Good morning Farmer Family …
US farm markets were mixed but mostly weaker on Tuesday.
Corn prices fell more than 2.5% and soybeans also declined by 1.34%.
Forecasts for rain next week, has increased optimism for sizable U.S. crops, despite persist some pockets of stress from hot and dry conditions.
The U.S. Department of Agriculture (USDA) late on Monday rated 64% of the U.S. corn crop in good-to-excellent condition, unchanged from the previous week, while analysts had expected a decline of 1 percentage point.
For soybeans, the USDA rated 61% of the crop as good-to-excellent, down from 62% in the previous week, while analysts on average had expected no change.
Soymeal stayed relatively firm through the Tuesday pullback, ending the session with fractionally gain by 0.12%.
Bean oil faded the most on the day with 2.07% losses by the bell.
Wheat prices finished lower after a choppy session.
Particularly, prices declined after Egypt’s state grains buyer cancelled the international wheat purchase tender that had attracted offers of U.S. supplies.
Thus, Chicago SRW wheat price ended the day off the lows but still fractionally in the red by 0.06% .
Kansas City wheat prices closed with 0.54% losses.
Minneappolis spring wheat prices ended the day with losses around 1%.
Commodity funds yesterday were net sellers of CBOT corn, soybean, soyoil, soymeal and wheat futures contracts.
Pressure on markets, also stemmed from hopes that a deal will be found to export more grains out of Ukraine as Russian President Vladimir Putin met with his Turkish counterpart in Iran to discuss the matter.
The Russian leader said not all the issues had been resolved yet on grain shipments, “but the fact that there is movement is already good.”
On this morning, Chicago corn and soybean prices lost more ground.
Wheat also slid.
The most-active corn contract on the Chicago Board of Trade (CBOT) lost 0.8% to $5.90-1/4 a bushel, as of 04:13 GMT, and soybeans gave up 1% to $13.44-1/4 a bushel.
Wheat dropped 0.3% to $8.10 a bushel.
In energy market, oil prices slumped more than $1 a barrel on Wednesday, pressured by global central bank efforts to tame inflation and ahead of expected builds in U.S. crude inventories as product demand weakens.
Indeed, Brent crude prices for September fell $1.50, or 1.4%, to $105.85 a barrel by 06:45 GMT, while U.S. West Texas Intermediate (WTI) crude for August slipped $1.40, or 1.3%, to $102.82 per barrel.
The WTI contract will expire later on Wednesday.
The more active September WTI contract was at $99.09 a barrel, down $1.65.
Both contracts settled about 1% higher on Tuesday.
In the United States, crude stocks rose by about 1.9 million barrels for the week ended July 15, according to market sources citing American Petroleum Institute figures on Tuesday.
Official weekly crude and fuel inventory data from the U.S. Energy Information Administration (EIA) is expected on Wednesday at 15:30 GMT.
Meantime, the U.S. 3:2:1 and gasoline crack spreads – measures of refining profit margins – both fell to their lowest since April on Tuesday, indicating weaker fuel demand.
In freight markets, the Baltic Exchange’s main sea freight index edged down on Tuesday as the capesize segment snapped a four-session streak of gains.
The overall index, indeed, was down 17 points, or 0.8%, at 2,145 points.
Particularly, the capesize index fell by 68 points, or 2.3%, to 2,899 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $560 at $24,043.
The panamax index was up 17 points, or 0.9%, at 1,889 points, logging its first rise in 21 sessions.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased by $155 to $17,001.
The supramax index rose by 2 points to 2,039 points, snapping a losing streak since June 23.
In equity markets, U.S. stock indexes on Tuesday rallied sharply.
Strength in technology stocks led the overall market higher on speculation that bad news is already priced into markets and upside earnings surprises will lead to outsized gains in stocks.
Travel stocks rallied after Bank of America said spending on debit cards is up +10% in the first two weeks of July, with a shift in spending towards experience and travel.
Tuesday’s U.S. housing data was mixed.
Indeed, U.S. June housing starts unexpectedly fell -2.0% m/m to a 9-month low of 1.559 million, weaker than expectations of an increase to 1.580 million.
Also, June building permits, a proxy for future construction, fell -0.6% m/m to 1.685 million, stronger than expectations of 1.650 million.
In this context, the S&P 500 climbed 2.8% to 3,936.69.
The Dow jumped 2.4% to 31,827.05.
The Nasdaq roared 3.1% to 11,713.15. The Russell 2000 surged 3.5% to 1,799.32.
On Thursday, the European Central Bank is expected to raise interest rates for the first time in 11 years in hopes of knocking down high inflation.
Meantime, Asian shares advanced on Wednesday on the wake of Wall Street.
Tokyo’s Nikkei 225 jumped 2.7% to 27,680.26, while the Hang Seng in Hong Kong gained 1.5% to 20,966.48.
In Seoul, the Kospi added 0.7% to 2,386.98.
Australia’s S&P/ASX 200 climbed 1.7% to 6,759.80, while the Shanghai Composite index rose 0.7% to 3,303.61.
Shares also rose in India and Taiwan.
China’s central bank kept its loan prime rate steady despite the latest data showing a significant slowdown in growth in the past quarter.
In currency trading, the U.S. dollar was unchanged at 138.18 Japanese yen.
The euro slipped to $1.0230 from $1.0231.
From South America, AgRural cited the Central-South region 2nd crop corn harvest reached 53% completion as of 7/14.
That compares with 30.1% during last year’s drought.
In Europe, the wheat market was driven by the Gasc tender on Tuesday.
The tender, however, has excluded European and Black Sea origins (read below).
European wheat offered some gains, despite another 1% jump in the eurodollar parity.
Corn prices, on the other hand, fell into negative territory.
European rapeseed, for its part, widened its losses.
The rebound in palm oil prices in Malaysia and oil did not provide support.
Germany’s 2022 winter barley crop will increase to about 9 million tonnes which would be up from about 8.8 million tonnes last year, the association of German farmers DBV said on Wednesday.
But there is concern wheat in Germany is suffering heat stress, it said.
Germany’s winter barley yields had risen to about 7.5 tonnes a hectare from 7.2 tonnes last year, the association said.
Early results of Germany’s rapeseed harvest show satisfactory results, it said.
But wheat is believed to have suffered from hot weather, especially in June, which may have hit quality and yields, it said.
Weather conditions still allow harvests to progress in France.
The impact of high temperatures nevertheless remains to be monitored on corn crops, the condition of which is deteriorating.
Meantime, Romania warned that it could export much less corn and sunflower this season as it prioritizes local supplies after drought battered harvests.
The country was by far the European Union’s biggest corn exporter last season, but output will probably slump significantly this year after dryness destroyed harvests in several parts of the country, Agriculture Minister Petre Daea said in an interview on Tuesday.
On the other hand, European fertilizer giant Yara International ASA said the energy crisis is forcing it to curb output and warned that more cuts may come.
The huge ammonia distributor has had to cut output due to high prices of natural gas, a crucial feed stock used to make crop nutrients.
Yara said on Tuesday that it has curtailed production at several sites, cutting capacity by 1.3Mt for ammonia and 1.7Mt for finished fertilizer.
From North Africa, the lowest offer in the international tender from Egypt’s state commodities buyer GASC to purchase wheat on Tuesday was believed to be $395 a tonne FOB for wheat sourced from the United States.
Another offer of U.S.-origin wheat was also submitted at $443 a tonne c&f, which includes ocean shipping costs.
The tender is unusual as wheat from Egypt’s main traditional suppliers in the Black Sea region and Europe cannot be offered.
French and Russian wheat was also offered in the tender but rejected as invalid.
Shipment was sought between Sept. 16-30, Oct. 1-15, Oct. 16-31 and Nov. 1-15.
Payment is in 180 days from contract award.
GASC has cut the minimum protein content of U.S. wheat that can be offered in the tender, apparently to stimulate more U.S. participation.
In its last major purchase on July 4, GASC bought an estimated 444,000 tonnes of wheat directly from trading houses sourced from France, Romania and Russia at $416 a tonne c&f.
GASC said the tender on Tuesday was cancelled as the offer prices it had received were higher than estimated prices.
Meantime, the Authority will seek to buy an unspecified amount of wheat in direct talks with trading houses without an international tender being issued.
The deadline for submission of price offers is Wednesday, July 20.
Offers can be submitted for all origins in GASC’s accepted list and must remain valid until Thursday, July 21.
The direct talks will seek wheat for shipment between Sept. 16-30, Oct. 1-15, Oct. 16-31 and Nov. 1-15 with traders free to offer for any of the shipment periods.
Payment is in 180 days
Tunisia’s food trade deficit doubled to 1.559 billion dinars ($496.99 million) due to the higher cost of imports of cereals and sugar in the first half of the year compared to the same period last year, the state Agricultural Observatory said on Tuesday.
The food trade deficit was 806 million dinars in the first half last year.
Tunisia’s total trade deficit widened by 56 % to $3.66 billion in the first half of 2022 , the state Institute of Statistics said this month.
($1 = 3.1369 Tunisian dinars).
From South Africa, the sharp upsurge in the cost of farming inputs for corn farmers in South Africa intensified the risk of production in a weather dependent industry, despite record-high commodity prices.
As a result, USDA attaché forecasts that South Africa’s corn area will stay flat in marketing year 2022/23.
However, South Africa should maintain its status as a net exporter of corn under normal weather conditions.
South Africa’s corn crop in marketing year 2021/22 is estimated at 15.3 million metric tons, a drop of nine percent from the previous year’s crop of 17.0 million metric tons, mainly due to excessive rainfall during the early parts of the season.
However, marketing year 2021/22’s corn crop is the fourth largest on record for South Africa and the third consecutive year of surpassing 15.0 million metric tons of corn.
From the Black Sea basin, the Russian government will start buying grain for the state’s reserve fund next month, the agriculture ministry said on Tuesday.
The ministry said it would plan to buy around 1 million tonnes of grain from Russian producers this year, starting in August.
The state’s grain reserve fund is designed to help smooth prices in the domestic market, allowing the government to cool the market by offloading supplies should prices rise too fast.
In Ukraine, the Ministry of Agrarian Policy and Food of Ukraine forecasts grain production at 52 mln tonnes in 2022/23 MY, while oilseeds at 13-15 mln tonnes.
Meantime, according to APK-Inform, last week, the purchasing prices of Ukrainian corn kept on decreasing in ports of Reni and Izmail.
The prices remained pressured by high domestic stocks, limited demand, growing supply of new-crop grain.
Particularly, the bid prices of corn decreased to 165-190 USD/t (sometimes 155 USD/t) or 5000-5800 UAH/t CPT-port compared to 175-195 USD/t and 5000-6000 UAH/t CPT-port in Reni and Izmail.
In Ukrainian ports of the Danube, the purchasing prices of barley were quite stable last week with slight dominance of downward trend.
The bid prices of new-crop barley for delivery in July-August totaled 130-155 USD/t CPT-port in Reni and Izmail compared to 130-160USD/t CPT-port last week.
The prices in hryvnia terms totaled 4000-5000 UAH/t CPT-port.
Few companies announced the maximal prices.
The demand was low.
The prices for delivery to port of Giurgiulești in July-August totaled 180-190 EUR/t, to Romania – 220-250 EUR/t DAP, and at CIF Constanta – 280-300 EUR/t.
Also the prices of Ukrainian wheat for delivery to ports of the Danube and some European countries declined.
Particularly, the bid prices of new-crop 2-grade, 3-grade and feed wheat decreased in ports of Reni and Izmail by 10 USD/t to 180-195, 175-190 and 160-180 USD/t СPT-port.
The bid prices in hryvnia terms of food and feed wheat totaled 5300-6350 and 4800-5500 UAH/t CPT-port.
The bid prices of 12.5% and feed wheat for delivery in July-August to Bulgaria totaled 290-300 and 270-280 USD/t DAP, to Romania – 280-300 and 260-280 EUR/t DAP.
The bid prices of 12.5% wheat at CIF Constanta totaled 310-325 EUR/t.
They decreased by 20 EUR/t to 310-320 EUR/t DAP for delivery to Lithuania.
Meantime, according to the export statistics provided to APK-Inform, Ukraine supplied abroad 1.4 mln tonnes of grain in June, down by 43% y/y (2.5 mln tonnes), but up by 22% compared to May (1.1mln tonnes).
Particularly, Ukraine exported 1.2 mln tonnes of corn (-52% y/y, +12% m/m), 142.7 thsd tonnes of wheat (-78% y/y, up 3.2 times m/m) and 36.2 thsd tonnes of barley (-44% y/y, up 3.2 times m/m).
In 2021/22 MY that ended on June 30, Ukraine exported 18.7 mln tonnes of wheat (+13% y/y), 5.8 mln tonnes of barley (+37% y/y), and 515.5 thsd tonnes of rye, oats and peas (+35% y/y).
Taking into account blockage of seaports in Ukraine, APK-Inform sees wheat export from Ukraine at 12 mln tonnes in 2022/23 MY (+36% y/y), barley – 1.5 mln tonnes (-74%), corn – 23 mln tonnes.
According to the Bureau of National Statistics of the Agency for Strategic Planning and Reforms of the Republic of Kazakhstan, May wheat export from the country totaled 299.8 thsd tonnes, down 38% m/m and down 41% y/y.
It is the lowest May export over the last 11 seasons.
In July-May 2021/22 MY, Kazakhstan exported 5.8 mln tonnes of wheat, up 10% compared to the same period of the previous season.
Uzbekistan imported 2.6 mln tonnes of Kazakh wheat in July-May 2021/22 MY, down 14.3% y/y, Tajikistan – 856 thsd tonnes, down 5.3% y/y.
Iran significantly raised purchases of Kazakh wheat to 765 thsd tonnes in July-May 2021/22 MY, up 3.9 times y/y.
APK-Inform forecasts export of Kazakh wheat at 6.4 mln tonnes in full 21/22 MY and at 7 mln tonnes in 2022/23 MY.
In January-May, Azerbaijan imported 355.53 thsd tonnes of wheat, down by 9.7% compared to the same period of 2021, reported the State Customs Committee of the Republic of Azerbaijan.
In the reporting period,the purchased volumes of wheat in monetary terms totaled 124.5 mln USD, up by 23.8% y/y.
Besides, the imports of vegetable oils increased by 12.1% to 59.21 thsd tonnes at the sum of 94.15 mln USD (up by 34.3%).
From the Middle Kingdom, China’s soybean imports from Brazil in June fell while shipments from the United States increased, customs data showed on Wednesday.
High prices, indeed, curbed demand for South American cargoes.
There are poor crush margins.
Crushers in the key processing hub of Rizhao are currently losing about 682 yuan from each tonne of soybeans processed.
Demand for soymeal from the feed sector has come under pressure after hog farmers made huge losses earlier this year, while edible oil prices have also slumped.
In this context, according to data from the General Administration of Customs, China imported 7.24 million tonnes of the oilseed from Brazil in June, down from 10.48 million tonnes a year earlier.
Total imports last month dropped 23% from a year before to 8.25 million tonnes.
However, shipments from the United States in June came in at 773,114 tonnes, up from 54,806 tonnes in the same month last year.
For the first six months of the year, China brought in 27.71 million tonnes of Brazilian beans, up from 26.13 million tonnes in the same period of 2021.
But imports from the United States for January to June came in at 17.54 million tonnes, down from 21.57 million tonnes the previous year.
Meantime, China’s sow herd at the end of June rose for the second consecutive month, as farmers increased production amid rising pig prices.
The sow herd at the end of June was at 42.77 million head.
The figure was a 2% monthly increase from 41.92 million reported at the end of May, but down 6.3% from a year earlier.
China’s end-May sow herd saw its first monthly increase in a year.
Rising pig prices lately, however, have boosted production.
China’s state planner had earlier urged the country’s top hog breeders to ensure steady supplies after prices surged since May.
China’s massive agricultural sector is facing growing risks as a result of extreme weather and shifting planting conditions brought about by climate change, an official with the agriculture ministry said on Wednesday.
China’s farming belts have been hit by record temperatures and rainfall this year, as well as drought in the north.
Thus, the country is facing a surge in “extreme meteorological disasters, which have become more and more abnormal and unpredictable, bringing more and more challenges to agricultural production”.
China will maintain grain supplies this year by increasing production in unaffected regions.
Overall planting conditions remain favourable and autumn grain production was likely to be largely unchanged.
China is providing to take action to control pests and diseases caused by the changing climate.
Planting methods are already changing as farmers responded to shifts in weather patterns.
there are also risks of forest fires and the spread of pests and diseases.
On this wake, China said it would set up a food security system capable of adapting to climate change, and would impose stricter controls over the use of farmland, with the government committed to keeping total arable land at a minimum of 1.2 million square kilometres.
From South East Asia, India plans to secure fertiliser supplies and hedge against price rises by expanding its footprint in mineral-rich countries through investments and multi-year import deals, fertiliser minister Mansukh Mandaviya said on Wednesday.
The chase for supply security comes as prices of key crop nutrients such as urea, potash and Di-ammonium Phosphate (DAP) have jumped to records following sanctions on key producers such as Belarus and Russia and lower supplies from Morocco and China.
Thus, Indian firms are looking to buy stakes in phosphoric acid mines in Senegal and DAP mines in Saudi Arabia and similar assets in Africa and Canada.
India imports about a third of its annual consumption of 60 million tonnes of soil nutrients.
The fertiliser subsidy could rise to a record 2.5 trillion rupees in the current fiscal year to March 31.
“Our priority is to get fertilisers and raw materials at lower prices to secure our food security and timely availability to our farmers,” the Ministry said.
Indian companies could sign 3- to 5-year deals to annually import 2 million tonnes of phosphatic fertilisers.
Some firms have already signed 5-year deals this year with companies in Jordan and Israel for higher volumes of fertiliser and raw materials.
India has also signed a three-year deal with Russia’s Phosagro for 500,000 tonnes of DAP and renewed one of similar duration with Oman’s Omifco for a million tonnes of urea a year.
From Australia, local markets in the west picked up a bid on old crop wheat yesterday.
Clear Grain Exchange traded with some liquidity ASW1 at $430 FIS and APW1 at $480 FIS.
New crop wheat bids lifted $5-10/t across the board while barley and canola values were also quoted higher over the day.
The next 8 days are looking relatively dry for NSW and SA with less than 10mm expected.
Vic is now looking to receive between 5-25mm.
Wide areas of WA and Qld are forecast to receive between 10-25mm with some localised falls of up to 50mm in central and south west Qld, parts of NNSW and coastal WA.
On international trade scene, Jordan’s state grain buyer is believed to have made no purchase in an international tender to buy 120,000 tonnes of milling wheat which closed on Tuesday.
Two trading houses participated, CHS and Cargill.
Meantime, the state grain buyer has issued an new international tender to buy 120,000 tonnes of milling wheat which can be sourced from optional origins.
The deadline for submission of price offers in the tender is July 26.
Pakistan tendered for 200,000t international milling wheat, for shipment first half September; they still have another tender out for 300,000 tonnes for which offers were to be submitted last Monday.
That’s all, thank you.
To all of you, we wish you a good day and … Good Harvest 2022!
Author: Sandro F. Puglisi
