Good morning Farmer Family …
US farm markets were mixed but mostly higher in the midweek session.
Dec corn prices declined 1%, on profit-taking at the end of the month and mounting recession worries.
December contract, indeed, hit a two-month high on Monday and with a long weekend approaching, due to Labor Day, (the Chicago market will be closed on Monday), some operators are therefore taking advantage of the current price levels.
Also, a broad slide in commodity and financial markets also weighed on prices.
The soybean complex was mixed with Nov soybean contract down 0.7%, Oct meal contract shedding 2.12%, while Oct bean oil closing up 1.79%.
The wheat complex turned higher on technical buying and worries about shipments from war-torn Ukraine.
Grain silos in Ukraine’s second biggest port, Mykolaiv, were hit by Russian shelling of the city on Tuesday, causing a fire.
In this context, December Chicago SRW wheat prices gained 1.37%, December Kansas City HRW prices rose 1.64%, and December MGEX spring wheat prices added 0.98%.
However, is should to note that this port isn’t icluded in the grain deal.
For the month, CBOT December corn rose 8%, November soybeans fell 3%, December wheat inched up 0.7%.
Meantime, operators still reevaluating the latest weather forecasts and international demand expectations.
More rainfall is likely for the Central and Southern Plains between today and Sunday, but very few areas in the Midwest will see any measurable moisture during that time, according to NOAA.
The agency’s new 8-to-14-day outlook predicts seasonally dry weather around the Great Lakes region, with warmer-than-normal conditions likely for most of the United States between September 7 and September 13.
Today we’ll don’t have the weekly USDA’s export sales report, as they are struggling to launch a new reporting system for the data.
Thus, USDA said it would delay its next report until Sept. 15 at the earliest, leaving grain traders in the dark about overseas demand.
The USDA .
Meantime private exporters reported to the USDA having sold 167,000 tonnes of U.S. soybeans to China.
This follows other daily soybean sales totalling 940,000t to China and unknown destinations over the past week.
Ethanol production shifted lower for the fourth-consecutive week, falling to a daily average of 970,000 barrels in the week through August 26, per the latest data from the U.S. Energy Information Administration.
That was down 17k barrels per day from the prior week’s production.
It’s also the lowest weekly tally since late April.
The ethanol stockpile shrank 274k barrels (1.15%) to 23.533 million barrels.
In this context, corn basis bids were mostly steady to weak on Wednesday after falling 2 to 5 cents lower at three interior river terminal and dropping 10 to 15 cents lower at two other Midwestern locations.
An Ohio elevator bucked the overall trend after rising 8 cents higher.
Soybean basis bids were mostly steady across the central U.S., but did tilt 20 cents higher at an Indiana processor and 7 cents lower at an Ohio elevator.
Commodity funds were net sellers of CBOT soybean, corn and soymeal futures contracts, and net buyers of wheat and soyoil futures.
On this morning, Chicago corn, wheat and soybeans slid.
The most-active corn contract on the Chicago Board of Trade (CBOT), indeed, was down 0.3% at $6.68-1/4 a bushel, as of 03:20 GMT.
The contract was set for a third consecutive day of losses.
Soybeans also lost 0.3% to $14.18 a bushel, after three sessions of losses.
Meanwhile, wheat gave up 0.1% to $8.30-1/2 a bushel.
Growing concerns over global economic slowdown weighed on commodity markets.
Asian stocks slid and the dollar spiked.
Losses, however, were limited by hot weather conditions curbing U.S. and European crop prospects.
In energy markets, oil prices dropped on this morning, as investors were worried that aggressive interest rate hikes from global policymakers would slow economies and dent fuel demand, while renewed restrictions to curb COVID-19 in China also added pressure.
Thus, Brent crude futures fell 80 cents, or 0.8%, to $94.84 a barrel by 06:26 GMT.
U.S. West Texas Intermediate (WTI) crude futures slid 85 cents, or 1%, to $88.70 a barrel.
Yesterday benchmarks, both Brent and WTI, fell more then 2.2%.
China’s factory activity contracted for the first time in three months in August amid weakening demand, while power shortages and fresh COVID-19 flare-ups disrupted production, a private sector survey showed.
Production in both OPEC and the United States has risen to its highest level since the early days of the coronavirus pandemic.
OPEC’s output hit 29.6 million barrels per day (bpd) in the most recent month, according to analysts, while U.S. output rose to 11.82 million bpd in June.
Thus, the oil market will have a small surplus of just 0.4 million bpd in 2022.
However, that is much less than forecast earlier, according to OPEC+, mainly due to underproduction of its members, OPEC+ sources said.
Meanwhile, U.S. crude stocks fell by 3.3 million barrels, the U.S. Energy Information Administration said on Wednesday, while gasoline stocks were down 1.2 million barrels.
Finance ministers from the G7 will discuss the U.S. Biden administration’s proposed price cap on Russian oil when they meet on Friday, the White House said.
In freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships ferrying dry bulk commodities, fell on Wednesday and registered its biggest monthly decline in more than two years on waning demand across vessels, led by capesizes.
The overall index, indeed, fell 52 points, or 5.1%, to 965 points, a more than two-year low.
The index shed nearly 50% in August, a third straight monthly decline and its worst performance since January 2020.
Particularly, the capesize index lost 35 points, or 10.4%, at 302 points, also an over two-year low.
The capesize index lost about 86% this month, its worst since May 2020.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, dropped $288 to $2,505.
The panamax index, which has not seen a single day of gains since over a month, slipped 67 points, or 5.2%, to 1,217 points, a 21-month low.
The index marked its fifth straight monthly dip, and with an about 41% fall, its worst monthly loss since January 2020.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $600 to $10,956.
The supramax index fell 65 points to 1,626 points, on its worst day in about 10 months.
In equity markets, US stocks on Wednesday moved lower for a fourth session.
The 10-year T-note yield climbed to a new 2-month high of 3.17% from 3.11% late Tuesday, as record inflation in the Eurozone pushed the 10-year German bund yield to a 2-month high and increased the chances of the ECB tightening monetary policy aggressively.
Eurozone Aug CPI climbed at a record pace of +9.1% y/y.
Also, Cleveland Fed President Mester said that, “in her view, it will be necessary to move the fed funds rate up to somewhat above 4% by early next year and hold it there.”
However, the U.S. Aug ADP employment change rose +132,000, weaker than expectations of +300,000 and the smallest increase in 19 months.
That is dovish for Fed policy.
Meantime, the U.S. Aug MNI Chicago PMI unexpectedly rose +0.1 to 52.2, stronger than expectations of no change at 52.1.
The China Aug manufacturing PMI rose +0.4 to 49.4, stronger than expectations of 49.2.
The China Aug non-manufacturing PMI fell -1.2 to 52.6, stronger than expectations of 52.3.
In this context, on Wall Street, the S&P 500 fell 31.16 points, 0r 0.8%, to 3,955, extending its losing streak to a fourth day.
The index is down 17% so far this year.
It ended the month with a 4.2.% loss after surging 9.1% in July.
The Nasdaq lost 66.93 points, or 0.6%, to 11,816.20, while the Dow gave up 280.44 points, or 0.9%, to close at 31,510.43.
The Russell 2000 index of smaller companies fell 11.48 points, or 0.6%, to 1,844.12.
Technology stocks and big retailers were among the heaviest weights on the market.
Chipmaker Nvidia fell 2.4% and Best Buy slid 5.6%.
Energy companies fell with Occidental Petroleum slipped 1.4%.
Only communications stocks eked out a slight gain after Snap said it was cutting 20% of its payroll to rein in costs.
In currency trading, the U.S. dollar inched up to 139.31 Japanese yen from 139.04 yen.
The euro cost $1.0022, down from $1.0054.
From Canada, as we said yesterday, Manitoba Agriculture, Food and Rural Development reports that delayed seeding, high humidity and frequent rainfall has hampered crop development as well as fieldwork, with 2022/23 harvesting seen at 3pc complete (35pc year ago, 39pc 5-year ave.), including winter wheat at 69pc (100pc year ago), spring wheat at 2pc (69pc), barley at less than 1pc (78pc) and canola at less than 1pc (7pc).
Crop conditions are mostly good to very good in most parts of the province.
From South America, Brazil’s grain exporters association have cut its August maize export forecast by 400,000t, to 7.1Mt, citing unfavourable weather conditions affecting port operations this week, with cumulative 2022 (Jan-Aug) shipments at 19.2Mt (20.6Mt same period last year).
August soybean exports were cut by 200,000t, to 5.3Mt.
Argentina’s agriculture ministry reports the country’s 2021/22 soybean production came in at 44 million tonnes, which was a year-over-year decline of 4.3%.
Argentine farmers have sold nearly 52% of their current crop so far, versus 62% at the same time last year.
Farmers will begin planting their 2022/23 crops in September and October.
In Europe, the downward movement in prices observed on Tuesday favored a rebound on Euronext yesterday.
Rapeseed prices rebounded sharply, while gains were less in wheat and corn.
Per latest data published by Euronext on Wednesday, non-commercial market participants added to their net long position in Euronext’s milling wheat futures and options in the week to Aug. 26.
Particularly, non-commercial participants, which include investment funds and financial institutions, edged up their net long position to 68,747 contracts from 68,164 a week earlier, the data showed.
Commercial participants similarly raised their net short position to 82,382 contracts from 81,238 a week earlier.
Commercials’ short positions accounted for 62.5% of the total short position, while commercial long positions accounted for 48.6% of total long positions.
Non-commercial short positions represented 37.5% of total short positions, while non-commercial net long positions accounted for 51.4% of the total longs.
In Euronext’s rapeseed futures and options, non-commercial market participants decreased their net short position to 22,435 contracts from 24,754 a week earlier.
Commercial participants similarly lowered their net long position in rapeseed to 22,524 contracts from 24,720 a week earlier.
As for durum wheat, the EU-27 imported just 30,700t of durum wheat between the start of the 2022-23 marketing year on 1 July and 28 August, according to provisional data from the EU commission. This was sharply down from 240,000t the same time a year ago and 576,800t in 2020-21.
India, this year, is emerging as the largest durum supplier with some 20,500t shipped so far.
At the same time, only 7,150t of durum was received from Canada.
Also no durum was imported from Australia so far.
On the buyer side, it should to note that Italy, the EU’s largest durum importer, has yet to begin receipts of product for this marketing year.
Meanwhile Malta and Belgium received the bulk of international cargoes.
The EU’s durum production is expected to hit 7.12mn t in 2022-23, down from 7.74mn t a year earlier and its lowest in at least five years, according to the European Commission.
Persisting dry and hot conditions weighed on yields both in France and Italy.
Thus, durum imports are forecast to rise to 2.5mn t from 1.3mn t last year.
On this wake, imports from Australia resumed, with a 50,000t Italy-bound durum cargo shipped from the Newcastle port on 24 August, line-up data show.
Canada is ready to supply much of the EU’s rising durum requirements in 2022-23, although has made slower progress this year due to milder and wetter weather in the spring and much of the summer.
That could delay deliveries into Europe by several weeks.
From UK, the wheat area in England for this year’s harvest rose 0.8% from 2021 to 1.67 million hectares, Britain’s farm ministry said on Wednesday, issuing the results of its June survey.
The ministry noted that the wheat harvest in England was one of the earliest on record and was 92% complete, as of Aug. 16.
Rapeseed plantings in England were estimated by the ministry to have risen by 20% to 322,786 hectares although they remain far below a peak of 712,671 set in 2012.
The spring barley area in England fell 13% to 410,000 hectares while winter barley plantings rose 7.7% to 372,000 hectares.
From North Africa, Egypt approved on Wednesday raising the guide price of local wheat procurement for the new harvest season by 13.6 percent to EGP 1,000 per ardeb (1 ardeb is equivalent to 150kg).
In the current local supply season, the local wheat procurement price has totalled EGP 880 per ardeb on average, including additional incentives.
So far, Egypt has purchased 4.2 million tonnes of local wheat from farmers, representing around 70 percent of the 6 million tonnes of local wheat.
The country consumes around 18 million tonnes of wheat annually.
Earlier this month, Moselhi said Egypt currently has strategic wheat reserves that can cover domestic consumption for 7.2 months.
From the Black Sea basin, Ukraine’s August grain exports fell by 59.5% year on year to 2.26 million tonnes, agriculture ministry data showed on Wednesday.
The export volume includes 763,000 tonnes of wheat, 1.33 million tonnes of corn and 161,000 tonnes of barley, the data showed.
Meantime, Russian wheat exports are expected to rise to 4 million tonnes in September from 3.5 million tonnes in August.
Russian supplies, however, will still be low compared with September last year as a strong rouble and problems with logistics and payments caused by Western sanctions imposed on Moscow.
Exports from Russia fell by 27% in July-August.
However, the IKAR consultancy sees Russian wheat exports at about 4 million tonnes in September, up from estimated 3.6-3.7 million tonnes in August.
Andrey Sizov, the head of Sovecon, said he expected Russian wheat exports at 4-4.5 million tonnes in September vs 4.7 million tonnes a year ago.
The upper end of the estimate could be reached if the Russian domestic price keeps falling, the global price rises and competition from European supplies eases, he added.
Kazakhstan is lifting restrictions on wheat and flour exports from Sept. 10, the government said on Thursday, as the Central Asian nation expects a strong crop this year.
At the same time, the cabinet said it was introducing quotas on livestock exports.
From Australia, current crop values remain largely unchanged amid steady local trade.
New crop wheat values slid lower yesterday by $4-5/t and canola also lost a few bucks.
Production estimates around the country now build as we come into spring with another bumper harvest forecast, keeping buyers at bay for the time being.
In this context, price moves have been mixed and mostly moderate in the past week in continued thin volume as the local industry shifts its focus from drivers such as the Northern Hemisphere new crop to the quality profile of the eastern Australian harvest.
Reports are trickling in that the earliest Central Queensland (CQ) wheat crops are being harvested, and the region is expected to be going at pace by the end of the month.
If rainfall is minimal between now and harvest, Queensland wheat has every chance of making Hard or Prime Hard segregations, and Victoria’s Mallee could well be the same.
However, New South Wales’ wet growing season means it is likely to produce APW-type wheat at best in many districts.
This has most consumers comfortably sitting out of the market and waiting for supply-side pressure to hit feedgrain values.
On the international trade scene, Taiwan’s MFIG purchasing group has issued an international tender to buy up to 65,000 tonnes of animal feed corn which can be sourced from the United States, Brazil, Argentina or South Africa.
The deadline for submission of price offers in the tender is Sept. 7.
Price offers are being sought for one consignment of yellow corn at a premium over the Chicago March 2023 corn contract.
Shipment is sought between Nov. 1 and Nov. 20 if the corn is sourced from the US Gulf, Brazil or Argentina.
If sourced from the US Pacific Northwest coast or South Africa, shipment is sought between Nov. 16 and Dec. 5.
South Korean animal feed maker Nonghyup Feed Inc. (NOFI) bought an estimated 137,000 tonnes of feed corn in an international tender on Tuesday.
The grain is for arrival around December 5.
Bangladesh on Wednesday approved the import of 500,000 tons of wheat from Russia.
Bangladesh will pay Russia in US dollars for this wheat, he said, adding that wheat will be purchased at $430 per ton.
Algeria’s OAIC (state grains agency) purchased an unspecified volume of milling wheat, likely to be sourced from Russia, at around US$364-$365/t c&f, Sep/Oct shipment.
Russian wheat was reportedly offered at about $10 to $15 a tonne cheaper than EU wheat.
Philippines importers reportedly rejected all offers for up to 100,000t feed wheat in the 30 August tender, with prices regarded as too high.
LDC sold 60k MT Barley to Jordan for SH Feb shipment at $323.5 PMT CFR Aqaba port.
$4.5 below what MIT booked last week for SH Jan and FH Feb shpts.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
