Good morning Farmer Family …
US farm markets were mixed but mostly lower yesterday.
Corn prices rose 1.54% higher on lingering concerns about U.S. crop quality and production potential.
Wheat prices also made moderate inroads, as December’s Chicago SRW wheat contract added 0.74%; December’s Kansas City HRW wheat contract picked up 0.48%, while, December Minneapolis spring wheat held substantially steady, as was down just 0.03%.
Soybeans failed to follow suit.
Soy oil led the decline for the complex as closed with 4.47% losses.
Meal was also hit with 3.16% losses.
Soybeans were a little firmer on 1.53% losses.
The USDA released its Crop Progress report Tuesday night after the sessions close.
As of September 4, 92% of the U.S. corn crop has reached the dough stage, just shy of the five-year average of 93%.
Sixty-three percent has reached the dented stage, compared with the five-year average of 67%.
Fifteen percent is mature, 3% shy of the five-year average.
Crop condition was rated 54% good/excellent, reflecting no change from last week.
As for soybeans, USDA’s report noted soybeans setting pods are at 94%.
The five-year average for this point in the season is 96%.
Ten percent are dropping leave, behind the five-year average of 14%.
Soybean crop condition was rated 57% good/excellent for the third week in a row.
Soybeans rated poor/very poor went up by 1% to 14%.
As for wheat, spring wheat is 71% harvested in the top six producing states, far behind the five-year average of 83%.
Three percent of winter wheat is planted, on par with the five-year average.
Meantime, NASS announced that the FSA has sufficient data to review planted/harvested area for both corn and soybean ahead of the upcoming Crop Production reports (Monday 9/12).
Thus, they will be included in the September reports this year
The normal review typically takes place during September for the October release.
On the weather side, some parts of the Northern Plains and upper Midwest will see some rainfall between today and Saturday, but large portions of the Corn Belt won’t see any measurable moisture during that time.
The agency’s new 8-to-14-day outlook predicts near-normal to slightly dry precipitation totals in the Midwest between September 13 and September 19, with most of the United States likely to see above-normal temperatures.
On the demand side, weekly inspections data showed 518,373 MT of corn was exported during the week that ended 9/1.
The 22/23 season began with a 109,584 MT export on 9/1 included in the week’s total.
Last week saw 689,451 MT of corn shipped and the same week last year had 338,716 MT.
As for soybeans, USDA reported 495,845 MT of soybeans were exported during the week that ended 9/1.
That compared to 439,811 MT last week and 93,653 MT during the same week last year.
The 22/23 export season has 49,582 MT shipped through the first day.
As for wheat, the report had 477,657 MT of wheat exports for the week that ended 9/1.
That was down from 631,326 MT last week but up from the 412,649 MT shipped during the same week last year.
MYTD wheat shipments still trail last year’s pace by ~1 MMT.
In this context, corn basis bids were steady to mixed after moving as much as 10 cents lower at an Illinois processor and as much as 25 cents higher at an Illinois ethanol plant.
Soybean basis bids were mostly steady but did slide 10 cents lower at an Illinois river terminal while climbing 20 to 35 cents higher at two other Midwestern locations.
Commodity funds were net sellers of CBOT soybean, soyoil and soymeal futures contracts.
The funds were net buyers of CBOT corn and wheat.
On this morning, Chicago soybean prices lost more ground, with prices dropping to their lowest in three weeks, on expectations of a record U.S. production and higher South American planting.
Wheat and corn prices slid for the first time in three sessions.
Particularly, the most-active soybean contract on the Chicago Board of Trade (CBOT) lost 1% to $ 13.85 a bushel, as of 03:32 GMT, after dropping to its weakest since Aug. 18 at $13.84 a bushel.
Wheat fell 0.8% to $8.10 a bushel and corn gave up 0.9% to 6.69-3/4 a bushel.
In energy markets, oil prices fell more than $1 on Wednesday.
COVID-19 curbs in China and expectations of more interest rate hikes spurred worries of a global economic recession and lower fuel demand.
Thus, Brent crude futures fell $1.08, or 1.2%, to $91.75 a barrel by 06:44 GMT after slipping 3% in the previous session.
The contract hit a session low of $91.20, the lowest since Feb. 18.
U.S. West Texas Intermediate crude futures shed $1.20, or 1.4%, to $85.68.
The benchmark fell to a session low of $85.08, the lowest since Jan. 26.
A strong U.S. dollar, aggressive rate hikes, a spike in bond yields, and a slowdown in China’s growth are factors pressuring down oil prices.
Lending some support to prices, however, were expectations of tighter oil inventories in the United States.
U.S. crude stockpiles, indeed, are expected to have fallen for a fourth consecutive week, declining by an estimated 733,000 barrels in the week to Sept. 2.
Crude inventories in the U.S. Strategic Petroleum Reserve (SPR) fell 7.5 million barrels in the week to Sept. 2 to 442.5 million barrels, their lowest since November 1984, according to data from the Department of Energy.
Weekly U.S. inventory reports from the American Petroleum Institute and Energy Information Administration will be released on Wednesday and Thursday respectively.
In ocean freight markets, the Baltic Exchange’s main sea freight index snapped a three-session long streak of gains on Tuesday, due to a fall in capesize and supramax rates.
The overall index, indeed, was down 19 points, or about 1.7%, at 1,114 points, its lowest in over a week.
Particularly, the capesize index also snapped its three session gain streak, losing 116 points, or 13.7%, to 728 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, fell by $963 to $6,037.
The panamax index was up 86 points, or 6.48%, at 1,327 points, marking its biggest gains in almost seven months.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, was up $774 to $12,715.
The supramax index fell for an eighth consecutive session, losing 11 points to 1,487 points.
In equity markets, stocks on Tuesday posted moderate losses.
Rising T-note yields weighed on the overall market.
The yield on the 10-year Treasury, which influences interest rates on mortgages and other loans, rose to 3.34% from 3.19% late Thursday. The two-year Treasury yield, which tends to track expectations for Fed action, rose to 3.51% from 3.39%.
Tuesday’s U.S. economic news was hawkish for Fed policy and pushed T-note yields higher.
The Aug ISM services index, indeed, unexpectedly rose +0.2 to a 4-month high of 56.9, stronger than expectations of a decline to 55.3.
Meantime, Morgan Stanley Tuesday said they expect S&P 500 company earnings to fall 3% in 2023, even in the absence of a recession.
Also, Morgan Stanley said, “the next several quarters will end up containing some of the most significant downward revisions to forward EPS forecasts we have seen in the past several cycles.”
In addition, Morgan Stanley predicts “the lows for this bear market will likely arrive in Q4,” and the S&P 500 will fall to at least 3,400, about 13% below current levels, and could fall to 3,000 in the event of a recession.
Consequentially, shares fell on Wall Street with the S&P 500 down 0.4% or 16.07 points to 3,908.19, after bouncing between a gain of 0.5% and a loss of 1%.
The Dow Jones Industrial Average slid 0.6% or 173.14 points to 31,145.30 and the Nasdaq lost 0.7% or 85.96 points to 11,544.91.
The Russell 2000 index fell 17.42 points, or 1%, to 1,792.32.
Technology and communications stocks were among the biggest losers.
Semiconductor stocks were under pressure after monthly sales data from the Semiconductor Industry Association showed weakness in memory-related products in July.
Bed Bath & Beyond fell 18.4%, the company that wants to take Trump Media public, Digital World Acquisition, plunged 11.4%,
Wall Street is also grappling with worries about a brewing energy crisis in Europe and the implications it could have for the global economy and corporate profits.
Meantime, Asian shares were mostly lower this morning.
In Japan, the government is giving 50,000 yen ($350) to needy families, to help cope with daily needs and energy prices in a move also designed to boost the lagging economy.
In China, China’s trade weakened in August as high energy prices, inflation and anti-virus measures weighed on global and Chinese consumer demand.
Imports of Russian oil and gas surged, China’s customs data showed.
Exports rose 7% over a year ago, decelerating from July’s 18% expansion, while imports contracted by 0.2%, compared with the previous month’s already weak 2.3% growth.
Demand for Chinese exports has softened as Western economies cool and central banks raise interest rates to contain surging inflation.
At home, repeated closures of Chinese cities to fight virus outbreaks has weighed on consumers’ willingness to spend.
In this context, Japan’s benchmark Nikkei 225 shed 0.7% to finish at 27,430.30.
Australia’s S&P/ASX 200 dropped 1.4% to 6,729.30.
South Korea’s Kospi slid 1.4% to 2,376.46.
Hong Kong’s Hang Seng dipped 1.0% to 19,003.55, while the Shanghai Composite was little changed, inching up less than 0.1% at 3,245.22.
In currency trading, the U.S. dollar rose to 143.98 Japanese yen from 142.76 yen. The euro was little changed at 99 cents.
From Canada, harvest in Manitoba is 2% complete and 16% done in Saskatchewan.
Yields in most areas seem to be average to slightly above average.
Canadian spring wheat exports for week four were 265.6k mt for a season total of 928.3k mt, down 33% from last year given the late harvest.
Deliveries of 320.4k mt were strong as the first wave of new crop enters the elevator system.
The Ag Transport Coalition says that CN and CP supplied 94% of the ordered hopper cars in shipping week three, and 95% of the ordered hopper cars in week four.
Durum harvest is 51% complete in Saskatchewan with yields have been variable.
From South America, Brazil’s Mato Grosso Institute of Agricultural Economics forecast 2022/23 soybean production at 41.5Mt (+2pc y/y) from an area of 11.8Mha (+3pc).
There are early indications of rains of up to 50mm predicted over the next month, with particularly sizeable amounts in the northwest, northern and mid-northern regions of the state.
The 2021/22 corn estimate was raised by 4.6Mt, to 43.8Mt (+35pc y/y).
2022/23 corn production pegged at 45.5Mt (+4pc).
Brazilian consultancy AgRural reported that 9% of the country’s first corn crop has been planted so far, which is slightly behind last season’s pace of 10.1%.
AgRural predicts that 2022/23 first corn production will reach 28.2 MMT, which would be a year-over-year increase of 13.7%, if realized.
Harvest of 2nd crop there reached 98% complete.
Argentina’s Economy Minister Sergio Massa announced a special locked FX rate to facilitate soy exports.
The Peso will be fixed at 200/ $1 USD.
The change stimulated a significant increase in trading volume in Argentina.
Argentina’s daily soy trading volume, indeed, has hit its highest level in five and a half years, the country’s Rosario grains exchange said on Tuesday.
Particularly, the Rosario grains exchange said in a report that Argentine soy operations registered on Monday, the first day the FX rule came into effect, had been close to 800,000 tonnes, which it said was the highest trading volume since early 2017.
Traders and analysts said the flurry of soy trades was already impacting local markets.
Meantime, BAGE reported that 23.7% of Argentina’s wheat area is facing poor conditions and will have below trend yields.
In Europe, uncertainty about global economic growth dominates the news at the moment, with the corollary of a general decline in commodity prices, with the exception of energy prices.
The dollar continues to rise, posted thuis morning at 0.9890 against the euro.
In a good part of the European production zones are notably improving the upcoming winter sowings conditions, as beneficial rains come.
The dynamics of Black Sea exports are also weighing on prices, although they remain fragile and dependent on the sustainability of the current corridor set up for Ukrainian exports.
Meantime, European Union soybean imports in the 2022/23 season that started on July 1 had reached 2.16 million tonnes by Sept. 3, per latest data from the European Commission.
That compared with 2.49 million tonnes by the same week in the previous 2021/22 season, the data showed.
EU rapeseed imports had reached 1.08 million tonnes, compared with 732,158 tonnes a year earlier.
Soymeal imports over the same period totalled 2.73 million tonnes against 2.87 million tonnes the prior season, while palm oil imports stood at 567,310 tonnes versus 1.09 million tonnes in 2021/22.
EU sunflower oil imports, most of which usually come from Ukraine, were at 299,836 tonnes, against 278,224 tonnes a year earlier, the data showed.
EU 2022/23 corn imports are trending well above last year’s pace so far, with 176.0 million bushels through September 3.
European Union’s 2022/23 soft wheat exports reached 6.21 MMT through September 3, which is slightly above last year’s pace so far.
EU barley exports are sharply lower year-over-year, with 1.62 MMT.
The Commission, which has reported repeated technical problems in the past weeks, said the data may again be incomplete.
From North Africa, Egypt has been negotiating to replace a detained Ukrainian wheat shipment.
The cargo of about 60,000 tonnes of Ukrainian wheat is currently aboard a ship called Emmakris III which was detained in July at the request of Ukraine’s prosecutor general to investigate its alleged Russian owner.
The company, which the Ukrainian officials identified as the owner, did not respond to several requests for comment.
The cargo was purchased by Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), in a December tender for shipment in February but has been stuck at the port of Chornomorsk.
In the case of inability to deliver a cargo, GASC’s tender book requires suppliers to fulfil contractual quantity from an alternative origin as GASC’s tender book does not contain a provision for force majeure.
GASC, however, did release suppliers of four Ukrainian wheat cargoes bought before the war but never loaded on a vessel from their contractual obligations in July.
It has since sought to diversify wheat supplies, buying more than 2 million tonnes since June through tenders and direct purchases in an effort to boost its strategic reserves.
Egypt’s strategic reserves of wheat currently stand at 6.7 months.
From the Black Sea basin, Russia’s Foreign Minister Sergei Lavrov said on Tuesday that the West was not honouring its promise to help Russian food and fertilizer exports reach global markets.
Lavrov said the West had not relaxed sanctions to make it easier for Russia to export agricultural products.
Moscow saw the commitment as a key part of the export corridor deal.
“Our Western colleagues are not doing what we were promised by the U.N. Secretary-General,” Lavrov told a news conference in Moscow.
Russian President Vladimir Putin on Wednesday warned of a looming global food crisis and said he would discuss amending the landmark grain deal with Ukraine to limit the countries that can receive cargo shipments.
Putin said Russia had signed the deal, on the understanding it would help alleviate surging food prices in the developing world, but instead it was rich Western countries that were taking advantage of the deal.
“If we exclude Turkey, almost all the grain exported from Ukraine is sent to European Union countries,” Putin said.
“Only two of 87 ships, carrying 60,000 tonnes of products, went to poor countries” he added.
Consequentially, Putin said he would look at “limiting the destinations for grain and other food exports”.
A Ukrainian presidential adviser said on Wednesday that Russia had no grounds to review the grain deal.
The comments have raised doubts that the deal will be extended beyond the initial 120 days.
Russia’s wheat harvest is reported as 88.2 MMT as of 9/2.
That compares to 66.4 MMT last year before cleaning and drying.
That implies a 3.97 MT/HA yield, compared to 2.99 last year.
22/23 wheat production number estimates (after drying) was seen at 82.9 MMT.
Russia was 75% harvested.
Meantime, Black Sea market analyst SovEcon pegged Russian August wheat exports at 3.5Mt (2.3Mt prior month, 5.2Mt same month of previous year), barley at 600,000t (200,000t, 564,000t), maize at 100,000t (150,000t, 68,000t).
As for wheat, if realized, that was the highest monthly tally since last September but still 52% lower year-over-year.
From Ukraine, Ukrainian Agrarian Council expects total exports of agricultural products in 2022/23 (Jul/Jun) to total 50Mt from a harvest of 60-65Mt.
According to Ukraine’s Ag Ministry, as of 2 Sep, grain exports totalled 4.2Mt (9.1Mt previous year), incl. wheat 1.2Mt (5.0Mt), maize 2.6Mt (1.3Mt) and barley 361,000t (2.8Mt).
From the Middle Kingdom, China’s soybean imports fell 24.5% in August from a year earlier, customs data showed on Wednesday.
China, indeed, brought in 7.17 million tonnes of soybeans in August, versus 9.49 million a year earlier.
The figure was the lowest for the month of August since 2014.
It was also lower than July’s 7.88 million tonnes.
Industrial animal feed production fell almost 7% in July versus a year ago, according to the China Feed Industry Association.
Crush margins in China have been negative since mid-April, with crushers in the key processing hub of Rizhao losing 519 yuan ($74.80) for each tonne of soybean processed as of Sept. 5.
From January to August, China brought in 61.33 million tonnes of the oilseed, down 8.6% from the same period a year ago, the customs data showed.
From Australia, canola bids were a touch firmer.
Today’s price outlook for canola is negative given the 2pc lower Winnipeg futures close.
Wheat and barley price changes in Australia yesterday were small.
The Reserve Bank has lifted interest rates for the fifth month in a row, increasing the cash rate by 0.5pc to 2.35pc, a 7-year high.
On the international trade scene, a South Korean consumer purchased about 65,000t feed wheat expected to be sourced from Australia, according to global media.
The price was said to be about US$351.75/t c&f plus a $1.50/t surcharge for additional port unloading, and shipment 19 Dec to 20 Jan.
Jordan has purchased 60,000 tonnes of wheat in an international purchasing tender from Viterra at $347 a tonne, a government official said on Tuesday.
The purchase is to be shipped in the second half of February, the official said.
Ameropa also participated in the tender.
Jordan also opened a tender for 120,000 tonnes of wheat, to be shipped in March and April.
The tender closes on Sept. 13.
Taiwan issued an international tender to purchase 2.0 million bushels of grade 1 milling wheat from the United States, which closes on Thursday.
The grain is for shipment in November.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
