Good morning Farmer Family …
US farm markets after tumbling to multi-month lows on Tuesday, closed mixed but mostly lower on Wednesday.
Corn and soybean prices rebounded thanks some bargain buying helped support prices.
Also, remains uncertainty about the size of the upcoming U.S. row crops harvesting and about the future of crop exports from Ukraine.
However, until the funds quit selling, everything else is secondary.
Thus, Wednesday session saw a wide ranged trading for corn prices, as they touched both the red and the black side before closing by 1.27% higher, at the bell.
The new crop contracts stayed under $6/bu during the day.
Sep has been above the $6 mark, but ultimatily closed a quarter of a penny under.
Ditto for soybean.
November contract printed a wide 40 cent range after trying both sides of the open.
Prices initially went for a bounce back, but ultimately closed only with 0.5% gains on front month.
Soymeal prices closed the day with 1.27% gains, while soybean oil fell another 1.78% on the day after Tuesday’s limit drop.
Wheat prices worked higher initially on Wednesday, but turned weaker in afternoon and closed red.
CBOT SRW wheat price, indeed, ended the day with 0.31% losses.
Kansas City wheat prices ended the day with double digit losses of as much as 1.22% in the front months.
Spring wheat prices closed with 0.42% losses.
On this morning, Chicago wheat prices rose more than 3% with prices climbing for the first time after six sessions drop.
Corn and soybeans, on their part, gained around 2%.
Worries about wheat supplies from the Black Sea region continue to support prices as the new crop marketing year starts in July.
For corn and soybeans, operators are also keeping an eye on U.S. crop weather.
However, the U.S. Department of Agriculture, in a daily weather report, said rain showers and thunderstorms from Nebraska to Ohio were greatly benefiting fields.
The agency, in its Crop progress report issued on Tuesday, had rated 64% of the corn crop as good to excellent as of Sunday, down 3 percentage points from the previous week, while analysts had expected a two-point decline.
In energy markets, oil prices regained some footing on Thursday after steep losses in the previous two sessions.
Investors returned their focus to tight supplies even as fears of a global recession persisted.
It’s hard to be overly bearish on oil prices.
Recent Iranian nuclear talks don’t appear to have achieved much.
Consultancy FGE still expects demand to grow by about 2 million barrels per day until end of 2023.
Operators are watching for possible oil supply disruptions at the Caspian Pipeline Consortium (CPC), which has been told by a Russian court to suspend activity for 30 days.
Exports at CPC, which handles about 1% of global oil supplies, were still flowing as of Wednesday morning.
In addition, investors are awaiting U.S. government data due on Thursday that will shed light on the state of domestic oil and fuel inventories.
Industry data on Wednesday showed that U.S. crude inventories rose by about 3.8 million barrels last week, according to market sources.
Gasoline inventories fell by 1.8 million barrels, while distillate stocks fell by about 635,000 barrels.
In this context, Brent crude futures rose 16 cents, or 0.2%, to $100.85 a barrel by 0637 GMT.
WTI crude futures climbed 18 cents, or 0.2%, to $98.71 a barrel.
Prices swung between about $2 in losses and gains of nearly $1 in the volatile session.
In freight markets, the Baltic Exchange’s main sea freight index, fell for the fourth straight session to a fresh 12-week low on Wednesday due to low demand across vessel segments.
The overall index, indeed, fell by 55 points, or 2.6%, to 2,043 points, its lowest since April 12.
Particularly, the capesize index slipped 84 points, or 4%, to 2,000 points, its lowest since April 22.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, fell $695 to $16,588.
The panamax index fell for the twelfth straight session, shedding 78 points, or 3.2%, to a near 5-month low of 2,363 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $695 to $21,270.
The supramax index fell 18 points to 2,247 points, heading into the tenth day of its losing streak.
In equity markets, US stock indexes Wednesday recovered from overnight losses and moved moderately higher.
Better-than-expected U.S. economic reports Wednesday, including May JOLTS job openings and Jun ISM services, were bullish for stocks.
Particularly, the U.S. Jun ISM services index fell -0.6 to 55.3, stronger than expectations of 54.0.
U.S. May JOLTS job openings fell -427,000 to 11.254 million, showing a stronger labor market than expectations of 11.000 million.
However, the upside in stocks Wednesday was limited by an increase in T-note yields, as the 10-year T-note yield rebounded from a 5-week low Wednesday of 2.744% and jumped +11.4 bp to 2.919% on the hawkish FOMC meeting minutes.
The minutes of the June 14-15 FOMC meeting, indeed, said that many on the FOMC saw a “significant risk” of entrenched inflation and that an “even more restrictive” policy was possible in time.
In this context, the S&P 500 rose 0.4% to 3,845.08.
The The Dow Jones Industrial Average gained 0.2% to 31,037.68.
The Nasdaq composite added 0.3% to 11,361.85.
Meantime, Asian stock markets gained on Thursday after the details from the minute of Federal Reserve meeting.
Thus, Shanghai, Tokyo and Sydney advanced.
Hong Kong declined.
Particularly, the Shanghai Composite Index rose 0.5% to 3,372.42 and the Nikkei 225 in Tokyo gained 1.1% to 26,399.23.
The Hang Seng in Hong Kong lost 0.4% to 21,498.91.
The Kospi in Seoul climbed 2.1% to 2,340.03 and Sydney’s S&P-ASX 200 was up 0.4% to 6,618.90.
India’s Sensex opened up 0.6% at 54,089.,79.
New Zealand declined while Southeast Asian markets advanced.
In currency trading, the dollar declined to 135.69 yen from Wednesday’s 135.98 yen.
The euro gained to $1.0201 from $1.0182.
On the weather side, more rains and some cooler temperatures are forecast for the Heartland, according to NOAA’s short-range forecasts.
Once again, heavy showers and thunderstorms will continue to stretch from the Plains through the Eastern Corn Belt, dropping up to an inch of precipitation along the way over the next 24 hours.
Regions of Eastern Nebraska and Western Iowa could see rainfall totals up to 2 inches.
The system is not likely to dissipate until the weekend, providing heat-stressed crops a favorable reprieve just ahead of peak reproductive season.
NOAA’s 6- to 10-day and 8- to 14-day forecasts updated, continue to trend on the warm side for the Heartland during the second week of July.
While the chances for rain in the Upper Midwest are growing increasingly slim, above average precipitation forecasts are being predicted for the Southern Plains and Southeast.
In this context, while the spring wheat crop continues to be behind in terms of development, condition of the crop so far is mostly good.
The most recent USDA Crop Progress report shows about 66% of the U.S. crop rated in good to excellent condition, a notable increase from last year when only 16% was rated in good to excellent condition.
Meanwhile, condition ratings are highest in Minnesota and North Dakota where 76-77% of the crop is rated in good to excellent condition, higher than last week.
Producers in North Dakota report mostly adequate moisture and good crop conditions, although some areas could use some precipitation.
Also notable is the wide distribution of developmental stages given some of the wheat was planted in early April, but a good portion not until after June 1.
Some of the later planted crop did get hurt by the hot conditions right after emergence.
In North Dakota, only 12% of the crop has headed out, well below the average of 55%.
Durum growing conditions also remain favorable with mostly adequate moisture to help along crop development.
Producers note that precipitation throughout the growing season will be needed to promote development and yield potential.
86% of the North Dakota durum is rated in good to excellent condition, up slightly from last week.
Last year at this time, just under half of the crop was rated in good to excellent condition.
Similar to spring wheat, development of the crop is well behind normal.
About 10% has headed out, well behind 43% on average.
USDA released their Acreage report on June 30.
It was noted in the report that producers in Minnesota, North Dakota and South Dakota will be resurveyed in July since many were still planting when the survey was done the first half of June.
The June 30 report showed U.S. spring wheat acres at 11.1 million, compared to the March estimate of 11.2.
Montana’s acreage estimate dropped by 300,000 to 2.75 million, while North Dakota’s spring wheat acreage estimate increased by 200,000 to 5.4 million from the March report.
U.S. durum acres are projected to be just shy of 2 million, a potential 20% increase from a year ago.
Montana’s acreage estimate decline from the March survey, while North Dakota’s increased.
After the resurvey, updated acreage numbers may be released in August.
Meantime, it’s estimated funds to have sold another 2,000 lots of wheat yesterday, but bought 4,000 lots of corn and 3,500 lots of soybeans.
From South America, Brazil’s safrinha (second) corn crop is over a third harvested in the country’s center south region.
The Brazilian consultancy Anec forecasts 2021/22 Brazilian corn exports reaching 43.18 MMT.
USDA’s latest estimate for old crop Brazilian corn exports is slightly more optimistic.
In Europe, we saw another very eventful session yesterday.
Global economic growth has been revised downwards once again by the IMF to just +3.6%.
The rise in energy costs combined with European inflation at an annual rate of +8.1% in May are prompting caution, particularly among fund managers.
Consequentially, non-commercial market participants cut their net long position in Euronext’s milling wheat futures and options in the week to July 1, data published by Euronext on Wednesday showed.
Particularly, non-commercial participants, which include investment funds and financial institutions, lowered their net long position to 102,956 contracts from 120,385 a week earlier, the data showed.
Commercial participants similarly cut their net short position to 122,695 contracts from 142,829 a week earlier.
Commercials’ short positions accounted for 66% of the total short position, while commercial long positions accounted for 45.3% of total long positions.
Non-commercial short positions represented 34% of total short positions, while non-commercial net long positions accounted for 54.7% of the total longs.
In Euronext’s rapeseed futures and options, non-commercial market participants increased their net short position to 24,063 contracts from 23,525 a week earlier.
Commercial participants reduced their net short position in rapeseed to 20,112 contracts from 20,732 a week earlier.
Meantime, with harvesting under way, the EU is expected to produce 125.7 million tonnes of common wheat – or soft wheat – in 2022, down 3.4% from last year’s crop.
After early reports of yields 20-30% below average in the south, French volumes are expected to pick up sharply in the north where deep soils and late-spring showers tempered drought.
The situation appears worse in Spain and Italy.
An eastward shift in high temperatures since last month has also raised concern about crop stress in countries like Hungary.
But Romania and Bulgaria are still expected to reap large crops, though below last year’s record levels.
Romania’s Romanian Farmers Club estimates 22/23 grain output will slide 15% yr/yr to 30 MMT – including 9.6 MMT of wheat, itself down 17% yr/yr.
Beneficial rain could help further north, with some traders and analysts revising up estimates for Germany, Poland and Britain.
Grain quality, which determines wheat’s suitability for milling, is difficult to predict.
Early results in France, suggest potential for satisfactory quality, including in protein content.
A large, good-quality harvest could put Germany in a strong position for the wheat export.
The water deficit in western Europe is also causing concern for future autumn harvests, and irrigation restrictions are in the news.
Another key element to take into account is the risk of an electricity and gas shortage next winter.
On this wake, if the prices of agricultural products have lost ground significantly in recent weeks, the same is not true for fertilizers, raising fears of a scissor effect among producers for the 2023 harvest.
From North Africa, Egypt’s strategic wheat reserves are sufficient for seven months, which is unprecedented, Supply Minister Aly Moselhy said on Wednesday.
The country’s strategic reserves for sugar are sufficient for 7.8 months, while those of vegetable oils are enough for six months, Moselhy added.
From South Africa, the South Africa’s Minister of Mineral Resources and Energy announced a further upward adjustment to the fuel prices with petrol increasing by R2.37/litre and R2.57/litre respectively for the two grades (93 ULP and LRP; 95 ULP and LRP) effective from the 6th of July 2022.
The diesel prices were hiked by R2.31/l and R2.30/l respectively to R25.53/l and R25.39/l for the 0.05% and 0.005% sulphur content.
This comes at a time when the consumer inflation deteriorated and breached the upper end of the South African Reserve Bank (Sarb) target of 3% to 6% in May 2022, signalling further rate hikes after the 50 basis points increase to 4.75% last month.
The May 2022 agriculture producer price index (PPI) increased by 19.3% year-to-year with sharp increases of 30.8% year-on-year for the cereals and other crops and 20.8% year-on- for the fruit and vegetable subcategories.
On the consumer front, the latest update shows the 2Q2022 FNB/BER Consumer Confidence Index (CCI) remained on the downside for the second consecutive quarter signalling potential contraction in consumer spending in the medium term. The 2Q2022 CCI dropped sharply to -25 points following a decrease to -13 index points in 1Q2022.
Reduced spending may dampen demand and subsequently prices for produce despite input costs unrelenting at elevated levels, thus a potential squeeze on producer margins in the near term.
(1USD=16.5283 ZAR).
From the Black Sea basin, Agritel yesterday published the results of its crop tour of Ukraine, with an estimated wheat harvest of 21.8 million tonnes, down sharply from last year by 32.2 million.
This breaks down between 18.1 million tonnes in the unoccupied territories, and 3.7 million in the rest.
The estimate for the 2022/23 season was based on an expected harvested area of 5.8 million hectares, down from 6.7 million hectares initially sown by farmers
Meantime, the Ukrainian Traders Union has estimated wheat production this year at 20.8 million tonnes and that of corn at 27.3 million.
In Russia, Agriculture ministry will buy 1 million tonnes of wheat and 90,000 tonnes of sugar for the state stockpile from the domestic market in 2022, state controlled trader United Grain Company (UGC) said on Wednesday.
Russia is on track to purchase up to 3 million tonnes of wheat and 250,000 tonnes of sugar in total for the stockpile by 2024, UCG Chief Executive Dmitry Sergeyev told President Vladimir Putin during their televised meeting.
Russia, uses this stockpile to support domestic supply in poor crop years and to ease pressure on domestic prices at times of a good harvest.
It is expected to harvest a large crop in 2022, with a record amount of wheat available for export.
Meantime, the UGC, which owns stakes in two Black Sea grain export terminals, signed several grain supply contracts with Turkish buyers, with payment in roubles, Sergeyev said, adding that the last such contract was signed in March.
On the other hand, Russia’s foreign ministry said on Wednesday that reports the Russian-flagged cargo ship Zhibek Zholy was detained in the Turkish port of Karasu on suspicion of carrying stolen Ukrainian grain are false.
Foreign Ministry Spokesman Alexei Zaitsev said the 7,146 dwt Zhibek Zholy, which Ukrainian authorities have said is carrying grain from the occupied port of Berdyansk, was “undergoing standard procedures”.
Ukraine’s ambassador to Turkey said on Sunday that Turkish authorities had detained the Zhibek Zholy.
From the Middle East, a Yemeni delegation will visit India next week in a bid to secure wheat for the war-ravaged country where strategic food stockpiles are running out, a government minister said on Thursday.
It was not immediately clear how much wheat Yemen was seeking from India or how soon it could be delivered, if a deal was reached.
With no response from Russia regarding wheat supply to Pakistan on a government-to-government (G2G) basis, Islamabad decided on Tuesday to accept 500,000 tonnes of open international tenders for import of major staple commodity at a much lower rate than earlier.
The Economic Coordination Committee (ECC) of the cabinet led by Finance Minister Miftah Ismail also directed the authorities concerned to get back with a definitive opinion based on engagements with the other side by July 20 if Russian wheat could be arranged on a government-to-government basis or else more tenders should follow.
In the second week of May, the ECC allowed duty- and tax-free import of three million tonnes of wheat, including 2m tonnes as a government-to-government from Russia and 1m tonnes through open international competitive tender.
The Trading Corporation of Pakistan (TCP) has already given contracts for the first tender of 500,000 tonnes at the rate of $515.5 a tonne for delivery windows of July to August.
The meeting was informed that the second tender for another 500,000 tonnes had fetched almost 15pc lower rates at about $440 per tonne compared to the first tender, which had a $76 per tonne higher price.
“The ECC, considering the lower trend of wheat in the international market, approved the lowest bid offer of M/s Cargill Int. PTE /Cargill Agro Foods Pakistan at the rate of $439.40 per tonne for 110,000 tonnes with plus-minus 5pc [more or less seller option] to the extent of 500,000 tonnes,” an official announcement said.
Viterra BV/Marine International and Falconbridge — had also very close bids of $439.69 and $439.99 per tonne for 240,000 and 110,000 tonnes, respectively.
The bids have a very limited acceptance window.
The landed estimated cost at port works out at about Rs102.851 per kg or Rs4,114 per 40kg.
The commodity would be delivered between August and Sept 15.
On the request of the World Food Programme (WFP) of the United Nations, the ECC approved the request to reserve 120,000 tonnes of wheat for Afghanistan from the imported wheat stock of Passco on the latest import price in view of the situation in the neighbouring country and on humanitarian grounds.
The amount of supplied wheat, along with cost and incidentals, would be charged in US dollars.
The wheat will be locally ground into wheat flour and will be supplied to Afghanistan by the WFP, subject to relaxation of a ban on flour exports to the extent of the instant proposal of 120,000 tonnes of wheat.
From the Middle Kingdom, there are rumors that China was in the wheat market shopping around, with US wheat well priced at the moment.
From South East Asia, India has tweaked export policy for wheat flour and asked traders to secure permission before exporting the commodity, the government said in a notification published on Thursday.
After the ban, demand for wheat flour jumped from neighbouring countries struggling to secure wheat at lower prices from other suppliers.
The restriction on wheat flour exports would be effective from July 12, the government said.
From Australia, wheat, barley, sorghum and canola prices have continued to fall both on new and old crop, with wet weather conditions in southern Queensland and New South Wales adding to the already cemented market hesitancy across the board.
Particularly, new crop wheat markets held some ground and were down $4-5/t for both port and track bids.
Delivered wheat and barley markets also slipped another $5-10/t along the East Coast for both new and old crop.
While canola values were off $15-25/t on new crop port zone bids.
The uncertainty around new crop prospects has reduced the number of growers in the market, especially in the areas worst hit by the recent rainfall.
Old crop movements have also been constrained by the weather, with wet farms affecting the ability to execute grains contracts.
The continuing influence of global conditions – most significantly with the rising local fuel prices – has kept demand at a minimum.
Generally, consumers also appear to have short term coverage and are waiting before making movements for new crop.
Meantime, Viterra released their monthly receival report this week stating a further 28,300t were delivered into their system from June 6 to July 3 with a large portion of those deliveries being pulses.
Viterra also stated that South Australian grain exports surpass 5 million tonnes for the season.
On international trade scene, Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 122,420 tonnes of food-quality wheat from the United States and Canada in regular tenders that closed on Thursday.
A group of South Korean flour mills on Wednesday bought about 50,000 tonnes of milling wheat to be sourced from the United States and 100,000 tonnes to be sourced from Australia.
The wheat was all bought on an FOB basis with a range of types purchased.
The U.S. purchase involved soft white wheat of about 10.5% protein content bought at about $338 a tonne, soft white wheat of 9% protein bought at about $348 a tonne, hard red winter wheat of 11.5% protein bought at an estimated $386 a tonne and dark northern spring wheat of 14% protein bought at about $370 a tonne.
Shipment from the United States is Sept. 1-30, they said.
The Australian purchase involved two 50,000 tonne consignments, both bought at the same price. The first was for shipment Nov. 10-20 and the second for Nov. 1-30.
Both consignments involved Australian standard white Korean grade (ASWK) bought at $380 a tonne FOB and Australian hard wheat bought at about $400 a tonne FOB.
Egypt’s state grains buyer GASC purchased about 63,000 tonnes of German-origin wheat in a direct deal this week, sources said on Thursday.
It was believed the purchase was made on July 5, continuing recent buying by GASC without international tenders being issued.
That’s all, thank you.
To all of you, we wish you a good day and … Good Harvest 2022!
Author: Sandro F. Puglisi
