Good morning Farmer Family …
On Wedsneday, traders finished squaring some of their positions ahead of Grain stocks and Crop acreage Update reports, will release by USDA today.
Also, next Monday US markets will be closed for the Independence Day holiday.
All that, left US farm markets with mixed results yesterday.
Nearby corn contracts firmed more then 1.4%, but new crop prices saw September and December deadlines down more then 0.8%
Soybeans also finding moderate gains yesterday, with July contract’s up 0.63%.
Nov was up the most posting a 1.08% gain.
Soymeal prices were 1.78% higher by the close.
Soybean oil prices ended the day with 0.71% gains.
Wheat prices continued to struggle to find forward momentum, meantime, but most contracts took on moderate losses.
Front month SRW wheat prices, indeed, were 0.62% lower.
Minneapolis wheat prices fell 1.47% for the session.
Kansas City wheat closed off the highs but held on with fractional 0.15% gains.
Meantime, Chicago edged down on Thursday, weighed by increased chances of rain in growing areas in the United States.
Wheat and soybeans both fell.
The most-active corn contract on the Chicago Board of Trade (CBOT) fell 0.08%.
Wheat fell 0.08% and soybeans edged down 0.32%.
Traders expect the U.S. Department of Agriculture (USDA) to raise its estimate of domestic corn plantings in its today’s report.
USDA was also expected to cut its estimates on soybean and spring wheat planting acreage.
The report, however, will show an increase in soybean quarterly stocks estimate, according to trade expectations.
In energy markets, benchmark U.S. crude fell $1.98 on Wednesday to $109.78.
Brent crude, the price basis for international oil trading, shedded $1.72 in yesterday session to $116.26 per barrel.
Crude inventories fell by 2.8 million barrels in the week to June 24, far exceeding analysts’ expectations for a 569,000 barrel drop, U.S. Energy Information Administration data showed.
However, U.S. gasoline and distillate stockpiles climbed, as refiners ramped up activity, operating at 95% of capacity, the highest for this time of year in four years.
Meantime, on this morning prices were largely steady in volatile trading, as the market weighed concerns over global supply against a build in U.S. fuel product inventories.
Thus, Brent crude futures for September, the more actively traded contract, were up 28 cents, or 0.3%, at $112.73 a barrel by 09:11 GMT.
The August contract, which expires on Thursday, was down 11 cents, or 0.1%, at $116.15.
U.S. West Texas Intermediate (WTI) crude futures rose 20 cents, or 0.2%, to $109.98.
Further disruptions to supply, indeed, supported prices, amid the suspension of Libyan shipments from two key eastern ports, while Ecuador saw output fall due to ongoing protests.
However, concerns over slowing economic growth continued to cap price gains.
A stronger dollar also capped price gains as it makes oil more expensive for buyers using other currencies.
Meanwhile, the OPEC+ group, began two days of meetings on Wednesday, though sources said there was little prospect of pumping more oil.
In freight markets, the Baltic Exchange’s main sea freight index, slipped on Wednesday as a dip in panamax and supramax vessels overshadowed an uptick in the larger capesize segment.
The overall index, indeed, was down 18 points, or about 0.8%, at 2,186 points, its lowest in more than two months.
Particularly, the capesize index rose for the first time since June 23, gaining 48 points, or over 2.2%, to 2,200 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $399 at $18,248.
The panamax index shed 56 points, or almost 2.2%, to 2,510 points, its lowest in more than four months.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $503 to $22,589.
The supramax index fell 57 points to 2,359 points.
In equity markets, US stocks on Wednesday waffled between modest gains and losses the entire day and finally settled mixed.
Stocks had support Wednesday on positive comments from Fed Chair Powell, who said the U.S. economy is in “strong shape” and “overall the U.S. economy is well-positioned to withstand tighter monetary policy.”
Also, better-than-expected global inflation news knocked bond yields lower and boosted stocks after German consumer prices in June unexpectedly eased.
On the other hand, a negative for stocks was data that showed U.S. Q1 GDP was unexpectedly revised downward to -1.6% (q/q annualized), weaker than expectations of -1.5% and the steepest pace of contraction since Q2 of 2020.
Q1 personal consumption rose +1.8%, weaker than expectations of +3.1%.
Also, the Q1 core PCE deflator rose +5.2% q/q, higher than expectations of +5.1% q/q.
Also, U.S. stock indexes were weighed down Wednesday on negative carry-over from a -1.4% fall in China’s Shanghai Composite Stock Index after Chinese President Xi Jinping vowed to maintain his country’s strict Covid zero policy.
Finally, hawkish comments overnight from Cleveland Fed President Mester weighed on stocks when she said she wants to see the fed funds rate reach 3.0% to 3.5% this year and “a little bit above 4% next year” to rein in price pressures even if that tips the economy into recession.
Thus, the S&P 500 slipped 0.1% to 3,818.83.
The U.S. benchmark is down 7.6% for the month and 20% from its Jan. 3 peak.
The Dow Jones Industrial Average rose 0.3% to 31,029.31.
The Nasdaq composite slipped less than 0.1% to 11,177.89.
Meantime, Asian stock markets were mixed Thursday.
China reported stronger factory activity.
A monthly purchasing managers’ index released Thursday by the Chinese statistics agency and an industry group, indeed, rose to 50.2 in June from 49.6 on a 100-point scale on which numbers above 50 indicate activity is increasing.
The came after factories, shops and offices in Shanghai and other cities were allowed to reopen.
In this context, the Shanghai Composite Index rose 1.4% to 3,406.82.
The Hang Seng in Hong Kong gained 0.2% to 22,032.70.
The Nikkei 225 in Tokyo fell 1.4% to 26,394.77 after May industrial production slumped 7.2% compared with the previous month.
That was the sharpest decline since the start of the coronavirus pandemic in early 2020 and largely reflected disruptions in China due to the pandemic.
The Kospi in Seoul shed 1.6% to 2,339.70 and Sydney’s S&P-ASX 200 declined 1.1$ to 6,625.40.
India’s Sensex opened up 0.1% at 53,081.17.
New Zealand, Singapore and Bangkok advanced while Jakarta declined.
In currency trading, the dollar declined to 136.38 yen from Wednesday’s 136.54 yen.
The euro fell to $1.0452 from $1.0523.
On the weather side, scattered rains will continue to fall on the Midwest and Plains between today and Sunday, but very few areas will gather much more than 0.25” during that time, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook shows seasonally wet weather will be likely for the eastern Corn Belt between July 6 and July 12, with widespread hotter-than-normal conditions across the central U.S.
On the supply side, ahead of the June Grain Stocks report traders surveyed expect between 4.07 bbu and 4.5 bbu of corn in the bins.
The average 4.345 bbu estimate would be up 5.6% yr/yr.
New crop acreage estimates are expected to increase, with the average calling for an extra 280k acres from the March report.
The full range is from 88.4m to 91m acres.
As for soybean, analysts expect on average soybean stocks will be 954 mbu.
That would be a 24% increase yr/yr if realized.
The full range of estimates is to see between 740 mbu and 1.1 bbu in the report.
For acreage, trader expectations range from a 1.76m acre cut March to June to a 1.42m acre bump.
The average trade guess is to see 90.6m acres of 22/23 soybeans were planted.
As for wheat, traders are looking for 21/22 wheat ending stocks to be 655 mbu on average.
That compares to 845 mbu last year and matches the June WASDE.
The full range of responses is from 635 mbu to 675 mbu.
Wheat planted area on average is expected to be 380k acres lighter than March at 46.97m.
On the demand side, EIA released their ethanol production data from the week that ended 6/24 showing average daily production of 1.051m barrels.
That was a slight pullback from the week prior’s 1.055m bpd.
Ethanol stocks were higher last week, but dropped 730k barrels to 22.746m barrels.
The U.S. soybean crush likely totalled 5.457 million short tons in May, or 181.9 million bushels, which would be above the 180.9 million bushels processed in April and up from the 173.5 million bushels crushed in the same month last year.
Going into the weekly Export Sales report (Thursday), the trade is looking for old crop corn sales of between 200k and 700k MT.
New crop sales are expected to be reported at less than 500k MT.
As for soybean, estimates are looking for old crop soybean business to be between 100k MT of net cancelations and 300k MT of net new sales.
New crop sales estimates range 100k to 500k MT.
As for wheat, analysts are looking for USDA to report between 200k MT and 600k MT of wheat bookings.
In this context, corn basis bids were steady to soft across the central U.S. after spilling 3 to 15 cents lower at four Midwestern locations on Wednesday.
Soybean basis bids fell 5 to 8 cents lower at three Midwestern locations, but held steady elsewhere across the central U.S..
The funds were net buyers yesterday for 8,500 lots of soybeans but net sellers for 1,500 lots of wheat.
They were corn neutral.
From Canada, Manitoba’s Ag Ministry reported that 700k acres remain unseeded, and that over 150k acres were planted after the 6/20 insurance deadline.
The province was 93% planted, compared to the 5-yr 100% average.
From South America, according to Datagro, Brazil 2021/2022 total corn crop was seen at 116.10 million tonnes versus the 114.35 million tonnes in previous forecast.
Meantime, Brazil will harvest nearly 148 million tonnes of soybeans in the coming season.
Farmers, indeed, are expected to grow soy plantings by nearly 3% more to 42.2 million hectares.
Meantime, June corn exports from Brazil were reported as 1.758 MMT according to Anec.
Brazil’s Anec also reported 10.154 MMT of soybean exports for the month of June.
Meal shipments were 2.209 MMT.
Argentina’s major farm groups called for a trade strike to pressure the government to do more as frustration over crippling shortages of diesel and fertilizers weighs on the country’s key agricultural sector.
A truck driver protest in the country is also disrupting grains transport and threatening exports.
On the other hand, Argentinian weather remains a challenge for the wheat growing regions.
Rains Saturday and next week should improve moisture slightly in northeast areas, but dryness will remain extensive in much of the belt.
The USDA currently predicts a 20Mt wheat crop in Argentina.
In Europe, Euronext confirmed its recent rebound.
Gasc’s call for tenders provoked many reactions.
However, the many European offers have confirmed the capacity of the Old Continent to impose itself on this destination in the absence of the Black Sea, but these substantial volumes have also reassured as to the supply to come in the first part of the season.
In France, harvesting projects are continuing with this observation of high volatility on yields, depending on the location of the farms and the quality of the land.
The impact of the water deficit and the high temperatures at the beginning of June was also more or less significant depending on the stage of the crops.
This year thare is a bumper crop in Bulgaria.
That could put the country to export as much as 5Mt wheat this year.
It is in Italy, in contrast, that the situation is critical, with the worst drought the country has experienced in 70 years.
European corn prices, benefited from the firmness of wheat, despite crude oil prices were down and a US market was under pressure.
Rapeseeds, for their part, followed soybeans and canola higher.
Canola prices, indeed, posted a 4th consecutive increase yesterday, thanks to good crush margins.
Meantime, non-commercial market participants reduced their net long position in Euronext’s milling wheat futures and options in the week to June 24, data published by Euronext on Wednesday showed.
Non-commercial participants, which include investment funds and financial institutions, cut their net long position to 120,385 contracts from 164,773 a week earlier, the data showed.
Commercial participants narrowed their net short position to 142,829 contracts from 186,047 a week earlier.
Commercials’ short positions accounted for 65.9% of the total short position, while commercial long positions accounted for 41.9% of total long positions.
Non-commercial short positions represented 34.1% of total short positions, while non-commercial net long positions accounted for 58.1% of the total longs.
In Euronext’s rapeseed futures and options, non-commercial market participants expanded their net short position to 23,525 contracts from 17,616 a week earlier.
Commercial participants raised their net long position in rapeseed to 20,732 contracts from 17,132 a week earlier.
Euronext added its durum wheat futures in its positions report after the market registered a first trade last week following it launch in January.
From the Black Sea basin, Russia said on Wednesday it was ready to work with the United Nations to combat the risks of a global food crisis, and was willing to meet its obligations to export food and fertilisers.
Meantime, a first cargo ship has left the Russian-occupied Ukrainian port of Berdyansk.
Russia’s TASS and RIA news agencies, indeed, said a cargo ship to leave Berdyansk was carrying 7,000 tonnes of grain to “friendly countries”.
Russian wheat harvest is expected at a record level allowing an export potential of more than 40 million tonnes, potential which may not be realized given the logistical constraints linked to the conflict.
Leading consultancy and Black Sea market analyst SovEcon, indeed, increased its Russian export projection to 42.6 million tonnes (Mt).
Meantime, Russia may set the base price for calculating its wheat export tax at 15,000 roubles ($286) per tonne, the Interfax news agency reported on Thursday.
Russia could also extend its duty on sunflower oil exports by a year until the end of August 2023.
($1 = 52.4300 roubles)
In Ukraine, grain exports fell by 36.5% in June this year compared to last year, to just 1.26 million tonnes.
Particularly, Ukraine’s Ag Ministry reported June’s corn shipments are 1.09 MMT, which is 21.4% below June 2021.
Ukraine’s wheat exports for June were 122k MT according to the Ag Ministry, which was a 75.5% dip from June of ’21.
From the Middle Kingdom, China’s agriculture ministry on Thursday said its sow herd had dropped more than 8% in May compared with a year ago, a larger decline than previously estimated.
A ministry analyst had earlier said the breeding herd was almost 5% lower than May 2021.
The total size of the breeding herd, at 41.92 million heads, did not change, according to data published on the ministry website, nor did the estimate of a 0.4% increase in May compared with the prior month.
The size of China’s sow herd is a closely watched indicator for pork production in the world’s top producer of the meat.
China’s hog market has suffered low prices and large losses for months after farmers expanded too much in prior years.
Hog prices plunged sharply in the first half of last year but have picked up in recent weeks.
From Australia, prices for wheat and barley have fallen in the past week as grower interest in selling current-crop surges on the eve of the new financial year, and new-crop selling interest ramps up amid solid production prospects around the globe.
It has meant growers have become keen to clear their silos and push grain into export pathways before the Northern Hemisphere new-crop hits the world market.
Many consumers are already covered for July-September, and are therefore providing little competition for export accumulators.
Most consumers have started booking up some new-crop tonnage, and it appears big carryovers in the New South Wales and Brisbane port zones are weighing on buyers’ price ideas.
Meantime, local markets were mixed across the day, yesterday.
Current crop wheat values were yet again relatively unchanged but caught a bid late in the day in Vic and WA.
New crop drifted a touch lower in Victoria while South Australian new crop wheat markets held their premium with grower bids at $450/t port.
Barley and canola markets are very ho hum.
Supply chain woes continue to work against exporters.
There are reports of breakdowns in eastern Australia at the ports of Melbourne and Kembla which will likely cause significant loading delays.
The forecast for rain starting tomorrow is building for Qld and NSW with a widespread 5-25mm expected for most with the higher totals expected in the east.
On international trade scene, South Korea purchased 136,000 t of animal feed corn, likely sourced from South America, in an international tender that closed yesterday.
The purchase is comprised of two consignments, both of which are for delivery in October.
Taiwan purchased 55,000 tonnes of animal feed corn, likely sourced from South Africa, in an international tender that closed yesterday.
The grain is for shipment in September.
South Korea made no purchases in its international tender to purchase 120,000 metric tons of soymeal from optional origins, which closed on Tuesday.
Bids were thought to have been too pricy.
The grain would have been for arrival between late October and early November.
Jordan issued a new tender to purchase 120k MT of milling wheat from optional origins that closes July 5.
The country has struggled to close similar deals in recent weeks due to high prices, although it did purchase 60k MT of milling wheat in a tender that closed yesterday.
Taiwan purchased 40k MT of milling wheat from the United States in a tender that closed yesterday.
The grain is for shipment in August.
Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), bought 815,000 tonnes of wheat in a tender, marking its biggest single purchase in years as prices slightly ease.
Particularly, Egypt bought 14 ships of wheat, including 6 from France, ie 350,000 t.
The other sources are Bulgarian for 50,000 t, Romanian for 240,000 t and only 175,000 t of Russian origin.
The loads are distributed between August, September and October.
Pakistan is looking for 500k MT of wheat.
That’s all, thank you.
To all of you, we wish you a good day and …
Good Harvest 2022!
Author: Sandro F. Puglisi
