Good morning Farmer Family …
US farm markets were mixed, but mostly lower yesterday.
Corn prices ended 0.04% higher after trading both sides of unchanged during the session.
Soybean prices traded mostly lower through the midweek session to finish 0.85% down at the bell.
Soymeal closed with 0.64% losses.
Bean oil shedded 0.82%.
The wheat complex mostly worked prices lower, but went home off their lows.
Minneapolis spring wheat rallied back into the black for the closing bell, ending the day up by 0.23% in the front month.
Chicago SRW prices closed with 1.42% losses on the day.
Kansas City HRW went home with front month losses of 0.8%.
Chicago wheat touched a six-month low with traders saying that newly harvested supplies are able to meet the current global demand.
As we said yesterday, global wheat consumption is headed for its biggest annual decline in decades as record inflation forces consumers and companies to use less and replace the grain with cheaper alternatives.
EIA reported ethanol producers averaged 1.043 million barrels per day.
That was up from 1.021m barrels per day from the week prior as a 4-week high.
Ethanol stocks were reported as 23.394 million barrels, up from 23.328 million last week.
The first grain vessel to leave a Ukrainian sea port since the start of the war was inspected in Turkey on Wednesday before its onward journey to Lebanon.
However, the importance of this factor in continuing to maintain the downward trend in grain prices will depend solely on the quantity of wheat and corn that will actually be managed to get out of Ukraine in the next few weeks.
Soybean prices also were weaker, with wheater forecasts turning decidedly less hot for the second half of August.
That is a key development periods for the U.S. crop.
Meantime, more rains are coming to the eastern Corn Belt later this week, with some areas set to gather another 1.5 inches or more between today and Sunday, per the latest 72-hour cumulative precipitation map from NOAA.
Parts of the Central Plains and most of Iowa will receive no measurable moisture during that time, in contrast.
NOAA’s new 8-to-14-day outlook, however, predicts a return to seasonally dry weather for the Northern Plains and upper Midwest between August 10 and August 16, with warmer-than-normal conditions likely for most of the central U.S.
Weakness in crude oil yesterday added more pressure to the soy complex.
Soybean prices have fallen for three days in a row.
Ahead of today’s weekly Export Sales report, analysts surveyed expect to see between 0 and 300k MT of old crop corn was booked during the week that ended 7/28.
New crop forward bookings are estimated between 100k and 400k MT.
As for soybeans they were in a range between 100,000 and 900,000 tonnes.
That compares with the prior week’s total of 690,204 tonnes. Estimates for soymeal export sales ranged from 25,000 to 350,000 tonnes and from zero to 30,000 tonnes for soyoil.
As for wheat, analysts expect between 200,000 and 550,000 MT of wheat was sold during the week that ended 7/28.
Meantime, private exporters reported to the USDA sold 135,000 metric tons of soybean cake and meal for delivery to Poland during the 2022/2023 marketing year.
In this context, commodity funds were net sellers of CBOT soybeans, wheat, soymeal and soyoil futures contracts on Wednesday.
The funds were net even in corn futures.
Corn basis bids were steady to mixed after tumbling 25 cents lower at an Illinois processor while firming 1 to 5 cents higher at three other Midwestern locations.
Soybean basis bids were steady to mixed after rising as much as 15 cents higher at an Iowa river terminal while falling as much as 20 cents lower at an Illinois river terminal.
On this morning, Chicago wheat futures edged higher, with prices rising form their lowest in six months on bargain-buying, although pressure from newly harvested supplies capped gains.
Soybeans and corn ticked lower on forecasts of improved U.S. Midwest weather for crops, which have suffered from intense heat in recent weeks.
Thus, Chicago wheat price rose 0.7% to $7.69 a bushel, as of 04:40 GMT.
Soybeans lost 0.3% to $13.65-1/2 a bushel and corn gave up 0.6% to $5.92-3/4 a bushel.
In energy markets, oil prices slid about 4% on Wednesday to almost six-month lows, after U.S. data showed crude and gasoline stockpiles unexpectedly surged last week.
Particularly, crude stocks rose 4.5 million barrels last week, compared with an analyst forecast for a draw of 600,000 barrels.
Gasoline stocks gained 200,000 barrels, versus expectations for a 1.6 million-barrel drop.
Also, OPEC+ said it would raise its oil output target by 100,000 barrels per day (bpd).
In addition, weighing on prices, Iranian and U.S. officials said they were travelling to Vienna to resume indirect talks about Iran’s nuclear programme.
On the demand side, Federal Reserve officials voiced their determination again on Wednesday to rein in high inflation.
The U.S. dollar index, which rose, pressured demand by making oil more expensive for holders of other currencies.
Thus, Brent crude futures settled down $3.76, or 3.7%, at $96.78 a barrel.
That was its lowest settlement since Feb. 21.
West Texas Intermediate (WTI) crude futures fell $3.76, or 4%, to $90.66, the lowest settlement since Feb. 10.
The contract reached a session low of $90.38 a barrel, weakest since Feb. 25.
On this morning, oil prices rose, rebounding from multi-month lows plumbed in the previous session.
Brent crude futures, indeed, rose 42 cents, or 0.4%, at $97.20 a barrel by 02:50 GMT, while West Texas Intermediate (WTI) crude futures was last up 49 cents, a 0.5% gain, at $91.15.
Supporting prices on Thursday, there has been also the Caspian Pipeline Consortium (CPC), which connects Kazakh oil fields with the Russian Black Sea port of Novorossiisk, that said supplies were significantly down, without providing figures.
In freight markets, the Baltic Exchange’s main sea freight index dropped to its lowest since February on Wednesday, extending its decline to the eighth day, on lower demand across vessel segments.
The overall index, which factors in rates for capesize, panamax and supramax shipping vessels, indeed, fell 86 points, or 4.7%, to 1,731 points.
Particularly, the capesize index dropped 181 points, or 9.2%, to its lowest since April 21, at 1,790 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $1,505 to $14,842.
A 22.8% decline was reported during the past five days for the Capesize sector.
The panamax index was down 21 points to 2,005 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $188 to $18,047.
The supramax index fell 61 points to 1,805 points.
In equity markets, U.S. stock indexes on Wednesday rallied moderately.
An easing of U.S.-China tensions gave the markets a boost after House Speaker Pelosi left Taiwan without incident.
Better-than-expected U.S factory order and ISM reports also supported stocks, as U.S. June factory orders rose +2.0% m/m, stronger than expectations of +1.2% m/m and the biggest increase in 5 months.
Meanwhile, the sevice sector grew faster than expected in July, according to the Institute for Supply Management.
The index, indeed, unexpectedly rose +1.4 to 56.7, stronger than expectations of a decline to 53.5.
In addition, solid quarterly corporate earnings results are propelling stock prices higher.
Technology companies, retailers and communications companies were some of the biggest winners.
Robinhood Markets, rose 11.7%.
PayPal jumped 9.2%.
Drugstore chain CVS rose 6.3%.
Starbucks rose 4.3%.
The yield on the 10-year Treasury fell to 2.71% from 2.73% late Tuesday.
In this context, the S&P 500 rose to 4,155.17, an almost 2-month high.
The Nasdaq gained 2.6% to 12,668.16.
Both indexes more than recouped losses earlier in the week.
The Dow Jones Industrial Average rose 1.3% to 32,812.50.
The Russell 2000 index of smaller companies ended 1.4% higher, at 1,908.93.
Stocks gained Wednesday despite hawkish Fed comments.
St. Louis Fed President Bullard said, he favors a strategy of “front-loading” big interest rate hikes, and he wants the fed funds rate at 3.75% to 4.00% at the end of the year.
Minneapolis Fed President Kashkari said that the Fed is “laser-focused” on getting inflation down and that interest rate cuts in 2023 seem like a “very unlikely scenario.”
San Francisco Fed President Daly said, “it will likely be appropriate for the Fed to raise interest rates by 50 bp at the September FOMC meeting if economic data comes in as forecast.”
Upcoming data on the jobs market could help investors determine how the Federal Reserve will move ahead with its interest rate policy, which has been aggressive in an effort to try and tame inflation.
U.S. jobless claims numbers for last week will be released today, and the government issues its July jobs report on Friday.
Some weak recent data on the economy heightened speculation that the peak for inflation and for the Federal Reserve’s aggressive rate hikes may be approaching or has already passed.
The weak data, though, also shows the risk of a recession.
That’s why Wednesday’s more positive economic reports helped put traders in a buying mood.
Meantime, Asian shares were mostly higher on Thursday, following the strong rally on Wall Street.
Benchmarks rose in Tokyo, Hong Kong, Shanghai and Seoul but fell in Taiwan and India.
Sydney finished flat.
Particularly, Japan’s benchmark Nikkei 225 added 0.7% to finish at 27,932.20.
Australia’s S&P/ASX 200 lost earlier gains, shedding just 1 point to 6,974.90.
South Korea’s Kospi added 0.5% to 2,473.66.
Hong Kong’s Hang Seng rose 1.6% to 20,092.04, while the Shanghai Composite climbed 0.5% to 3,177.92.
India’s Sensex lost 0.5% and the Taiex in Taiwan also fell 0.5%.
In currency trading, the U.S. dollar edged down to 133.73 Japanese yen from 133.83 yen.
The euro cost $1.0167, little changed from $1.0172.
From Canada, the Manitoba Agri-Food and Rural Development division crop report from w/e 2 August said 2022/23 spring wheat fields have completed flowering and kernel development is underway.
The majority of the later seeded wheat has finished flowering.
The spring wheat crop is rated mostly (around 55%) from good to excellent, with some exceptions due to extreme moisture.
Fusarium head blight fungicide application in spring wheat is complete.
Armyworm damage on cereals has been discovered in the Beausejour area, control is underway as needed on specific fields where careful scouting was required.
Higher wheat midge counts were observed in the Roblin areas.
Barley crops range from flowering to head filling (milky dough) stages, with malt crops most advanced, and greenfeed or very late-seeded fields further behind.
Oat crops have finished flowering and are becoming heavier with grain fill developing.
Fall rye is turning colour and is at the hard dough stage, leaves have dropped off and stems are browning.
Winter wheat has mostly reached the hard dough stage, the crop is starting to turn colour.
Pre-harvest aid application could start this week in the Eastern region.
Canola crop conditions were variable, broadly estimated at 75pc good-to-excellent.
In Europe, volatility on the markets is undeniable.
Grain prices on Euronext fell sharply into the red.
Rapeseed, which lost more than €20/t by the close, lost ground again in the wake of canola and other vegetable oils!
The grain market once again took on the weight of the resumption of Ukrainian exports after the boat loaded with 26 kt of corn was able to leave Turkey and head for Lebanon, its final destination.
However, climatic conditions in France remain very worrying with a heat wave which pushed the thermostat above 35°C in a very large part of the territory, even towards 40°C in the South-West.
Meantime, demand on the international scene remains strong, making the bases more expensive on the physical market.
Also, with this hot and dry weather, water levels on the river Rhine in Germany fell again this week and cargo vessels are sailing with reduced loads with transport prices rising.
Vessels are continuing to sail, but it is up to the vessel owners to decide whether there is deep enough water to navigate and whether it is commercially viable for them.
Consequentially, a fewer vessel owners are able or willing to pass through Kaub and spot prices are rising to compensate for sailings with much reduced loads.
In this context, spot prices for a liquid tanker barge from Rotterdam to Karlsruhe south of Kaub rose to about 87 euros ($88.61) a tonne on Wednesday, up 7 euros on the day and up from only around 20 euros a tonne in June before water levels fell.
The Rhine is an important shipping route for commodities including grains, minerals, chemicals coal and oil products including heating oil.
Water stress remains unprecedented and apart from a few local storms expected in the next 24 hours, no significant change is expected in the coming days.
This will have a strong impact on corn yields in particular.
Meantime, per latest data published by Euronext on Wednesday, non-commercial market participants added to their net long position in Euronext’s milling wheat futures and options in the week to July 29.
Particularly, non-commercial participants, which include investment funds and financial institutions, lifted their net long position to 80,285 contracts from 68,327 a week earlier, the data showed.
Commercial participants similarly raised their net short position to 99,140 contracts from 84,861 a week earlier.
Commercials’ short positions accounted for 64.6% of the total short position, while commercial long positions accounted for 48.8% of total long positions.
Non-commercial short positions represented 35.4% of total short positions, while non-commercial net long positions accounted for 51.3% of the total longs.
In Euronext’s rapeseed futures and options, non-commercial market participants lowered their net short position to 19,266 contracts from 19,349 a week earlier.
Commercial participants ticked up their net long position in rapeseed to 19,463 contracts from 19,455 a week earlier.
From the Black Sea basin, Ukraine’s forecast for its wartime 2022 harvest has increased to 65-67 million tonnes of grain from 60 million tonnes, Prime Minister Denys Shmygal said on Wednesday.
According to APK-Inform, last week, the prices of Ukrainian wheat were mainly growing at western borders.
Particularly, the bid prices of 12.5% wheat for delivery in August-September at the border with Poland, Lithuania and in Constanta’s port increased by more than 35 EUR/t to 340-350 EUR/t DAP, they totaled 280-295 and 290-310 EUR/t DAP at the border with Romania and Hungary.
Ukraine exported 3 MMT of grain and oilseeds through alternative routes in July, deputy chairman of Ukrainian Agrarian Council Denis Marchuk said on August 3.
In June, the country shipped 2.2 mln tonnes of grain and oilseeds.
The increase in export volume demonstrated the improvement of the capacity of the Danube river ports, through which 1.3 mln tonnes of agricultural products were exported in July.
According to the expert, this is 3.7 times more than in previous months.
Meantime, the London insurance sector is preparing to cover Ukrainian grains and fertiliser shipments through a secure corridor, voyages that may need up to $50 million of insurance cover per cargo, industry sources involved said on Wednesday.
London’s marine insurance market has placed the Black Sea region on its high-risk list and insurance costs have soared.
For each voyage, every ship will need separate layers of cover including for the cargo and for the ship itself, known as hull and machinery cover.
An additional premium is also charged by underwriters for entering such areas.
Initial costs for the additional premium to cover ships for any attack were being worked out at around 3% of the value of a ship for a 7-day period, one insurance source said.
That compares with up to 1.5% for the wider Black Sea waters, which would still be hundreds of thousands of dollars in costs for a seven-day voyage.
On this wake, Lloyd’s insurer Ascot and broker Marsh have launched a facility for grain traders to provide up to $50 million in cargo cover for every voyage.
It is unclear what cover the first high-profile shipment had, but the industry officials said insurance would be essential for all voyages.
A Turkish official said the number of deliveries from Ukraine may pick up after the successful first trip.
In Russia, consumer prices declined for the fourth week running, data showed on Wednesday, as the rouble’s appreciation in the past few months and a drop in consumer demand weighed on the pace of price growth.
The consumer prices index (CPI), indeed, dipped 0.14% in the week to Aug. 1 after easing 0.08% a week earlier, the federal statistics service Rosstat said.
The CPI extended its fall even after the central bank slashed its key rate by 150 basis points to 8% last month and indicated it was ready to consider further monetary easing to limit the depth of economic recession.
In a separate set of data, the economy ministry said annual consumer inflation remained steady at 15.30% as of Aug. 1, the same level seen a week earlier.
Inflation remains high but is slowing after prices of nearly everything, from vegetables and sugar to clothes and smartphones, have jumped sharply since started war.
So far this year, consumer prices have risen 11.16% compared with a 4.69% increase in the same period of 2021, Rosstat data showed.
From Kazakhstan, USDA attaché in Nur-Sultan forecasts no significant change to wheat planted area for MY2022/23.
Producers in Kazakhstan’s three main wheat producing regions reported no adverse weather events and precipitation has been generally more than last year, especially through June, although July precipitation in some areas has come in slightly lower.
Kazakhstan has extended wheat and wheat flour export restrictions until September 30, 2022.
Noting robust demand for wheat flour, the government increased export quotas to meet higher domestic and export demand.
After nearly five months of a Russian wheat export ban to the Eurasian Economic Union, Russian wheat was reportedly again flowing into Kazakhstan beginning in early July, forcing domestic wheat prices lower.
Wheat and wheat flour exports to Iran increased three-fold to more than 622,706 metric tons (MT) from September 2021 to May 2022, compared to the same period in 2020-2021, mostly due to a reduced production outlook in Iran.
From the Middle Kingdom, while China raises concerns over American boots on the ground in Asia, continues to growthe footprint of those country in the U.S.
According to USDA’s latest data, China owns over 191,000 acres of U.S. lands, but that was before a North Dakota land sale this Spring.
A Chinese company, Fufeng Group, indeed, recently acquired 300 acres in North Dakota for $2.6 million.
According to the company, it intends to establish a milling plant.
From Australia, minimal grower selling combined with consumer hopes for softer values have kept traded volume to a minimum in the domestic market this week.
In southern Queensland, fine weather has allowed consumers to catch up on deliveries, while rain in Victoria and New South Wales is slowing grain movement.
Consumers generally are seen as well covered in the closing months of the current crop year, and confident that volume will be available once harvest rolls around.
Meantime, liquidity in the local market continues to be lacklustre and buying demand is steady across the commodities.
SA and WA wheat values firmed slightly.
Eastern Australian values remained relatively unchanged yesterday. Canola bids gained $5/t however with offshore canola values down overnight you would expect to see local values peel back today.
On the weather side, in the past week, many crops in Western and South Australia and Victoria received welcome rain, while in parts of NSW, concerns grow in some districts about waterlogging.
Rainfall totals of 10-50mm were recorded this week across most of southern WA.
Lower totals of 5-25mm fell across Vic and cropping regions of SA, and NSW.
A widespread rain band is pushing across NSW today with 15-50mm forecast for most cropping regions.
It will move up through northeast NSW tomorrow into southern Qld with the heavier totals expected in NSW.
A relatively dry weekend is forecast for all states.
On international trade scene, Algeria’s state grains agency OAIC purchased more than 700,000 tonnes of optional-origin milling wheat in an international tender held on Tuesday.
After initially reporting a volume of about 660,000 tonnes late on Tuesday, on Wednesday estimates raised to 720,000-780,000 tonnes, with some suggesting the Algerian purchase had topped 800,000 tonnes.
Further assessments of the tender results were still expected.
Traders said they thought OAIC had paid about $384 a tonne, cost and freight (c&f) included, for the entire volume, the same price cited in initial assessments on Tuesday.
They said they expected much of the purchase to be sourced from France, but part of the volume was likely to come from Russia.
Tuesday’s tender requested shipment from main supply regions, including Europe, in three periods: Sept. 21-30, Oct. 1-15 and Oct. 16-31.
If sourced from South America or Australia, shipment is one month earlier.
A group of South Korean flour mills on Wednesday bought around 50,000 tonnes of milling wheat to be sourced from the United States and 50,000 tonnes to be sourced from Australia.
The U.S. wheat was bought for shipment between Sept. 16 and Oct. 5, which was slightly earlier than originally sought.
The Australian wheat was bought for shipment between Dec. 16 and Dec. 31, they said.
The U.S. and Australian wheat was all bought on an FOB basis with a range of types purchased.
The U.S. purchase involved 21,695 tonnes of soft white wheat of about 10.5% protein content bought at around $360 a tonne, 1,115 tonnes of soft white wheat of 8.5% protein bought at around $361 a tonne, 14,590 tonnes of hard red winter wheat of 11.5% protein bought at an estimated $395 a tonne and 12,600 tonnes of northern spring/dark northern spring wheat bought around $380 a tonne.
The U.S. wheat was all said to have been sold by trading house CJ International.
The Australian purchase involved 45,085 tonnes of Australian standard white Korean grade (ASWK) bought at about $369 a tonne and 4,915 tonnes of Australian hard (AH) wheat bought at about $392 a tonne.
The Australian wheat was said to have been sold by trading house Mitsui.
ODC Tunisia purchased 100kt soft wheat from Viterra at an avg price of $391.86/t and 25 kt at 389.99$ from Amber.
Also, ODC Tunisia purchased from Viterra 50kt of barley at an avg price of $349.38/t.
Jordan barley tender close on August 3, got 5 participants.
MIT purchased 60k from Viterra at $336/t CFR to be shipped fh January 2023.
Other offers were, Cargill at 345,50 usd; Bunge at 349,95 usd; Ameropa at 365,00 usd; Australian Grains at 343,20 usd.
Pakistan would also have bought 300,000 t of wheat, of which 240,000 t from France and 60,000 t from Russia.
The Taiwan Flour Millers’ Association purchased an estimated 50,910 tonnes of milling wheat to be sourced from the United States in a tender which closed on Thursday.
The wheat was bought in one consignment comprising various wheat types for shipment from the U.S. Pacific Northwest coast between Sept. 21 and Oct. 5.
The purchase involved 29,795 tonnes of U.S. dark northern spring wheat of 14.5% protein mininum content bought at $381.94 a tonne on a free-on-board (FOB) basis U.S. Pacific Northwest coast.
The purchase also involved 13,670 tonnes of hard red winter wheat of a minimum 12.5% protein bought at $391.65 a tonne FOB and 7,445 tonnes of soft white wheat of a maximum 9.5% protein bought at $358.99 a tonne FOB.
The consignment has an additional freight charge of $43.70 per tonne for ocean shipping from the U.S. Pacific Northwest coast to Taiwan.
The dark northern spring and soft white wheat was sold by trading house United Grain Corporation, while the hard red winter and soft white came from trading house Columbia Grain International.
The tender had been announced on July 27 and the purchase was not seen as connected to the current political tension with China.
That’s all, thank you.
To all of you, we wish you a good day and … Good Harvest 2022!
Author: Sandro F. Puglisi