Good morning Farmer Family …
US farm markets were sharply down yesterday.
Corn prices ended the day with double digit losses, down 2.79%.
The front month soybean prices closed 2.10% weaker.
Soymeal prices ended the session 0.48% in the red.
Bean oil prices fell triple digits with 2.38% losses.
Thus, corn prices fell to two-week lows and new-crop soybeans hit a six-month low.
Improving crop weather in the Midwest and news of a deal to restart Ukraine’s Black Sea grain exports pushed markets lower.
As for wheat, after trading in the black through midday, the wheat complex faded into double digit losses for the bell.
All three markets fell to the day’s lows late in the session after Turkish President Tayyip Erdogan’s office said Ukraine, Russia, Turkey and U.N. Secretary-General Antonio Guterres will sign a deal on Friday to resume Ukraine’s Black Sea grain exports.
Thus, CBOT SRW wheat prices, left the board 1.62% lower.
Kansas City wheat closed 1.06% in the red.
Minneapolis spring wheat prices ended Thursday with 1.27% losses.
Weekly Export Sales data showed 33,900 MT of corn was sold during the week of 7/14.
That was near expectations and came via sales to Japan and Mexico offsetting cancelations from unknown.
New crop bookings were 570,200 MT for the week, which was above the range of estimates.
That had the forward book at 7.4 MMT. USDA reported 1.109 MMT of corn was shipped through the week.
Accumulated exports reached 54.524 MMT.
For milo, the weekly update showed 5.9k MT were sold for 21/22 delivery with no new crop bookings.
As for soybean, the report had 203,500 MT of old crop beans sold during the week of 7/14.
That was above estimates and led by China.
China also led new crop purchases with 136k MT of the 254k MT total.
Total forward sales to all destinations is 14.1 MMT, with nearly half for China.
Weekly bean shipments were 499,900 MT, bringing the accumulated total to 52.973 MMT.
For the products, USDA reported 109,300 MT of soymeal sales.
That was as expected, though 27,600 MT were sold for 22/23 delivery.
Traders weren’t expecting more than 150k MT.
Soybean oil sales were 600 MT for 21/22 with no forward bookings reported.
As for wheat, FAS data had 511,100 MT of wheat sales reported for the week that ended 7/14.
That was down 50% wk/wk but was mid range of the pre report estimates.
Philippines and unknown were the top buyers, each with over 100k MT.
Wheat shipments were reported as 141,800 MT, for a MYTD pace of 1.856 MMT.
That is down 22% yr/yr.
Meantime, commodity funds were net sellers of CBOT soybean, corn, wheat, soyoil and soymeal futures contracts on Thursday.
On this morning, Chicago corn prices slid 1.1%, with the market falling to its lowest in almost eight months, while soybeans lost 0.5%
Wheat, on its part fell by 2.3%.
For the week, corn is declining 6%, falling for a second week in a row.
In energy markets, oil prices climbed in Asia trading on Friday, rebounding from previous declines.
Thus, Brent crude futures rose $1.61, or 1.6%, to $105.47 a barrel by 06:30 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained $1.43, or 1.5%, to $97.78 a barrel.
On Thursday, U.S. benchmark crude oil had lost 3.53% to settle $96.35 per barrel on the New York Mercantile Exchange.
Brent crude, faded 2.86% to $103.86 per barrel.
The sign of softening U.S. demand weighed on oil prices and sent both benchmarks down this week, in spite tight global supplies.
Indeed, the outlook for the supply issue remains problematic, and until proven evidence for softened demands comes into sight, supply shortage will keep the oil prices staying strong.
In fact, while the U.S. gasoline demand, in the midst of the peak summer driving season, has dropped nearly 8% from a year earlier, due the record prices at the pump, in contrast, we are watching signs of a strong demand in Asia.
Demand in India for gasoline and distillate fuels, indeed, rose to record highs in June, despite higher prices, with total refined product consumption running at 18% more than a year ago.
In freight markets, the Baltic Exchange’s main sea freight index rose on Thursday as an uptick in rates for smaller panamax and supramax vessels offset weakness in the capesize segment.
The overall index, indeed, was up 5 points, or 0.24%, at 2,118 points, snapping two sessions of losses.
Particularly, the capesize index fell for the third straight session, losing 66 points, or 2.4%, to 2,653 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down by $553 at $21,999.
The panamax index, in contrast, was up 79 points, or 4%, at a nine-day high of 2,051 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased by $709 to $18,455.
The supramax index also rose by 16 points to 2,073 points, its highest since July 13.
In equity markets, U.S. stock indexes Thursday recovered from early losses and posted moderate gains.
Stocks initially moved lower.
US President Biden tested positive for COVID.
Concerns about the economic implications of U.S. weaker-than-expected economic data growed.
U.S. weekly initial unemployment claims, indeed, unexpectedly rose +7,000 to an 8-month high of 251,000, showing a weaker labor market than expectations of a decline to 240,000.
The U.S. July Philadelphia Fed business outlook survey unexpectedly fell -9.0 to -12.3, weaker than expectations of an increase to 0.8 and the steepest pace of contraction in 2 years.
U.S. June leading indicators fell -0.8% m/m, weaker than expectations of -0.6% m/m and the biggest decline in 2 years.
Also, airline stocks tumbled after United Airlines Holdings said it is limiting flights for the rest of this year and curtailing growth plans in 2023 due to labor shortages and traffic control issues.
Stocks of energy companies also fell as the price of U.S. crude oil settled 3.5% lower.
Meantime, the +50 bp rate hike by the European Central Bank (ECB) also weighed on stocks.
On the other hand, strong earnings results from Tesla and Danaher fueled optimism for the corporate Q2 earnings season and boosted the overall market.
Tesla climbed 9.8%.
Chip stocks gained on strong demand from mobile phone shipments from China.
Stocks also rallied as the 10-year T-note yield dropped -11.0 bp to 2.917%.
In this context, the S&P 500 climbed 1% to 3,998.95, returning to its highest level in six weeks.
The Dow rose 0.5% to 32,036.90 and the Nasdaq rose 1.4% to 12,059.61.
The Russell 2000 gained 0.5%, at 1,836.69.
Meantime, Asian shares were mixed on Friday.
Tokyo, Shanghai and Hong Kong gained while Sydney and Seoul declined.
Particularly, Tokyo’s Nikkei 225 index gained 0.4% to 27,914.66, while the Hang Seng in Hong Kong added 0.3% to 20,624.18.
Australia’s S&P/ASX 200 lost less than 0.1% to 6,791.50.
In South Korea, the Kospi declined 0.6% to 2,393.14.
The Shanghai Composite index edged 0.1% higher to 3,274.15.
A preliminary reading on factory activity for Japan showed output and new orders contracting to their worst levels in months.
Japan reported its inflation rose at a slower pace in June, with food prices growing 6.5% year-on-year compared to 12.3% in May and the increase in energy costs falling to 16.5% from 20.8%.
Core inflation excluding volatile energy and food prices rose to 2.6% from 2.2% the month before.
The Bank of Japan has indicated that unlike the Federal Reserve and other central banks, however, it does not intend to raise its minus 0.1% benchmark interest rate to counter the trend given that wages are not rising in tandem with prices, constraining consumer demand.
In currency trading, the U.S. dollar bought 137.56 Japanese yen, up from 137.41 late Thursday.
The euro slipped to $1.0158 from $1.0230.
From South America, ANEC trimmed its July Brazilian corn export forecast 300 K to 5.9 million MT.
Even so, it is still nearly double the July 2021 total of 3 million MT.
ANEC also revised its estimate of Brazil’s July soybean exports 700 K lower to 7.2 MMT, against 8.7 a year ago.
However, soybean meal shipments continue at a robust pace with the latest estimate 100 K greater at 2.2 million which is a ½ MMT increase over the July 2021 total.
The EU booked a Brazilian soybean vessel for early/mid-August loading, indicative that Brazil is still the cheapest origin for the time being.
Brazil is as much as $20 per MT BELOW the U.S. Gulf for CNF beans to China.
The ocean freight market finds dry bulk rates from Brazil to China firming $.50/MT the past week to $58 while Gulf to China rates were $4 weaker at $68.50 and the PNW-China route was $1.75 softer at $40/MT.
The forecast for Argentina’s wheat-planting area for the upcoming season was downwardly revised again on Thursday, as the South American country grapples with fallout from unfavorable weather.
According to the Buenos Aires grains exchange, indeed, the key wheat crop is seen planted across 6.1 million hectares (15.1 million acres) during the 2022/2023 harvesting season, down from 6.2 million hectares estimated previously.
The revised wheat area forecast for the 2022/2023 cycle marks the fifth cut of the exchange, since its first forecast made in May.
The 2022/23 wheat harvest will begin around November after planting started last May.
As of Wednesday, agricultural producers had planted nearly all, or 96.8%, of the planned area, the exchange said.
Meanwhile, low rainfall recorded in the last week helped the 2021/22 corn harvest, with production forecast unchanged at 49 million tonnes.
Argentine farmers have already harvested 67.2% of 7.3 million hectares of corn, according to the exchange.
In Europe, yesterday was a very busy day in terms of news and price changes.
Grain prices on Euronext rose, returning to levels comparable to last week, taking advantage of the strength of international demand.
The Gasc notably concluded its private negotiations with the purchase of an estimated volume of 640 kt of milling wheat, including 360 kt of French origin!
French port activity has also been gaining in intensity since mid-July.
In contrast, the current downturn in the oilseed market, yesterday for European rapeseed caused prices to fall again.
The approach of the closing of the August 2022 deadline, next week, also pushes certain players to obligatorily settle their positions now.
Prices for the near term thus came close to €600/t at the start of the session on Euronext, only to recover as the day progressed, and nevertheless close lower at the end of the session but above 620 €/t.
This year’s winter grain crops in France show excellent quality levels and yields within average but results are very heterogeneous, Axereal, one of France’s largest grain cooperatives, said on Thursday.
Grain production in France, is expected to fall this year after harsh weather hurt crops in some areas.
The harvest of winter grains, such as wheat, barley, rapeseed and durum, was about to end with nearly two weeks in advance, Axereal said.
“The results at this stage are within a decent average and generally show very good quality, in line with the expectations” Axereal Chairman said in a statement.
Axereal pegged this year’s grain yields within olympic averages, calculated while removing the high and low values, but it did not give average levels per cereal.
Soft wheat protein levels were “satisfactory” at an average 11.9%.
Some spring crops, which mainly include corn and sunflower, could start being harvested nearly a month in advance, with the sunflower harvest expected to start at the end of August, Axereal said.
Meantime, on this morning, according to the usual Friday’s report from FranceAgriMer, France’s grain harvest kept up at a fast pace in the week to July 18, with soft wheat running two weeks ahead of last year, while maize crop conditions deteriorated as the country experienced a hot spell.
Particularly, the farm office said in a crop report that French farmers had harvested 84% of the soft wheat crop by July 18, up from 50% last week and 12% by the same time in 2021.
The winter barley harvest was now over, compared to just 70% a year ago.
An estimated 63% of soft wheat was in good or excellent condition, down from 64% the previous week and 75% below last year.
Durum wheat harvesting was 96% complete, versus 82% a week earlier, while 77% of the spring barley crop had been cut, up from 41% the previous week.
FranceAgriMer estimated that 75% of French grain corn crop was in good or excellent condition by July 18, against 83% the previous week and 90% a year earlier.
Extremely warm weather is feared to have caused damage to maize crops in some key growing regions, analysts said.
Dry and warm weather is expected to last at least two more weeks.
On the economic front, the ECB raised its rates by +0.50 points.
The main interest rate thus rose to +0.50%, while the rate on bank liquid assets was at 0 after a long period of negative rates.
The euro/dollar parity finally fluctuated little at this announcement, evolving around 1.02 like the beginning of the week.
The speakers also noted in Christine Lagarde’s speech a risk of a darkening of the economic situation in the second half of 2022.
Meantime, Italy will hold a snap national election on Sept. 25 after Prime Minister Mario Draghi resigned following the collapse of his national unity government, sending tremors through financial markets.
From the Middle East, poor rainfall, fuel shortages, soaring fertilizer prices: it’s been a bad year for farmers in northeastern Syria where a disappointing wheat crop looks set to deal another blow to food supplies in a country grappling with climate change and war.
Syria’s grain output dropped from an annual average of 4.1 million tonnes prior to the crisis – enough to meet domestic demand – to an estimated 1.05 million tonnes in 2021, according to the U.N.’s Food and Agriculture Organization.
Production in 2020 was 2.8 million tonnes.
While wheat imports from Russia have plugged some of the gap, food insecurity across the fractured country is more acute than at any point since the war began, due to factors including the Syrian pound’s collapse.
The World Food Programme says 12.4 million Syrians, or close to 70% of people in the country today, are food insecure.
The northeast region, so far, only 379,000 tonnes of wheat have been harvested this year .
The expected yield is 450,000 tonnes – less than the 600,000 tonnes was needed to meet the area’s needs.
From Russia, a tanker carrying a liquid fertilizer product from Russia is about to arrive in the United States, sources and vessel tracking data showed in recent days, at a time of widespread worry that sky-high global fertilizer prices could lead to food shortages.
Russia and Ukraine are major exporters of fertilizer, key to keeping corn, soy, rice and wheat yields high. Farmers have scaled back fertilizer use due to high prices, and cut the amount of land they plan to cultivate.
The Liberia-flagged tanker Johnny Ranger was scheduled to arrive in New Orleans on Monday carrying about 39,000 tonnes of urea ammonium nitrate solution, a fertilizer produced by combining urea, nitric acid and ammonia.
The vessel loaded last month at St. Petersburg, according to Eikon data.
In 2021, the United States imported $262.6 million worth of urea ammonium nitrate fertilizers from Russia, according to the Commerce Department.
This week, the U.S. International Trade Commission revoked hefty anti-dumping and anti-subsidy duties on urea ammonium nitrate fertilizers from Russia in an effort to ease fertilizer shortages and price increases.
According to the Russia AgMin, over 30 MMT of grain have harvested by July 21.
That included 25.3 MMT of wheat and 3.9 MMT of barley.
Yield is significantly higher than last year at 4.17 MT/HA vs 3.33 MT/HA a year earlier.
Meantime, it is due to be signed a grain deal at Istanbul’s Dolmabahce Palace offices today at 1330 GMT in a ceremony attended by U.N. Secretary General Antonio Guterres and Turkish President Tayyip Erdogan.
Russian Defence Minister Sergei Shoigu was travelling to Turkey for the deal, and Ukraine’s infrastructure minister would also attend.
From South East Asia, according to the USDA attaché in New Delhi, the weak southwest monsoon in first half of June 2022 slowed ongoing plantings of the kharif (fall harvested) season crops.
Plantings will recover under adequate soil moisture conditions with the revival of monsoon starting the third week of June, along with expected normal precipitation in July.
On July 6, India’s Ministry of Commerce and Industry notified authorizing the export of wheat flour and other products … only on the recommendation of Inter-Ministerial Committee on the Export of Wheat.
Based on the domestic market supply situation, FAS New Delhi continues to estimate market year (MY) 2022/2023 wheat production at 99 million metric tons (MMT), exports at 6 MMT, and ending stocks at 8.5 MMT.
From Australia, local current crop wheat and barley bids were relatively unchanged and liquidity again slow.
New crop wheat trade markets were a touch softer and eastern Australian grower bids were unchanged.
South Australia grower bids firmed.
Canola bids took a $25-30/t dive again.
Rail lines through Maitland and Gunning have reopened this week to boost the flow of agricultural freight to export pathways out of Port Kembla, Port Botany and Newcastle.
The Main Western line over the Blue Mountains remains closed near Blackheath as crews work to rectify an embankment impacted by flooding earlier this month.
Crop conditions are diminishing in parts southern Queensland as another 20-80mm fell overnight on waterlogged crops from Moonie up to the Downs and Western Downs.
There is another 15-50mm on the forecast for today.
On international trade scene, the Korea Feed Association (KFA) Busan section purchased some 63,000 tonnes of animal feed corn expected to be sourced from either South America or South Africa in an international tender on Friday.
It was purchased in one consignment at an estimated $314.99 a tonne including a surcharge for additional port unloading, traders said.
Seller was believed to be trading house Olam, with corn arrival in South Korea around Nov. 10.
Shipment from South America was between Sept. 12-Oct. 1 or from South Africa between Sept. 22-Oct. 11.
If sourced from South Africa, the consignment can be only 50,000 tonnes.
IGC – July Update
The International Grains Council on Thursday trimmed its forecast for 2022/23 global corn output, largely driven by drought stress in the European Union.
In its monthly update, the inter-governmental body reduced its 2022/23 world corn (maize) crop outlook by 1 million tonnes to 1.189 billion tonnes, well below the previous season’s 1.220 billion tonnes.
The EU’s corn crop was seen at 76.5 million tonnes, versus a previous forecast of 78.2 million.
However, the IGC raised its 2022/23 world wheat production forecast to 770 million tonnes, up 1 million from last month.
Wheat export activity still stands at 194 Mt, unchanged from June estimates.
That’s all, thank you.
To all of you, we wish you a good day and … Good Harvest 2022!
Author: Sandro F. Puglisi
