Good morning Farmer Family …
US farm markets were mostly higher, yesterday.
Corn prices closed with near 2.8% gains for the day.
December was up 3.5% on the day.
The soy complex was mixed, as soybean oil faded by 0.5% to 0.9% on the day.
Soybean prices ended the day 2.3% to 2.7% higher and soymeal closed with gais between 3.71% and as much as 4.33%.
Wheat prices rebounded.
Chicago SRW closed with 1.45% gains.
Kansas City wheat prices ended the day 2.38% higher.
Minneapolis spring wheat prices were up 1.49% on the day.
Wheat prices rallied after the Russian missile strike on the Ukrainian port of Odesa over the weekend raised doubts about the implementation of last week’s agreement to open a corridor for grain exports from Ukraine.
Soybean and corn prices followed wheat, supported by forecasts for hot, dry weather across parts of the U.S. Midwest during crucial development stages.
On the demand side, USDA reported 724,214 MT of corn was exported during the week that ended 7/21.
That was down from 1.075 MMT last week and was down 530,269 MT from the same week last year.
Mexico was the week’s top destination from 236,118 MT, followed by China with 209,419 MT.
Accumulated shipments reached 51.027 MMT, compared to 61.625 MMT at the same point last year.
As for soybean, weekly Inspections data had 388,212 MT of soybeans were exported through the week that ended 7/21.
That was down from 437k MT last week but was up by 145,973 MT yr/yr.
Mexico was the top destination.
Accumulated exports reached 53 MMT according to the report, trailing last year’s pace by 8.9%.
As for wheat, exports were 475,426 MT for the week that ended 7/21.
That was a 284,093 MT increase wk/wk, but still 39,788 MT below the same week last year.
The Inspections by Class reported Durum with shipments of 19.000t this week after none were reported in the prior weeks.
Commodity funds yesterday were net buyers of CBOT corn, soybeans, soymeal and wheat futures contracts and net sellers of CBOT soyoil futures.
After the sessions closed, USDA released its Weekly Crop Progress report.
As of July 24, 62% of corn is silking compared with the five-year average of 70%.
USDA said 13% of the U.S. corn crop has reached the dough stage, right on the heels of the five-year average of 15%.
In the top 18 corn growing states, crop condition was rated 61% good/excellent, a 3% drop from last week.
Only 14% was rated poor/very poor.
As for soybean, USDA’s report noted 64% of the soybean crop has bloomed, nearly catching up to the five-year average of 69%.
Soybeans setting pods are at 26% across the top 18 soybean growing states.
The five-year average for this point in the season is 34%.
Soybean crop condition was rated 59% good/excellent, a 2% drop from last week.
Only 11% were rated poor/very poor.
Spring wheat was reported at 86% headed, making a big leap for the second week in a row, but still behind the five-year average of 96%.
Spring wheat crop condition was rated 68% good/excellent, a 3% drop from last week.
Only 8% was rated poor/very poor.
This week 77% of the winter wheat crop has been harvested.
On this morning, Chicago corn jumped 2.3%, with prices climbing to their highest in a week, while soybeans rose 1.8% after USDA Crop Progress report showed declining condition of both crops.
Wheat, on its part, continued to gain more ground on concerns about Black Sea grain deal.
In energy markets, oil prices rose on Tuesday for a second day after Russia cut gas supply to Europe through the Nord Stream 1 pipeline.
Gazprom indeed said supplies to Germany would drop to just 20% of capacity, leaving the country unable to meet its goals to refill natural gas storage ahead of the winter demand period.
Thus, Germany, faces potentially rationing gas to industry to keep its citizens warm during the winter months.
Consequentially, Brent crude futures for September settlement rose $1.51, or 1.4%, to $106.66 a barrel by 03:39 GMT, extending a 1.9% gain in the previous day.
U.S. West Texas Intermediate (WTI) crude futures for September delivery increased $1.36, or 1.4%, to $98.04 a barrel, having gained 2.1% on Monday.
In freight markets, the Baltic Exchange’s main sea freight index slipped on Monday over declining rates in the capesize vessel segment.
The overall index, index, was down 32 points, or 1.5%, at 2,114 points.
The capesize index lost 100 points, or 3.7%, to 2,596 points, its lowest since July 11.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $836 at $21,526.
The panamax index was up for the fifth straight session, gaining 7 points, or 0.33%, at a two-week high of 2,100 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased by $62 to $18,900.
The supramax index fell by 1 point to 2,079 points, snapping four sessions of gains.
In equity markets, U.S. stock indexes settled mixed yesterday.
Weakness in technology stocks weighed on the overall market.
Walmart shares fell nearly 10%.
Expectations for tighter Fed policy boosted T-note yields and undercut stocks.
On Tuesday and Wedsneday FOMC will meeting, at which officials are expected to announce a rate hike of up to three-quarters of a percentage point, triple the usual margin.
That would put the Fed’s benchmark rate in a range of 2.25% to 2.5%, the highest since 2018 before the coronavirus pandemic.
U.S. economic data yesterday was negative for stocks after the June Chicago Fed national activity index was unchanged at a 16-month low of -0.19, weaker than expectations of 0.00.
Also, the July Dallas Fed outlook for manufacturing activity index fell -4.9 to a 2-year low of -22.6, weaker than expectations of -18.5.
Meantime, stocks had support from general Q2 earnings optimism.
This week we will have earnings results from the mega-tech companies of Alphabet, Amazon, Apple, and Microsoft.
Energy stocks moved higher after the price of crude oil climbed +2%.
In this context, the S&P 500 advanced 0.13% to 3,966.84.
The Dow Jones Industrial Average rose 0.3% to 31,990.04.
The Nasdaq Composite fell 0.4% to 11,782.67.
Meantime, Asian stock markets were mostly higher on Tuesday.
Shanghai, Hong Kong and Seoul advanced.
Tokyo edged lower.
Particularly, the Shanghai Composite Index rose 0.6% to 3,270.31 while the Nikkei 225 in Tokyo shed less than 0.1% to 27,581.73.
The Hang Seng in Hong Kong gained 1.4% to 20,808.56.
Alibaba, said it plans to apply for a primary listing in Hong Kong.
The move would make Alibaba a dual-primary listed company on the New York Stock Exchange and the Hong Kong Stock Exchange.
The Kospi in Seoul added 0.3% to 2,408.85 and Sydney’s S&P-ASX 200 was 0.1% higher at 6,798.00.
New Zealand retreated while Southeast Asian markets gained.
In currency trading, the dollar declined to 136.49 yen from Monday’s 136.72.
The euro rose to $1.0237 from $1.0221.
From Canada, the latest Saskatchewan and Alberta spring wheat ratings were at 74% and 83% Gd/ Ex, thus the rains last week should have improved that.
The crops look pretty good and at least average yields should be assumed.
The July AAFC balance sheets for wheat indeed project much-improved production, and better exports, but also again increasing ending stocks.
Canadian grain production is set for a significant rebound this season on the back of a sharp improvement in weather conditions across most of the Prairies, according to Agriculture and Agri-Food Canada’s (AAFC) latest Outlook for Principal Field Crops.
Crop conditions are generally favourable in the Western Prairies, with recent rain events reducing the drought-affected areas, and the Eastern Prairies are getting back on track after excessive moisture delayed planting in many regions.
As of July 12, drought is confined to a small area in the southwestern Prairies with good June rainfall eliminating all areas of extreme drought.
Currently, only 39pc of Canadian agricultural land is suffering some form of dryness or drought, down from 100pc since the beginning of the year.
According to the AAFC report, the total area seeded to grain crops has remained relatively static at 31.45 million hectares compared to 31.53Mha last year.
But a massive jump in the average yield will see total grain and oilseed output jump by more than 34pc year-on-year to 87.3 million tonnes (Mt).
Canadian farmers have substantially increased the area sown to wheat at the expense of coarse grains, oilseeds and pulses in the 2022/23 season.
The total wheat area has increased by 9pc to 10.35Mha compared to last year, 1.5pc higher than the original seeding intentions released back in April.
The area planted to spring wheat makes up almost three-quarters of the total wheat area at 7.37Mha.
Next in line is durum wheat with 2.43Mha, and winter wheat has a minor slice of the pie at 477,000 hectares.
The most common wheat class in Canada is Canadian Western Red Spring wheat which is planted into approximately 78pc of the total wheat area (excluding durum).
Assuming 98pc of the planted area is harvested, and we see a return to near average yield of 3.33t/ha, AAFC is pegging the Canadian wheat crop at 33.72Mt, an increase of 55.7pc on the 2021/22 crop.
If that estimate proves correct at the conclusion of harvest, it would be the third biggest Canadian wheat crop on record behind 2013 with 37.59Mt and 2020 with 35.18Mt.
Canada is one of the world’s major wheat exporters.
AAFC anticipates shipments will return to normal levels in the 2022/23 marketing year.
The current estimate of 22.4Mt, including 4.4Mt of durum, is more than 51pc higher season-on-season.
This seems conservative given port capacity, the strong global demand and much higher carry-out stocks.
However, Canadian export prices are high at the moment due to production uncertainty, the extremely tight old crop balance sheet and escalating domestic transport costs.
Barley production is also set to increase year-on-year, but AAFC calls the planted area down more than 15pc to 2.85Mha.
This is the lowest area planted to barley in the last four years, is 6pc lower than the March planting intentions and more than 1pc lower than the five-year average.
Alberta and Saskatchewan are the two top barley producing provinces, and the seeded area is down 8pc and 25pc, respectively.
On the other hand, plantings in Manitoba are 3pc higher than in the 2021/22 season.
Using normal abandonment of around 10pc and a slightly above average yield of 3.49t/ha, production is forecast to increase to 9.06Mt in 2022/23.
This is 30pc higher than the 6.95Mt produced last harvest and is 2pc higher than the five-year average.
With the increase in supply, AAFC forecasts Canadian barley exports to increase from 2.59Mt in the 2021/22 marketing year to 3.05Mt in 2022/23.
Canada is the world’s biggest canola producer, and production is expected to jump substantially after a horror harvest in 2021.
While the seeded area is estimated to be 4.7pc lower at 8.67Mha, yields are forecast to jump from 1.4t/ha last year to 2.14t/ha in this year’s harvest.
The Manitoba area is slightly lower than early season indications, but farmers in Saskatchewan and Alberta have gone harder on canola than initially intended.
Assuming abandonment of less than 1pc and a five-year average yield of 2.14t/ha, AAFC is forecasting production to rebound from 12.6Mt last year to 18.4Mt this year.
That would be the seventh highest canola crop on record, with the six higher years all occurring since 2013.
With the higher output comes a recovery in the export program, and shipments are projected to jump almost 75pc to 9Mt.
Lentils and dry peas (field peas) are the main pulse crops in Canada, and production of both are expected to recover after last season’s drought.
The area planted to lentils has remained stable year-on-year but a 52pc jump in yield to 1.43t/ha will see production climb by around 56pc to 2.46Mt.
The dry pea area has dropped by around 12pc, but a 64pc hike in yield to 2.47t/ha will see production up by 46pc to 3.3Mt.
Meantime, Canadian weekly exports for common wheat were poor again for week 50 at 166,4k mt, for a year-to-date total of 10.7 million mt, compared to 19 million mt last year.
As for durum, durum exports for week 50 were at only 40,1k mt, for a year-to-date total of 2.5 million mt, compared to 5.9 million mt last year-to-date.
From South America, according to the USDA attaché post in Buenos Aires, wheat exports for marketing year (MY) 2022-2023 are forecast at 12.35 million tons, 1.15 million tons lower than USDA’s official number as a result of lower production.
The wheat and barley crops are suffering very dry weather.
Corn exports in MY 2022-2023 are forecast at 38.8 million tons, 2.2 million tons lower than USDA as FAS post forecasts a lower production at 53 million tons.
Sorghum exports for MY 2022-2023 are forecast at 1.65 million tons, 850,000 tons lower than USDA as China’s demand has recently cooled down.
Brazilian and Chinese officials are re-discussing a trade protocol so that Brazil can ship corn to China sooner than intended, Brazilian Agriculture Minister Marcos Montes said on Monday.
The successful revision of the protocol would allow Brazilian corn to be exported to China in the second half of the year as opposed to next year.
Brazil has harvested almost 62% of its second corn crop in the center south, according to private consultancy AgRural.
Harvesting so far in the 2021/22 season totalled some 50 million tonnes, AgRural said in a report, noting that work is gaining pace in states such as Parana and Mato Grosso do Sul amid a recent improvement in grain humidity.
This year, Brazilian farmers will harvest an estimated 87.3 million tonnes of second corn, AgRural said.
Meantime, Safras and Mercado estimated the 22/23 Brazilian soy export at 91.5 MMT, compared to old crop’s 77.2 MMT projection.
That does come via a 18% production boost yr/yr with their 22/23 output figured at 154.53 MMT.
In Europe, grain prices on Euronext rebounded after the decline recorded at the end of last week without however managing to compensate for the recent drop.
The European Union’s crop monitoring service MARS on Monday cut its yield forecasts for all summer crops, including corn, due to hot and dry weather in many parts of the bloc while making small reductions to its winter grain projection.
Forecasts for corn crops were down on last month at 7.25 t/ha, now down nearly 8% on June estimates.
The situation is similar in sunflower where the estimated yield is 2.18 t/ha against 2.37 t/ha last month.
The areas worst affected by drought include parts of Spain, Italy, France, Germany, Romania and Hungary.
From the Black Sea basin, despite the Russian missile strike of a military ship in Odesa, Ukrainian officials say they are moving forward with implementing the deal to restart grain exports. Ukraine’s
Infrastructure Minister hopes the first shipment will be this week from Chornomorsk and from other ports in the agreement within two weeks.
The minister says the deal included no limits on the volume of grain exports and also includes the shipment of fertilizers from Ukrainian ports.
This morning a massive missile strike was launched against Mykolaiv.
The port infrastructure was attacked.
This was announced by the head of Mykolaiv OVA Vitaly Kim on Telegram.
Meantime, according to APK-Inform, the prices of wheat continued decreasing in Ukrainian ports of the Danube last week.
In the ports of Reni an Izmail, the bid prices of 2-grade and 3-grade wheat decreased by 3-15 USD/t to 170-192 and 160-190 USD/t СPT-port, the bid prices of feed wheat declined by 30-35 USD/t to 125-150 USD/t CPT-port.
The bid prices of corn were mainly stable with slight prevailing of downward trend.
Indeed, the bid prices of corn decreased slightly to 160-190 USD/t (sometimes to 135 USD/t) in ports of Reni and Izmail.
The bid prices in hryvnia terms were quite stable at 5000-6000 UAH/t CPT-port.
From Russia, Russia’s Gazprom announced yesterday that they will be cutting flows to Nord Stream 1 to just 20pc of its capacity, starting Wednesday, citing a turbine repair as the reason.
The pipeline had just been turned back on last week after a 10-day maintenance shutdown that caused widespread concern through Europe that Russia may not return supply to normal.
Even prior to the maintenance shutdown, flows through Nord Stream 1 were running at a reduced rate of roughly 40pc of capacity.
Kazakhstan sees the 2022 wheat crop at 13.0-13.5 million tonnes, up 15% from last year, Agriculture Minister Yerbol Karashukeyev said on Tuesday.
With domestic consumption forecast at 6.0 million tonnes, the remainder will be available for export, he told a briefing.
From the Middle Kingdom, Chinese President Xi Jinping is expected to hold in-person talks in Beijing with his Indonesian counterpart Joko Widodo on Tuesday.
Jokowi, as the Indonesian president is widely known, is in Beijing this week at the invitation of Xi for what China said would be “an exchange of in-depth views”.
Indonesia, one of China’s biggest trading partners, is an important source of ferronickel, coal, copper and natural gas for the world’s second-largest economy.
In the first half of 2022, Chinese imports from Indonesia, mostly commodities, surged 34.2% on year, the most after Russia.
On the weather side, China’s weather, is improving and easing some concerns over possible corn and oilseed production losses.
China was reported yesterday to have bought US Gulf beans.
However, the latest sale of soybean from China’s reserve stocks was less than 1 ½% of the 503,800 MT offered.
From South East Asia, Indonesia has issued palm oil export permits for a combined 3.84 million tonnes through its so-called Domestic Market Obligation (DMO) scheme as well as its programme to accelerate exports as of Monday, Trade Ministry adviser Oke Nurwan said on Tuesday.
Indonesia has set a total export quota of around 6.3 million tonnes under the DMO and export acceleration schemes.
From Australia, current crop bids on wheat and barley started the week softer by $5-10/t for wheat and $5/t for barley.
New crop values were also softer.
Jan ASX East Coast wheat traded down to $411, finishing down $4 from Friday’s settlement price.
Port wait times blew out to 30 days in Kwinana this week up from 25 days last week.
Wait times also increased in Geraldton, Port Kembla, Newcastle and Brisbane.
There were 26 vessels anchored at Australian ports.
That’s all, thank you.
To all of you, we wish you a good day and… Good Harvest 2022!
Author: Sandro F. Puglisi
