Good morning Farmer Family …
US farm markets were mixed but mostly lower on Thursday.
Wheat prices fell for the fourth straight day on optimism about a deal that could lead to the resumption of Ukrainian Black Sea grain exports.
Thus, CBOT SRW wheat contract was 1.94% lower and Kansas City HRW wheat price was down 1.57%.
Minneapolis spring wheat was firmer, but still 0.36% lower on the day.
Corn prices, in contrast, rose for the sixth time in seven sessions on growing concerns about hot weather stunting crop development in the U.S. Midwest during the key pollination phase.
The 8-14 day outlook, indeed, shows chance for hot and dry weather for much of the Western Corn Belt and into parts of IL near the end of July.
Thus, July corn prices rolled off the board at $6.95, while Sep contract was up 0.83%, coming back above $6.
Soybean pricees ended 0.88% lower after trading both sides of unchanged, as concerns about a weakening global economy cooling demand seeped through the market.
Soybean prices have crumbled after coming within a nickel of all-time highs in June and now were trending about 65 cents lower than a year ago.
Soymeal prices tried to hold things up, with gains of 0.39%.
Soy oil was a drag on the market, down 1.46%.
On this morning, the most-active wheat contract on the Chicago Board of Trade (CBOT) added 0.8%, as of 0315 GMT, but the market is on track for its biggest weekly decline since early April as it has dropped 10.2% this week.
Corn and soybeans gained ground, but both markets are poised to end the week in a negative territory.
Corn is down 2.6% this week and soybeans have lost more than 3%.
Strong demand for U.S. cargoes underpinned some grain prices.
Exports of U.S. wheat in the week ended July 7 totalled more than 1 million tonnes, U.S. government data showed on Thursday.
That was the biggest weekly tally since March 2020.
USDA indeed reported weekly sales of 1,017,156 tonnes of “old crop” wheat, harvested in 2022.
China bought 265,300 MT, with South Korea buying 148,400 MT.
Another 30,000 tonnes of “new crop” wheat to be harvested in 2023 was sold, for a total of 1,047,156 tonnes.
As for corn, the report tallied old crop export bookings at 59,027 MT. That was well above the previous weeks net reduction, but down 57.5% vs. the same week last year.
New crop sales were reported on the high end of estimates at 348,156 MT.
That was a 3-week high.
Sales of sorghum were at a 7-week low of a net cancellation of 2,555 MT.
Weekly export figures have provided little support for soybeans.
The report, indeed, showed a MY low with net cancellations of 362,885 MT for old crop.
That was below last week’s net cancelations and below the trade estimates coming in.
Much of that was switched from unknown, with China cancelling 130,759 MT.
New crop sales were tallied at 113,944 MT, on the low end of expectations and a 9-week low.
Soymeal export sales were below the trade estimate at 8,236 MT, with an additional 145,894 MT for 22/23.
Soybean oil saw 1,011 MT of exports booked during the week, above last week’s met reduction.
Analysts are expecting that the National Oilseed Processors Association report out this afternoon to show the June soy crush at 164.484 million bushels, which would be the lowest level in nine months.
Meantime, commodity funds yesterday were net sellers of CBOT soybeans, wheat and soyoil futures contracts and net buyers of CBOT corn and soymeal.
On the weather side, Corn Belt rain amounts through Wednesday are expected to range from 1/3 to 2 inches of rain in 65% of the region with 2 ½ to 3 inches possible; far western areas will be the driest.
Temperatures are forecast to be near to slightly above normal.
The Southeast is forecast to receive ¾ to 2 ½ during the period with a few amounts of three to four inches.
Temperatures are forecast to be near to slightly below normal.
The US Delta is forecast to receive 1/10 to ¾ of an inch with 1-3 inches possible, especially in the south.
Temperatures are forecast to be near normal.
35% of the HRW area might receive 1/10 to ¾ of an inch of rain as temperatures average above normal.
Mostly above normal temps in the Canadian Prairies during the period with perhaps 75% of the region receiving 1/3rd to 2 inches.
In energy markets, oil prices rose on Friday amid prospects of a less aggressive U.S. rate hike, although worries about a recovery in demand capped gains.
Thus, Brent crude futures for September delivery rose 94 cents, or 1.0%, to $100.04 a barrel by 06:30 GMT, while WTI crude rose 63 cents, or 0.7%, to $96.41 a barrel.
The rate hike uncertainty and weak economic data pushed both oil contracts to lows on Thursday.
Still, both Brent and WTI had clawed back nearly all losses by the end of the trading session, although concerns about the outlook for demand continue to keep a lid on oil prices.
China’s refinery throughput in June shrank nearly 10% from a year earlier, with output for the first half of the year down 6% in the first annual decline for the period since at least 2011, data showed on Friday.
Meanwhile, U.S. President Joe Biden will on Friday fly to Saudi Arabia, where he will attend a summit of Gulf allies and call for them to pump more oil.
However, it should to note, that Saudi Arabia, the world’s largest oil exporter, more than doubled the amount of Russian fuel oil it imported in the second quarter to feed power stations to meet summer cooling demand and free up the kingdom’s own crude for export, data showed.
Data obtained by ship tracking, indeed, showed Saudi Arabia imported 647,000 tonnes (48,000 barrels per day) of fuel oil from Russia via Russian and Estonian ports in April-June this year.
That was up from 320,000 tonnes in the same period a year ago.
For the full year 2021, Saudi Arabia imported 1.05 million tonnes of Russian fuel oil.
The increased sales of fuel oil, used in power generation, to Saudi Arabia show the “challenge” that Biden faces as his administration seeks to isolate Russia and cut its energy export revenues.
While many countries have banned or discouraged purchases from Russia, China, India and several African and Middle Eastern nations have increased imports.
In freight markets, the Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities, edged up on Thursday as capesize rates hit a three-week peak and offset weakness in the panamax and supramax segments.
The overall index, indeed, was up 8 points, or 0.4%, at 2,010 points.
Particularly, the capesize index gained 123 points, or 5.3%, to 2,457 points, its highest since June 21.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $1,017 at $20,375.
The panamax index was down for a 18th straight session, shedding 88 points, or 4.4%, to 1,920 points, its lowest since Feb. 7.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased by $795 to $17,280.
The supramax index fell by 27 points to a fresh five-month low of 2,050 points, registering its 16th straight decline.
In equity markets, U.S. stock indexes Thursday settled mixed.
The S&P 500 and Dow Jones Industrials dropped to 3-week lows.
U.S. weekly initial unemployment claims unexpectedly rose +9,000 to an 8-month high of 244,000, showing a weaker labor market than expectations of unchanged at 235,000.
The U.S. June final-demand PPI rose +1.1% m/m and +11.3% y/y, stronger than expectations of +0.8% m/m and +10.7% y/y.
Jun PPI ex-food & energy rose +8.2% y/y, right on expectations and easing from May’s +8.5% y/y increase.
The stronger-than-expected increase in producer prices pushed the 10-year T-note yield Thursday up +3.1 bp to 2.965%.
The yield on the 10-year Treasury, which affects mortgage rates , was at 2.94% early Friday.
However, it remains lower than the two-year Treasury, which is at 3.12%.
That’s a relatively rare occurrence, and some investors believe it augurs a potential recession.
Meantime, bank stocks slumped, ledding the overall market lower.
Also, energy stocks retreated after crude prices fell to a 4-1/2 month low.
Stock indexes recovered from their worst levels after St. Louis Fed President Bullard and Fed Governor Waller said they favored a 75 bp rate hike at the July FOMC meeting, dampening speculation that the Fed may favor raising rates 100 bp.
However, traders are betting on a 44% chance of a full-point hike, up from zero a month ago, according to CME Group.
A rally in semiconductor stocks lifted the Nasdaq 100 into positive territory.
Taiwan Semiconductor Manufacturing indeed, raised its revenue forecast for the year.
In this context, the S&P 500 fell 0.3% to 3,790.38.
The Dow Jones Industrial Average fell 0.5% to 30,630.17.
The Nasdaq rose less than 0.1%, to 11,251.19.
Small-company stocks fell more than the broader market in another signal that investors are worried about economic growth.
The Russell 2000, indeed, fell 1.1% to 1,707.51.
Meantime, share prices were mixed in Asia on Friday.
Official data showed the Chinese economy shrank by 2.6% compared with the January-March period’s already weak quarter-on-quarter rate of 1.4%.
Compared with a year earlier, which can hide recent fluctuations, growth slid to a weak 0.4% from the earlier quarter’s 4.8%.
Anti-virus controls shut down Shanghai and millions of families were confined to their homes, depressing consumer spending.
More outbreaks this week in China and elsewhere in Asia have raised worries that COVID-19 controls might be restored, on top of existing precautions.
Thus, Tokyo’s Nikkei 225 index added 0.5% to 26,788.47.
The Kospi in Seoul was up 0.2% at 2,327.76 and shares also rose in India and Taiwan.
The Shanghai Composite index lost 0.8% to 3,254.74.
Australia’s S&P/ASX 200 dropped 0.8% to 6,596.90 and the Hang Seng in Hong Kong declined 1.9% to 20,347.96.
In currency trade, the U.S. dollar fell to 138.87 Japanese yen from 138.94 yen.
Rising U.S. interest rates have continued to push the dollar higher against other major currencies in countries where rates have not risen or have lagged the hikes by the Fed.
The euro rose to $1.0023 from $1.0020.
From South America, Brazilian corn may only be shipped to China next year because of demands made by Beijing regarding trade protocols being put in place, an agriculture ministry official was quoted as saying in Valor Economico newspaper on Thursday.
Beijing requested the monitoring of some weeds and fungi in corn crops, calling it a common request in negotiations of sanitary agreements and protocols.
But Brazilian farmers did not monitor the current second corn crop, thus exports will only be possible from the 2022/23 summer crop onwards as Brazilian corn growers who want to export to China will have to conform and report the conditions of the crop and the products used to fight pests and diseases.
Meantime, Brazil’s largest biofuel producer BSBios will build the country’s first big facility that uses wheat to make ethanol, which will increase, not diminish, food supplies, its chief executive said, amid a global discussion on prioritizing food over fuel production.
Whereas wheat-based ethanol plants are common in Europe and Canada, most of Brazil’s production comes from sugarcane and more recently from corn.
BSBios’ project underscores his confidence that farmers will expand wheat area and output, reducing dependence on imports and creating an even bigger domestic market for the cereal.
Brazil is forecast to produce a record 9 million-tonne crop this year, with growers sowing the largest area in 32 years .
BSBios’ facility should go on-stream in the second half of 2024 in Rio Grande do Sul, Brazil’s southernmost state and the country’s biggest wheat producer.
It will produce 111 million liters (29.3 million gallons) of ethanol in the project’s first phase.
Brazil’s wheat yields jumped fivefold to about 3,000 kilos a hectare since the 1970’s, according to agriculture research agency Embrapa.
Also, Brazil recently began testing a variety of drought resistant, genetically modified wheat in partnership with Argentina.
In Europe, wheat prices eased; rapeseed was esitant, while corn marked a net rebound, evolving in contrast to the other products.
Germany association of cooperatives, estimates national production up by +5.3% compared to last year.
German wheat production could thus exceed 22.5 Mt, a figure which nevertheless remains lower than the June estimate resulting from the arrival of the heat wave.
In rapeseed, German production is also announced to be up by +8.2% at 3.77 Mt, close to June expectations.
Consultancy Strategie Grains, in contrast, cut all its forecasts for this year’s grain crops in the European Union, as it fine-tuned wheat and barley estimates as harvest progresses in the bloc and pointing to dry weather threatening maize fields.
The EU wheat crop is now expected at 123.3 million tonnes, down from 124.4 million projected in June and below the revised 129.9 million tonnes harvested last year.
The barley harvest was seen at 49.6 million tonnes, down from 50.3 million last month and 51.9 million in 2021.
In maize, the crop was seen falling to 65.4 million tonnes, down from 66.8 million tonnes seen last month and 69.7 million last year.
On the wheat market, the analyst kept its EU export forecast nearly unchanged at 30.4 million tonnes.
Meantime, French farmers had harvested 50% of this year’s soft wheat crop by July 11 compared with 14% a week earlier and far ahead of last season after hot and dry weather boosted crop development, farm office FranceAgriMer said on Friday.
French farmers had only harvested 3% of the soft wheat crop by the same time in 2021.
An estimated 64% of soft wheat was in good or excellent condition, up from 63% the previous week but down from 76% last year, FranceAgriMer said in a cereal crop report.
Details per region showed contrasting results, with poor conditions in the south, much better ones in the north and excellent ones in the far east.
Winter barley harvesting was nearly over, with 97% of the crop gathered by Monday against 83% a week earlier and just 39% a year ago, the office’s report showed.
Durum wheat harvesting was 82% complete, versus 50% a week earlier, while 41% of the spring barley crop had been cut, from 14% the previous week.
A second wave of warm and dry weather forecast for next week is expected to keep field work brisk.
But the expected sweltering temperatures and sparse rain could hurt maize crops.
An estimated 83% of the maize crop was rated good or excellent by Monday, down slightly from 84% the previous week and compared with 89% a year earlier.
From the Black Sea basin, Ukrainian farmers have threshed 3.6 million tonnes of grain of the 2022 grain harvest from about 10% of the sowing area, Ukrainian agriculture ministry said on Friday.
The ministry said in a statement that the yield averaged 2.93 tonnes per hectare.
Ministry data showed that the volume included 1.7 million tonnes of wheat with an average yield of 2.88 tonnes per hectare, 1.8 million tonnes of barley with a yield of 3.09 tonnes per hectare and 77,300 tonnes of peas with a yield of 1.84 tonnes.
The ministry also said farmers harvested 679,200 tonnes of rapeseed from 133,700 hectares or 11% of the sown area.
The grain yield is far below last year’s level, both by a sharp rise in the cost of fertilizers and other necessary materials due to the blocked seaports, and by unfavourable weather in the south of the country, where harvesting is currently underway.
Meantime, Ukraine’s grain exports in the first seven days of July, the first month of the new 2022/23 season, were down 35.4% year on year at 598,000 tonnes, the agriculture ministry said on Monday.
The ministry data showed the exports in July included 435,000 tonnes of corn, 119,000 tonnes of wheat and 40,000 tonnes of barley.
Grain exports for the 2021/22 season ending June 30 rose 8.5% to 48.5 million tonnes, driven by strong shipments before the war started.
Russia, Ukraine, Turkey and the United Nations are due to sign a deal next week aimed at resuming Ukraine’s grain exports.
Russian farmers have harvested close to 20 million tonnes (Mt) of grain, according to its agriculture minister 15.5Mt of wheat and 3.5Mt barley and commenting that harvest pace and yields are higher than previous season on some crops.
Meantime, Russia continues to export wheat to non-NATO countries.
Nearly 735 K of wheat shipped from its deep-sea ports in the week ending July 13th with destinations including Iran, Libya, Egypt, Saudi Arabia, Algeria.
Turkey and Italy were also on the book.
Another 881 K is scheduled for departure by the end of the month.
This was actually double the total from the approximate same period last year.
From the Middle Kingdom, China is rolling out a quota system to limit exports of phosphates, in the second half of this year.
The quotas, set well below year-ago export levels, would expand China’s intervention in the market to keep a lid on domestic prices and protect food security while global fertiliser prices are hovering near record highs.
China is the world’s biggest phosphates exporter, shipping 10 million tonnes last year, or about 30% of total world trade.
Its top buyers were India, Pakistan and Bangladesh, according to Chinese customs data.
China appears to have issued export quotas for just over 3 million tonnes of phosphates to producers for the second half of this year, a China fertiliser analyst said.
That would mark a 45% drop from China’s shipments of 5.5 million tonnes in the same period a year ago.
Although China has imposed export duties on fertilisers in the past, the latest measures mark its first use of inspection certificates and export quotas, analysts said.
The surge in prices over the last year has raised concerns for Beijing, which needs to guarantee food security.
Domestic Chinese prices remain at a significant discount to global prices, however, and are currently about $300 below the $1,000 per tonne quoted in Brazil, incentivising exports.
DAP and monoammonium phosphate exports in the first five months of this year totalled 2.3 million tonnes, down 20% from a year ago.
On the other hand, China’s first-half pork output rose 8.2% year on the year to 29.39 million tonnes, official data showed on Friday, after an increase in the size of its breeding herd.
China’s overall pig herd contracted slightly by 1.9% compared to the same period a year earlier to 430.57 million heads, according to the National Bureau of Statistics.
From Australia, the threat of Foot and Mouth Disease (FMD) arriving in Australia continues to generate plenty of conversation and concern for agriculture.
It has domestic consumers on high alert and how that looks for the grain market on domestic feed grains.
The June unemployment rate was 3.5pc.
Experts report this would all but guarantee the RBA lifting the official interest rate 0.5pc for a third straight month.
Showers of rain continue to push through Western Australia growing regions, whilst parts of South Australia and Victoria are set to receive showers over the weekend.
On international trade scene, an importer group in the Philippines is believed to have bought around 110,000 tonnes of animal feed wheat in a tender.
Traders said two 55,000 tonne consignments were purchased, the first at an estimated $378 a tonne c&f and the second at an estimated $376.50 a tonne c&f.
Sellers were believed to be trading houses CHS and ETG.
Shipment of the first consignment had been sought during Oct. 5-25 if sourced from the Black Sea/European Union or Oct. 21-Nov. 10 from Australia.
Shipment of the second consignment had been sought during Oct. 20-Nov.9 if sourced from the Black Sea/European Union or Nov. 5-25 if from Australia.
It is believed the Philippines group made no purchase of 50,000 tonnes of feed corn also sought, which had been requested for shipment between Oct. 1-20.
Two other importer groups in the Philippines are also tendering for feed wheat on Friday, one seeking 50,000 tonnes and the other 40,000 tonnes.
Leading South Korean animal feedmaker Nonghyup Feed Inc. (NOFI) is believed to have purchased an estimated 135,000 tonnes of animal feed corn and 65,000 tonnes feed wheat in an international tender which closed on Thursday.
The corn was bought in two consignments, both at $325.49 a tonne c&f plus a $1.50 a tonne surcharge for additional port unloading.
The corn was expected to be either sourced from South America or South Africa.
The first consignment of 69,000 tonnes for arrival around Oct. 20 was bought from trading house Cargill.
The tender had sought shipment of the first consignment from South America between Aug. 22 and Sept. 10 or from South Africa between Sept. 1 and 20.
The second consignment of 66,000 tonnes for arrival around Oct. 30 was bought from trading house ADM.
The tender had sought shipment from South America between Sept. 1 and 20 or from South Africa between Sept. 11 and 30.
The Australian-origin feed wheat was bought in one consignment all at $369.88 a tonne c&f plus a $2.00 a tonne surcharge for additional port unloading. Seller was said to be CJ International.
Wheat shipment was between Sept.13 and Oct. 5, slightly different than in the tender.
That’s all, thank you.
To all of you, we wish you a good day and … Good Harvest 2022!
Author: Sandro F. Puglisi
