Good morning Farmer Family …
Yesterday, NASS released the quarterly US Grain Stocks and the annual June Planted acreage reports.
As we said, planted acreage report and quarterly Grain Stocks updates, is one of the agency’s most highly anticipated reports of the entire year.
Traditionally, the price reaction on this report day can be dramatic; potentially leaving prices nearly limit up or limit down depending on the information received.
USDA Reports, as expected, shocked prices lower, with some contracts losing more than 4%.
Thus, Chicago wheat touched a four-month low yesterday after the USDA report showed quarterly grain stocks and spring wheat acres above consensus forecasts.
NASS data, indeed, had the wheat acreage figured at 47.09m acres for the 22/23 season.
Winter wheat specific was shown as 34.006m acres, down about 200k acres from the March figure.
Other spring was shown as 11.11m acres, also a 100k acre dip from the prior estimate.
Durum was shown as 1.976m compared to 1.920m in the March report.
However, wheat ending stocks for the 21/22 season were 659.994 mbu.
That was up about 5 mbu from both the trade average guess and the WASDE forecast.
NASS showed there were still 93 mbu of wheat stocks on farms at the end of the season, compared to 141.6 mbu at the same time last year.
Last year’s carryout was 845.2 mbu.
Thus, CBOT SRW wheat prices closed 4.3% to 5.1% in the red on losses to levels not seen since before the Russia-Ukraine war started.
Kansas City wheat prices closed 3.7% to 3.98% lower with near 40 cent losses.
MPLS spring wheats ended 3.11% to 3.74% cents lower in the front months.
For the month, July SRW wheat contract gave back $2.18 3/4 (-20.1%) per bushel.
July HRW closed $2.16 3/4 (-18.6%) lower for the month of June, while MPLS spring wheat shedded $2.09 (-17.5%).
As for corn, USDA showed plantings at 89.921 million acres (36.39 million hectares), topping analysts estimates at 89.861 million acres.
Quarterly stocks of corn at 4.346 bbu, were above trade estimates.
That implies a Q3 use of 3.41 billion bushels.
March corn stocks were 94 mbu lower in a revision.
Thus, corn prices fell a sharp 26.4 to 35.2 cents on report day.
September was down the most with a 5.3% loss to a near 4 month low.
Red December corn was down 3.3% to $5.84/bu, the lowest since March 21st.
For the month, July contract gained 12.8 cents, but Sep contract shedded 77.4 cents (or -11%).
As for soybean, the USDA said that soybean plantings totalled 88.325 million acres for 2022, much lower than trade expectations at 90.446 million acres.
Combined corn and bean area shrank to 178.246 million.
The Grains Stocks report had soybean stocks as 971.4 mbu, that was a bit above the average trade guess but well within the range.
Implied Q3 usage was a record 959.8mbu compared to last year’s 792.6 mbu usage.
However, traders shrugged off the USDA report, as are not quite buying its data on soybeans.
The USDA, indeed, said it will collect updated more information on 2022 planting acreage of major crops, including soybeans, in some states next month, with any necessary revisions appearing in its Aug. 12 monthly crop production report.
Thus, in spite soybeans held onto decent gains through much of Thursday’s session, the July contract only managed to close slightly higher at the bell, while August contract after a firts bullish reaction worked lower to ultimately close double digits in the red, posting a 0.7% decline.
November contracts also followed a similar path, ending the day 1.37% weaker at $14.58.
Soybean meal prices ended yesterday session gaining 1.45% in the front month.
Soybean oil prices, in contrast, were down 3.58% to 3.68% on the day.
On this morning, Chicago soybean prices fell, pressured by lower oil prices and by yesterday’s broader retreat in the grain markets, while corn and wheat prices continued their slide from the previous session.
Thus, the most-active soybean contract on the Chicago Board of Trade (CBOT) shed 1.68% to $14.33-1/2 a bushel.
Chicago corn slipped 0.77% to $6.15 a bushel.
Wheat fell 0.79% to $8.77 a bushel.
In energy markets, oil prices fell on Friday, extending the previous day’s plunge, as lingering fears of a recession weighed on sentiment, putting the benchmarks on track for their third straight weekly losses.
Thus, Brent crude futures were down 43 cents, or 0.4%, at $108.60 a barrel by 06:53 GMT, giving up earlier gains of more than $1.
WTI crude futures for August delivery slid 60 cents, or 0.6%, to $105.16 a barrel, also surrendering an early gain of nearly $1.
Both contracts fell around 3% on Thursday.
The OPEC+ meeting gave no surprise.
They said would stick to their planned oil output hikes in August.
However, the producer club avoided discussing policy from September onwards.
But, fears that the aggressive rate hikes by the Federal Reserve would lead to a U.S. recession and hamper fuel demand dampened sentiment.
In freight markets, the Baltic Exchange’s main sea freight index, posted its first monthly drop since January on Thursday due to weakness across vessel segments.
The overall index, indeed, rose 54 points, or nearly 2.5%, to 2,240 points.
But the index registered an about 12.7% decline for the month, and 5% for the quarter.
Particularly, the capesize index rose 234 points, or about 10.6%, to 2,434 points, but fell 8.8% for the month.
The index still notched up a 38.3% quarterly gain.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $1,942 to $20,190.
The panamax index was down 25 points, or 1%, at 2,485 points, registering its third consecutive monthly drop of 13.5%, bringing it down 20.9% for the quarter.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased by $220 to $22,369.
The supramax index fell 53 points to 2,306 points, down 15.9% for the month.
In equity markets, stocks on Thursday declined.
Recession fears hammered stocks after U.S. economic data showed a slowdown in consumer spending.
U.S. May personal spending, indeed, rose +0.2% m/m, weaker than expectations of +0.4% m/m.
The U.S. economy shrank 1.6% in the first quarter .
Weak consumer spending was a key part of that contraction.
May personal income rose +0.5% m/m, right on expectations.
The U.S. May PCE core deflator rose +0.3% m/m and +4.7% y/y, a slower pace of increase than expectations of +0.4% m/m and +4.8% y/y.
The U.S. Jun MNI Chicago PMI fell -4.3 to a 1-3/4 year low of 56.0, weaker than expectations of 58.0.
Investors got another update on inflation Thursday.
A measure of inflation that is closely tracked by the Fed rose 6.3% in May from a year earlier, unchanged from its level in April.
U.S. weekly initial unemployment claims, fell -2,000 to 231,000, close to expectations of 230,000.
Meantime, concern that price pressures will be slow to recede has raised fears of stagflation.
Comments from the global central bankers meeting at an annual forum hosted by the ECB Wednesday warned that inflation will last longer than expected, with ECB President Lagarde saying, “I don’t think we are going back to that environment of low inflation.”
In this context, Wall Street closed out its worst quarter since the onset of the pandemic in early 2020.
It was the worst first half since the first six months of 1970.
The S&P 500 fell 0.9%, its fourth consecutive drop, to 3,785.38.
The benchmark index is now down 21% since it hit an all-time high at the beginning of the year.
It entered a bear market earlier in June.
The Dow Jones Industrial Average fell 0.8%, to 30,775.43.
The Nasdaq slid 1.3% to 11,028.74, and small company stocks also fell, with the Russell 2000 losing 0.7% to 1,707.99.
The yield on the 10-year Treasury, which helps set mortgage rates , fell to 3.01% from 3.09% late Wednesday.
Technology companies were among the biggest weights on the market, as investors continued to favor utilities and other traditional defensive stocks.
Apple fell 1.8%, while Exelon rose 2.2%.
Retailers and other companies that rely directly on consumer spending also posted big losses.
Amazon slipped 2.5% and Best Buy shed 2.9%.
Meantime, Asian benchmarks were mostly lower on Friday, echoing a decline on Wall Street, after a quarterly report by Japan’s central bank rekindled worries about the world’s third largest economy.
Worries are growing because of pressures from a weakening Japanese yen.
A bit of positive news, the monthly purchasing managers’ index issued by Caixin rose to 51.7 from 48.1 in May on a 100-point scale on which numbers above 50 show activity increasing.
New orders rose while employment declined for a third month.
In this context, Japan’s benchmark Nikkei 225 dropped 1.7% to finish at 25,935.62.
Australia’s S&P/ASX 200 edged down 0.4% to 6,539.90.
South Korea’s Kospi lost 1.4% to 2,301.10.
The Shanghai Composite fell 0.3% to 3,387.31.
Hong Kong’s markets were closed for a holiday.
In currency trading, the U.S. dollar inched down to 135.28 Japanese yen from 135.75 yen.
The euro cost $1.0464, down from $1.0484.
On the weather side, most of the Midwest and Plains will see at least some measurable rainfall between today and Monday, per the latest 72-hour cumulative precipitation map from NOAA.
However, few places are likely to gather more than 0.25” during this time.
NOAA’s 8-to-14-day outlook predicts that the eastern third of the country could see more seasonally wet weather between July 7 and July 13, with warmer-than-normal conditions probable for the entire central U.S.
Coming back on grain markets, ethanol data from the U.S. Energy Information Administration has arrived late due to “systems issues” and shows production has mostly stabilized over the past three weeks.
The daily average moved slightly lower for the week ending June 24, with 1.051 million barrels, versus week-ago totals of 1.055 million barrels per day.
Last week marked the sixth consecutive week that production stayed above the 1-million-barrel-per-day benchmark.
The USDA yesterday reported 88,795 MT of old crop corn was sold for export through the week that ended 6/23.
For old crop exports the weekly FAS report showed 1.25 MMT were shipped for a MYTD total of 51.47 MMT.
That is 82.7% of USDA’s forecasted total.
For new crop, 119,259 MT were sold during the week. That was at the low end of estimates.
As for soybean, FAS reported old crop soybean exports sales were net negative 120,175 MT.
Soybean shipments were 517k MT taking the accumulated total to 51.73 MMT.
For new crop, USDA reported 127k MT were sold for a forward book of 13.5 MMT.
In the products, FAS data showed 24k MT of old crop soymeal was booked and 48k MT was booked for the 22/23 delivery.
In bean oil export sales were 1,163 MT all for 21/22 delivery.
As for wheat, the report had 496,719 MT of wheat sold during the week of 6/23.
The Philippines, Brazil, and Mexico were the top destinations.
Wheat shipments were 241k MT for a season total of 1.16 MMT through 6/23.
That is 0.15% below last year’s pace.
In this context, corn basis bids dropped 7 to 13 cents lower at two interior river terminal and fell 5 cents at an Ohio elevator while holding steady elsewhere across the central U.S. on Thursday.
Soybean basis bids were steady to soft in the central U.S., after falling 2 to 7 cents lower across four Midwestern locations.
Commodity funds were net sellers of Chicago Board of Trade corn, wheat and soyoil futures contracts on Thursday and net buyers of soymeal.
From Canada, the climatic conditions remain favourable, making it possible to envisage a marked rebound in production after a catastrophic year last year.
Statistics Canada will release a new round of crop planting data next Tuesday morning.
Ahead of that report, analysts expect to see Canadian all-wheat plantings at 24.7 million acres.
That would be a more than 1-million-acre increase from 2021’s tally of 23.4 million acres.
Canadian corn plantings are expected to hold steady from a year ago, with 3.5 million acres, and Canadian soybean plantings are expected to decrease slightly to 5.2 million acres.
From South America, Datagro raised their Brazilian corn crop to 116.1 MMT from 114.35 MMT.
They lifted the 2nd crop estimate to 91.25 MMT from 89.5.
In Argentina, truckers strike ended on Thursday, after some unions upset with diesel shortages reached a deal to lift the one-week protest around the major port of Rosario, which is expected to help the flow of grains for export going forward.
In Europe, markets continued to show much volatility, with a sharply decline in grain prices.
Operators are focusing, among other things, on the negotiations with Russia on the establishment of a food corridor, despite negotiations remain very difficult.
Greece is willing to provide ships to help export grain from Ukraine’s Black Sea ports, NATO Secretary-General Jens Stoltenberg said on Thursday.
This year’s French soft wheat harvest is expected to bring a lower yield than average as hot, dry weather hurt crops in some areas, crop institute Arvalis and grain industry group Intercereales said on Friday.
The 2022 yield is forecast to reach 6.95 tonnes per hectare, down 2% from last year and 3% below the 10-year average, they said.
Soft wheat harvesting got off to an early start in southern regions last month, following an exceptional heatwave.
Farm office FranceAgriMer said on Friday that 5% of the national soft wheat area had been harvested by June 27, versus zero a year ago, while an estimated 64% of soft wheat was in good or excellent condition, unchanged from the previous week.
Arvalis and Intercereales did not give a production forecast.
But taking their yield projection with the farm ministry’s area estimate of 4.76 million hectares would give a soft wheat crop of about 33.1 million tonnes, broadly in line with recent market expectations.
Arvalis projected that protein content – a key quality requirement in milling markets – in the French soft wheat crop would reach 11.6%, close to the 10-year average.
Harvesting sites were stopped yesterday in France following a disturbance that covered a large part of France.
The return of the good weather should allow a fairly rapid resumption of construction sites.
Rapeseed prices, on their part, suffered from the pressure of the withdrawal of the soybean complex, as well as the new drop in crude oil prices.
The Britain and Germany have tried to convince the other G7 countries (the United States, Japan, France, Italy and Canada) to introduce temporary exemptions on biofuels.
Some policymakers and organizations are advocating for a relaxation of biofuel blending requirements in gasoline and diesel, so as to reserve grains and oilseeds for food consumption.
But the request of the two countries has little chance of succeeding, indicate several German and British sources, because of resistance from Canada and the United States.
The USA is in fact the world’s largest producer, and soaring energy prices have led to an increase in demand for biofuels.
From Romania, analysts show an estimate of the wheat harvest in Romania at 9.31 million tonnes against 11.15 million last year, a consequence of the water deficit that the country has experienced in recent months.
On this wake, the European Union’s executive on Friday lowered its forecast for soft wheat production in the bloc in 2022/23 to well below last season’s level but maintained its outlook for record exports.
In supply and demand data, the European Commission pegged usable production of common wheat, or soft wheat, in the EU at 125.0 million tonnes, down from 130.4 million projected a month ago and compared with 130.1 million harvested in 2021/22.
In an accompanying presentation, the Commission cited reduced yields for several countries including France, Poland, Romania and Spain, without giving further details.
However, the Commission kept unchanged its projection of EU soft wheat exports in 2022/23 at 38 million tonnes, which would be a record for the bloc.
For the past 2021/22 season, the Commission cut its estimate of EU soft wheat exports to 30 million tonnes from 31 million a month earlier.
From the Black Sea basin, farmers in southern and eastern Ukraine have started the 2022 harvest, threshing 293,800 tonnes of grain from around 1% of the sown area, the agriculture ministry said on Friday.
The ministry said farmers had threshed 131,500 hectares and the grain yield averaged 2.23 tonnes per hectare.
The harvested volume included 106,000 tonnes of barley and 21,800 tonnes of wheat, it said.
The government said this year the harvest could fall to about 65 million tonnes of grain and oilseeds from 106 million tonnes in 2021.
Farmers have reduced the sowing area by around 25% due to hostilities in some regions and grain production could fall to 48 to 50 million tonnes, with exports seen at 30 million tonnes in the 2022/23 season, which runs from July to June.
From Australia, markets yet again drifted a touch lower on new crop wheat and barley while canola was up across the boards.
Basis came into $50-55/t in Western Australia for new crop wheat.
Old crop markets found a bid late in the day over in the West with Clear Grain Exchange trading 20,500t for the day with most of the liquidity being ASW1 and ANW1 in Kwinana zone.
Grower selling interest for old crop increased this week as we came to the end of the financial year.
New crop selling interest has also increased as growers get the last of winter crops planted before the rain and the prospect of a third bumper crop is becoming clearer.
However, most consumers are already covered for July-September, and are therefore providing little competition for exporters
On the weather side, most of Central Queensland and south-east Queensland are forecast to receive 15-50mm of rain over the next four days.
North-east and central New South Wales are set for similar totals.
Victoria, South Australia, and WA are looking at a dry four days with light showers developing next week.
Although the forecast rainfall will bring winter sowing opportunities to a close, it will be beneficial for emergence and establishment of crops already in the ground.
On international trade scene, the Korea Feed Association (KFA) Busan section on Friday purchased about 58,000 tonnes of animal feed corn in an international tender.
It was purchased in one consignment at an estimated $343.49 a tonne including a surcharge for additional port unloading.
Trading house Olam is expected to be the seller with corn arrival in South Korea around Oct. 15.
If sourced from South Africa, the seller can supply 52,000 tonnes.
Shipment is sought for Sept. 11-30 if the corn is sourced from the U.S. Pacific Northwest coast; for Aug. 22 – Sept. 10 if sourced from the U.S. Gulf or Black Sea region/east Europe; for Aug. 17 – Sept 5 if sought from South America; and for Aug. 27 – Sept. 15 if sourced from South Africa.
Other corn importers in South Korea and Taiwan also made large purchases this week.
Egypt purchased 26,000t of US soft red winter wheat in the week ended June 23, USDA data showed.
That’s the first cargo of US variety sold to Egypt since 2019.
The announcement comes after Egypt’s wheat-buying agency made its biggest purchases in at least a decade.
That’s all, thank you.
To all of you, we wish you a good weekend and …
Good Harvest 2022!
Author: Sandro F. Puglisi
