Good morning Farmer Family …
US farm markets were mixed but mostly higher to start the week.
Corn prices found double-digit gains up 2.24%.
Soybeans failed to follow suit and after the Sep options either expired or were converted to their corresponding futures position, the September soybean contract dropped a sharp 4.39%.
The other front months were also 1.3% to 1.6% lower to start the week.
Soymeal prices were more kind for the Sep contract, as it was 0.06% stronger, though the other nearby contracts were down on the day.
Bean oil prices were also up 0.23% in the Sep contract, while were down in the other nearby months.
Wheat prices were 2.5% to 4.5% higher by the close.
Particularly, Chicago SRW wheat contract, left the front month prices above the $8 mark gaining 4.49% on the day.
Kansas City HRW market took the board above the $9 mark, as was 3.31% higher during the session.
Minneapolis spring wheat prices closed Monday’s session2.57% higher.
Persistent concerns over true U.S. corn production potential, and strengthened considerably, while there are new rampant production challenges across Europe.
US corn quality, indeed, eased another point lower last week, with 54% of the crop rated in good-to-excellent condition through Sunday.
Another 27% was rated fair (unchanged from last week), with the remaining 19% rated poor or very poor (up a point from last week).
Physiologically, 86% has reached the dough stage, 46% is now dented, and 8% is fully mature.
All three categories are running behind the prior five-year average.
The weekly update showed 23% of the 22/23 sorghum crop was mature as of 8/28.
That is down 2% points from average maturity.
Milo harvest reached 18% complete.
As for soybeans, analysts had predicted a one-point decline in soybeans ratings, which did not come to pass.
Soybean quality, indeed, held mostly steady, with 57% of the crop rated in good-to-excellent condition through Sunday (although the G/E split shifted from 47/10 to 46/11).
Another 30% is rated fair (unchanged from last week), with the remaining 13% rated poor or very poor (also unchanged from last week).
Ninety-one percent is now setting pods, versus the prior five-year average of 92%.
And 4% is now dropping leaves, versus the prior five-year average of 7%.
All that, jointly with new record-breaking production estimates for Brazil released by more groups, pressured down soybean markets.
As for wheat, winter wheat harvest advanced far enough NASS is no longer tracking it.
Analysts were expecting to see stable spring wheat ratings, but USDA surprisingly moved them four points higher, with 68% of the crop now rated in good-to-excellent condition.
Another 26% is rated fair (down two points from last week), with the remaining 6% rated poor or very poor (down two points from last week).
Spring wheat harvest has reached the halfway point, up from 33% a week earlier.
That’s much slower than 2021’s pace of 86% and the prior five-year average of 71%.
On the weather side, more rains will be sweeping across the eastern Corn Belt between today and Friday, while much of the Northern Plains and upper Midwest will gather no measurable moisture during that time, according to NOAA.
The agency’s 8-to-14-day outlook predicts a return to seasonally hot, dry conditions for the northern half of the country between September 5 and September 11.
Meantime, a renoved and buoyant international demand has developed a general optimism on wheat and corn markets.
Weekly Export Inspections data from the USDA, indeed, showed 520,791 MT of wheat were shipped during the week that ended 8/25.
Last week’s export was 594k MT.
However, MYTD wheat shipments reached 5.014 MMT through 8/25, down from last season’s 6.2 MMT pace.
As for corn USDA reported weekly corn shipments were 689,052 MT.
That was down from 821k MT last week but compares to 583k MT inspected during the same week last year.
However, it should to note that as the MY rounds out, USDA reported the weekly total corn exports at 54.6 MMT.
That was down last year’s export program had reached 66 MMT at this point.
As for soybean, the report showed 436,851 MT of soybeans shipped during the week of 8/25.
That was down from 686.8k MT last week and compares to 387k MT shipped during the same week last year.
Total soybean exports at 56.44 MMT, were down from 59,40 MMT reached at this point last year.
In this context, corn basis bids were mostly steady across the central U.S. on Monday but did climb 15 cents higher at an Iowa processor while falling 7 to 8 cents lower at two other Midwestern locations.
Soybean basis bids held steady across the central U.S..
The funds were net buyers yesterday for 12,500 lots of corn and 13,000 lots of wheat.
They were net sellers for 8,500 lots of soybeans.
Funds were seen as net even in soymeal and soyoil futures.
On this morning, Chicago corn prices slid, as investors took a breather after prices hit a more than two-month high.
Wheat dipped but traded close to a seven-week top marked in the previous session, while soybeans slid for a second straight session.
Particularly, the most-active corn contract on the Chicago Board of Trade (CBOT) slid 1.2% to $6.74-1/2 a bushel, as of 2:46 GMT.
Wheat fell 1% to $8.34-1/2 a bushel and soybeans lost 1.3% to $14.19-3/4 a bushel.
In energy markets, oil prices were stable on Tuesday as the market balanced supply concerns with fears that an inflation-induced weakening of global economies would soften fuel demand.
Thus, Brent crude futures for October settlement fell 9 cents, or 0.09%, to $105 a barrel by 08:41 GMT, after climbing 4.1% on Monday, the biggest increase in more than a month.
The October contract expires on Wednesday and the more active November contract was at $103.03a barrel, up 0.1%.
The price fall was capped by the prospect of tighter supplies.
OPEC+, is due to meet on Sept. 5.
Possible reduction in OPEC+ production is the reason why the oil market has pushed up, in spite the weakening equities and the strong dollar.
Russia is set to reduce oil and gas condensate production in August by 2% from July.
The political violence on Monday night in Iraq, OPEC’s second-largest producer, also supported prices.
According to analysts, U.S. crude oil stockpiles likely fell 600,000 barrels in the week to Aug. 26, with distillates and gasoline inventories also seen down.
The American Petroleum Institute, is due to release data on U.S. crude inventories at 20:30 GMT on Tuesday.
In freight markets, the Baltic Dry Index yesterday was not quoted due to a public holiday.
Last Friday it fell 41 points, or 3.7% to an over two-year low of 1,082 points.
The capesize index, is slumped by 13.3% to an over two-year low of 411 points; and the panamax index, continued its month-long decline, falling 3.7% to 1,372 points.
At the same time, the supramax index fell for the second day, shedding 19 points to 1,744 points.
In equity markets, US stocks on Monday extended last Friday’s sharp losses, with the S&P 500, Dow Jones Industrials, and the Nasdaq 100 falling to 1-month lows.
Stocks were under pressure after Fed Chair Powell last Friday signaled the Fed would maintain a restrictive policy stance for some time.
Technology stocks retreated after the 10-year T-note yield rose to a 2-month high of 3.127%.
Global stock markets moved lower Monday on concerns aggressive central bank rate hikes may exacerbate an economic slowdown.
Losses in the overall equity market were limited thanks to the strength in energy stocks.
As we said, supply risks pushed crude oil prices up by more than +4%.
In this context, on Wall Street, the S&P 500 fell 0.7% to 4,030.61.
On Friday, the benchmark index lost 3.4% in its biggest one-day drop in two months.
The Dow Jones Industrial Average dropped 0.6% to 32,098.99.
The Nasdaq composite tumbled 1% to 12,017.67.
Meantime, Asian stocks were mixed on Tuesday.
The Shanghai Composite Index lost 0.6% to 3,220.47 and the Hang Seng in Hong Kong tumbled 1.3% to 19,762.31.
The Nikkei 225 in Tokyo gained 1% to 28,162.52 after the official unemployment rate for July held steady and the labor participation rate, or the share of the working-age population that is in jobs, stayed at a record high.
The Kospi in Seoul added 0.7% to 2,443.90 and Sydney’s S&P-ASX 200 gained 0.5% to 6,996.60.
New Zealand and Southeast Asian markets also advanced.
In currency trading, the dollar declined to 138.55 yen from Monday’s 138.83 yen.
The euro rose to 99.99 cents from 99.92 cents.
From Canada, Canadian farmers will harvest more wheat than expected, and the biggest canola crop in three years, a report featuring the government’s first official harvest estimates showed.
Statistics Canada, indeed, estimated all-wheat production at 34.6 million tonnes, 55% more than last year, and exceeding the industry’s average estimate of 34 million.
That comes via a 25.56 MMT spring wheat crop (trade looking for 25.4), and a 6.47 MMT durum crop (trade 6.00 MMT).
Also, production estimates from StatsCan show the canola crop should reach 19.499 MMT, up from 13.8 MMT last year (revised up from their prior 12.6 MMT figure).
The trade was looking for StatsCan to report 19.6 MMT.
For soybeans, Canada is expected to harvest 6.4 MMT, up from 6.27 MMT last year, and above the 6.2 average trade guess.
Meantime, spring wheat harvest is <1% done in Manitoba and 6% done in Saskatchewan.
Alberta Ag is expecting average yields in AB to be 53.2 bushels per acre; up from their last estimate of 32.8 bushels per acre.
Canadian durum yields have been mixed.
There are poor yields being reported in West Central Saskatchewan, but yields are generally stronger in the South.
Meantime, Canadian producers delivered 191.4k mt of grain into the Canadian elevator system, a slight uptick from previous weeks as some new crop is now entering the system.
Exports of common wheat were low at 129.6 million mt.
There is still just under 1.8 million mt of visible supplies in the system.
Durum wheat exports were at 40.3k mt vs 58.8k mt a week earlier.
From South America, Brazil’s Abiove is the latest group predicting a record-breaking soybean production for the upcoming season.
The oilseeds lobby estimates production will reach an unprecedented 151.00 MMT in 2022/23.
That’s slightly above Brazilian governmental estimates of 150.36 MMT.
Meantime, Brazil’s Datagro offered an even more bullish estimate of 151.81 MMT.
In Europe, markets once again showed extreme nervousness yesterday, with a sharp rise in grain prices at the end of the day against a backdrop of renewed tension in Ukraine.
While rapeseeds lost ground in the wake of palm and soybeans, in spite rapeseed sowing for the 2023 harvest in France is at risk given the persistent water deficit.
Soft wheat exports at European level stood at 4.86 million tonnes on August 28, close to 4.88 million tonnes last year to date.
However, barley exports are lagging behind, at 1.52 million tonnes against 2.67 last year.
Corn imports rose to 3.87 million tonnes against 2.60 last year.
Rapeseed imports are also up at 972,567 t against 617,850 last year to date.
European Union soybean imports have reached 1.96 MMT through August 28, which is slightly below last year’s pace so far.
EU soymeal totals are also down slightly year-over-year, with 2.37 million metric tons.
From the Black Sea basin, Ukraine’s agricultural exports could rise to 6 million-6.5 million tonnes in October, double the volume seen in July, as its sea ports gradually reopen, the country’s agriculture minister said on Monday.
However, a Ukrainian counter-offensive in the Kherson region has Ukraine claiming a breakthrough and Russia claiming it failed.
The obvious question will be whether the export corridor agreement will hold up if there is an escalation.
About that, SovEcon believes the grain corridor will continue to work at least in the short-term unless there is a major war course change and that this highlights how fragile the agreement is.
Ukraine’s export capacity remains a key element of the world market and this will have to be closely monitored in the coming months.
In Russia, Russian wheat export prices fell last week under pressure from the arrival of the new crop.
Particularly, the harvesting data as of Aug 25 saw all grains at 105.2 MMT of which 78.9 MMT wheat and 17.7 MMT barley.
Russia exported 660,000 tonnes of grain last week, down compared with 850,000 tonnes the previous week.
Meantime, farmers had already sown winter grains for the 2023 crop on 928,000 hectares compared to 1.0 million hectares around the same date in 2021.
In this context, according to Sovecon wheat prices for immediate supply were at $312-318 per tonne compared to $334-337 a week ago.
According to IKAR, Russian prices for wheat with 12.5% protein content and for supply from Black Sea ports fell by $10 to $315 a tonne free on board (FOB) at the end of last week.
As for the other products, price for domestic 3rd class wheat, European part of Russia, excluded delivery was at 11,925 rbls/t ($199.2) -450 rbls (Sovecon).
Price for sunflower seeds was at 26,100 rbls/t unchanged (Sovecon).
Price for domestic sunflower oil was at 74,025 rbls/t +75 rbls (Sovecon).
Price for domestic soybeans was at 34,250 rbls/t unchanged (Sovecon).
Export price for sunflower oil was at $1,430/t +$10 (Sovecon).
Export price for sunflower oil was at $1,320/t -$30 (IKAR).
Price for white sugar, Russia’s south was at $886.7/t -$80.6 (IKAR).
In this context, Sovecon raised its forecast for Russia’s wheat exports in the 2022/23 marketing season which started on July 1 by 200,000 tonnes to 43.1 million tonnes.
($1 = 59.8750 roubles).
From the Middle Kingdom, China’s agriculture minister expressed concern for the country’s autumn grain production, according to a ministry statement on Monday, and said high temperatures and drought have hit rice production in the eastern Jiangsu and Anhui provinces.
From South East Asia, Indonesia’s palm oil export tax was raised to ~$124/ton from $74/ton as the deputy for food and agriculture raised the CPO reference price to $930.02/ton.
Indonesia will also require 11.03m kL of palm-based biodiesel to meet their B30 requirements.
The prior allocation was 10.15m kL.
From Australia, local markets firmed slightly yesterday with wheat bids up a buck or 2 on the boards for new crop, barley was also a fraction firmer through the day and canola was $3-5/t stronger.
Current crop was relatively unchanged although we saw ASW1 in PKE firmer and quality wheat in Victoria continue to get a bid under it.
Average wait times for vessel loading have blown out in most major ports this week with Geraldton and Kwinana at 36 days and 31 days respectively.
Newcastle and Albany have both increased to 15 days from 8 days last week and Brisbane has increased to 8 days.
There are currently 17 vessels anchored with 10 loading.
On the international trade scene, Algeria is therefore purchasing wheat delivered to small ports.
South Korea issued an international tender to purchase 30,000 t of GMO-free soybeans from optional origins that closes on September 6.
The grain is for arrival starting in late October.
Bangladesh’s state grains buying agency has postponed the deadline for submission of price offers in its international tender to purchase 50,000 tonnes of wheat from Sept. 1 to Sept. 18.
Other tender terms were unchanged.
Bangladesh is set import 500,000 tonnes of wheat at $430 a tonne from Russia in a government-to-government deal, government officials said on Sunday.
South Korean animal feed maker Nonghyup Feed Inc. (NOFI) has bought an estimated 137,000 tonnes of animal feed corn in an international tender which closed on Tuesday.
The corn was bought for arrival in South Korea in two consignments in December at premiums over Chicago corn futures.
The corn is expected to be sourced from South America and/or South Africa.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
