Good morning Farmer Family …
U.S. farm markets were mixed but mostly higher yesterday.
Corn and soybean prices climbed both of around 0.6%.
Forecasts for hot and dry conditions across the Midwest farm belt, indeed, spurred some technical buying, although updated weather models appeared slightly less threatening to crops.
Soymeal prices went home 0.37% higher.
Soybean oil closed the day 1.81% stronger.
Meanwhile the wheat complex turned lower.
Operators squarred their position ahead of today’s monthly U.S. Department of Agriculture (USDA) supply-and-demand reports.
Thus, we saw CBOT SRW wheat’s contract print +80 cent ranges from low to high.
Selling accelerated when prices dipped below its 200-day moving average, and by the close, the front month was down by as much as 3.93%.
Kansas City wheat prices closed the first trade day of the new week with 3.32% losses.
Minneapolis spring wheat went home 2.82% lower.
USDA’s weekly Export Inspections report showed 933,725 MT of corn was shipped during the week that ended 7/7.
That was up 6.5% on the week, but under the same week last year by 6.8%.
China was the top destination with 43% of the week’s total. USDA added 199,562 MT of corn shipments to past weeks for an accumulated total of 49.227 MMT through 7/7.
For milo, the USDA reported the 183k MT shipped during the week set the season’s total at 6.95 MMT – compared to 6.557 MMT last season.
As for soybean, the report showed 356,716 MT of soybeans were exported during the week that ended 7/7.
That was down from 437k MT last week, but was 156k MT above the same week last year.
The USDA added 82k MT of bean shipments to past reports, leaving the season’s accumulated total shipment as 52.174 MMT.
At the same time last year, a record 57.786 MMT had been shipped.
As for wheat, exports were 309,802 MT during the week that ended 7/7.
That was up from 273k MT last week but under the 429k MT shipped during the same week last year.
HRW made up about a third of the total, with HRS and SRW each at ~80-85k MT.
USDA also added 161k MT of late reported exports for a season total of 1.922 MMT, compared to 2.337 MMT at the same time last year.
After the sessions close, the U.S. Agriculture Department in its weekly Crop Progress and Condition report, said the U.S. corn crop stabilized as much of the crop grown in the Midwest hit its pollination phase, which is critical for determining harvest yields.
The U.S. Agriculture Department also said that good-to-excellent ratings for soybeans fell for the fourth week in a row but rose for the spring wheat crop in the northern U.S. Plains.
Particularly, 64% of the U.S. corn crop was rated good to excellent, unchanged from a week ago.
Good-to-excellent ratings for soybeans were pegged at 62%.
That was down 1 percentage point from a week ago.
Ratings for spring wheat jumped 4 percentage points to 77% good to excellent.
A year ago, the corn crop was rated 65% good to excellent, soybeans were rated 59% good to excellent and spring wheat was rated 16% good to excellent.
Meantime, USDA also said that US winter wheat harvest was 63% complete, 2 percentage points above the average of the previous five years.
On the weather side, not much rain is expected for the central U.S. between today and Friday, per the latest 72-hour cumulative precipitation map from NOAA.
The Plains and western Corn Belt are unlikely to see any measurable moisture during this time, while parts of the eastern Corn Belt could receive trace amounts up to 0.25”.
NOAA’s 8-to-14-day outlook expects hotter-than-normal conditions for all of the Midwest and Plains between July 18 and July 24, with seasonally dry weather persisting across the central U.S. next week.
In this context, corn basis bids were steady to mixed across the central U.S. to start the week, moving as much as 5 cents higher at an Ohio elevator and as much as 12 cents lower at an Illinois ethanol plant.
Soybean basis bids were mostly steady across the Midwest, but did jump 15 cents higher rat an Illinois river terminal while eroding 15 cents lower at an Iowa river terminal.
Meantime, the funds were net buyers yesterday for 5,500 lots of corn and 5,000 lots of soybeans.
On the other hand, they were net sellers for 12,500 lots of wheat.
On this morning, corn and soybean prices rose for a fifth session.
Wheat prices also rose after closing sharply lower on Monday.
The most-active corn contract on the Chicago Board of Trade (CBOT) was up 0.4% at $6.31-1/4 a bushel, as of 02:07 GMT, and soybeans added 0.7% to $14.15 a bushel.
Wheat, on its part, gained 0.6% to 8.61-3/4 a bushel.
In energy markets, oil prices fell on Tuesday as fresh COVID-19 curbs in China,and fears of a global economic slowdown weighed on the outlook for fuel demand.
Thus, Brent crude futures for September had fallen $1.81, or 1.7%, to $105.29 a barrel by 06:33 GMT.
It was up US$0.08 per barrel to $107.10 in the previus session.
U.S. West Texas Intermediate crude for August delivery, meantime, was at $102.14 a barrel, down $1.95, or 1.9%.
It lost 70 cents to $104.09 a barrel on Monday.
Growing fears of a recession and continued sluggish demand in China are pulling oil prices lower, though the current supply-demand balances remain precarious.
U.S. Treasury Secretary Janet Yellen is in Asia to discuss ways of further strengthening sanctions against Russia, including setting a price cap on Russian oil to limit Moscow’s profits and help lower energy prices.
International Energy Agency Executive Director Fatih Birol said any price caps on Russian oil should include refined products.
Oil prices also fell as worries of a disruption at the Caspian Pipeline Consortium’s system (CPC) eased after a Russian court Monday overturned an earlier ruling suspending operations at the pipeline for 30 days.
However, analysts remain fearful that Russia will suspend the pipeline, which carries oil from Kazakhstan to the Black Sea.
Suspension could disrupt 1% of global crude supply.
In freight markets, the Baltic Exchange’s main sea freight index went up 0.7% to 2,081 points on Monday, the highest since July 5th, as the capesize index, which tracks iron ore and coal cargos of 150,000 tonnes, rose 4.2% to 2,365 points, a peak since July 1st.
Meanwhile, the panamax index, which tracks about 60,000 to 70,000 tonnes of coal and grains cargoes, fell for the 15th straight session, slipping 2.3% to a fresh low of 2,172 points; and the supramax extended its losing streak since June 23rd, falling 11 points to 2,152 points, its lowest since February 10th.
In equity markets, U.S. stock indexes fell on Monday.
China’s Shanghai Composite Index on Monday fell -1.27% on the Covid resurgence in China and on new fines for tech giants; a -0.99% sell-off in the Euro-Stoxx 50 index, and the caution ahead of the Q2 earnings season that starts later this week weighed on the market.
The markets are also nervous ahead of Wednesday’s U.S. June CPI report, which is expected to rise to +8.8% y/y from May’s 40-year high of +8.6%, although the core CPI is expected to ease to +5.7% y/y from May’s 6.0%.
Also, the recent decline in commodity prices and a weaker U.S. economy could mean that inflation is in the process of peaking.
In this context, the S&P 500 dropped 1.2% to 3,854.43, giving up most gains from the previous week.
The Dow Industrial Average dipped 0.5% to 31,173.84, while the Nasdaq composite fell 2.3% to 11,372.60.
Stocks of smaller companies were some of the biggest losers, with the Russell 2000 index down 2.1%, as worries about a possible recession continued to dog markets.
Meantime, Asian shares mostly fell on Tuesday.
Japan’s benchmark Nikkei dropped 1.8% to 26,336.66.
Australia’s S&P/ASX 200 gained nearly 0.1% to 6,606.30.
South Korea’s Kospi slipped 1.0% to 2,317.76.
Hong Kong’s Hang Seng sank 1.3% to 20,854.76, while the Shanghai Composite index shed 1% to 3,281.47 on growing concerns over COVID-19.
In currency trading, one euro is worth close to $1 now, down 15% from a year earlier, for example.
The euro cost $1.0011, down from $1.0042, having dipped as low as $1.0005.
The U.S. dollar inched down to 137.39 Japanese yen from 137.47 yen.
Both currencies have been trading at 20-year lows as the dollar has surged along with U.S. interest rates, which promise higher returns for investors.
That means sales made in euros or yen are worth fewer dollars than before.
From South America, Brazil’s Abiove slightly raised its estimates for the country’s 2022 soybean production, which it moved to 125,79 MMT.
Of that total, around 76.8 MMT is expected to enter the export market.
Brazilian soymeal production also increased slightly, to 37 million metric tons.
Around half of that total (18.5 MMT) will be exported.
From Canada, growing conditions in the Western Provinces remain strong overall.
Alberta has too much moisture in its Central Region which caused provincial crop conditions to fall by 2% from last week to 82% Gd/Ex.
Soil moisture conditions in SK improved, and topsoil moisture is 71% adequate.
In Manitoba, the spring wheat crop is in strong condition at 90% Gd/Ex.
Durum wheat conditions in Alberta rose 2% from the last time they were reported (on June 14th) to 63% Gd/Ex.
The latest CIMT Canadian shipping data showed that Canada exported 1.1 million mt of wheat during the month of May.
This was the third largest export month year-to-date, behind only the harvest months of Aug and Sept.
Aug-May exports total 10.0 million mt, or 57% of last year’s amount.
Japan has been the largest customer of Canadian wheat this year.
At 1.3 million mt, they have imported 1% more wheat than last year and are the only major customer who has not dramatically decreased imports of Canadian wheat.
Canadian durum exports in May were 267.7k mt for an Aug-May total of 2.2 million mt, 42% of last year’s amount.
Morocco remains the largest customer, importing a to-date total of 531k mt, which is only half of last year’s number.
North Africa has had a dry growing season so it’s expect there will be more demand from countries like Algeria and Morocco in the upcoming season.
In Europe, wheat prices turned lower on Monday.
After a near three-week high European wheat prices, indeed, retreated while traders awaited U.S. government crop forecasts.
Corn stayed in positive territory as a heatwave expected in southern France this week raised some concerns about damage to pollinating corn crops.
Thus September’s wheat price settled down 1.3% at 352.50 euros ($354.76) a tonne.
As for corn, new-crop November on Euronext settled up 2.1% at 313.25 euros a tonne, after earlier jumping to 320.25 euros.
Rapeseed, on its part, rose slightly yesterday on the wake of canola.
A 20-year low for the euro against the dollar underpinned European prices by reinforcing early-season export prospects especially for wheat.
Morocco continued to dominate wheat loadings at French ports.
However, the start of the Eid holiday in Muslim countries is likely to limit tender activity this week.
This year’s soft wheat crop in France, is expected to fall by about 7% from last year’s level after harsh weather dented yields and farmers planted less of the cereal, the farm ministry said on Tuesday.
The ministry, indeed, projected 2022 soft wheat production at 32.90 million tonnes (mln t), down 7.2% compared with 2021 and 5.9% below the average volume of the past five years.
The production outlook was based on an expected yield of 6.99 tonnes per hectare (t/ha), against 7.11 t/ha last year, and an estimated crop area of 4.71 million hectares (mln ha), down from 4.98 mln ha in 2021, the ministry said in a report.
The yield forecast was slightly above the 6.95 t/ha projected by crop institute Arvalis earlier this month.
As for durum wheat production at 1,319 million tonnes, down 16.6% compared with 2021 and 21.4% below the average volume of the past five years.
The production outlook was based on an expected yield of 5.13 tonnes per hectare (t/ha), against 5.38 t/ha last year, and an estimated crop area of 257.000 hectares, down from 294.000 ha in 2021, the ministry said in a report.
Adverse weather, including drought, affected straw cereals like wheat and barley, the ministry said.
The ministry projected this year’s total barley production, including both winter and spring crops, at 11.18 million tonnes, down 2.4% from last year.
Of the total, the winter barley crop was seen at 8.24 mln t, up 0.2%, and spring barley production pegged at 2.94 mln t, down 9.2%.
For rapeseed, France’s main oilseed crop, 2022 production was estimated at 3.98 mln t, up 20.4% from last year but 2.6% lower than the five-year average.
In area revisions for later-harvested crops, the ministry increased its estimate of the grain maize area, excluding crop grown for seeds, to 1.37 mln ha from 1.36 mln ha last month, but still sharply lower than 1.46 mln ha in 2021.
For sunflower seed, the estimated 2022 area was increased to 840,000 ha from 797,000 ha last month and was now the highest since 1997, according to the ministry.
Meantime, sellers of standard 12% protein wheat for September delivery in Hamburg were offering around 21 euros a tonne over the Euronext December contract against 18 euros last week.
From the Middle East, Israel is considering a possibility of importing wheat from Kazakhstan.
This issue will be one of the key ones during the negotiations of official delegations of the two countries, which will be held this week in Kazakhstan.
Israel does not purchase grain via some state company, but a private company is responsible for maintaining an emergency stock of wheat.
However, ther is a state support in the form of state insurance, easier bureaucratic procedures and platforms for concluding deals and to provide a significant assistance in procurement on the global market.
In Russia, Russian wheat exports are gradually speeding up according to SovEcon.
In Its first July estimate, the consultancy has seen for the month 2.0-2.6 mmt, slightly below average, but two times higher than June.
Weekly exports from Russia sped up last week – to 340,000 tonnes of grain vs 250,000 tonnes a week earlier – but still remain low for this time of the season.
On this wake, the IKAR agriculture consultancy said on Monday that it downgraded its forecast for Russia’s July wheat exports to 1.7-2 million tonnes from the previously expected 2-2.3 million tonnes.
There is a growing domestic demand from exporters, farmers are ready to sell as ruble prices in ports are up thanks to the weaker ruble and lower export taxes.
Thus, Russia likely will export 4 mmt+ of wheat in August.
Sovecon currently expects Russia’s wheat exports in the July-June season at 42.6 million tonnes.
Meantime, wheat yields are good after harvesting of 5.4 mmt, around 4.1 mt/ha (+29% YOY) SovEcon said.
Barley yields are also good after harvesting of 2.8 mmt, around 4.9 tonnes/hectare vs. 4.1 in 2021 season.
The Rostov region is expected to repeat last year’s record crop when it harvested 12.7 million tonnes of wheat, including 11.5 million tonnes of winter wheat.
Russian agriculture ministry stopped publishing harvesting data.
Meantime, Russian wheat export prices fell last week.
Prices for the new wheat crop with 12.5% protein content and for supply from Black Sea ports fell by $17 to $358 a tonne free on board (FOB) at the end of last week, the IKAR said.
Sovecon, said wheat prices for supply in July and August were at $365-$370 a tonne vs $375-$385 a week ago.
Wheat prices in the domestic market, in contrast, rose on higher demand from exporters.
Indeed, domestic 3rd class wheat, European part of Russia, excludes delivery was at 13,575 rbls/t ($222.5) +150 rbls according to Sovecon.
Also, some foreign traders started to conduct additional checks of farmers, probably to avoid buying any grain from Ukraine.
Ukraine has accused Russia of stealing grain, but Moscow denies this.
Meanwhile, price for sunflower seeds was at 25,900 rbls/t -1,425 rbls (Sovecon);
price for domestic sunflower oil was at 74,000 rbls/t -1,000 rbls (Sovecon);
price for domestic soybeans was at 35,125 rbls/t -975 rbls (Sovecon); export price for sunflower oil was at $1,540/t -$20 (Sovecon);
export price for sunflower oil was at $1,370/t -$20 (IKAR);
price for white sugar, Russia’s south, was at $1,013.6/t -$75.7 (IKAR).
($1 = 61.0000 roubles).
On the other hand, the Ministry of Agriculture of the Russian Federation approved the minimum and maximum prices, upon reaching which, in 2022-2023, procurement and commodity interventions in the grain and sugar markets can be carried out.
Both price groups are calculated with VAT, are the same for all regions and will be valid from July 31, 2022 to June 30, 2023.
Purchase prices:
– wheat of the 3rd class — 15.84 thousand rubles/t;
– wheat of the 4th class — 15.07 thousand rubles/t;
– rye not lower than the 3rd class — 11.11 thousand rubles/t;
– barley – 12.98 thousand rubles/t;
– sugar – 36.96 thousand rubles/t;
Sales prices from the intervention fund:
– wheat of the 3rd class — 17.38 thousand rubles/t;
– wheat of the 4th class — 16.61 thousand rubles/t;
– rye not lower than the 3rd class — 12.21 thousand rubles/t;
– barley — 14.3 thousand rubles/t;
– sugar – 40.7 thousand rubles/t.
On the geopolitical front, Putin and Erdogan are expected to meet shortly in Turkey.
A fresh round of talks between Russia, Ukraine, Turkey and the United Nations over grain exports from Ukraine will take place on Wednesday in Istanbul, Interfax news agency reported, citing the Russian foreign ministry.
Meantime, Russian Parliament is to hold an emergency meeting on July 15.
In Ukraine, according to APK-Inform, the bid prices of wheat in hryvnia terms decreased last week in Ukrainian ports of Reni and Izmail.
The range of prices in dollar terms also narrowed.
The bid prices in hryvnia term of food and feed wheat, indeed, deceased by 1000 USD/t last week to 5500-6500 and 5000-6000 UAH/t CPT-port.
Only few companies announced the maximal prices.
The bid prices in dollar terms of 2-grade, 3-grade and feed wheat totaled 190-205, 185-200 and 170-190 USD/t СРТ-port in Reni and Izmail.
The indicative export prices of Ukrainian wheat and barley also continued declining in deep-sea ports last week.
The indicative offer prices of 12.5%, 11.5% and feed wheat of harvest 2022 for delivery in July-August decreased by 15-25 USD/t to 370-395, 365-390 and 325-355 USD/t FOB Black Sea last week.
The offer prices of new-crop barley declined by 10-15 USD/t to 330-355 USD/t FOB.
A spread between offer and bid prices remained quite wide and was 15-20 USD/t for wheat and 10-15 USD/t for barley.
Also the bid prices of corn continued to decline at western borders of Ukraine last week.
Indeed, the bid prices of corn for delivery in July-August decreased by 10 USD/t to 195-210 USD/t DAP Poland, and by 20-25 USD/t to 190-200 USD/t DAP Hungary.
Ukraine’s grain exports in the first seven days of July, the first month of the new 2022/23 season, were down 30% year on year at 402,000 tonnes, the agriculture ministry said on Monday.
The ministry data showed the exports in July included 311,000 tonnes of corn, 71,000 tonnes of wheat and 17,000 tonnes of barley.
The government has said that Ukraine could harvest at least 50 million tonnes of grain this year.
Meantime, since a reopening of shipping via the Danube – Black Sea canal, 8 foreign vessels have arrived to Ukrainian ports to export agricultural products, the press service of the Navy of Ukraine reported.
From Azerbaijan, farmers have already harvested 1.7 mln tonnes of grain reaped throughout more than 1 mln ha (58% of a plan).
The average yields is 2.99 t/ha, the agricultural ministry informed.
This year, Azerbaijan planted about 600 thsd ha with wheat and 400 thsd ha with barley.
Wheat has been harvested throughout 44% of planted area.
So far, farmers have produced 793 thsd tonnes of wheat with the average yields at 3.19 t/ha.
They have harvested 910 thsd tonnes of barley with yields at 2.84 t/ha throughout 81% of planned area.
From Australia, local markets kicked off the week firmer.
Milling wheat led the way on old crop, with east coast values up A$20/t by Monday’s close of business.
New-crop values across the board were up $15-$20/t on wheat, $15/t on barley, and $10-$12/t for canola.
There was an improvement in congestion at some major ports this week, with wait times in Newcastle falling from 29 days last week to just one day this week.
Kwinana fell from 31 to 29 days this week, with 13 boats anchored. Esperance went from 11 days last week to 10 this week and Geraldton 17 to 15 days.
Wait times increased in Albany, Port Kembla and Geelong.
On the international scene, importers from The Philippines bought 50,000-60,000t of feed wheat from Australia in an international tender on Friday, at $415/t cost and freight for November shipment.
Additional, the Philippines purchased as much as 60.000t of corn, likely sourced from South America, in an international tender that recently closed.
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy 130,900 tonnes of food-quality wheat from the United States, Canada and Australia in regular tenders that will close on Thursday.
That’s all, thank you.
To all of you, we wish you a good day and … Good Harvest 2022!
Author: Sandro F. Puglisi
