Good morning Farmer Family …
US farm markets were mixed but mostly higher yesterday.
Corn prices were up 0.93%.
The wheat complex captured double-digit gains, with Chicago SRW saw a 2.34% increase, Kansas City HRW contract was up 2.47%, Minneapolis spring wheat was 1.51% higher at the end of the session.
Soybeans, in contrast, after posted large gains during the day, evaporated by the close as ended 0.21% lower.
Meal was up 0.11% in Sep but lower in most other contracts.
Bean oil held up, closing 2.46% higher.
Corn and wheat prices rose yesterday, as hot, dry weather in parts of the United States and Europe kept attention on harvest risks.
The slide in the dollar, triggered by lower than expected U.S. inflation, also supported a strong rise in Chicago wheat.
Meanwhile soybeans settled lower after notching contract highs.
Traders also adjusted positions ahead of the USDA WASDE report on Friday.
The government is expected to trim its outlook for U.S. corn production.
However, parts of the Midwest received rain in recent days, even if heat in the western side of the farm belt is expected to continue stressing crops.
Commodity Weather Group predicted showers in the next week will leave about a quarter of corn and soybeans under stress from dryness.
In the afternoon, private exporters reported to the USDA a sales of 196,000 metric tons of soybeans for delivery to China during the 2022/2023 marketing year.
Meantime, the EIA showed ethanol production in the week of August 5th at 1.022 million barrels per day, a 21,000 bpd drop from the week prior.
Stocks were also on the decline, down 138,000 barrels to an 8-week low of 23.256 million barrels.
In this context, yesterday commodity funds were net buyers of CBOT corn, wheat, soybean, soyoil and soymeal futures contracts.
Corn basis bids were steady to weak after sliding 2 to 5 cents lower at three Midwestern locations.
Soybean basis bids tumbled 22 cents lower at an Ohio elevator and dropped 10 cents at an Iowa river terminal while holding steady elsewhere across the central U.S..
On this morning, Chicago corn and wheat futures retreated, after hitting more than one-week highs.
Soybeans extended Wednesday losses.
Indeed, corn was down 0.4% at $6.15-3/4 a bushel, as of 00:49 GMT, and wheat fell 0.5% to $7.95-1/2 a bushel.
Soybeans slid 0.3% to $14.23-1/4 a bushel.
In energy markets, oil prices slipped in Asia on Thursday after gaining more than $1 in the previous session, as concerns over supply disruptions eased and markets looked for evidence of improving fuel demand.
Thus, Brent crude futures dipped 18 cents, or 0.2%, to $97.22 a barrel by 04:19 GMT, while U.S. West Texas Intermediate crude futures fell 22 cents, or 0.2%, to $91.71.
U.S. crude oil stocks rose by 5.5 million barrels in the most recent week, the U.S. Energy Information Administration said, more than the expected increase of 73,000 barrels.
Gasoline product supplied rose in the most recent week to 9.1 million barrels per day, though that figure still shows demand down 6% over the past four weeks compared with the year-ago period.
The resumption of flows on the Russia-to-Europe Druzhba pipeline further calmed market worries over global supplies.
Monthly oil reports from IEA and OPEC are expected later on the day.
In freight markets, the Baltic Exchange’s main sea freight index rose on Wednesday as a third straight session of capesize gains overshadowed weeks-long losing streaks in the panamax and supramax segments.
The overall index, indeed, rose 28 points, or 1.8%, to 1,592 points.
Particularly, the capesize index gained 112 points, or 7.4%, at a one-week high of 1,622 points on its best day since July 15.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $934 at $13,455.
The panamax index was down for the 12th straight session, shedding six points, or 0.3%, at 1,932 points, its lowest in over three weeks.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $59 to $17,385.
The supramax index extended losses, falling 22 points to 1,614 points, its lowest since Feb. 4.
In equity markets, stocks rallied sharply on Wednesday’s favorable CPI report.
The July CPI report of unchanged m/m and +8.5% y/y, indeed, was weaker than expectations of +0.2% m/m and +8.7% y/y.
The July CPI eased from June’s report of +1.3% m/m and +9.1% y/y.
Meanwhile, the July core CPI report of +0.3% m/m and +5.9% y/y was weaker than expectations of +0.5% m/m and +6.1%.
The July core CPI report compared favorably with June’s report of +0.7% m/m and +5.9% y/y.
On a year-on-year basis, Wednesday’s July CPI report of +8.5% y/y was down by 0.6 points from June’s 40-year peak of +9.1% y/y.
The July core CPI of +5.9% y/y was unchanged from June and was 0.6 points below the 40-year peak of +6.5% y/y posted earlier this year in March.
All that, sparked hopes that inflation may has been peaking and that the Fed may be able to limit its rate-hike regime.
Still, experts warned the war against inflation is not over.
Softer energy prices were the main factor tempering inflation, while prices for food, housing and wages pushed higher.
On this wake, two Fed officials downplayed the CPI report and indicated that the Fed will continue to raise interest rates.
In this context, T-note yields initially fell sharply on the CPI report, but then moved higher later in the day, with the 2-year T-note yield ended the day down -5 bp while the 10-year T-note yield ended the day up +1 bp.
Taiwan tensions eased Wednesday after China said that its Taiwan military drills are over.
In this context, on Wall Street, the S&P 500 rose 2.1% or 87.77 points to 4,210.24, hitting its highest levels since early May.
It is now nearly 15% above its mid-June low.
The Nasdaq, jumped 2.9% to 12,854.80.
It’s up more than 20% from June.
The Dow Jones Industrial Average rose 1.6% to 33,309.51.
Technology stocks, cryptocurrencies and other of the year’s hardest-hit investments were some of the day’s biggest winners.
Bitcoin rose 2.2% to just under $24,000.
Meantime, shares advanced Thursday in Asia after benchmarks closed at three-month highs on Wall Street.
Hong Kong, Shanghai and Seoul saw gains of more than 1%.
Tokyo was closed for a holiday.
Particularly, Hong Kong’s Hang Seng index added 2.2% to 20,044.76, while the Shanghai Composite index gained 1.6%, to 3,281.09.
The Kospi in Seoul rose 1.4% to 2,515.45.
In Australia, the S&P/ASX 200 climbed 0.9% to 7,057.30.
Taiwan’s Taiex was up 1.7%.
In Thailand, the SET picked up 0.4% after the country’s central bank raised its benchmark interest rate by 0.25 percentage points to 0.75% a day earlier.
In currency trading, the U.S. dollar rose to 133.03 Japanese yen from 132.93 yen late Wednesday.
The euro slipped to $1.0293 from $1.0300.
From South America, according to the Rosario Stock Exchange, corn production in Argentina should be around 55 million tons and that of soybeans around 47 million.
From Brazil, according to the chief executive at Brazilian food processor BRF, global demand for chicken meat will rise 47% by 2030.
Thus, companies in Brazil, the world’s biggest chicken exporter, should prepare to cater to growing demands.
He warned, however, that higher costs are weighing on the industry after corn and soymeal prices rose by 3.4 and 2.5 times respectively in the past seven years.
In Europe, grain prices found its way up on Wednesday evening in a market still very concerned about weather conditions, while rapeseed were on a slightly negative trend, in the wake of palm prices.
December wheat on Paris-based Euronext settled up 0.8% at 327.25 euros ($337.89) a tonne, moving away from Monday’s near two-week low of 320.25 euros.
Gains on Euronext were curbed by a sharp rise in the euro against the dollar.
The resumption of Ukrainian maritime exports, as well as expectations of a record Russian harvest, were also capping wheat prices.
However, traders remained cautious about chances of large-scale flows from Ukraine and saw European Union wheat continuing to attract strong export demand.
In Poland, indeed, prices rose on export demand and slack selling by farmers.
Despite good yields from the new crop, farmers indeed are putting large quantities into their stocks and delaying sales, likely due to fear of inflation, especially uncertainty about fertiliser and energy prices.
In this context, export prices for 12.5% protein wheat rose about 10 zloty on the week to around 1,680 zloty a tonne (356.9 euros) for August/September delivery to ports.
Polish ports are busy with a big line-up of ships loading wheat for export.
Certantly, corn from Ukraine arriving in Poland by land is also being exported but no Ukrainian wheat exports via Poland was seen.
Meantime, in Gdansk/Gdynia, one ship was loading 55,000 tonnes of wheat believed to be for Saudi Arabia, while two ships are both loading 55,000 tonnes for undisclosed destinations.
Another ship has just sailed with 55,000 tonnes for Nigeria.
In Szczecin, one ship has just sailed with 27,000 tonnes for Togo and another is loading 35,000 tonnes for undisclosed destinations.
In France, official sources said while difficult growing conditions reduced the soft wheat crop to 33.9Mt this year the quality of the harvest mainly was good.
Particularly, production was 3pc below the 5-year average, as there was a lower planted area.
As for quality, French soft wheat crop is showing mixed protein content in key northern production regions, although readings are generally satisfactory, farm office FranceAgriMer said on Wednesday.
Protein content, was averaging around 11% in the northern half of France, while readings in the south were high to very high.
As for test weights, readings were generally in line with market requirements, with high levels in the north.
Hagberg falling numbers, were also mostly meeting milling requirements despite the impact of storms on some crops.
Moisture levels in soft wheat were lower than usual.
As for durum wheat, quality indications had protein levels often reaching 14% with exception in the southeast.
Test weights were very mixed, meantime.
As for barley, malting quality was contrasting.
Winter barley was showing mixed results, while spring barley readings were generally good although with some high protein levels.
In rapeseed, oil content was estimated at around 44.5%, above the 43.2% average of the past five years.
Romania has finished reaping its wheat crop for the year.
The country harvested between 15% to 18% smaller than in 2021, Agriculture Minister Petre Daea said on Wednesday.
Romania reaped a record wheat crop of 11.3 million tonnes in 2021.
Consequentially, the ministry said earlier this month, “the wheat harvest was large enough to cover Romanian domestic needs and ensure a surplus for exports”.
The country’s domestic consumption, indeed, traditionally ranges from 2.5 to about 3 million tonnes.
Meantime, Romanian farmers have started reaping sunflower although high temperatures and prolonged drought have affected crops damaging around 284,376 hectares of sunflower and corn, out of roughly 7 million hectares of grain and oil-producing crops.
Meantime, Bulgaria has collected 6.3 million tonnes of wheat and 620,000 tonnes of barley year to date, with the end of harvesting approaching, the agriculture ministry said on Wednesday.
The average yield is around 5.3 tonnes per hectare for wheat and 5 tonnes per hectare for barley, the ministry.
These quantities are entirely sufficient to guarantee supplies for human consumption, animal feed, industrial processing and crop seeding, and the country is expected to keep its significant wheat export potential, the ministry added.
There were 7.16 million tonnes of wheat collected in the country’s 2020-2021 bumper crop year.
Bulgaria expects to harvest around 6.5 million tonnes of wheat in 2022.
Between 1.4 million and 1.5 million tonnes are necessary for domestic consumption.
Thus, anything above that amount fit for potential export, especially in light of heightened global demand for the commodity.
Bulgaria has exported a provisional amount of 5.2 million tonnes of wheat in 2021 season.
On this wake, Bulgaria is mulling various strategies to cope with grain oversupply.
Further measures are also being weighed up regarding phytosanitary control of grain imports, he said.
Meantime, non-commercial market participants cut their net long position in Euronext’s milling wheat futures and options in the week to Aug. 5, data published by Euronext on Wednesday showed.
Non-commercial participants, which include investment funds and financial institutions, lowered their net long position to 79,315 contracts from 80,285 a week earlier, the data showed.
Commercial participants raised their net short position to 100,422 contracts from 99,140 a week earlier.
Commercials’ short positions accounted for 65.3% of the total short position, while commercial long positions accounted for 49.8% of total long positions.
Non-commercial short positions represented 34.7% of total short positions, while non-commercial net long positions accounted for 50.3% of the total longs.
In Euronext’s rapeseed futures and options, non-commercial market participants extended their net short position to 21,592 contracts from 19,266 a week earlier.
Commercial participants reduced their net long position in rapeseed to 19,021 contracts from 19,463 a week earlier.
From North Africa, Egypt’s supply minister reported that the country has strategic wheat reserves that are sufficient for more than seven months.
Egypt’s strategic vegetable oil reserves should last 5.3 months.
From Russia, the agriculture ministry has proposed to the government that rapeseed exports be allowed from the country’s far east, which borders several Asian countries, and from its Baltic exclave Kaliningrad.
The exports could be allowed for one year starting from Sept. 1, the ministry said in the proposal which was published on Wednesday on the government website for drafts of orders.
Russia produced 2.8 million tonnes of rapeseed in 2021.
It banned exports of the commodity from April 1 to Aug. 31 to protect domestic supply for rapeseed oil producers.
From Ukraine, Ukraine’s grain, oilseed, vegetable oil exports rose 22.7% in July to 2.66 million tonnes versus June, due to higher wheat and barley shipments, the agriculture ministry said on Wednesday.
July’s exports 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, the ministry said.
However, the ministry said Ukrainian grain exports were down almost 52% year-on-year at 2.2 million tonnes so far in the 2022/23 season.
From the Middle East, Yemen has secured enough wheat to cover two-and-a-half months of consumption, a commerce ministry document dated Aug. 4 showed.
Particularly, 176,400 tonnes of wheat are available – 70,400 stockpiled and 106,000 booked for August/September delivery – according to the document.
This is in addition to 32,300 tonnes of wheat available from the United Nations, which feeds some 13 million people a month in Yemen.
Yemen is grappling with a dire humanitarian crisis that has left millions hungry in the seven-year conflict that divided the country and wrecked the economy.
Yemen imports 90% of its food, and 45% of its wheat needs came from Ukraine and Russia.
HSA Group, one of Yemen’s largest food conglomerates, said it had booked around 250,000 tonnes of wheat from Romania and France, sufficient to supply the market until mid-October, and that it is looking to secure a further 110,000 tonnes.
Yemeni importers are unable to store significant amounts of wheat due to infrastructure limitations at Yemen ports and the country’s limited storage capacity, the HSA spokesperson said, and therefore the firm books new shipments every 2-3 weeks depending on availability and global prices.
Another issue facing importers is Yemen’s foreign reserves shortage.
The Aden-based central bank has put in place an auction mechanism to ease access to foreign currency, but no import financing mechanism is currently in place to support the market.
From Australia, prices for feedgrain were mostly steady in the northern market and firmer in the south as trading interest migrates to new-crop slots.
While exporters have mostly ratcheted back their buying in order to gauge the size and quality of the Northern Hemisphere harvest, the domestic market is waiting for a clearer picture on the local crop.
The big variable for the coming week will be how much rain falls in New South Wales, where crops range in condition from struggling because of waterlogging to excellent.
Consumers are generally seen as well covered into new crop, and buyer selling is expected to be minimal in the closing weeks of winter.
Meantime, current crop markets on Clear Grain Exchange traded thinly at prices little changed from previous.
New crop multigrade wheat bids firmed a dollar or two in Victoria and SA.
New crop canola firmed $10-15/t into domestic crush for Jan-plus delivery.
New crop markets remained at a standoff.
On the international trade scene, Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said on Wednesday that it will seek 70,000 tonnes of feed wheat and 40,000 tonnes of feed barley to be loaded by November 30 and arrive in Japan by January 26, 2023, via a simultaneous buy and sell (SBS) auction that will be held on August 19.
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 Aug. 16.
A new announcement had been expected after Jordan made no purchase in its previous tender for 120,000 tonnes of wheat on Tuesday.
Shipment in the new tender is sought in a series of possible combinations in 60,000 tonne consignments in the same periods as Tuesday’s tender.
Possible shipment combinations are in 2023 for Jan. 1-15, Jan. 16-31, Feb. 1-14 and Feb. 15-28.
A separate tender from Jordan to buy 120,000 tonnes of animal feed barley closed on Wednesday.
MIT got 4 participants: Cargill, Viterra, Bunge and Australian grain export.
MIT cancelled its tender.
Meantime, on this morning, the state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley.
The deadline for submission of price offers in the tender is Aug. 17.
Shipment in the new tender is sought in a series of possible combinations in 60,000 tonne consignments.
Possible shipment periods are in 2022 for Dec. 16-31 and in 2023 for Jan. 16-31, Feb. 1-14 and Feb. 15-28.
That’s all, thank you.
To all of you, we wish you a good day and… Good Harvest 2022!
Author: Sandro F. Puglisi