Good morning Farmer Family …
US farm markets climbed yesterday.
Corn prices closed the day with 2.93% gains.
Soybean front month prices were 4.06% stronger.
The rally in soymeal took the front months to new life of contract highs.
At the close, indeed, they were 4.75% to 5.56% in the black, with ~$20/ton gains.
August meal is up $40.90/ton in two days!
Soybean oil was the laggard of the complex, but still ended the day with 0.68% gains.
Wheat prices gained double digits.
Chicago SRW wheat closed 4.38% higher in the Sep contract.
Kansas City was up 4.44%.
Minneapolis spring wheat rallied 5.06%.
Corn and soybean prices rallied as hot and dry conditions threatened both crops.
The U.S. Department of Agriculture’s weekly condition ratings for corn, soybeans and spring wheat on Monday fell more than most analysts expected.
Meantime, strong wheat demand amid a lack of Ukrainian supplies is underpinning prices.
In this context, yesterday commodity funds were net buyers of CBOT soybeans, wheat, corn, soyoil and soymeal futures contracts.
On this morning, Chicago corn prices eased from a one-week high, while soybeans fell for the first time in four sessions.
Particularly, corn contract fell 0.6% to $5.97-1/4 a bushel, as of 03:43 GMT, and soybeans dipped 0.3% to $13.80 a bushel.
Wheat also lost ground.
Spring wheat yields in southern and east central North Dakota rebounded as ample soil moisture boosted harvest potential in the country’s top-producing state.
Scouts, in their annual Wheat Quality Council’s crop tour, indeed, said on Tuesday, that estimate for crops hard red spring wheat present an average yield of 48.9 bushels per acre (bpa) in the 120 field stops on the first day.
That was up from the tour’s day-one findings in 2021 of 29.5 bpa and above the five-year average of 39.0 bpa.
In this context, wheat gave up 0.8% to $7.97-1/2 a bushel.
In energy markets, oil prices held steady on Wednesday.
Brent crude futures were at $104.55 a barrel at 06:40 GMT, up 15 cents, or 0.1%. U.S. West Texas Intermediate (WTI) crude rose 27 cents, or 0.5%, to $95.25 a barrel.
Yesterday, benchmark U.S. crude fell $1.72 cents to $94.98 per barrel on the New York Mercantile Exchange.
Brent crude, shedded 75 cents to $104.4 per barrel in London.
The American Petroleum Institute said crude stocks in the United States fell by 4 million barrels last week.
That was four times bigger than the decline expected by analysts.
Gasoline inventories fell by 1.1 million barrels, compared with expectations for a build of 3.5 million barrels, the data showed.
The U.S. government’s Energy Information Administration releases its weekly oil report later on Wednesday.
A sharper decline in US inventories should support oil prices, but the rebound was limited by concerns about potential weak demand.
The U.S. Federal Reserve likely will announce an aggressive rate rise later on Wednesday and that weighed on market sentiment.
Also, the Biden administration said on Tuesday it will sell an additional 20 million barrels of oil from the country’s Strategic Petroleum Reserve to calm oil prices.
The administration said in late March it would release a record 1 million barrels of oil per day for six months from the SPR.
The United States has already sold 125 million barrels from the reserve with nearly 70 million barrels delivered to purchasers.
In Europe, the EU has agreed to a deal to curb natural gas consumption starting next week, the latest show of solidarity against Russia.
The reductions will initially be voluntary, but they could become binding should an energy supply crunch cause an emergency.
The agreement came less than 24 hours after Russia’s state-owned gas monopoly, Gazprom, said that it would further reduce the amount of natural gas it sends to Germany, Europe’s biggest consumer of Russian gas.
In freight markets, the Baltic Exchange’s main sea freight index fell to a nearly two-week low on Tuesday as rates across its vessel segments declined.
The overall index, indeed, shed 53 points, or 2.5%, to 2,061 points, the lowest since July 14.
Particularly, the capesize index fell for the second straight session, losing 141 points, or 5.4%, to 2,455 points, a near two-week low.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $1,167 at $20,359.
The panamax index was down 12 points, or 0.57%, at 2,088 points, snapping a five-session winning streak.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased by $110 to $18,790.
The supramax index fell by 8 points to 2,071 points, its lowest in nearly a week.
In equity markets, U.S. stock indexes on Tuesday closed lower.
Weaker-than-expected U.S. economic data weighed on markets.
The Conference Board’s U.S. July consumer confidence index, indeed, fell -2.7 to a 17-month low of 95.7, weaker than expectations of 97.0.
U.S. June new home sales fell -8.1% m/m to a 2-year low of 590,000, weaker than expectations of 655,000.
Walmart, the world’s largest retailer, said rising prices for food and gasoline are forcing shoppers to cut back on more profitable discretionary items, particularly clothing.
Consequentially, company shares tumbled -7.6% leading all retailer stocks lower.
Target dropped 3.6%, Macy’s slid 7.2% and Kohl’s fell 9.1%.
United Parcel Service closed down more than -3% after it said package deliveries worldwide fell more than expected.
A selloff in cybersecurity stocks led technology stocks lower.
Microsoft fell 2.7%, Amazon slid 5.2% and Facebook owner Meta Platforms dropped 4.5%.
General Motors fell 3.4% after its second-quarter profit fell 40% from a year ago.
U.S. sales fell 15% after shortages of processor chips and other components left the company unable to deliver 95,000 vehicles during the quarter.
However, stock indexes maintained moderate losses after the International Monetary Fund cut its global 2022 GDP forecast to 3.2%, down from a 3.6% estimate in April.
The IMF has said in a new report that the world could soon be on the brink of a global recession as the economies of the U.S., China and Europe slowed more sharply than anticipated.
It said the probability of a recession starting in one of the Group of 7 advanced economies was now nearly 15 percent, four times its usual level.
And it said some indicators suggested that the US was already in a “technical” recession, though most economists didn’t think it yet met the formal definition.
In addition, a decline in T-note yields was supportive after the 10-year T-note yield fell to a 2-month low Tuesday at 2.705%.
On the positive side, McDonald’s rallied more than +2% after it reported stronger-than-expected quarterly sales.
General Electric also jumped +4% after reporting stronger-than-expected Q2 revenue.
In this context, the S&P 500 index fell 1.2% to 3,921.05.
The Dow Jones Industrial Average dropped 0.7% to 31,761.54.
The Nasdaq composite closed 1.9% lower at 11,562.57.
Meantime, Asian stock markets followed Wall Street lower on Wednesday.
Shanghai, Hong Kong and South Korea declined.
Tokyo and Sydney advanced.
Particularly, the Shanghai Composite Index lost 0.1% to 3,274.37 while Tokyo’s Nikkei 225 advanced 0.3% to 27,728.93.
The Hang Seng in Hong Kong sank 1.5% to 20,590.46.
The Kospi in Seoul retreated 0.4% to 2,401.78 and Sydney’s S&P-ASX 200 gained 0.1% to 6,814.00.
India’s Sensex opened up 0.3% at 55,418.55.
New Zealand, Bangkok and Jakarta advanced while Singapore declined.
In currency trading, the dollar rose to 137.01 yen from Tuesday’s 136.00 yen.
The euro gained to $1.0151 from $1.0120.
From South America, AgRural reported the 2nd crop harvest as 62% complete.
That compares to 53% last week and the 39% last season.
They figure the output at 87.3 MMT for the 2nd crop
Conab’s last figure was 88.4 MMT.
IMEA reported Mato Grosso’s safrinha harvest reached 94% on Friday, up 9 points for the week and running 12 ahead of LY and 21 ahead of the 5-year average.
Meantime, Brazil shipped approximately 950 K MT of corn the third week of July, 60% more than the 597 K shipped in the same period in 2021.
Brazil’s soybean exports the 3rd week of July plunged nearly 1 MMT from a week earlier to 1.2 MMT from a week earlier and the total was 300 K less than in the year ago week.
Soybean meal shipments jumped 262 K/85% to 572 and topped the 429 K exported in the same week in 2021.
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.
Argentina’s government is looking at creating a separate peso-U.S. dollar exchange rate for the country’s agricultural sector in a bid to incentivize farmer sales.
Local media reported that sales are lagging behind last year’s levels.
A total of 20.4 million mt of the newly harvested soybean crop have been sold as of July 13, which is around 48% of the production for the season, and it is nearly five percentage points behind the farmer sales done at same time last year.
In Europe, markets were very dynamic yesterday.
The July report published by Monitoring Agriculture Resources showed that hot temperatures in the EU continued to have an adverse impact across the region’s key growing regions.
2022 yield forecasts for corn, sunflowers, and soybeans are expected to reduce by 8 to 9%, below the 5-year average.
Romania’s wheat crop will drop this year by 25% compared to last year, to 9 mln tonnes, due to drought, according to the first estimates of the farmers.
According to the Romanian Farmers’ Club, an organization formed by over 1,000 members, wheat has been already harvested from 96% of the cultivated area.
Agritel’s estimate for soft wheat production in France is down on last year by around -5.6% at 33.44 Mt.
However, the consultancy expects France’s soft wheat exports outside the EU to rise 12.4% this season to 10.95 million tonnes.
On the demand side, indeed, we saw a renewed interest on international scene, after the downward movement in price due the harvest period.
After hefty sales to China last week, traders were reported on Tuesday to have bought up to seven shipments of French wheat aimed for Pakistan as part of a 300,000 tonne tender last week for shipment in August.
It came in addition to the over 900,000 tonnes of French wheat already exported outside the EU since the start of the 2022/23 season on July 1, including 526,200 tonnes to Morocco and 144,500 tonnes to Algeria, according to Refinitiv data.
Another 120,000 tonnes of French wheat for Algeria and 35,000 tonnes for Ivory Coast were loading or due to be loaded by Thursday.
This would bring French wheat exports well over 1 million tonnes this month.
German traders also remained optimistic about further export sales.
About 2 million tonnes of German new crop wheat have been sold in advance of the harvest.
Premiums in German export ports remain firm.
Customers include Algeria, Saudi Arabia and West Africa.
German wheat harvesting is underway in south and central regions.
Sellers of standard 12% protein wheat for September delivery in Hamburg were offering around 30 euros a tonne over the Euronext December contract against 22 euros over early last week.
Meantime, latest figures from the European Commission concerning export activity recorded last week, confirmed this trend with 1.40 Mt of soft wheat exported since the start of the campaign.
Export activity, on the other hand, is down sharply compared to last season in barley, where 280.000t vs 1 MMT last year.
Corn imports are also high, at 1 Mt (851 kt in 2021).
Soybean imports were pegged at 890.412 t.
Soymeal imports were at 1 MMT.
Rapeseed imports were around 280.000t.
From the Black Sea basin, after the port of Odessa last Saturday, the Russian bombardments, yesterday affected the port infrastructure of Mykolaiv.
The World Food Program had issued a tender for around 30,000 mt of Ukrainian milling wheat for delivery in August, trade sources said Monday.
Based on the activity this week, this will most likely not be delivered via Ukraine’s ports.
The UN, however, believes Ukraine may begin exporting by sea within a few days.
Ukraine’s Ag Minister said that grain exports “may” reach 3.5 MMT per month in the near future, beginning with 1.5 million in August.
Under the most favorable of circumstances, however, trade sources are warning not to expect an early return to the use of handysize and panamax vessels for export.
Most of the vessels used for grain exports for the time being will be the 10,000 MT coaster size vessels, rather than the 40-70 K MT ones.
Many operators would be reluctant to go in the Black Sea without reassurance that it is safe.
In the meantime a lot of short-term wheat demand was turning to Europe, notably France.
Still the Joint Coordination Centre (JCC), established as part of the deal to resume grain exports from Ukraine, has started work in Istanbul, Russian news agencies reported, citing Russia’s defense ministry.
The Russian delegation to the JCC will arrive in Turkey today and begin work in a four-way format, alongside Turkey, Ukraine and the United Nations.
Cargo ships carrying Ukrainian grain are most likely to undergo inspections at the Turkeli Anchorage near the Bosphorus Strait, Russia’s TASS news agency reported.
Representatives of JCC will inspect ships when they enter and exit the Bosphorus Strait.
However, Russian Deputy Foreign Minister Andrei Rudenko said on Wednesday that the Turkish-brokered deal to unblock Ukrainian grain exports could collapse if obstacles to Russia’s agricultural exports are not promptly removed, Interfax reported.
Interfax cited Rudenko as saying that grain shipments from Ukraine would start soon, and he hoped the grain deal would hold.
From the Middle East, Iraq has sufficient wheat reserves to cover its needs until the end of the current year after procuring 2.2 million tonnes of local grain.
From South East Asia, Indian wheat prices jumped to a record high, despite a ban on exports, amid strong demand and dwindling supply from a crop damaged by heatwave.
The price rally has reduced chances of India supplying substantial amounts of wheat under government-to-government deals.
Local wheat prices, indeed, jumped to a record 23,547 rupees per tonne on Wednesday.
That was up nearly 12% from recent lows that followed the government’s surprise ban on exports on May 14.
India 2022 wheat production has dropped far more than the government had estimated.
The “government’s estimate is for 106.41 million tonnes.
However, supplies are suggesting production of around 95 million tonnes.
The U.S. Department of Agriculture’s Foreign Agricultural Service has pegged production at 99 million tonnes.
Lower supplies are also reflected in government wheat procurement, which so far this year is down 57% on the same period of 2021, at 18.8 million tonnes.
India, however, exported 3.5 million tonnes of wheat in the second quarter, mainly to Bangladesh, Nepal, Indonesia, the Philippines and Sri Lanka, up from 1.1 million tonnes a year earlier.
From Australia, Southern zone current crop wheat markets took a $15-20/t dive yesterday, both delivered and port.
New crop held some ground over the course of the day.
The weather forecast is looking relatively dry in all states over the next 4 days with rain starting to build on Sunday across large areas of WA, SA, Vic and southern NSW.
Northern NSW is forecast to receive less than 10mm and southern Qld less than 5mm.
On international trade scene, Jordan’s state grains buyer purchased about 60,000 tonnes of hard milling wheat to be sourced from optional origins in a tender which closed on Tuesday.
It was believed to have been bought from trading house Cargill at an estimated $405.75 a tonne c&f for shipment in the second half of December.
Three other trading houses participated in the tender with their offers in dollars a tonne c&f: CHS offering $413.50, Viterra $422 and Ameropa $430.
Meantime, Jordan’s state grain buyer has issued an 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 said to be Aug. 2.
Romania is the main supplier of wheat to Jordan, Minister of Foreign Affairs Bogdan Aurescu stated in a joint press statement with the Deputy Prime Minister and Minister of Foreign Affairs and Expatriates of the Hashemite Kingdom of Jordan, Ayman Safadi.
That’s all, thank you.
To all of you, we wish you a good day and… Good Harvest 2022!
Author: Sandro F. Puglisi
