracted 852 visits and 30 transactions involving 860,000 catties of garlic during the 16 days it was available, the advertisement said.
The wholesale market price for both garlic and wheat is 1.5 yuan per 500 grams.
($1 = 6.6945 Chinese yuan renminbi).
From Australia, locally, yesterday’s bid side of the market continued to retreat through the day as offshore futures relaxed on the open.
The offers have stubbornly held their ground for now.
Protein grades are faring much better through the whole east coast versus feed grades.
Domestic consumers are stepping in intermittently to improve coverage heading into Q3&Q4.
The La Niña weather pattern has finally ended, according to a Bureau of Meteorology (BOM) update.
The ENSO outlook status has moved to La Niña watch. However, some models suggest La Niña may re-form in the southern hemisphere during spring for the third consecutive time.
A triple La Niña has only happened three times before – in 1954-57, 1973-76 and 1998-2001.
Moving to La Niña watch did not change the outlook for above average rainfall for much of the country over the next few months.
A widespread 1-5mm has popped up on the forecast for Queensland and NSW next week.
The timing of rainfall and totals received will impact the late winter crop plant.
On international trade scene, consumer demand, has taken the opportunity to go shopping.
Particularly, Tunisia’s state grains agency has issued an international tender to purchase an estimated 75,000 tonnes of soft wheat and 50,000 tonnes of animal feed barley.
The tender closes today, June 22.
The grains can be sourced from optional origins, but excluding the Black Sea region where shipments from Ukraine and Russia have been disrupted by the conflict in Ukraine.
Shipment is in various periods between July 20 and Aug. 15 depending on origin supplied.
Algeria would have bought around 660,000 t of common wheat at $445/mt CFR, during its call for tenders, optional origins.
France should be able to be retained in part.
Japan is buying just over 168,000 tonnes of soft wheat from the USA, Canada or Australia.
Saudi Arabia’s SAGO secures 540k mt of wheat from SALIC.
Bangladesh DGF announces first milling wheat tender for 2022/23 MY.
That’s all, thank you.
To all of you, we wish you a good day …
Author: Sandro F. Puglisi