Good morning Farmer Family …
US farm markets were sharply down yesterday.
Despite corn bounced into the close, prices were still down double digits at the end of the session, with July contract 2.77% lower.
Soybean prices were 3.6% in the red.
Soybean meal prices ended the day with 1.32% losses.
Bean oil prices sank by another 4.17% on the day.
The wheat complex was hammered.
July SRW dropped more then 4% and brought the board back to near pre-war day levels.
KC wheat prices closed with 3.3% losses on the day.
Spring wheats went home 2.31% lower.
July options expire at the close today, with many strikes still in play due to the large price swings.
Promises of widespread Midwestern rains this weekend and early next week caused a selloff on corn and soybean.
Harvest progress across the Northern Hemisphere continued to weigh on wheat prices.
Corn, wheat and soybeans prices opened today’s session falling, and in spite they are bouncing a bit, they are set for their second consecutive weekly slump.
Warnings of a creeping recession fanned worries about global demand, adding more pressure on grain markets.
Also, ongoing talks over a safe corridor for Ukrainian grain exports weighed on prices this week.
Washington welcomed Turkey’s involvement in brokering an agreement to get grain out of Ukraine, while Britain expressed willingness to assist with demining operations in Ukraine to move millions of tonnes of grain out of the country.
In energy markets, oil prices slipped on Friday and were heading for a second weekly fall.
Tight supply was overshadowed by concern that rising interest rates could push the world economy into recession.
Thus, Brent crude fell 8 cents, or 0.1%, at $109.97 a barrel by 08:15 GMT, while U.S. West Texas Intermediate (WTI) crude was also down 8 cents at $104.19.
Yesterday Brent crude futures settled at $110.05 a barrel, falling$1.69, or 1.5%.
U.S. West Texas Intermediate (WTI) crude futures settled at $104.27 a barrel, down $1.92, or 1.8%.
Both benchmarks are heading for their second weekly decline.
The OPEC+, meet on June 30 and are expected to stick to an earlier plan to accelerate slightly hikes in oil production in July and August, rather than provide more oil.
Official U.S. oil inventory figures for technical problems, will delay until next week, the U.S. Energy Information Administration said, without giving a specific timeline.
In freight markets, the Baltic Exchange’s main sea freight index edged up on Thursday, as stronger rates for capesize vessels overshadowed declines in the panamax and supramax segments.
The overall index, indeed, gained 5 points, or 0.2%, to 2,354.
The capesize index added 76 points, or 3.24%, to 2,419.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, increased by $631 to $20,061.
The panamax index dipped 65 points, or 2.32%, to 2,732 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000-70,000 tonnes, decreased $578 to $24,592.
The supramax index inched 9 points lower to 2,466.
Interest in the smaller ships has been particularly big during the last 12 months, accounting for 39.6% of all contracting in this period alone, the Baltic and International Maritime Council said in a note.
Meantime, on week 25, freight rates dropped by several dollars in the Azov and Black Sea region.
Thus, the rate for a 3K parcel of wheat from Azov to Marmara Sea ports is $47 per ton, Sea Lines shipbrokers report.
There are practically no new contracts for June dates in the grain market. Shipments for July are mostly only being calculated.
However, there is no sharp drop in rates in the region due to quite active shipments of coal, as well as the execution of previously concluded contracts by shipowners.
According to Sea Lines, on week 25, freight rates for shipping wheat by 3,000 dwt bulkers from Azov make $45 pmt to the Black Sea, $47 pmt to Marmara, $62 pmt to Mersin and $69 pmt 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 for some destinations declined.
On week 25, freight rates for shipping corn by 3,000 dwt bulkers to Iran make $19 pmt from Aktau, $25 pmt from Makhachkala, and $31 pmt from Astrakhan.
In equity markets, US stock indexes Thursday posted moderate gains.
Big technology and health care companies did much of the heavy lifting.
Microsoft rose 2.3% and Johnson & Johnson rose 2.2%.
A fall in T-note yields sparked short-covering in stocks.
The 10-year T-note yield, indeed, fell to a 1-1/2 week low Thursday of 3.002% from 3.15% late Wednesday.
Also, a decline in inflation expectations was bullish for stocks after the 10-year breakeven inflation rate dropped to a 4-month low.
Finally, stocks maintained moderate gains after Fed Chair Powell said that the U.S. economy is “well-positioned” to handle higher interest rates.
Gains in stocks Thursday were limited by negative carry-over from a -0.8% drop in the Euro Stoxx 50 to a 3-1/2 month low.
Also, weaker-than-expected U.S. economic data Thursday was bearish for stocks.
U.S. weekly initial unemployment claims fell -2,000 to 229,000, showing a slightly weaker labor market than expectations of 226,000.
The U.S.Q1 current account deficit was a record -$291.4 billion, wider than expectations of -$275.0 billion.
The U.S. Jun S&P Global manufacturing PMI fell -4.6 to a nearly 2-year low of 52.4, weaker than expectations of 56.0.
In this context, in a wobby trading, the S&P 500 ended 1% higher at 3,795.73 after having been down as much as 0.4%.
The Dow Jones Industrial Average rose 0.6% to 30,677.36 and the Nasdaq gained 1.6% to 11,232.19.
Smaller company stocks also gained ground.
The Russell 2000 rose 1.3% to 1,711.67.
Meantime, shares were higher in Asia on Friday, despite data suggesting economies are slowing.
Tokyo’s Nikkei 225 index added 1.2% to 26,491.97 and the Kospi in Seoul jumped 2.4% to 2,369.16.
Hong Kong’s Hang Seng advanced 2% to 21,707.92 and the Shanghai Composite index added 1% to 3,354.63.
In Australia, the S&P/ASX 200 gained 0.8% to 6,577.40.
Shares also rose in India and Taiwan.
U.S. and European futures also were higher.
A report Friday showed inflation in Japan remained at 2.1% in May, pushed higher by energy costs and a weaker currency.
However, underlying core inflation, which excludes volatile costs for energy and fresh foods, remained at 0.8%.
In Japan the wage growth remains soft and the higher energy costs are weighing on corporate profits and consumer sentiment.
Thus the central bank is unlikely to follow the example of the U.S. Federal Reserve and other central banks in raising interest rates.
In currency trading, the U.S. dollar fell to 134.73 Japanese yen from 134.94 yen.
The euro rose to $1.0539 from $1.0524.
On the weather side, wetter weather is coming to parts of the central U.S. between today and Monday, per the latest 72-hour cumulative precipitation map from NOAA.
Large parts of Iowa and Minnesota may see the largest totals, ranging between 0.75” and 1.0”.
NOAA’s 8-to-14-day outlook predicts seasonally warm weather for most of the Midwest and Plains between June 30 and July 6, with wetter-than-normal conditions returning to the Plains, upper Midwest and parts of the western Corn Belt.
Meantime, the North Dakota hard red spring wheat crop reached 97 percent planted as of June 19, up from 91 percent the previous week.
Although not 100 percent, it can be assumed that planting is essentially finished across the state as we are now into the last third of June.
Emergence of the crop has reached 80 percent, still well behind the typical 97 percent for this date, but a notable jump was made from the previous week’s level of 56 percent.
The first real extreme heat of the season prevailed over the state during the weekend of June 17-19 with some locations exceeding 100 degrees Fahrenheit, and most of the state reaching the mid 90 F level.
This was beneficial in accelerating the development of the later crop, and fortunately most areas had good soil moisture to sustain the crop, and the heat was not too prolonged.
The condition rating on the emerged crop had a slight improvement from the previous week with 71 percent rated good to excellent, up from 66 percent.
None of the crop is rated poor to very poor due to adequate soil moisture in most of the state, and thunderstorm rains following the extreme heat.
The crop is in much better condition compared to a year ago, even though it is two to three weeks later in development.
A year ago, just 19 percent was rated good to excellent, and 50 percent was poor to very poor.
The North Dakota durum crop is 95 percent planted as of June 19, up from 83 percent the previous week, and there are reports of some planting still taking place in far northern areas.
Emergence of the crop has been more rapid than the springs planting pace, as temperatures have warmed and recent rains are keeping topsoil moist.
As of June 19, 75 percent of the crop was emerged, and 14 percent jointed, still well behind the normal pace of 94 percent and 50 percent, respectively.
No condition rating is yet available on the crop, but most area report good initial growth.
The Montana durum crop is rated 83 percent good to excellent, and crop development there is more advanced compared to North Dakota due to the earlier planting progress.
Ninety-seven percent of the crop is emerged with 10 percent already at the boot stage, equal to the five-year average.
Meantime, day 8 of the KS wheat harvest reports focused on South and Southwest counties.
Reports from Hamilton County have typical yields in the 9-20 bpa range – citing earlier dryness.
Stafford County yields were reported near mid 20s to low 30s, which was below expectations as rains had seemed timely.
On the demand side, data from the EIA was delayed due to a systems issue.
Ahead the delaied weekly Export Sales report, survey respondents are looking for between 300k and 600k MT of old crop corn sales.
New crop bookings are anticipated to be between 200,000 and 600,000 MT.
As for soybean, expectations have old crop soybean sales ranging from 100k MT of net cancelations to 300 MT of net new sales.
New crop business is expected to be below 500k MT.
For soymeal, the trade expects between 100k and 300k MT were sold for 21/22 delivery.
Soybean oil bookings are estimated below 25k MT.
As for wheat, analysts anticipated between 150k and 400k MT of new crop wheat was sold during the week that ended 6/16.
In this context, corn basis bids were largely steady across the central U.S. but did tilt 7 cents higher at an Indiana ethanol plant while picking up a penny at an Illinois river terminal on Thursday.
Soybean basis bids were largely steady across the central U.S. but mixed at a few locations after firming 4 cents higher at an Iowa river terminal while sliding 3 to 8 cents lower at two other Midwestern locations.
The funds were net sellers yesterday for 30,000 lots of corn, 26,000 lots of soybeans and 11,000 lots of wheat.
From South America, Argentinian truck drivers went on strike by blocking 4 miles of a main grain highway.
The protest was inspired by high diesel prices and fuel shortages throughout the country.
Other citizens joined the effort, but reports are that the protest has disbanded and transport is flowing again.
Earlier in June, Argentina upped the required biodiesel blend rate for a 60 day period hoping to alleviate some of the fuel shortage.
Meantime, Argentina’s wheat-planting area for the 2022/2023 crop is estimated at 6.3 million hectares (15.6 million acres), down 1.6% from 6.4 million hectares previously estimated, the Buenos Aires Grains Exchange (BdeC) said on Thursday.
Farmers have planted nearly 62% of the area expected for wheat, according to BdeC data.
Last year, Argentina was the world’s seventh-largest wheat exporters, with sales valued around $3 billion.
Meanwhile, the exchange said that Argentina’s corn production forecast for the 2021/2022 cycle remains unchanged at 49 million tonnes.
The dry weather of the last few days and the completion of the soybean harvest has allowed for a quicker pace to the 2021/2022 corn harvest, which is currently about 42% complete.
The area planted with non-genetically modified soybeans in Brazil in the new season (2022/23) is expected to grow by 24%, according to a study by the Instituto Soja Livre.
Farmers’ intention to grow the non-GMO soy area will answer to higher demand from Europe, which partly gets its soy from India, a country that only plants conventional, or no-transgenic, beans.
The situation will lead to a sharp rise in premiums paid for Brazil’s conventional soy, ISL said.
“The soy that India produces is all conventional, but sold to Europe without a premium…”.
Non-GMO soybeans accounted for just 2% of the soy planted area in Brazil.
Brazil’s total soybean area was almost 41 million hectares (101.3 million acres) in 2021/2022.
In the new season that will begin in September, the area planted with conventional soybeans is expected to reach almost 1 million hectares, compared with 793,000 hectares in 2021/2022, according to ISL.
Given the global fall in conventional soybean supplies, European buyers are already closing early deals with Brazilian farmers, paying premiums of up to $11 per 60-kilo bag, with an average of US$6/bag in Mato Grosso for soy to be produced in the next crop, Dalcin said.
In Europe, markets continue to decline.
Harvests which have started in France have been halted in many regions due to bad weather, often in the form of thunderstorms.
Rapeseed prices continue to decline significantly too.
Germany wishes to temporarily reduce biofuel mandates to cope with food inflation.
Uncertainty therefore remains high in a context where price formation must include geopolitics, fundamentals, and an inflationary economic environment.
The International Grains Council (IGC) on Thursday raised its forecast for 2022/23 global corn output, largely driven by an improved outlook for production in Ukraine.
In its monthly update, the inter-governmental body increased its 2022/23 world corn (maize) crop outlook by six million tonnes to 1.190 billion tonnes.
Ukraine’s corn crop was seen at 25.1 million tonnes, up from a previous projection of 18.6 million – but still sharply below the 42.1 million in the prior season.
The IGC said corn acreage in Ukraine had exceeded initial expectations.
Global corn consumption in 2022/23 was seen at 1.204 billion leading to a drawdown in stocks by the end of the season to 271 million, down from 285 million a year earlier.
The IGC also maintained its forecast for global wheat production in the 2022/23 season at 769 million tonnes.
Ukraine’s wheat crop in 2022/23 was still seen at 19.4 million tones, down from 33.0 million a year earlier.
Meantime, FranceAgriMer showed on Friday growing conditions for wheat and barley crops in France continued to decline.
An estimated 64% of French soft wheat was in good or excellent condition by June 20, against 65% the previous week and 79% a year ago.
The rating has dropped by 27 percentage points since the start of May.
Durum conditions also moved down to 60% from 61% a week ago and down from 67% a year ago.
French barley conditions were unchanged, from previous week.
The good to excellent rating for winter barley was to 63%.
The corresponding score for spring barley, in contrast, decreased by 1 percentage points to 53%, FranceAgriMer’s report showed.
Rating for emerged maize plants, was at 84%, down from 87% of the crop valued in good or excellent conditions last week.
Russia may gradually switch state export taxes for grains and sunflower seeds to the rouble currency from the U.S. dollar, the Interfax news agency reported on Thursday.
“Government ministries are discussing modernisation of the grain and sunflower seeds’ tax mechanism to preserve profitability and investment attractiveness of the Russian farmers,” the source said, according to Interfax.
“It is a matter of giving a certain discount to the export duty, taking into account the risks of declining profitability of production. This will not affect the domestic prices, but will support exports,” the unidentified source added.
Meantime, Russia has set out its grain export taxes for June 29 – July 5, 2022.
It will increase for wheat to $146.1 per ton against $142.0 per ton this week, according to the materials of the Ministry of Agriculture.
The duty on corn also will increase to $88.7 from $86.5 a week ago.
For barley remains unchanged to $117.5, meantime.
The wheat rate is calculated based on the indicative price of $404 per ton, for barley — $352.5 per ton, for corn $311.8 per ton.
That, it’s compared with the prior week when indicative prices were at $399.4 per ton for wheat, $352.5 per ton for barley, $308.6 per ton for corn.
From Ukraine, Prime Minister Boris Johnson said on Thursday Britain was willing to assist with demining operations off Ukraine’s southern coast and was considering offering insurance to ships to move millions of tonnes of grain stuck in the country.
London’s insurance market has placed the entire region on its high risk list meaning soaring costs for shipments.
Johnson said Britain was considering all options when asked whether the government could provide sovereign guarantees for shipping insurance.
Johnson said: “we are talking with Ukrainians at a technical level to help them to demine Odesa.”
British Foreign Secretary Liz Truss said separately on Thursday that urgent action needed to be taken within the next month, ahead of the next harvest, to maintain supply.
In a statement late on Thursday, Britain pledged 372 million pounds ($456 million) in aid to countries hit hardest by rising global food costs and shortages of fertiliser, including 130 million pounds for the World Food Programme.
Britain said its funding will provide humanitarian aid to increase access to food across the worst hit African countries.
($1 = 0.8158 pounds).
From the Middle Kingdom, China announced it has tripled its soymeal supplies over the past three months to 1.09 million metric tons amid weakening demand.
That was a big cause for soymeal futures to trend more than 1.3% lower yesterday.
Meantime, China’s commerce ministry said the sooner US tariffs on Chinese goods are lifted, the sooner consumers and companies will benefit.
It says removing all additional tariffs on Chinese goods would benefit China, the US and the world.
The comments come on the heels of US Trade representative Katherine Tai on Wednesday saying the US should keep tariffs on Chinese goods in place as “a significant piece of leverage” against Beijing.
She also said lifting the tariffs would have limited impacts on controlling short-term inflation
From Australia, markets continue their free fall with bidders becoming increasingly unwilling to participate as the offer side starts to ramp up.
Rainfall totals for the week ending June 23 were highest in Western Australia, where it was needed.
Most WA cropping areas received 10-25mm and up to 50mm closer to the coast.
South Australia picked up less with most areas receiving less than 5mm with the exception of the lower south-east which picked up 10-15mm.
Victoria received 5-15mm across the western half of the state, with parts of the south-east picking up 15-50mm.
This extended into isolated pockets of south-east New South Wales, with the rest of southern NSW receiving less than 5mm.
It was another very welcome dry week for central and northern NSW and Queensland.
The BOM outlook for July 2022 indicates that there is a 75pc chance of rainfall totals between 10-50mm across NSW, south-east Queensland, Victoria, southern SA, the southwest of WA and Tasmania.
On international trade scene, the General Grain Corporation announced today the launch of a tender to import a quantity of 480 thousand tons of wheat for supply during the period (November 2022 – January 2023).
His Excellency the Governor of the General Grain Corporation, Eng. Ahmed bin Abdulaziz Al-Faris stated that the offered quantity comes within the framework of the Corporation’s plan to maintain strategic stocks of wheat, and meet all the needs of milling companies, especially with the stability of wheat supply chains to all ports of the Kingdom.
He added that the quantity is distributed over a number of 8 ships for Jeddah Islamic Port, 2 ships for Yanbu Commercial Port, and 3 ships for King Abdulaziz Port in Dammam.
That’s all, thank you.
To all of you, we wish you a good day and a Good harvest 2022!
Author: Sandro F. Puglisi