Good morning Farmer Family …
US farm markets rose yesterday.
Corn prices, after a drop in weekly crop condition ratings, posted a turnaround, bouncing in Sep contract by 1.15%.
Soybean rallied closing the day 3.3% higher.
Product values were a supporting factor, as nearby meal was up 2.91%, and soybean oil was 0.63% higher.
The wheat complex struggled to stay positive, however, all three contracts closed higher.
Indeed, CBOT SRW wheat contract was up 0.22%.
Kansas City HRW wheat was 0.47% stronger.
Minneapolis spring wheat was the leader to the upside, as closed 1.36% higher on the weaker condition ratings from Monday.
Corn and soybean prices climbed to their highest in more than a week.
A firmer Brazilian real and improved U.S. export sales underpinned corn and soy prices following another daily USDA announcement of 133,000 tonnes of new-crop corn sold to China.
Wheat, on its part, was firmer also because the dollar softened.
Gains, however, were limited by pressure from inter-market spreading and the resumption in sea exports from Ukraine.
Traders, are monitoring export shipments.
Twelve vessels have already departed.
Meantime, operators are awaiting monthly WASDE report, will out on Friday.
As for corn, analysts expect the agency to show average corn yields at 175.9 bushels per acre, for a total production of 14.392 billion bushels.
That would be a moderate decline from USDA’s July estimate of 14.505 billion bushels, if realized.
In the meantime, the trade is estimating USDA to raise ending stocks for old crop by 10 mbu to 1.52 bbu.
New crop is seen at 1.406 bbu, a 64 mbu drop on the lower expected production.
As for soybean, analysts anticipate that the agency will show soybean yields at 51.1 bushels per acre, for a total production of 4.481 billion bushels.
If realized, that would be slightly below USDA’s July estimate of 4.505 billion bushels.
In the meantime, analysts are also expecting that old crop soybean stocks at 225.6 mbu, a 10 mbu jump from the July USDA number.
New crop is seen down just 5 to 225 mbu.
As for wheat, USDA’s Crop Production report is expected to show a 15 mbu increase to 2022 US wheat output to 1.796 bbu on Friday.
Much of that is seen from spring wheat, up 9 mbu to 512 mbu, with increases expected from white winter and durum as well.
In this context, yesterday commodity funds were net buyers of CBOT corn, wheat, soybean and soymeal futures contracts, and net even in soyoil.
Corn basis bids were mostly steady across the central U.S., but did tilt as much as 10 cents higher at an Illinois river terminal and as much as 8 cents lower at an Iowa processor.
Soybean basis bids were steady to mixed and offered quite a bit of variability, jumping as much as 30 cents higher at an Illinois river terminal and sliding as much as 10 cents lower at an Iowa processor.
On this morning, when the sessions opened, Chicago corn prices eased sligtly.
Soybeans were substantially unchanged.
Wheat rose for a third consecutive session.
In energy markets, oil prices eased on Wednesday after industry data showed U.S. crude inventories unexpectedly rose last week, signaling a potential hiccup in demand, though concerns over supply kept losses in check.
Thus, Brent crude futures fell 23 cents, or 0.2%, to $96.08 a barrel at 0323 GMT.
U.S. West Texas Intermediate crude futures declined 28 cents, or 0.3%, to $90.22 a barrel.
U.S. crude stocks rose by about 2.2 million barrels for the week ended Aug. 5, according to market sources citing American Petroleum Institute figures.
Official government data is due on Wednesday at 10:30 a.m. EDT.
Both oil benchmarks were volatile yesterday, both rising and falling by more than $1 a barrel during the session, but they settled slightly lower by the close.
The European Union on Monday put forward a “final” text to revive the 2015 Iran nuclear deal which would boost Iran’s crude exports.
Meantime, Ukraine halted oil flows on the Druzhba oil pipeline to parts of central Europe.
Western sanctions, indeed, has prevented a payment from Moscow for transit fees of going through!
Flows along the southern route of the Druzhba pipeline have been affected, although it expected Russian oil supplies to the Czech Republic to restart within several days.
Meanwhile the northern route serving Poland and Germany has been uninterrupted.
On the other hand, the operator of the giant Kashagan oilfield in Kazakhstan has started gradually restoring output after an emergency shutdown last week caused by a gas leak.
The Kashagan oilfield produces about 300,000 barrels per day.
In freight markets, the Baltic Exchange’s main sea freight index was little changed on Tuesday as declines to multi-week lows in the panamax and supramax segments countered gains in capesize rates.
The overall index, indeed, edged down two points to 1,564 points.
Particularly, the capesize index was up for the second session, gaining 45 points, or 3.1%, at 1,510 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $369 to $12,521.
The panamax index was down for the 11th straight session, shedding 20 points, or 1%, at a three-week low of 1,938 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $180 to $17,444.
The supramax index fell 35 points to 1,636 points, its lowest since Feb. 4.
In equity markets, stock investors turned cautious ahead of Wednesday’s U.S. July CPI report.
That will be a key factor for the Fed in determining the size of its rate hike on September 20-21meeting.
Meantime, 10-year T-note yield rose by +2 bp.
There were poor labor-cost and productivity news, yesterday.
Q2 U.S. unit labor costs rose +10.8%, stronger than expectations of +9.5% and only modestly below Q1’s revised +12.7%.
The high level of labor costs is taking a direct bite out of U.S. corporate earnings.
Also, Q2 U.S. productivity fell by -4.6%, illustrating that companies are not getting a bang for their buck from their labor forces.
Q1 productivity was revised slightly weaker to -7.4% from -7.3%.
Taiwan tensions continued after China on Tuesday held another day of military drills.
In some positive news for stocks, the July NFIB U.S. small business optimism index in July rose by +0.4 points to 89.9 from June’s 9-year low of 89.5.
In this context, the S&P 500 fell 0.4% to 4,122.47.
The Dow slipped 0.2% to close at 32,774.41.
The Nasdaq dropped 1.2% to 12,493.93.
The Russell 2000 ended down 1.5%, at 1,912.89.
Chipmaker Micron Technology fell 3.7%.
Nvidia shedded 4%.
Norwegian Cruise Line plunged 10.6%.
Expedia fell 1.6% and American Airlines fell 2.7%.
Meantime, Asian stocks followed Wall Street lower on this morning.
Shanghai, Tokyo, Hong Kong and Seoul declined.
Particularly, the Shanghai Composite Index lost 0.6% to 3,227.98 and the Nikkei 225 in Tokyo sank 0.7% to 27,803.26.
The Hang Seng in Hong Kong plunged 2.2% to 19,559.33.
The Kospi in Seoul fell 0.9% to 2,480.20 and Sydney’s S&P-ASX 200 was 0.3% lower at 7,005.70.
India’s Sensex opened down less than 0.1% at 58,827.86.
New Zealand and Southeast Asian markets retreated.
In currency trading, the dollar declined to 135.02 yen from Tuesday’s 135.18 yen.
The euro rose to $1.0215 from $1.0205.
From South America, Brazil’s Anec is projecting the country’s soybean exports will reach 5,67 MMT in August, which is moderately above the projection it made a week ago.
Brazil’s corn exports are also on the rise, reaching an estimated 7,88 MMT this month.
Producer sales of corn in Brazil remained below expectations, but market sources reported that producers sold around 2-4 million mt in the weeks between July 25 and Aug. 5.
Rains hitting Mato Grosso could boost domestic sales of corn that is stored outside of warehouses.
According to IMEA, Brazil’s farmer corn sales in the top producing state have reached 83.93% Aug. 8, compared with 82.23% July 11 and 92.3% at the same period in 2021.
As for soybean, according to Safras&Mercado, Brazilian farmers had negotiated 79.9% of 21/22 soybean crop as of Aug5.
That was 5.6pp increase MoM, however, that was slower than 81.9% LY and 82.6% 5Y avg.
Regarding 22/23, the agency has estimated advanced sales of 17.3%vs 23% LY and 21.5% in 5Y avg.
Brazil soybean production is seen 1.45Mt higher at 125.5Mt and corn production is seen about 1Mt higher than the previous estimate according to a Bloomberg survey of eight analysts.
The Brazilian national supply company Conab will release its latest estimates tomorrow, having raised its July corn estimate by 440,000t to 88.4Mt.
AgRural said 2nd corn harvest in Brazil’s Central-South had advanced, with 80.3% harvested as of Aug. 4, above 58.4%LY.
Meantime, harvest is over in Mato Grosso and in Goias.
In Rio Grande do Sul, 22/23 sowing has already started.
5.5% has already been sown, for Dec – Jan harvest.
In Europe, grain prices ended with little change yesterday.
Traders continued to assess the resumption of maritime grain exports from Ukraine and adverse weather for corn crops.
More hot, dry weather in Europe this week was also underscoring the prospect of yield losses for corn.
UK and France issued fresh warnings this week for another bout of extreme heat and dry weather set to sweep Europe.
However, showers forecasted for next week may bring late relief.
Thus, December wheat on Paris-based Euronext settled down 0.3% at 324.75 euros ($331.93) a tonne, holding above Monday’s near two-week low of 320.25 euros.
In a sign of the poor harvest outlook, November maize on Euronext ended above December wheat at 327.50 euros, reversing its usual discount to wheat.
Rapeseed price, on its part, is finding support in the firmness of canola in Canada and the rise in palm prices.
French harvest ended, meanwhile field work are progressing rapidly in northern Germany.
New crop volumes are good and quality is also reasonable although we often have protein levels down about 1%, but in the north often new crop have protein levels of 11% to 12.5%.
Export sentiment remained positive in Europe.
EU data showed that the bloc had exported 2.49 million tonnes of wheat so far in 2022/23, slightly more than a year ago, although the
Barley exports are late at 938,394 t against 1.8 million last year.
Corn imports stand at 1.99 million tonnes against 1.37 to date last year.
Rapeseed imports into the EU on 7 August came to 628,542 t against 418,125 t last year.
Soybean imports reached 1,35 million tonnes through August 5, which is slightly below last year’s pace so far.
EU soymeal imports are fractionally lower year-over-year, with 1.42 million metric tons.
European Commission, however, warned the data was incomplete.
From the Black Sea basin, the size of the Russian harvest is unclear despite estimates being continually revised upward.
A government statement this week appeared to moderate the harvest reportage.
“The current yield is generally not bad, but the volume of grain harvested is currently noticeably less than a year ago…all this creates risks in terms of achieving the grain yield of 130 million tonnes…if the planned volumes are not achieved, we will have to revise the export plans of 50 million tons,” Russian Minister of Agriculture Dmitry Patrushev said.
Russia may lose up to 15% of expected crop size (refaction included) this year, president of Russian Grain Union Arkadiy Zlochevskiy said on August 8, Interfax informed.
According to him, heavy rains in some main grain producing regions may result in higher than average refaction (6%).
“Grain is wet and refaction will be not less than 10%, or even 12-13%. Moreover, the harvesting campaign is delayed and the optimal windows are missed, the grain is sprouting. It results in high losses”, – A. Zlochevskiy said.
He also pointed questionable quality of this year’s grain.
“We will see sharp decline of quality. Share of food wheat will be about 60%. It was 82% last year”. – he said.
However, according to IKAR the wheat crop in Russia could be 95 million tonnes (Mt) this year.
The consultancy indeed, increased its country’s 2022 wheat production estimate by 4.5 MMT, mainly due to higher yields in the Central and Volga regions.
In the meantime, its forecast for the barley crop was also raised to 21.5 million tonnes from 20 million tonnes.
Russia’s southern region of Krasnodar has harvested a slightly bigger winter grains crop than the record high achieved last year, the regional agriculture ministry said on Monday.
From Ukraine, more details of the agreement for the export corridor have been released.
The Joint Coordination Centre (JCC) will provide information on the planned movement of ships through the maritime humanitarian corridor, which will be shared with Russia, Ukraine and Turkey’s military to prevent incidents.
In a statement JCC said no military vessel, aircraft or UAVs (drones) will close to within 10 nautical miles of a merchant vessel transiting the maritime humanitarian corridor, excluding territorial seas of Ukraine.
About 370,000t agricultural products have been shipped so far, predominately corn, but also small volumes of soybeans, sunflower oil and sunflower meal.
There have not yet been any shipments of wheat.
Ukraine’s grain, oilseed, vegetable oil exports rose 22.7% in July versus June to 2.66 million tonnes thank to higher wheat and barley shipments, the agriculture ministry said on Wednesday.
The ministry said in a statement the July’s volume included 412,000 tonnes of wheat, 183,000 tonnes of barley, 1.1 million tonnes of corn, 362,100 tonnes of sunseed and tonnages of other commodities.
Shipments from Black Sea ports, however remain complicated, and for the time being it is the ships on standby since February which are trying to leave the country, with mainly corn on board, the quality of which may have been degraded by the precarious storage conditions during this period.
In this context, Lebanon refused one Ukrainian corn cargo this week.
Market participants said that the final cargo Razoni destination was Syria, with the cargo expected to be discharged in Lebanon and then it has transited to Syria.
However, we might see more loads being rejected if there are problems with grain quality with ships that were loaded months ago.
Consequentially, shippers remain very cautious before committing their fleet to the Black Sea basin, resulting in skyrocketing insurance costs.
From the Middle East, high cost and freight (CFR) world barley prices have drastically reduced the demand for barley in Saudi Arabia, and contributed to the increased demand for domestically processed animal feed.
For MY2021/22, USDA attaché, projected total Saudi barley imports to reach 3.87 million metric tons (MMT).
That is a 44 percent decline compared to 6.9 MMT imported in MY2020/21.
From Australia, the country exported 482,840 tonnes of feed barley, 52,682t of malting barley and 266,101t of sorghum in June, according to the latest export data from the Australian Bureau of Statistics (ABS).
Particularly, the feed barley figure is down 18 per cent from the May total of 585,968t, while the malting figure is down 27pc from 72,203t shipped in May.
The June sorghum figure is down very slightly from the 267,595t exported in May.
With 266,132t shipped in June, Saudi Arabia once again was the biggest market for feed barley, followed by Japan on 135,959t and Vietnam on 65,790t.
In malting, Japan on 22,637t, South Korea on 20,417t and Singapore on 4264t were the three biggest buyers.
China continues its run as the biggest customer by far for Australian sorghum, and was the destination for 188,993t of the June-shipped grain, followed by Japan on 69,500t and Taiwan on 5586t.
Meantime, current crop and new crop volume of trade increased yesterday at prices that were little changed.
Over 4000t mostly WA port zone current crop wheat and barley traded on Clear Grain Exchange yesterday.
In other news, Federal Agriculture Minister Murray Watt announced A$10m funding towards Indonesia’s foot and mouth disease containment work.
Senator Watt told the National Press Club in Canberra on Tuesday the biosecurity funding would go towards vaccines and technical support.
It is in addition to the $14m Australia committed last month to support Indonesia and to increase measures in Australia where 18 new biosecurity officers are to be stationed at airports and mail centres and detector dogs deployed.
On the international trade scene, Iranian state agency the Government Trading Corporation (GTC) has issued an international tender to purchase about 60,000 tonnes of milling wheat.
The deadline for submission of price offers in the tender is today Wednesday, Aug. 10.
The wheat is sought for shipment in September and October.
Volumes in Iran’s tenders are nominal and the country regularly buys more than the original tonnage sought.
The GTC had on Aug. 4 purchased between 180,000 tonnes to 240,000 tonnes of wheat expected to be of Russian origin in a tender.
Japan’s MAFF is seeking 82,955 MT of US and Canadian wheat in a tender this week, due Wednesday, with just 25,070 US specific.
Jordan Wheat Tender closing 09/08/2022 got 3 participants.
CHS, Cargill and Ameropa.
MIT cancelled the tender and a new tender is expected to be issued soon.
That’s all, thank you.
To all of you, we wish you a good day and… Good Harvest 2022!
Author: Sandro F. Puglisi
