Good morning Farmer Family …
US farm markets made significant inroads yesterday.
Corn prices saw the most upside, climbing 4.18% higher.
Soybeans also raked in big gains, with Sep contract rising 2.6%.
Soymeal prices closed with 1.74% gains.
Soy oil prices ended 1.19% higher.
Wheat markets extended Monday’s bounce, with front month prices closing another double digits higher.
Particularly, CBOT SRW wheat price ended the day up 1.59%.
Kansas City HRW wheat went home 1.99% higher.
Minneapolis spring wheat closed with 1.29% gain on the day.
USDA on Monday showed lower-than-expected quality ratings for both corn and soybeans, which triggered plenty of technical buying.
In addition, during the annual Pro Farmer tour of top U.S. production states, scouts found corn yield prospects lower than last year and below the three-year average.
Particularly, the yields averaged for a potential 118.6 bpa, compared to the 154.6 bpa seen last year during the drought.
South Dakota corn yields were projected at 118.45 bushels per acre.
In Ohio, they saw 174.2 bpa yield potential compared to 185.1 last year.
Nebraska corn yield prospects were lower than last year and below their three-year averages, with an estimated corn yield at 158.53 bushels/acre against 182.25 last year.
Ditto for Indiana at 177.85 bushels against 193.48 last year.
The Pro Farmer tour also announced an average pod count of 792.5 (samples from 408 to 1143) in a 3×3’ square.
In Ohio, the soy pod counts averaged 1,131 in a 3×3’ square.
However, we must keep in mind, that these are for the routes run, and not what they expect for the states as a whole.
Meantime, on the weather side, some rainy weather is returning to parts of the Northern Plains and upper Midwest between today and Saturday, while areas farther south will remain relatively dry during this time, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s new 8-to-14-day outlook predicts seasonally dry weather for much of the Corn Belt between August 30 and September 5, with near-normal temperatures also likely.
On the demand side, private exporters reported to the USDA having sold 110,000 metric tons of soybeans for delivery to China during the 2022/2023 marketing year.
In this context, corn basis bids were mostly steady across the central U.S., but did tilt 15 cents higher at an Illinois processor.
Soybean basis bids jumped 25 cents higher at an Illinois processor and tumbled 100 cents lower at an Illinois river terminal while holding steady elsewhere across the central U.S..
Commodity funds were net buyers for 14,500 lots of corn, 11,000 lots of soybeans and 6,000 lots of wheat.
On this morning, Chicago grains prices extended their gains.
Dec corn contract, indeed, was up 1.37% at $6.64-1/4 a bushel, as of 03:27 GMT, after rising to its highest level since June 28 earlier.
Dec wheat jumped 1.75% to $8.14-1/2 a bushel and soybeans rose 0.89% to $14.74 a bushel.
In energy markets, oil prices were little changed on this morning.
Brent crude prices for October settlement, indeed, were down 6 cents, or 0.06%, to $100.16 a barrel by 07:20 GMT, after rising 3.9% on Tuesday.
U.S. West Texas Intermediate crude for October delivery were up 9 cents, or 0.1%, at $93.83 a barrel, having jumped 3.7% the previous day.
Both contracts soared after the energy minister of Saudi Arabia, the de facto leader of the OPEC, flagged the possibility the group would cut supply to balance a market he described as “schizophrenic”.
However, potential output cuts from OPEC+, may not be imminent and are likely to coincide with the return of Iran to oil markets.
U.S. crude stockpiles fell by about 5.6 million barrels for the week ended Aug. 19., according to the American Petroleum Institute figures on Tuesday, against analysts’ estimate of a drop by 900,000 barrels.
But gasoline inventories rose by about 268,000 barrels, while distillate stocks increased by about 1.1 million barrels.
Meantime, U.S. gas prices shot above $10 for the first time in about 14 years due to a surge in prices in Europe, where tight supplies persist.
In freight markets, the Baltic Dry Index was little changed on Tuesday, rising 1 point, or 0.08%, to 1,271 points, and snapping a three-day losing streak.
Particularly, the capesize index rose 50 points, or 6.7%, also snapping a three-day long streak of declines, to 797 points.
The index registered its best daily percentage gain in two weeks.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $409 at $6,608.
The panamax index, which has not seen a single day of gains since a month, lost 73 points, or 4.4%, to 1,572 points, on its worst day in a month.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $659 to $14,149.
The supramax index rose for the eighth consecutive session, gaining 14 points to 1,765 points.
In equity markets, US stocks on Tuesday wavered on both sides of unchanged, however, finally settled modestly lower.
Weak U.S. economic news weighed on stocks as the U.S. Aug S&P Global manufacturing PMI fell -0.9 to a 2-year low of 51.3, weaker than expectations of 51.8.
Also, July U.S. new home sales fell -12.6% to a 6-1/2 year low of 511,000, weaker than expectations of 575,000.
In addition, the Aug Richmond Fed manufacturing index fell to -8, weaker than expectations of -2.
Such weak data on the U.S. economy raises worries that a recession may indeed be on the way, but it also could encourage the Fed to take it easier on rate hikes.
Thus, continued the rise in the 10-year T-note yield further above 3%.
T-note yields are climbing as the market braces for possibly hawkish comments from the Fed at Friday’s annual Fed symposium at Jackson Hole, Wyoming.
Strength in energy stocks, in contrast, supported the overall market as a jump of more than +3% in crude oil prices to a 2-1/2 week high boosted energy stocks.
Also, a +12% jump in Palo Alto Networks was positive for tech stocks after the company reported better-than-expected quarterly earnings.
In this context, the S&P 500 dipped 9.26 points, or 0.22%, to 4,128.73 after flipping between small gains and losses through the day.
The Nasdaq was unchanged at 12,381.30 points, while the Dow Jones Industrial Average declined 0.47% to 32,909.59 points.
Meantime, Asian shares were mixed on this morning.
Worries about inflation are weighing on investors’ minds, including in Asia.
Inflation data for Singapore released earlier in the week showed inflation was still going strong, with core inflation headed higher to 4.8% year on year for July.
Food price inflation was at 6.1%.
Benchmarks fell in Japan and China in afternoon trading, while rising in Australia and South Korea.
Particularly, Japan’s benchmark Nikkei 225 slid 0.4% in afternoon trading to 28,327.09.
Australia’s S&P/ASX 200 added 0.5% to 6,998.10.
South Korea’s Kospi rose 0.6% to 2,448.81.
Hong Kong’s Hang Seng dipped 1.2% to 19,262.55, while the Shanghai Composite shed 1.7% to 3,221.16.
In currency trading, the U.S. dollar inched down to 136.68 Japanese yen from 136.72 yen.
The euro cost was little changed at 99 cents.
From Canada, Agriculture and Agri-Food Canada (AAFC) said crop yields were higher than expected, leading it to revise upwards its August projections.
AAFC’s supply and demand estimates for August were released on Aug. 22, in advance of the first official Statistics Canada production estimates as well as Statistics Canada’s July 31 stocks estimate.
Season 2022/23 all wheat production was raised by 0.8Mt, to 34.5Mt (21.7Mt previous year) and exports were increased by 0.6Mt, to 23.0Mt (15.0Mt).
The largest production revision was seen in estimates for durum, with the production estimate revised 786,000 metric tons higher to 6.265 million metric tons, while ending stocks were revised 200,000 mt higher to 900,000 mt.
AAFC increased its estimated durum yield from 34.2 bushels per acre to 39 bpa.
This yield is well-above the 18.3 bpa average estimated for 2021, while the 2016-20 average, which excludes the drought-reduced yield from 2021, is 40.3 bpa.
Note that this yield estimate is despite the Aug. 9 crop condition for Alberta at 46.2%
Good to Excellent, while the Saskatchewan Crop Report as of August 15 describes the Southwest Region and the West-Central Region facing the potential for below to well-below average yields for crops in general.
Estimated durum production of 6.265 mmt would be 136% higher than realized in 2021.
Another interesting adjustment was made for 2021-22 durum, resulting in a modest 46,000 mt increase in ending stocks to 496,000 mt.
An adjustment was required as the week 52 commercial stocks are reported at a level which is close to AAFC’s July estimate for total stocks.
At the same time, this revision was made possible by a downward revision of the feed, waste and dockage estimate to a negative 97,000 mt, which stands out on the report as one of three revisions into negative territory, which also saw domestic use of both 2021-22 mustard and canary seed revised lower and to a negative volume.
Similar increases were seen in yield estimates for both barley and oats, with the barley yield estimate increased to 67.3 bpa (69.8 bpa) and the oat yield increased to 91.8 bpa (92.2 bpa), with the 2016-20 five-year average in brackets.
Estimated barley production would be up 35.3% from 2021, while oat production would by 76% higher.
Barley production forecast, indeed, was raised by 0.3Mt, to 9.4Mt (7.0Mt) and exports seen 0.4Mt higher, at 3.5Mt (2.6Mt).
Agriculture and Agri-Food Canada this week estimated 2022-23 canola output at 18.4 million tonnes.
Another interesting adjustment this month is a 2 mmt increase in estimated corn imports to 6.4 mmt.
As of June’s official Statistics Canada merchandise trade data, corn imports totaled 5.387 mmt, with 531,677 mt imported in the month of June.
This pace of movement has been evident in official data, yet the revision to the supply and demand tables was slow to appear.
From South America, Brazil is poised to produce more than 300 million tonnes of grains in 2022/2023 even as some farmers may cut fertilizer applications, according to Agroconsult.
In spite logistical bottlenecks may delay fertilizer deliveries to some parts of Brazil this year, crop yields will not suffer because there are nutrients still trapped in the soil after years of steady applications that will guarantee healthy plants, the consultancy said.
Deliveries of crop nutrients to Brazilian farmers will be around 45 million tonnes this year, slightly below the 45.8 million tonnes for 2021, according to Agroconsult projections and Anda.
Brazil will likely import less fertilizers overall this season.
On this wake, Agroconsult projects imports at 36.9 million tonnes in 2022, compared with 39.2 million tonnes in 2021.
On the other hand, a Brazilian flour milling association, Abitrigo, estimates that the country’s wheat production could reach 10 MMT, which is noticeably above governmental estimates of 9 MMT.
Brazil is currently a net importer of wheat, but Abitrigo expects improvements to planted area and yield potential will allow self-sufficiency within five years.
In Europe, European agencies, among them JRC MARS, report that extreme hot and dry conditions in large parts of Europe, notably in Spain, France, central and northern Italy, central Germany, Hungary, Romania, Slovenia and Croatia, continue to adversely impact 2022/23 summer crop yield potential, especially corn, sunflower and soybeans.
Europe is facing its worst drought in at least 500 years, with two-thirds of the continent in a state of alert or warning, reducing inland shipping, electricity production and the yields of certain crops, a European Union agency said on Tuesday.
The August report of the European Drought Observatory (EDO), overseen by the European Commission, said 47% of Europe is under warning conditions, with clear deficit of soil moisture, and 17% in a state of alert, in which vegetation is affected.
The severe drought affecting many regions of Europe since the beginning of the year has been further expanding and worsening as of early August,.
Also, the western Europe-Mediterranean region was likely to experience warmer and drier than normal conditions until November.
Thus, 2022 yields for grain maize set to be 16% below the average of the previous five years and soybean and sunflowers yields set to fall by 15% and 12% respectively.
Consequentially, European markets saw another sharp rise in prices for all products yesterday.
Particularly, December wheat on Paris-based Euronext settled up 2.9% at 326.00 euros ($325.19) a tonne.
It earlier rose to a one-week high of 326.75 euros as it continued a rebound from a near six-month low of 301.25 euros struck last Thursday.
The euro’s slide to below parity against the dollar has also buoyed Euronext by making the market more attractive overseas.
On this morning it fell below the symbolic parity threshold at 0.9950.
Despite dryness to finish the crop, Germany’s DBV farm lobby estimates winter wheat output at 21.8 MMT up from 21 flat last year.
From Ukraine, today is a national holiday.
Warnings by Ukrainian and U.S. officials of possible Russian attacks on Kyiv, as Ukraine prepared to mark independence from Soviet rule in 1991 and six months of war, maintained concern about disruption to Black Sea grain supplies.
Operators, indeed, fear that this could be an opportunity for Russia to a new show of force.
Meantime, Ukrainian Grain Association reduced their corn harvest outlook by 12% from their prior 27.3 MMT estimate to 24 MMT – citing a smaller harvested area.
They also reduced outlook for the 2022 wheat crop by 8.7% from their prior estimate to 19 MMT.
The flow of goods from Ukraine is down sharply compared to last year despite the establishment of the corridor since the beginning of the conflict, with only 10 million tonnes of grain exported against 19.5 the previous year on the same period.
Meantime, Russia’s Foreign Ministry said on Tuesday that Russia is “entirely committed” to the Turkish-brokered deal to unblock grain exports from Ukraine struck in Istanbul last month.
From Russia, SovEcon agriculture consultancy said on Tuesday that Russian wheat exports in July-August, the first two months of the 2022/23 season, amounted to 5.9 million tonnes, a decline of 27% from the year-earlier period and the lowest volume since 2017/18.
From Belarus, as of August 23, the harvest of grain in the country amounted to 7 mln tonnes, Belta reports with reference to the Ministry of Agriculture and Food.
“Grains and pulses (excluding corn, buckwheat and millet) were harvested from more than 87% of the planned area” – the ministry said.
From Kazakhstan, the country harvest is underway, reaching 14% completion and 3.3 MMT of grain as of 8/23.
According to the Bureau of National Statistics of the Agency for Strategic Planning and Reforms of the country, the wheat export from the country totaled 6.1 mln tonnes in 2021/22 MY, up 6% y/y.
Uzbekistan imported 2.8 mln tonnes of Kazakh wheat in 2021/22 MY, down 15% y/y, Tajikistan – 923.8 thsd tonnes, down 5% y/y.
Iran significantly raised purchases of Kazakh wheat to 766.9 thsd tonnes in, up 26% y/y.
Kazakhstan increased wheat export to the EU by 3.5 times to 354.3 thsd tonnes in 2021/22 MY.
Italy (324 thsd tonnes), Latvia (15.4 thsd tonnes) and Poland (13.2 thsd tonnes) were the main European buyers of the grain.
APK-Inform forecasts export of Kazakh wheat at 7 mln tonnes in 2022/23 MY, up15% y/y.
From the Middle Kingdom, extreme heat in China played havoc with crops and power supplies on Wednesday despite lower temperatures in some regions, with authorities across the Yangtze river basin scrambling to limit the damage from climate change on crops and livestock.
The southwestern region of Chongqing has been hit especially hard by weeks of hot, dry weather.
Both water and power has been cut in some locations after a four-day mountain fire in the district of Jiangjin.
People have need to go to a power centre over 10 kilometres away to charge their phones.
Chongqing’s agriculture bureau drew up emergency measures to protect livestock at more than 5,000 large-scale pig farms.
Damage to crops and water scarcity could “spread to other food-related sectors, resulting in a substantial price increase or a food crisis in the most severe case.
“China’s demand for all grains and oilseeds might jump if the heatwave and drought across the central China causes significant damage to their crops,” the Hightower Report said in a research note.
China’s National Meteorological Center downgraded its national heat warning to “orange” on Wednesday after 12 consecutive days of “red alerts”, but temperatures are still expected to exceed 40 Celsius (104 Fahrenheit) in Chongqing, Sichuan and other parts of the Yangtze basin.
China has warned it is especially vulnerable to climate change and natural disasters are expected to proliferate in coming years as a result of more volatile weather.
China, is committed to bringing CO2 to a peak before 2030 and to become “carbon neutral” by 2060, and it is also racing ahead in renewable energy development.
However, prospects for international cooperation to tackle the problem dimmed following the visit of U.S. House of Representatives speaker Nancy Pelosi to Taiwan this month.
On this wake, China cancelled climate talks with the United States, ending an important channel that has helped drive greener policies.
China has said the climate cannot be separated from wider diplomatic issues.
The foreign ministry told the United States last week that it should end a boycott of solar power products from the Xinjiang region and provide funds to help developing countries adapt.
The United States has banned imports from Xinjiang in an effort to safeguard the U.S. market from products potentially tainted by human rights abuses.
China denies that abuses are taking place.
“If recent events don’t focus minds, it’s hard to know what will,” Mark Beeson, a professor at the University of Technology, Sydney, who studies global climate politics, said of prospects for international cooperation.
From South East Asia, Indonesia has extended its policy of not collecting levies for palm oil exports to Oct. 31, Trade Minister Zulkifli Hasan told members of parliament on Wednesday.
The decision was taken to help encourage exports of palm oil and prop up prices of palm oil fruits for farmers, he said.
The policy, introduced in July, was due to run until the end of this month.
From Australia, local markets lifted a fraction yesterday. New crop trade wheat bids were $4-5/t higher.
Grower bids remained steady and the basis now has widened to minus $20/t.
Clear Grain Exchange dealt more than 9000t wheat and barley yesterday.
On the international trade scene, Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy 118,881t food quality wheat from the US, Canada and Australia in regular tenders that will close on Thursday.
Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), directly purchased 240,000 tonnes of Russian wheat on Aug. 22, the supply ministry said in a statement.
The cargoes will be shipped over the following periods: Sep. 20 to Oct. 10, Oct. 11 to Oct. 30 and Oct. 21 to Nov. 10, the ministry said.
The purchase comprised of six cargoes of 40,000 tonnes of Russian wheat sold on a cost and freight basis.
The ministry did not disclose the price but it’s believe it was sold at a price of $368 per tonne.
Further purchases could still be made as talks were still ongoing.
Jordan’s state grain buyer is believed to have made no purchase in an international tender to buy 120,000 tonnes of milling wheat which closed on Tuesday.
Two trading houses participated, CHS and Ameropa.
A new tender is expected to be issued in coming days and closing next week.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
