Good morning Farmer Family …
US farm markets rose to start the week.
General export optimism and lingering concerns over production potential kept both grain and oilseed prices firm, yesterday.
Corn prices trended another 1.2% higher, posting gains for the fourth consecutive session.
Soybeans turned in the best performance, rising 2.57%, led higher by gains in soymeal, up 2.63% on the day, and signs of strong demand from China.
Soybean oil prices also posted sharp gains, as were 1.28% higher by the close, shrugging off weakness in the crude oil market.
The wheat complex was variable, although all three contracts went home with fair gains by the close, thanks to short-covering and some bargain buying in focus after Chicago SRW wheat contract sank to its lowest level since February, last week.
Thus, CBOT Sep soft red winter wheat settled 2.29% higher.
K.C. hard red winter wheat for Sep delivery was up 2.43% and MGEX September spring wheat gained 1.57%.
Weekly Inspections data had 740,508 MT of corn shipments for the week that ended 8/18.
That was up from 540k MT last week, but 26k MT below the same week last year.
Mexico, Japan, and China were all shipped more than 100k MT.
Accumulated corn exports reached 53.821 MMT through 8/18, which was 17.7% behind last year’s pace.
As for soybean, USDA said that export inspections of soybeans totaled 686,583 tonnes in the week ended Aug. 18, in line with trade expectations for 400,000 to 875,000 tonnes.
USDA also boosted its estimate of the prior week’s soybean inspections total to 768,328 tonnes from 744,571 tonnes.
The USDA also went back to January to add shipments to past reports, the total was just a light 8.5k MT, with another 24k MT added to August’s data (32,296 MT total).
They were smaller entries mostly to Malaysia, Indonesia, Thailand, and Vietnam.
That took the accumulated soybean export to 55.994 MMT through 8/18 – last year’s program was 59.013 MMT.
As for wheat, export inspections of wheat totaled 594,273 tonnes in the week ended Aug. 18.
That was in line with trade forecasts of 250,000 to 650,000 tonnes.
That was up 204k MT wk/wk, but under the 729k MT shipped during the same week last year.
Japan was the top destination.
Accumulated wheat exports reached 4.494 MMT as of 8/18, compared to 5.768 MMT last season.
After the sessions close, USDA said condition ratings for corn and soybeans declined in the latest week, bucking analyst expectations for no change.
Stressful dry conditions, indeed, continued to impact crops in portions of the Midwest crop belt.
In this context, the USDA rated 55% of the U.S. corn crop in good to excellent condition, down from 57% the previous week.
For soybeans, the government rated 57% of the crop as good to excellent, down from 58% previously.
A 28% of U.S. corn production and 24% of the U.S. soybean crop remained in an area experiencing drought as of Aug. 16, mostly west of the Mississippi River, according to the USDA.
Condition ratings held steady for U.S. spring wheat, grown mostly in the northern Plains.
The USDA rated 64% of the crop as good to excellent, unchanged from the previous week and in line with analyst expectations.
The spring wheat harvest was 33% complete by Sunday, ahead of the average analyst estimate but behind the five-year average of 54%.
The U.S. winter wheat harvest was nearly finished, with 95% cut as of Aug. 21.
On the weather side, very little rain is expected to fall on the central U.S. later this week, although the upper Midwest will receive small to moderate amounts between today and Friday, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s new 8-to-14-day outlook predicts seasonally hot, dry weather returning to the Northern Plains and upper Midwest between August 29 and September 4.
In this context, corn basis bids were steady to mixed to start the week, moving as much as 5 cents higher at an Indiana ethanol plant and as much as 15 cents lower at a Nebraska processor.
Soybean basis bids climbed 25 cents higher at an Indiana processor and firmed 10 cents higher at an Illinois river terminal while holding steady elsewhere across the central U.S..
Commodity funds were net buyers of CBOT soybean, wheat, soymeal, corn and soyoil futures contracts.
On this morning, Chicago corn jumped to its highest level in more than one month, gaining 2.4%.
Wheat and soybeans rose more than 1% each.
Particularly, CBOT December corn contract was up 2.4% at $6.44-1/4 a bushel, as of 03:15 GMT, after climbing earlier in the session to the highest since July 11 $6.44-3/4 a bushel.
Dec wheat rose 1.3% to $7.98-1/4 a bushel and soybeans added 1.2% to $14.53 a bushel.
The market, indeed, has focussed on reports coming from scouts in the western Midwest.
South Dakota corn yield prospects and soybean pod counts are well below last year and the three-year average.
Particularly corn yields were projected at 118.45 bushels per acre (bpa), the worst on the tour since 2012 and well below the 2021 crop tour average of 151.45 bpa and the three-year crop tour average of 161.59 bpa.
As for soybean, in spite the four-day crop tour, does not project soybean yields, estimated the amount of soybean pods in a 3-by-3-foot square in South Dakota at an average of 871.40 pods, down from last year’s average of 996.86 pods and the three-year average of 1,026.86 pods.
In energy markets, oil rose on Tuesday as renewed concerns over tight supply dominated market sentiment after Saudi Arabia warned that the major oil producer could cut output to correct a recent oil price decline.
Also, the outcome of the Iranian nuclear deal remains a big uncertainty with Iran accused the United States on Monday of procrastinating in efforts to revive Tehran’s 2015 nuclear deal, while Washington deneied, and said a deal was closer than two weeks ago because of apparent Iranian flexibility.
Meanwhile, Europe faces fresh disruption to energy supplies due to damage to a pipeline system bringing oil from Kazakhstan through Russia, adding to concerns over a plunge in gas supplies.
The current tight demand-supply is underscored by U.S. crude inventory in the Strategic Petroleum Reserve at its lowest level in more than 35 years.
In this context, Brent crude gained 42 cents, or 0.4%, to $96.90 a barrel by 0630 GMT, after a choppy session on Monday when they dropped by more than $4 before paring losses to trade near flat.
It advanced by $1 a barrel in early Asia trading hours.
U.S. West Texas Intermediate crude futures rose 40 cents, or 0.4%, to $90.76 a barrel.
The benchmarks are down about 12% and 8% this month, respectively, amid fears about a global recession and fuel demand.
In freight markets, the Baltic Exchange’s main sea freight index extended its slide on Monday, hitting a fresh 18-month low, as demand for capesize and panamax vessel segments remained subdued.
The overall index, indeed, fell 9 points, or 0.7%, to 1,270 points, its lowest level since December 2020.
Particularly, the capesize index fell for the third straight session, shedding 9 points, or about 1.2%, to 747 points, its lowest in more than six months.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $68 at $6,199.
The panamax index, which has not seen a single day of gains since July 25, lost 43 points, or about 2.55%, at 1,645 points, to hit a more than 1-1/2-year low.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $380 to $14,808.
The supramax index gained 16 points to 1,751 points, rising for the seventh consecutive session, a more than two-week high.
In equity markets, US stocks on Monday sold off sharply.
Expectations that Fed Chair Powell this Friday at the Fed’s annual symposium at Jackson Hole, Wyoming, will reaffirm the Fed’s hawkish policy stance pushed up T-note yields and weighed on stocks.
Particularly, the 10-year T-note yield climbed to a 1-month high at 3.039%.
Losses in technology stocks weighed on the overall market after the 10-year T-note yield jumped.
Also, semiconductor companies that focus on memory-related chips were under pressure after Citigroup warned the companies could see a risk of weaker pricing trends in the second half of this year.
A positive factor for stocks was a recovery in China’s Shanghai Composite from a 1-week low to modestly higher after Chinese banks cut their benchmark lending rates and the government took steps to address the ailing property market.
Particularly, China cut its 5-year loan prime rate by 15 bp to 4.30%, a bigger cut than expectations of 4.35%.
The 1-year loan prime rate was cut by 5 bp to 3.65%, a smaller cut than expectations of 3.60%.
Meantime, Bloomberg reported that The People’s Bank of China (PBOC) and China’s Ministry of Finance would offer 200 billion yuan ($29.3 billion) in special loans to ensure that stalled housing projects are completed.
Monday’s U.S. economic data, also supported stocks after the July Chicago Fed national activity index unexpectedly rose +0.52 to 0.27, stronger than expectations of a decline to -0.25.
In this context, the S&P 500 had its biggest slide since mid-June, sliding 2.14% to 4,137.99 points, nearly doubling its losses from last week, when it broke a four-week winning streak.
The Dow Jones Industrial Average slumped 1.91% to 33,063.61 points and the Nasdaq dropped 2.55% to 12,381.57 points.
Smaller company stocks also lost ground, pulling the Russell 2000 index 2.13% lower to 1,915.74 points.
Meantime, Asian shares were mostly lower on Tuesday.
Benchmarks in Asia slid in Tokyo, Sydney, Seoul and Hong Kong, but shares were little changed in Shanghai.
Particularly, Japan’s benchmark Nikkei 225 lost 1.2% in afternoon trading to 28,454.45.
Australia’s S&P/ASX 200 slid 1.1% to 6,971.10.
South Korea’s Kospi dipped 1.1% to 2,435.26.
Hong Kong’s Hang Seng shed 0.8% to 19,509.56, while the Shanghai Composite was little changed, inching up less than 0.1% at 3,278.64.
In currency trading, the U.S. dollar fell to 137.14 Japanese yen from 137.49 yen.
The euro was little changed at 99 cents.
From Canada, spring wheat harvest is just getting going across the Western Prairies
In Saskatchewan 1% is completed.
Winter wheat harvest is almost done in Manitoba.
Yields have been low at 60-75 bushels per acre.
Durum harvest has started in Alberta and is 8% done in Saskatchewan.
The Argus Media crop tour lowered their average durum yield guess slightly to 39.5 bushels per acre.
Producers delivered another 169.3k mt of grain into the Canadian system, and there were 298.4k mt of exports during shipping week two.
Visible supplies fell slightly to 1.76 million mt, which is still high as we head into a large harvest.
Canada shipped 59k mt of durum in shipping week two.
Basis levels in Canada are relatively strong as harvest time approach.
From South America, the harvesting of Brazil’s 2021/2022 second corn crop, reached 89.5% of the planted area in center-south farms, according to consultancy AgRural on Monday.
AgRural said harvesting of Brazil’s second corn would be more advanced if it had not been for rains in states including Parana, Sao Paulo and Mato Grosso do Sul, which slowed work.
As this season draws to a close, Brazilian farmers are expected to harvest a record total corn crop, with production forecast at close to 116 million tonnes, almost 33% higher than last year.
This reflects second corn’s excellent conditions, analysts said.
Meanwhile cold temperatures are hampering the start of Brazil’s 2022/2023 first corn season in Rio Grande do Sul, the country’s southernmost state, AgRural said.
That state, also an important wheat producer, reaped 2.9 million tonnes of first corn last year, according to government data.
In Europe, the European Union’s crop monitoring service MARS on Monday lowered its yield forecasts again for summer crops in the bloc, with major cuts in corn, sunflower and soybeans.
Particularly, MARS put its yield outlook for the EU’s grain corn crop at 6.63 tonnes per hectare (t/ha) down from 7.25 t/ha projected last month and now 16% below both the 2021 level and the five-year average.
In oilseeds, MARS trimmed its EU sunflower seed yield forecast to 2.06 from 2.18 t/ha previously, while the soybean yield was expected at 2.46 t/ha, down from 2.72 t/ha in July.
In contrast, MARS slightly increased its winter crops yield projections as dry weather benefited harvesting in the bloc.
That included a rise in its outlook for the EU’s 2022 soft wheat yield to 5.76 t/ha from 5.74 t/ha last month.
The expected rapeseed yield this year was raised to 3.15 t/ha from 3.13 t/ha last month, while this year’s total EU barley yield was expected at 4.85 t/ha from 4.83 t/ha last month.
On this wake, Germany’s 2022 winter wheat crop will increase to about 21.8 million tonnes from 21.0 million tonnes last year, the DBV association of German farmers said on Tuesday.
The harvest of grains of all types is expected to increase to about 43 million tonnes, up about 2% from last year, DBV said.
The winter barley crop is expected to increase about 5% year on year to about 9.3 million tonnes, the association said.
The winter rapeseed crop is expected to rise to about 4 million tonnes from 3.4 million tonnes last year, helped by a 9% increase in planted area.
However, dry weather continues to cause concern especially on crops for autumn harvesting, including corn, the association said.
Meantime, on the demand side, per the latest data from the European Commission released yesterday, 2022/23 EU corn imports are trending well above last year’s pace so far, with 3.24 MMT through August 18.
EU soybean imports during the 2022/23 marketing year reached 1,79 MMT through August 21, which is a year-over-year decline of around 15% so far.
EU soymeal imports are also slightly below year-ago totals, with 2.10 million metric tons during the same period.
Rapeseed imports were at 821,196t, near the double from 451,018t a year ago.
European Union soft wheat exports during the 2022/23 marketing year have reached 3.75 MMT through August 21, which is a bit behind last year’s pace (although the European Commission concedes it may have incomplete data).
EU barley exports are also lower than year-ago totals, with 1,39 MMT.
From North Africa, Egypt’s supply minister has indicated that the country’s current strategic wheat reserves are sufficient for seven months, and its vegetable oil supplies are sufficient for six months.
Egypt’s supply minister said on Monday the agreement to buy wheat from India made in June, still stood despite recent curbs on Indian exports, although the grain had not yet been shipped.
“We have an agreement on quantity and price – 180,000 tonnes of wheat, and price was $400 per tonne,” supply minister Aly Moselhy told reporters on the sidelines of a news conference, adding that the wheat hadn’t left India.
From Levant, Turkey doubled its imports of Russian oil this year, Refinitiv Eikon data showed on Monday, as the two countries are set for broader cooperation in business and especially energy trade in the face of western sanctions against Moscow.
From Ukraine, according to the Turkish Defence Minister, 1-20 August grain exports from Ukraine’s Black Sea ports are at 656,349 tonnes.
As of 20 Aug, 51 vessels are engaged to ship grain, including 27 vessels that have left Ukrainian ports and 24 ready for loading.
According to the Ukrainian agriculture ministry, a total of 33 cargo ships carrying around 719,549 tonnes of foodstuffs have left Ukraine.
In addition to the vessels that have already left Ukraine, the agriculture ministry said a further 18 were now loading or waiting for permission to leave Ukrainian ports.
The Joint Coordination Centre in Turkey that monitors implementation of the agreement put the total amount of grain and foodstuffs exported from three Ukrainian Black Sea ports since the deal was reached at 721,449 tonnes.
Grain traders union UGA on Monday cut Ukraine’s 2022 combined grain and oilseeds crop forecast to 64.5 million tonnes from the previous outlook of 69.4 million due to a smaller than expected harvested area.
The 2022 grain harvest is forecast to fall to around 50 million tonnes from a record 86 million tonnes in 2021.
Particularly the UGA expects the country’s 2022 corn production will only reach 24 MMT, which would be a year-over-year reduction of more than 36%, if realized.
Ukraine’s wheat harvest is expected to spill 42% lower this season, falling to 19 MMT.
The union said in a statement that Ukraine could export 32.8 million tonnes of its key agriculture commodities in the 2022/23 season, including 10 million tonnes of wheat.
Last week the agriculture ministry said Ukraine’s grain exports in the 2022/23 season up to Aug. 19 are down 51.6% from a year earlier at 2.99 million tonnes.
Agricultural exports between Feb. 24 and Aug. 15 this year fell to 10 million tonnes from around 19.5 million in the same period last year, the ministry data showed.
Particularly, Ukraine has exported 3.8 million tonnes of corn, 1.4 million tonnes of sunflower seeds, almost 1 million tonnes of sunflower oil and around 640,000 tonnes of wheat, the ministry data showed.
The ministry said Ukrainian grain exports could reach 4 million tonnes in August, compared with 3 million tonnes in July.
From Russia, Russian wheat export prices fell last week.
The pace of exports remained slow.
Russia, indeed, exported 850,000 tonnes of grain last week, compared with 890,000 tonnes the previous week.
On this wake, from August 24, the export duty on wheat from the Russian Federation will decrease by 4.5%, according the Ministry of Agriculture.
Particularly, the export duty on wheat will decrease to 4,794.7 from 5,018.1 rubles per ton a week earlier.
The duty on barley will rise to 3,092.1 rubles from 3,034 rubles per ton.
Corn – up to 3,862.4 rubles from 3,705.8 rubles a week earlier.
This new duty rates will be in effect through August 30, inclusive.
The duties were calculated based on indicative prices: $358.1 per ton for wheat ($367.3 a week earlier), $299.8 for barley ($301.7), $317.6 for corn ($317.6).
It is noted that since July 6, duties on grain have been calculated in rubles, not dollars.
In this context, Sovecon estimates that wheat exports in August will reach 3.6 million tonnes, which would be the largest monthly total since last September, if realized.
Meantime, farmers were concerned about storage capacity.
The crop is huge, sales are sluggish and the sunflower and corn harvest is approaching.
The harvesting data provided by Sovecon as of Aug 18, had all grains at 92.5MMT, of which, wheat 72.0 MMT and barley 13.6 MMT.
On the weather side, Russia remains mostly dry and temperatures are above normal.
That could damage spring wheat and some late crops, while is delaying winter sowing.
Farmers, indeed, have already sown winter grains on 172,000 hectares compared to 288,000 hectares around the same date in 2021.
In this context, Russian prices for wheat with 12.5% protein content and for supply from Black Sea ports fell by $25 to $325 a tonne free on board (FOB) at the end of last week, the IKAR agriculture consultancy said in a note.
Sovecon noted that prices in the Russian domestic market are falling as supply is rising rapidly, particularly low protein wheat.
Particularly, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 12,375 rbls/t -450 rbls.
As for other products, price for sunflower seeds was at 26,100 rbls/t +400 rbls (Sovecon);
the price for domestic sunflower 73,950 rbls/t +275 rbls oil (Sovecon);
price for domestic soybeans was at 34,250 rbls/t unchanged (Sovecon);
the export price for sunflower oil was at $1,420/t -$10 (Sovecon);
the export price for sunflower oil was at $1,350/t -$10 (IKAR);
the price for white sugar, Russia’s south, was at $967.3/t -$80.2 (IKAR).
From Kazakhstan, Kazakh farmers have harvested 3.3 million tonnes of grains from 13.9% of the sown area so far during their harvest, the agriculture minister said on Tuesday.
Grain yield has grown to 1.46 tonnes per hectare this year from 0.91 tonnes last year, he told a government meeting.
From the Middle Kingdom, China’s scorched southwestern regions extended curbs on power consumption on Monday as they deal with dwindling hydropower output and surging household electricity demand during a long drought and heatwave.
State weather forecasters issued a heat “red alert” for the 11th consecutive day on Monday, as extreme weather continues to play havoc with power supplies and damage crops.
The drought has already “severely affected” mid-season rice and summer corn in some southern regions, the ministry of agriculture said on Sunday.
The long heatwave and drought is posing a “serious threat” to the country’s autumn crops and everything possible should be done to try to expand water availability, the agriculture ministry said in a notice posted on Tuesday.
The notice called on local authorities to “dynamically adjust” scheduling plans and make good use of water to guarantee supplies during a critical period for the autumn harvest.
It said more rockets should be made available to seed clouds and that machinery and motorised wells can be deployed to deliver water to regions that have no sources of their own.
Regions with severe crop damage are also urged to replant.
From South East Asia, India is committed to importing 2.6 million tonnes of palm oil products worth $3.16 billion, Indonesia’s trade minister said in a statement on Tuesday.
The commitment was part of dozens of deals Indonesia’s trade minister signed during a recent visit to India, the statement said, without providing details about the period for the palm oil exports.
From Australia, local markets kicked off the week relatively unchanged from the previous trading week although late in the day we did see a little jump in values on wheat and suspect we will see that follow through in today’s market however liquidity remains sluggish.
The ASX Jan-23 eastern Australian wheat futures contract settled A$4/t higher at $387/t.
The widespread 10-25mm forecast for most NSW cropping regions this week will add to soggy conditions.
Port congestion at Australian grain ports has increased.
The waiting time at Geraldton this week is 36 days.
At Kwinana times have improved marginally but are still at 29 days.
Newcastle wait time fell from 15 days to 8 and Albany fell from 10 days to 8.
There were 26 grain vessels anchored at Australian ports with 9 loading.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
