Good morning Farmer Family …
North American markets were shut yesterday for Labour Day public holidays.
Thus, there were no settlements.
On this morning, Chicago soybean lost ground, with prices facing headwinds, on expectations of higher farmer sales in Argentina.
Wheat rose 1.5% and corn gained around 1%, meantime.
In energy markets, oil prices inched lower this morning, as the OPEC+ deal to cut output by 100,000 barrels per day in October was seen as a largely symbolic move to bolster prices after the market’s recent slide.
OPEC+, indeed, is watching demand very closely and is trying to manage supply to keep a floor on oil prices.
Thus, Brent crude futures had fallen 49 cents, or 0.5%, to $95.25 a barrel by 06:38 GMT.
U.S. West Texas Intermediate (WTI) crude futures inched up from Monday to $88.94 a barrel, and were $2.07 higher, or 2.4%, than Friday’s close.
Also, a weaker oil demand outlook due to renewed lockdowns in some parts of China as well as an agreement to put price caps on Russian oil exports, weighed on oil prices.
Russia, however, will ship more to Asia, according to the energy minister, Nikolai Shulginov, while the European Union’s foreign policy chief said he was less hopeful about reaching an agreement on a revival of the Iran nuclear deal.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, extended gains for a third straight session on Monday on higher rates for capesize and panamax vessel segments.
The overall index, indeed, was up 47 points, or 4.3%, at 1,133 points, its highest in nearly two weeks.
Particularly, the capesize index gained for the third consecutive session, rising 111 points, or 15.1%, to 844 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron-ore used in construction, rose by $924 to $7,000.
The panamax index was up 56 points, or 4.4%, at 1,327 points, marking its best session in over five months.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, was up $499 to $11,941.
The supramax index fell for the seventh consecutive session, losing 16 points to 1,498 points.
In equity markets, European markets sank yesterday following Friday’s announcement by Russian gas giant Gazprom that a suspension of supplies through the Nord Stream 1 pipeline would be extended indefinitely.
Meantime, Asian stock markets were mixed Tuesday after Australia’s central bank raised its benchmark lending rate by 0.5 percentage points to 2.35%, its highest level since 2015, and said more rate hikes were planned..
Also, China promised to speed up the rollout of policy changes to boost anemic economic growth, with the Chinese Cabinet’s planning agency promised Monday to accelerate easier lending and other policies but announced no new spending.
The government, indeed, has trimmed interest rates, given entrepreneurs a break on rent and promised other aid to revive the economy.
Also Monday, Beijing freed up more foreign currency holdings of Chinese commercial banks for lending and trading by lowering the amount they must hold in reserve.
Chinese economic growth sank to 2.5% over a year earlier in the first half, less than half the official annual target.
In this context, the Shanghai Composite Index gained 1.1% to 3,235.57 while the Nikkei 225 in Tokyo added 0.1% to 27,643.06.
The Hang Seng in Hong Kong shed 0.2% to 19,177.70.
Sydney’s S&P-ASX 200 lost 0.3% to 6,833.80.
The Kospi in Seoul advanced 0.2% to 2,408.55 while India’s Sensex opened down less than 0.1% at 59,230.54.
New Zealand retreated while Southeast Asian markets gained.
In currency trading, the dollar advanced to 141.12 yen from Monday’s 140.46 yen.
The euro gained to 99.55 cents from 99.31 cents.
From South America, Brazilian farmers in center-south states have sown 9% of their 2022/2023 first corn area, compared with 10.1% at the same time last season, according to agribusiness consultancy AgRural on Monday.
In addition to Rio Grande do Sul and Santa Catarina states, which had been planting first corn since mid-August, now Parana growers also have deployed sowing machines on the fields, AgRural said.
In general weather conditions have been favorable for sowing and for the initial stages of crop development in the three southern states.
AgRural forecasts Brazilian farmers will produce 28.2 million tonnes of first corn this season, up from 24.8 million tonnes in the last.
At the same time more than 98% of Brazil’s 2021/2022 second corn has been reaped, AgRural said.
Based on StoneX calculations, first corn farmers will reap the biggest crop in seven years, just below 30 million tonnes, representing a 13% rise from last year.
At the same time the 2022/2023 Brazilian soybean crop is expected to be a record of 153.6 million tonnes, up 24% from last year, StoneX said.
And that, despite Brazilian farmers will spend more to nourish crops like soybeans and corn this season.
A soybean farmer in the south of the country spent on average 1,300 reais ($251.65) per hectare to buy nutrients in the last season.
For this coming season, farmers will have to pay around 60% more to acquire the same amount of fertilizers and for the first corn grower, will face a fertilizer price increase of about 85% on average this year.
On this wake, total fertilizer consumption will drop by an estimated 7.2% to 42.6 million tonnes, it predicted.
($1 = 5.1659 reais)
Argentinian FOB Up River soybean oil cash premiums ended August at unusual higher levels compared to Brazilian FOB Paranaguá’s.
According to Platts data from S&P Global Commodity Insights, the FOB Up River soybean oil basis level was assessed Aug. 31 at minus 500 points to the Chicago Board of Trade October futures for October dates, resulting on a flat price of $1,408.76/mt.
The FOB Paranaguá basis for the same month, in turn, was indicated at minus 550 points, with the outright price seen at $1,397.73/mt.
The main reason for this situation has been the poor pace of soybean sales by Argentinian farmers and subsequent impacts on crushing operations, sources told S&P Global Commodity Insights.
As of Aug. 24, producers had traded 22.70 million mt of soybeans for the current 2021-22 marketing year (April-March), from more than 28 million mt by this time in the prior cycle, the latest Ministry of Agriculture data showed.
As a result, Argentinian soybean crushing has been posting a decline on the year.
From January-July, 23.56 million mt of soybeans were crushed by local plants, a 9.2% drop from the same period in 2021, with monthly volumes falling sincding to official data.
For August, it is expected a crushing of around only 2 million mt.
Argentinian soybean oil output during January-July 2022 reached 3.42 million mt, 33.7% lower on the year.
On this wake, the government announced the FX incentive on Sunday to speed up stalled sales of the grain, allowing soy farmers to convert their earnings to local currency at 200 pesos per dollar, far higher than the official rate of 140 pesos.
However, Argentina’s farmers said on Monday the government’s decision is a temporary “patch” that will likely boost sales of the crop during the month, but fails to solve root issues.
Argentina’s central bank, indeed, is set to hike the country’s interest rate as early as this week, to tighten liquidity given the expected inflow of funds from the new FX measure.
In Europe, was a quiet session yesterday in the absence of US markets.
Paris wheat prices, however, edged slighty higher with support from a lower euro.
December milling wheat on the Paris-based Euronext exchange, indeed, settled up 0.5% at 321.75 euros ($319.47) a tonne.
But mounting energy prices and related recession fears are creating demand concerns for grain sectors.
Export prices around or below $300 a tonne for Ukrainian and Russian wheat, well below western European levels, have weighed on Euronext since late August.
Traders were also monitoring forecast rain for the week ahead, which could help winter grain sowing but hamper early harvesting of maize.
Also, the critical state of French corn crops and the first pessimistic yields, are amplifying production fears this year and limit the downward trend in grain prices.
Thus, corn price was unchanged to €316.25/t.
In rapeseed, November delivery on Euronext settled down 0.04% at 612.50 euros a tonne.
The euro’s weakness and a rally in crude oil were offset by pressure by a large EU harvest.
Strategie Grains, indeed, has raised its European rapeseed harvest estimate by 680 kt this year, to 19.15 Mt, against 18.47 million previously extimated and 17 Mt last year.
The consultancy, on the other hand, lowered by nearly 1.2 million tonnes its EU sunflower seed crop forecast to 9.17 million tonnes, down 11.3% from last year despite a sharp rise in the area sown.
For soybeans, the consultancy lowered its 2022 EU production forecast to 2.49 million tonnes from 2.78 million, now 7.3% below last year’s level.
From the Black Sea basin, exports from this region are conditioning the evolution of international grain prices.
According to APK-Inform, indeed, although traders’ bid prices of food wheat continued growing in Ukrainian ports last week, level remain low.
Particularly, the traders’ prices of 2-grade and 3-grade wheat increased to 185-210 and 180-205 USD/t CPT-port or 7500-8500 and 7300-8350 CPT-port in the ports of Great Odesa and the Danube.
Bid prices of corn also increased, according to APK-Inform.
At Ukrainian western border last week, the corn bid prices for delivery in September-October increased to 225-240 EUR/t DAP at the border with Poland, Romania, Hungary and Slovakia, they reached 330-320 EUR/t DAP for delivery to Greece.
The highest gains was observed at Polish borders amid better situation with rail transportation.
In contrast, the indicative FOB prices of wheat and barley continued declining in Ukraine last week, even if the pace of price decline slowed down.
According to APK-Inform,, indeed, the indicative offer prices of 12.5%, 11.5% and feed wheat for delivery in September decreased by 5-10 USD/t to 295-315, 285-305 and 245-265 USD/t FOB deep-sea ports.
The indicative prices of barley declined by 5-10 USD/t to 275-295 USD/t FOB.
Expected decrease of planted area under winter wheat in Ukraine, however, supported prices.
In Russia, Russian wheat export prices fell last week.
Market was under pressure from the new crop.
Harvesting data as of Sept 1 saw, all grains at 117.9 million tonnes, of which 86.9 million tonnes of wheat and 20.8 million tonnes of barley.
However, demand from importers was rising.
Russia, indeed, exported 760,000 tonnes of grain last week, up from 660,000 tonnes the previous week.
In spite that, according to the IKAR, Russian prices for wheat with 12.5% protein content and for supply from Black Sea ports fell by $5 to $310 a tonne free on board (FOB) at the end of last week.
Sovecon seen wheat prices for immediate supply at $310-315 a tonne, down from $312-318 a week ago.
Price for domestic 3rd class wheat, European part of Russia, excluded delivery was at 11,975 ($197.9) +50 rbls rbls/t (Sovecon).
Price for sunflower seeds was at 25,675 rbls/t -425 rbls (Sovecon).
Price for domestic sunflower oil was at 72,675 rbls/t -1,350 rbls (Sovecon).
Price for domestic soybeans was at 34,250 rbls/t unchanged (Sovecon).
Export price for sunflower oil was at $1,360/t -$70 (Sovecon).
Export price for sunflower oil was at $1,190/t -$130 oil (IKAR).
Price for white sugar, Russia’s south was at $838.3/t -$48.4 (IKAR).
Russia is expected to remain mostly dry this week, while farmers had already sown winter grains for the 2023 crop on 2.5 million hectares.
($1 = 60.5000 roubles)
From the Middle East, Iraq’s trade ministry bought 100,000 tonnes of US hard red wheat at $494.00 per tonne on a cost, insurance and freight basis, traders said on Monday.
The wheat was bought through a direct purchase agreement with Anderson.
Only three companies, including Cargill and ADM, were invited to bid during negotiations.
From Australia, rain, forecast for much of Australia’s cropping belt, is due to arrive at a perfect time for a lot of growers and will bolster their 2022/23 outlooks.
Buyers are happy to sit back and watch the crop grow for now in what is shaping up to be another season with no grain shortages.
ABARES, indeed, released its September Crop Report, predicting a winter crop of 55.5 million tonnes (Mt), the fourth highest on record and well above the 10-year average.
Wheat is forecast at 32.2Mt, eclipsed only by the 2021 crop of 36.3Mt, barley at 12.3Mt would be the fourth highest barley crop and canola, 6.6Mt, second highest behind ABARES 2021 crop estimate of 6.8Mt.
These figures are up from its previous forecasts issued in June of 30.3Mt for wheat, 10.9Mt for barley and 5.6Mt for canola.
Exceptional growing conditions and high global prices were continuing to benefit Australian agricultural production and exports, ABARES said.
Thus, total agricultural export earnings, are forecast to climb to a record $70.3 billion for 2022-23 (Jly-Jun), almost 50 per cent above their level of 10 years ago after accounting for inflation.
They will also exceed $70B for the first time.
Meantime, yesterday local markets saw a quiet start to the week and buyers were cautiously leaving bids yet again largely unchanged.
On logistics side, wait times improved at Geraldton this week but are still at 26 days (down from 36). Kwinana still out at 31 days but wait times improved in Newcastle and Port Kembla.
There were 21 vessels anchored at Australian ports with 7 loading.
On the international trade scene, South Korea’s Major Feedmill Group (MFG) has issued an international tender to purchase up to 70,000 tonnes of animal feed wheat sourced from North America or Australia only.
The deadline for submission of price offers is also Tuesday, Sept. 6.
The wheat is sought for arrival in South Korea in February, 2023.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
