Good morning Farmer Family …
U.S. farm markets rose on Monday.
Worries about potentially stressful hot weather in the Midwest and Europe, coupled with bullish sentiment in crude oil and a weaker dollar, pushed up prices.
Thus, although corn faded off the highs into the close, that was still enough for 1.32% gains on the day.
Soybean prices ended the day 2.13% higher.
Soymeal prices closed up 0.81%.
Soybean oil led the way with 4.7% to 5.2% gains.
Corn and soybean prices sometimes follow trends in crude oil due to their respective roles as feedstocks for ethanol and biodiesel fuel.
Weather has been in the spotlight as the U.S. corn crop continued to pollinate, a key phase for determining yields.
However, after the CBOT close, the U.S. Department of Agriculture rated 64% of the U.S. corn crop in good to excellent condition, unchanged from the previous week.
For soybeans, the USDA rated 61% of the crop as good to excellent, down from 62% the previous week.
Weekend rains boosted crops in the eastern Midwest, but dryness persists in western areas as forecasts called for rising temperatures.
Thus, Chicago corn prices lost ground this morning, as weekly Crop Progress report showed that condition of the U.S. corn crop is stabilising in its key phase of development.
Indeed, the most-active corn contract on the Chicago Board of Trade (CBOT) lost 1.2%, as of 04:13 GMT, and soybeans gave up 0.7% to $13.70-1/4 a bushel.
As for wheat, all three contracts traded higher yesterday, fueled by bargain buying after the Chicago September contract tumbled nearly 13% last week, the biggest plunge on a continuous chart of the most-active contract since March 2011.
The return to GASC purchases with a desire to favor sources other than Black Sea and European wheat provided support for American wheat.
As a reminder, in this period of increased winter wheat harvests, prices in Chicago have been once again trading at prices equivalent to the end of February.
Thus, CBOT SRW wheat prices were 4.63% stronger at the bell, with the September 2022 maturity therefore rose above the $8/bbl threshold, yesterday.
Kansas City wheats gained 4.36% on the day.
Spring wheat prices closed up by 3.56%.
On this morning, wheat prices lost ground falling around 0.5%, after the yesterday’s strong rally.
Meantime, the Crop Progress report showed winter wheat harvest as 70% complete.
That was up 7% points from last week and 1% point under the average pace.
The PNW is just getting started with ID now 1% cut (average is 7%), MT at 8% (5%), OR at 2% (19%), and WA at 3% finished (11% average).
Colorado, Michigan, Nebraska, and South Dakota each have more than 1/3 of the crop in the fields as well.
NASS showed the spring wheat crop was 68% headed as of 7/17. That was up from 44% last week but trails the 90% average.
Conditions were 71% good/ex and just 6% poor/very poor.
Operators, also continuing to monitor talks among Russia, Ukraine, Turkey and the United Nations about resuming Ukraine’s Black Sea grain exports.
Negotiators will most likely meet this week, Ankara said, while a Turkish official said lingering “small problems” should be overcome.
Meantime, USDA’s weekly Export Inspections report had 1.074 MMT of corn shipments during the week that ended 7/14.
That was up from 934,533 MT during the week prior and near even with the 1.076 MMT during the same week last year.
China and Mexico were the top destinations with 455k MT and 325k MT respectively.
The season’s total shipment reached 50.3 MMT (1.98 bbu) according to the report, down 10.07 MMT (396 mbu) yr/yr.
As for soybean, the report had 362,622 MT of soybean exports for the week that ended 7/14.
That is up 4k MT wk/wk and 219k MT yr/yr.
China and Japan combined for over 2/3 of the week’s total.
The MYTD soybean export reached 52.538 MMT through 7/14 according to the weekly data.
That is still down 9.3% yr/yr.
As for wheat, the report showed the season’s wheat export reached 2.108 MMT as of 7/14.
That came via a 185,989 MT shipment last week, but trails the 2.871 MMT pace last year.
Meantime, commodity funds were net buyers of CBOT soybean, wheat, soyoil, corn and soymeal futures contracts yesterday.
In energy markets, oil prices ran out of steam on Tuesday after gaining more than $5 a barrel in the previous session with concerns that surging crude will feed into a demand-killing recession slightly outpacing continued worries about tight supply.
Thus, Brent crude futures for September settlement fell 43 cents to $105.84 a barrel by 04:46 GMT.
The contract rose 5.1% on Monday, the biggest percentage gain since April 12.
WTI crude futures for August delivery dipped 28 cents to $102.32 a barrel.
The contract climbed 5.1% on Monday and the largest percentage gain since May 11.
The August WTI contract expires on Wednesday and the more actively traded September future was at $98.98 a barrel, down 44 cents.
The underlying supply/demand imbalance is as tight as ever.
U.S. President visited top oil exporter Saudi Arabia last week, hoping to strike a deal on an oil production boost to tame fuel prices.
However, officials from Saudi Arabia, did not give clear assurances an output increase was secured.
Oil prices were backed by a softer U.S. dollar on Tuesday, which stood around a one-week low level, making greenback-dominated oil slightly cheaper for buyers holding other currencies.
However, the forecast on oil inventories in the U.S., was that crude and distillate supplies may have risen last week while gasoline stockpiles likely fell, has weighened on oil prices.
In other news, gas supplies from Algeria to Italy will become more significant in the coming years, Italian Prime Minister Mario Draghi said on Monday, after meeting Algerian President Abdelmadjid Tebboune in Algiers.
Draghi said Italy was a “privileged partner” of Algeria and that the two countries were also cooperating in the development of renewable energy.
In freight markets, the Baltic Exchange’s main sea freight index rose on Monday as higher rates for larger capesizes overshadowed a fall in the panamax and supramax segments.
The overall index, indeed, was up 12 points, or 0.56%, at 2,162 points.
Particularly, the capesize index rose 48 points, or 1.64%, to 2,967 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $394 at $24,603.
The panamax index was down 13 points, or 0.69%, at 1,872 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $123 to $16,846.
The supramax index fell by 2 points to 2,037 points.
In equity markets, U.S. stock indexes on Monday after an advance early in the session, turned lower by the close.
Apple, indeed, erased the early rally in stocks, after Bloomberg reported the company plans to slow hiring and spending growth next year in some divisions to cope with a potential economic downturn.
In addition, the U.S. July NAHB housing market index fell more than expected to a 2-year low.
Thus, the S&P 500 fell 0.8% to 3,830.85.
Gains in energy producers, big retailers and other companies that rely on consumer spending were outweighed by a pullback in health care and technology stocks.
The Dow slid 0.7% to 31,072.61 and the Nasdaq gave up 0.8%, to 11,360.05.
The Russell 2000 index of smaller companies dropped 0.3% to 1,738.42.
In the bond market, the yield on the 10-year Treasury rose to 2.98% from 2.96% late Friday.
The two-year yield, which rose to 3.17%, is still above the 10-year yield.
Some investors see that as an ominous sign that could presage a recession in a year or two.
Later this week, investors expect the European Central Bank on Thursday to raise interest rates for the first time in 11 years to combat inflation.
Many investors expect an increase of 0.25 percentage points, “but more is not unthinkable,” economists wrote.
Meantime, Asian shares were mostly lower on Tuesday.
Investors weighed oil prices, inflation worries and corporate earnings.
Japan’s benchmark Nikkei 225 reversed early losses and added 0.7% in afternoon trading to 26,982.50.
Australia’s S&P/ASX 200 slipped 0.6% to 6,645.70.
South Korea’s Kospi dipped 0.2% to 2,370.57.
Hong Kong’s Hang Seng dropped 0.8% to 20,685.61, while the Shanghai Composite fell 0.1% to 3,276.07.
In currency trading, the U.S. dollar edged up to 138.21 Japanese yen from 138.13 yen.
The euro cost $1.0135, down from $1.0146.
From Canada, Canadian provincial Alberta crop summary reported spring wheat condition rated 83pc good-to-excellent (82pc week ago, 39pc year ago), durum rated 64pc good-to-excellent (63pc, 33pc), barley rated 75pc good-to-excellent (76pc, 41pc), canola rated 68pc good-to-excellent (71pc, 33pc).
Crop growing conditions are reportedly best in the north-eastern region, with the lowest ratings evident in southern parts.
Crop development is marginally behind normal.
Provincial surface soil moisture rated 82pc good/excellent/excessive and 18pc fair/poor.
From South America, according to Safras & Mercado, Brazil’s wheat production could total 10.42 million tonnes in 2022.
That is up by 34.5% from previous year.
Meantime, corn harvest is moving along in Brazil for their second corn crop.
IMEA says 85% of the Mato Grosso crop was harvested as of Friday, which is up 11 points from last week to this week.
Meantime, Brazilian corn exports via southern ports in Parana state have continued to exceed expectations, with shipments rising 221% in the first half of the year.
From January to June, 1.9 million tonnes of corn were exported through the ports in Parana state, up from last year’s 591,538 tonnes, the Paranagua port authority said.
After two years without any corn exports in the month of June, corn shipments last month reached 354,424 tons, the authority said.
The data suggests the South American country is on track to export about 37.5 million tonnes this year, up about 80% from 2021.
On the other hand, Brazil’s 2022-23 soybean planted area was estimated to increase 2.6% to a record, and production could end up at 151.5 million tons, also a record, according to Safras & Mercado.
The growth in soybean area is expected to slow over the long term if producers plant more corn amid potential exports to China.
In Europe, the weekend had been marked by a sharp decline in wheat prices, but yesterday’s rebound in oil prices provided support also to the other commodities.
The euro/dollar parity, going back above 1.01 in anticipation of the European Central Bank’s interest rate meeting, scheduled for Thursday, also supported prices.
However, the concern that sweltering temperatures and dryness in Europe this week, could hurt corn crops were behind most of the rise in wheat prices.
A lower corn crop, indeed, means potentially higher demand for wheat in animal feed.
Prices were also supported by strong international demand after past week’s price falls and a lack of progress in talks for the setup of a safe shipping corridor for Ukraine’s wheat exports.
Another meeting between officials from Russia, Ukraine, Turkey and the United Nations to discuss resuming Ukraine’s Black Sea grain exports is “probable” this week.
Export optimism continued in Germany, with sellers of standard 12% protein wheat for September delivery in Hamburg were offering around 22 euros a tonne over the Euronext December contract.
However, low water levels after recent dry weather continue to prevent cargo vessels from sailing fully loaded on the river Rhine in Germany.
Water levels fell again over the weekend and shallow water is hampering shipping on the entire river in Germany south of Duisburg and Cologne.
Shallow water triggers surcharges on freight rates, increasing costs for cargo owners.
Consultancy Agritel expects the soft wheat crop in France to fall to 33.25 million tonnes this year due mainly to a lower area harvested.
The estimate was, however, above the French farm ministry’s projection made last week of a 2022 soft wheat crop at 32.90 million tonnes.
Thus, European wheat prices rebounded.
Corn prices have also increased both in old and new harvests.
In oilseeds, despite the rebound in palm oil prices in Kuala Lumpur and the firmness of oil, rapeseed prices changed little yesterday, posting on Euronext a timid increase for the November 2022 deadline of around + 1.
European Union countries are expected to reap a record soybean crop in 2022 due to increased acreage, with Italy retaining its leading role in the E.U., according to association UFOP.
Soybean production in the 2022/23 season will exceed 3 million mt, an increase of 15% compared to last year.
From the Black Sea basin, Russia exported 500,000 tonnes of grain last week, compared with 340,000 tonnes the previous week.
It’s currently expects the country to export more than 2 million tonnes of wheat this month.
The United States last week issued clarification reassuring banks, shippers and insurance companies that transactions with Russian food and fertiliser exports would not breach Washington’s sanctions on Moscow.
Traders consider this clarification “with very careful optimism”.
The harvesting data provided by Sovecon as of July 14 saw:
all grains at 19.9 mln tonnes vs 14.9 in 2021 season.
Particularly the wheat is at 15.5 mln tonnes vs 10.6 in 2021 season, barley at 3.5 mln tonnes vs 2.7 in 2021 season.
Yield are on an average of 4.1 tonnes/hectare for all grain, of which 4.2 for wheat, and 4.6 tonnes/hectare for barley.
Total harvested area, is 4.9 mln hectares of whic 3.7 for wheat and 0.8 mln hectares for barley.
Russia’s agriculture ministry has yet to publish harvesting data for the current season.
Meantime, Russian wheat export prices rose slightly last week, helped by a stronger rouble.
Indeed, according to the IKAR, Russian prices for wheat with 12.5% protein content and for supply from Black Sea ports rose by $2 to $360 a tonne free on board (FOB) at the end of last week.
Wheat prices for imminent supply were at $355-360 a tonne.
As for other Russian products, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 13,275 rbls/t ($234.13) -300 rbls (Sovecon).
Price for sunflower seeds was at 26,250 rbls/t +300 rbls (Sovecon). Price for domestic sunflower oil was at 74,000 rbls/t, unchanged from prior week (Sovecon).
Price for domestic soybeans was at 34,925 rbls/t -200 rbls (Sovecon). Export price for sunflower oil was at $1,430/t -$110 (Sovecon).
Export price for sunflower oil was at $1,310/t -$60 (IKAR).
Price for white sugar, Russia’s south was at $1,089.9/t +$76.3 (IKAR).
($1 = 56.7000 roubles).
In Ukraine, according to APK-Inform, the indicative export prices of wheat and barley continued declining last week in deep-sea ports of Ukraine.
Indeed, the indicative offer prices of 12.5%,11.5% and feed wheat decreased by 10-25USD/t to 355-370, 350-365and 315-340 USD/t FOB Black Sea for delivery in July-August.
The indicative offer prices of barley declined by 15-25 USD/t to 315-330 USD/t FOB Black Sea.
According to APK-Inform, last week, also the export prices of corn at western borders and for delivery to European countries were fluctuating with slight dominance of downward trend.
The situation was additionally complicated by farmers of some EU’s countries (particularly Poland and Bulgaria), who were not happy with pressure on their local prices coming from a flow of Ukrainian agricultural products.
Thus, they asked their governments to limit this flow or close the border at all.
In this context, the bid prices of corn for delivery in July-August decreased by 10 USD/t to 185-200 USD/t DAP Poland, by 5 EUR/t to 205-215 EUR/t DAP Romania, while they increased by 5-10 USD/t to 195-210 USD/t DAP Hungary.
The bid prices of corn were announced at 250-260 USD/t DAP at Bulgarian border, at 215-225 and 250-265 EUR/t DAP in Romanian cities Botosani and Constanta.
The prices for delivery to port of Constanta increased to 270-285 EUR/t (July-August).
Meantime, officials from Russia, Ukraine, Turkey and the United Nations will most likely meet this week to discuss resuming Ukraine’s Black Sea grain exports.
Technical matters like forming a monitoring centre in Istanbul, identifying safe routes, and checkpoints at port exits and entries are on the agenda.
There is a general expectation that the agreemnt will be signed this week.
A Kremlin aide told reporters on Monday that the presidents of Russia and Turkey would discuss the issue during the meeting in Tehran today.
From the Middle Kingdom, China’s Customs data showed June corn imports were 2.2 MMT, compared to 3.576 MMT in June ’21.
China also brought in 15% less sorghum with 930k MT for June ’22.
China’s June wheat imports were 520k MT according to customs data.
That was down 31.3% from June ’21.
Through the first 6 months of 2022, China had brought in 4.94 MMT of wheat, trailing last year’s pace by 7.8%.
Meantime, China soybean reserve sales of imported soybeans were small again at just 15 K of the ½ MMT offered.
That is likely a signal that soybean procurements might be slow for the short term.
Another ½ MMT auction is scheduled for July 22.
From South East Asia, Indonesia exported only 678,000 tons of palm oil in May, which is down 77% from May of 2021.
But during this period, the export ban was in place to May 23 (started April 28).
Meantime, the country on Saturday announced they will remove all palm export levies until August 31 and set the max palm oil export tax of $240/ton from Sept. 1 when the reference price is above $1,500 per MT.
The Philippines is looking to strike import deals with some of the world’s biggest fertiliser suppliers, including China and Russia, to help lower costs and increase food production amid high inflation, the government said on Tuesday.
President Ferdinand Marcos Jr. has vowed to boost agricultural output over the next six months, saying he wants the Southeast Asian country to reduce its reliance on food imports and avoid being hit hard by a food crisis looming over the world.
The Philippines uses 2.5 million tonnes of fertilisers every year, according to the Fertilizer and Pesticide Authority.
From Australia, local markets started the week slow and steady. Current crop wheat bids were softer by $5-10/t.
The ASX Jan-23 eastern wheat contract eased $5/t to settle at $420/t.
Canola new crop values were relatively unchanged.
The next 8 days are looking relatively dry for NSW, Vic and SA with less than 10mm expected.
Wide areas of WA and Qld are forecast to receive between 10-25mm with some localised falls of up to 50mm forecast in CQ and coastal WA.
On international trade scene, private buyers from the Philippines booked 110k MT of feed wheat via an international tender.
A separate group also bought 40k MT of feed wheat via tender.
The Trading Corporation of Pakistan is on the market for 300k MT of wheat.
TCP Pakistan got the lower offer by Viterra at 404.86 $/t for immediate payment terms, while by Aston at 420 $/t for payment at 90 days.
South Korea’s Major Feedmill Group (MFG) purchased about 60,000 tonnes of soymeal in a private deal on Monday without an international tenders being issued.
The soymeal is expected to be sourced from South America.
It was purchased from trading house Bunge at an estimated $537.97 a tonne c&f including a surcharge for additional port unloading.
It was for shipment between Sept. 18 and Oct. 7 with arrival in South Korea around Nov. 15.
The purchase was made after South Korean importer NOFI rejected all offers in an international tender for soymeal on Monday with the lowest price received by NOFI said to be $541.49 a tonne a tonne c&f.
That’s all, thank you.
To all of you, we wish you a good day and … Good Harvest 2022!
Author: Sandro F. Puglisi
