Good morning Farmer Family …
USDA released its July World Agricultural Supply and Demand Estimates report yesterday in the afternoon.
The agency raised its forecast for domestic corn production at 14.505 billion bushels, 45 million bushels higher than USDA’s previous outlook as farmers were able to seed more grain that they had planned in the spring.
The season-average farm price received by producers is lowered 10 cents to $6.65 per bushel.
Meantime, they lowered their outlook for soybean exports by 65 million bushels and its outlook for domestic crush by 10 million bushels.
The U.S. season-average soybean price for 2022/23 is forecast at $14.40 per bushel, down $0.30 from last month.
The soybean meal price is projected at $390.00 per short ton, down $10.00.
The soybean oil price forecast of 69.0 cents per pound is down 1 cent.
USDA raised its supply estimates for wheat by 44 million bushels to 1.781 billion bushels due to an uptick in harvested area and per-acre yields.
The agency pegged winter wheat production at 1.201 billion bushels, plus another 503 million bushels for spring wheat.
USDA also raised its export forecast by 35 million bushels to 800 million for the 2022/23 marketing year, noting that a recent decline in prices makes U.S. grain more competitive overseas.
The season-average farm price slid 25 cents lower to $10.50 per bushel.
In this context, US farm markets saw corn price to weake with Sep contract down 6.75% and the Dec contract to within 20 cents of last week’s low.
Soybean prices weakened led down by bean oil, which ended the day with 5.67% losses.
Soybean prices faded, going home 3.53% in the red.
Soymeal prices closed with 1.87% losses.
Wheat prices faded into the lower portion of last week’s range.
Chicago SRW ended the day with 4.93% losses.
Kansas City wheats went home 5.19% lower.
Minneapolis wheat price settled 4.67% lower.
Commodity funds yesterday were net sellers of CBOT corn, wheat, soybean, soymeal and soyoil futures contracts.
Meantime, corn basis bids were mostly steady across the central U.S., but did move as much as 5 cents higher at an Illinois river terminal and as much as 3 cents lower at an Illinois ethanol plant.
Soybean basis bids tilted 5 cents higher at an Iowa river terminal and 14 cents lower at an Ohio elevator while holding steady elsewhere across the central U.S..
On this morning, Chicago soybean and corn prices slid for a second session to a one-week low, while wheat gained ground after Tuesday’s losses, but hopes of resumption in exports from Ukraine limited gains.
Thus, the most-active soybean contract on the Chicago Board of Trade (CBOT) was down 0.8% at $13.31-3/4 a bushel, as of 02:17 GMT, and corn lost 0.4% to $5.84 a bushel.
Both markets hit their lowest levels since July 6.
Wheat rose 0.8% to $8.20-3/4 a bushel.
On the weather side, not much rain is expected across the central U.S. between today and Saturday, although a very small part of the upper Midwest could gather up to 1” over the next three days, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts more seasonally dry weather for much of the Midwest and Plains between July 19 and July 25, with widespread hotter-than-normal conditions likely during this time.
In energy markets, oil edged up on Wednesday, a day after prices fell through $100 a barrel for the first time since April, but gains were limited by caution ahead of U.S. inflation data that could weaken the market.
Thus, Brent crude futures were up 45 cents, or 0.5%, at $99.97 a barrel at 0630 GMT.
U.S. West Texas Intermediate crude gained 44 cents, or 0.5%, to $95.27.
Prices fell by more than 7% on Tuesday in volatile trading.
Investors have sold oil positions on worries that aggressive interest rate hikes to stem inflation will sharply slow economic activity and hit oil demand.
A further concern is that U.S. interest rate rises will push up the dollar more, also undermining oil prices.
Oil is generally priced in U.S. dollars, so a stronger greenback makes the commodity more expensive to holders of other currencies, putting downward pressure on demand.
Renewed COVID-19 travel curbs in China also weighed on the market.
Meantime, U.S. crude stocks rose by about 4.8 million barrels for the week ended July 8.
Gasoline inventories rose by 3 million barrels, while distillate stocks rose by about 3.3 million barrels, according to market sources citing American Petroleum Institute figures on Tuesday.
Operators also are closely watching Biden’s visit to the Middle East, where he is expected to ask Saudi Arabia and other Gulf producers to raise oil output to help stabilise prices.
Meantime, in a monthly report issued on Tuesday, OPEC expected that global oil demand would rise in 2023 and that the market would remain tight.
Thus, it estimated that an additional 900,000 bpd of oil would be needed from its members in 2023 to balance the market.
In freight markets, the Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities, fell to a near five-month low on Tuesday as capesize rates dipped.
The overall index, indeed, was down 68 points, or 3.3%, at 2,013 points, its lowest since Feb. 18.
Particularly, the capesize index lost 116 points, or 4.9%, to 2,249 points, snapping a three-day rally.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $958 at $18,655.
The panamax index was down for the 16th straight session, shedding 76 points, or 3.5%, to 2,096 points, its lowest since Feb. 8.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased by $679 to $18,867.
The supramax index .BSIS fell by 29 points to a five-month low of 2,123 points, registering its 14th straight decline.
In equity markets, U.S. stock indexes Tuesday closed lower.
The overall market was weighed down by concern a flare-up in Covid infections in China could lead to expanded pandemic restrictions that slow economic activity and lead to supply-chain turmoil.
Stock indexes extended their losses Tuesday afternoon on inflation concerns ahead of Wednesday’s U.S. consumer price index for June, which is expected to climb to a new 40-year high of +8.8% y/y although the core CPI on a year-on-year basis is expected to move lower.
Richmond Fed President Barkin said he expects another elevated reading from U.S. June CPI, and he backs raising interest rates to neutral “expeditiously as we can.”
Meantime, the yield on the 10-year Treasury, or the difference between the market price and the payout at maturity, was steady at 2.98%, but it is below the two-year Treasury yield, which indicates some investors expect a recession in the next year or two.
The slump of more than -7% in crude oil prices undercut energy stocks but also boosted airline stocks.
In this context, the S&P 500 lost 0.9% to 3,818.80, declining for a third day.
Technology, health care and energy stocks accounted for a big share of losses.
The Dow Jones Industrial Average slid 0.6% to 30,981.33 and the Nasdaq composite slid 0.9% to 11,264.73.
Big companies are due to report second-quarter results over the next few weeks.
Expectations appear subdued.
Analysts are forecasting 5.1% growth for companies across the S&P 500, which would be the weakest since the end of 2020, according to FactSet.
Meantime, Asian stock markets rose Wednesday as investors are waiting for U.S. inflation data.
Thus, the Shanghai Composite Index gained 0.3% to 3,290.01 and Tokyo’s Nikkei 225 added 0.4% to 26,437.96.
The Hang Seng in Hong Kong rose 0.5% to 20,941.78.
The Kospi in Seoul was 0.6% higher at 2,329.56, while Sydney’s S&P-ASX 200 recovered from earlier losses to be flat at 6,606.30.
India’s Sensex edged 0.1% higher to 53,938.84.
New Zealand advanced while Southeast Asian markets declined.
South Korea’s central bank on Wednesday hiked its policy rate by an unprecedented margin of 0.5 percentage points to 2.25%, seeking to tamp down price increases that have been worsened by soaring energy and commodity prices and disruptions.
New Zealand’s central bank also lifted its benchmark interest rate by half a percentage point to 2.5%.
It was the third time this year that the Reserve Bank of New Zealand had lifted the cash rate by 50 basis points, following hikes in April and May.
There was also a quarter-percentage-point rise in February.
In currency trading, the dollar rose to 137.00 yen from Tuesday’s 136.77 yen.
The euro edged down to $1.0035 from $1.0045.
From South America, Brazil’s AgRural reported 2nd crop harvest was up 10% points through the week to 40.5% complete as of 7/7.
USDA left their estimate for Brazilian corn output at 116 MMT.
USDA estimated Brazil’s old crop soy output at 126 MMT, unchanged from June.
CONAB recently figured the soybean output as 124.05 after a 220k MT cut.
Abiove estimated the 21/22 soy crop in Brazil as 125.8 MMT, up 300k MT from their prior estimate.
Meantime, Brazil’s Anec expects the country to export 7.96 MMT of soybeans in July, along with 2.173 million metric tons of soymeal this month.
Brazil’s export figure was cut from June to 81 MMT.
That comes with 43.8 MMT of crush and 76.8 MMT of exports.
Anec also estimates that Brazilian corn exports will reach 6.25 MMT in July.
Total exports were estimated as 44.5 MMT.
Brazil may start exporting corn to China before the end of this year, Cesario Ramalho, the head of institutional affairs at corn farmer group Abramilho, said on Tuesday.
Agriculture Ministry officials, indeed, are in talks with China about the acceptance of certain types of transgenic corn cultivated in the South American country.
Brazilian and Chinese authorities concluded negotiations to update the protocol for exports of Brazilian corn to China.
In May, China’s customs authorities said they had finalized an agreement to allow imports of Brazilian corn, lining up an alternative to U.S. corn to replace imports from Ukraine.
But shipments have not begun, as talks are ongoing for China to approve certain types of transgenic corn that Brazilian farmers already plant with authorization from Brazilian biosecurity agency CTNBio.
It’s estimates China buys about half of Brazil’s exported meat and some 80% of its soy exports each year.
China will complete the signing of the quarantine agreement for imports of Brazilian corn and peanuts and soybeans from Malawi as part of its diversification of grain imports, said Li Kuiwen, a spokesman for the General Administration of Customs, during a news conference in Beijing on Wednesday.
In Europe, Euronext wheat fell 3% on Tuesday, pressured by the U.S. Crop Progress and monthly WASDE reports.
The economic situation remains an important factor influencing all the commodity markets, both energy and agriculture and and the European one is not exempt.
The new downward movement of the euro against the dollar, which has returned to trading at parity, i.e. its lowest level since December 2002, is mechanically a favorable factor for the export activity to Third Countries.
However, operators remain vigilant and very attentive to the meeting organized today in Istanbul between the Russian and Ukrainian authorities in the presence of UN representatives on the delicate subject of grain exports from Ukrainian ports, weighening on the market.
Thus, September wheat contract settled 3.0% lower at 341.75 euros ($343.94) a tonne, retreating further from Monday’s almost three-week peak of 371.25 euros.
German traders are assessing early results of the wheat harvest, starting in isolated areas of the south and east.
The first wheat cuttings in eastern regions like Saxony-Anhalt, Thueringen and Brandenburg are good.
Thus, Germany could achieve a wheat harvest of 22 to 22.5 million tonnes, still up about 5% on the year despite the heat and dryness.
In France, the current dry and hot weather conditions favor harvest work.
Meantime, the French farm ministry forecast the ongoing soft wheat harvest would produce 32.9 million tonnes, down 7% from last year after drought clipped yields and farmers reduced the wheat area.
Meanwhile the ministry pegged at 11.18 Mt barley production.
($1 = 0.9936 euros)
From Levant, Lebanon will receive 35,000 tonnes of wheat from Ukraine and Russia this week, the head of Lebanon’s mills association Ahmad Hoteit told Reuters on Tuesday.
The vessels were sailing from Ukraine’s smaller Danube river ports of Reni and Izmail, and the Russian ports of Rostov-on-Don and Kavkaz.
Shipping data showed the Haje Zeinab bulk carrier was in Izmail on July 8 and has set its destination as Beirut.
The shipments could help alleviate wheat shortages that have left some supermarkets without staple pita bread in recent days.
Lebanon imported some 754,000 tons of wheat in 2021, according to customs statistics, averaging roughly 60,000 tonnes of wheat consumption each month.
From Russia, grain prices continue to decline in almost all regions of the Russian Federation.
According to the monitoring of ProZerno, prices for wheat of the 3rd class fell most of all in the Volga region – by 715 rubles, up to 14,763 rubles per ton.
In the Chernozem region, the wheat fell in price by 590 rubles, up to 14,660 rubles, in the center – by 485 rubles, up to 15,200 rubles, in the south – by 285 rubles, up to 14,850 rubles, in the Urals – by 335 rubles, up to 16,583 rubles, in Siberia – by 100 rubles, up to 15,483 rubles per ton.
The Volga region also became a record holder in terms of falling prices for wheat of the 4th grade – by 925 rubles, up to 14,050 rubles.
In the Chernozem region, the decrease was 640 rubles, up to 14,230 rubles, in the center and in the Urals – by 565 rubles, up to 14,633 and 15,850 rubles, respectively, in the south – by 300 rubles, up to 14,283 rubles. In Siberia, prices fell by only 50 rubles.
Prices for wheat of the 5th grade in a number of regions did not fall so sharply.
The largest decrease was noted in the Chernozem region – by 720 rubles, up to 13,720 rubles.
In the Urals, this wheat fell in price by 400 rubles, up to 15,517 rubles. In other regions, price fluctuations were small.
Feed barley prices continued to fall in the center – by 335 rubles, up to 14,350 rubles, and in the Chernozem region – by 500 rubles, up to 13,570 rubles.
In the south, prices recovered by 385 rubles, up to 12,633 rubles.
Prices for food rye fell only in the center – by 100 rubles and in the Volga region – by 35 rubles. In other regions, prices have not changed.
Prices for corn fell most of all in the center – by 450 rubles, up to 13,567 rubles.
In the Chernozem region – by 320 rubles, up to 13,780 rubles, in the Volga region – by 250 rubles, up to 13,750 rubles, in the south – by 115 rubles, up to 14,217 rubles per ton.
From the Middle Kingdom, China is anticipating record-breaking corn yields in the 2022/23 season, despite some localized flooding that occurred last week.
Total production is expected to reach 272.56 MMT.
Soybean Chinese demand could decline with imports for the 2022/2023 campaign of -1 Mt compared to the latest estimates, thus reaching 98 Mt.
China’s June soybean imports fell 23% from a year earlier to 8.25 million tonnes, as high global prices and weak demand curbed appetite for the oilseed, customs data showed on Wednesday.
Last month’s imports were also lower than May’s 9.67 million tonnes, data from the General Administration of Customs showed.
Hog farmers faced heavy losses for much of the first half of the year and have been reducing herd numbers.
Crushing margins are relatively poor and importers are just buying what they needed and don’t want to build up large stocks when forward margins are negative.
Crush margins in China have been negative since mid-April, with crushers in Rizhao in the key northern soybean processing hub of Shandong now losing 692 yuan ($103) on each tonne of oilseed processed.
Despite a rally in hog prices in recent weeks that is boosting farming profits, soymeal demand will not improve until hog inventories begin to increase again, analysts said.
Edible oil prices have recently plunged, further crushing profits.
China brought in 46.28 million tonnes of the oilseed in the first six months of 2022, down 5.4% from the corresponding period a year ago, the data showed.
From South East Asia, Malaysian palm oil prices plunged more than 6% on Wednesday due to weak July exports and as fears of renewed COVID-19 curbs in China sparked a selloff in rival Dalian oils.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange slid 276 ringgit, or 6.71%, to 3,840 ringgit ($866.62) a tonne by the midday break.
Malaysia’s palm oil stocks at end-June rose to their highest in seven months as its exports were throttled by rival Indonesia’s policies to boost its own shipments, industry regulator data showed on Tuesday.
Exports from the world’s second-largest producer during July 1-10 fell between 2.7% and 21% from a month-ago period, cargo surveyors said.
($1 = 4.4310 ringgit).
From Australia, yesterday’s local markets were a mixed bag.
New crop wheat and barley values were a touch softer. Canola was up $10-15/t.
Old crop delivered wheat bids were a touch stronger for August homes.
WA ASW1/APW2 wheat trading actively yesterday.
The next 4 days are looking relatively dry for most winter cropping regions, except southern WA.
Rain forecasts start to build from Sunday for most of southern WA and south east Vic with totals up to 25mm.
Most of SA, NSW and Qld are forecast to receive less than 10mm.
On international trade scene, the Taiwan Flour Millers’ Association purchased an estimated 44,725 tonnes of milling wheat to be sourced from the United States in a tender which closed on Wednesday.
The wheat was bought in one consignment comprising various types for shipment from the U.S. Pacific Northwest coast between Aug. 31 and Sept. 14.
The purchase involved 30,275 tonnes of U.S. dark northern spring wheat of 14.5% protein content bought at an estimated $395.05 a tonne FOB U.S. Pacific Northwest coast.
It also involved 9,900 tonnes of hard red winter wheat of 12.5% protein bought at $394.26 a tonne FOB and 4,550 tonnes of soft white wheat of 10.0% protein bought at $400.13 a tonne FOB.
The consignment has an additional freight charge of $52.93 per tonne for ocean shipping from the U.S. Pacific Northwest coast to Taiwan, they said.
The seller of the dark northern spring and soft white wheat was said to be trading house ADM, while the hard red winter was said to have been sold by trading house CHS.
In its last reported tender on June 29, the association purchased an estimated 40,000 tonnes of milling wheat, also to be sourced from the United States.
The Korea Feed Association (KFA) has issued an international tender to purchase up to 136,000 tonnes of animal feed corn to be sourced from optional origins.
The deadline for submission of price offers in the tender is also Wednesday, July 13.
The KFA’s Incheon section, also known as the Feed Buyers’ Group, is seeking the corn in two consignments of up to 68,000 tonnes.
The first consignment is for arrival in South Korea around Oct. 20. Shipment is sought between Sept. 16 and Oct. 5 if the corn is sourced from the U.S. Pacific Northwest coast, between Aug. 27-Sept. 15 if from the U.S. Gulf or Black Sea region/east Europe, between Aug. 22 and Sept. 10 if from South America and between Sept. 1 and 20 if from South Africa.
The first consignment is for arrival in South Korea around Oct. 30. Shipment is sought between Sept. 26-Oct. 15 if the corn is sourced from the U.S. Pacific Northwest coast, between Sept. 6-25 if from the U.S. Gulf or Black Sea region/east Europe, between Sept. 1-20 if from South America and between Sept. 11-20 if from South Africa.
That’s all, thank you.
To all of you, I wish you a good day and … Good Harvest 2022!
Author: Sandro F. Puglisi
