Good morning Farmer Family …
US farm markets were mixed but mostly higher in midweek trading session.
Corn and soybean started with some gains overnight, but then they evaporated later in the day due some profit-takings.
Thus, corn closed with losses of around 0.75%, while soybeans fell 1.09%.
Soy oil ended the day 1.88% weaker.
Meal prices, in contrast, closed 1.07% higher.
Soybean prices continued to fall in a context of record production which is expected next spring on the South American continent.
Higher supplies from Argentina and slowing Chinese demand weighed on prices too.
Wheat prices made significant inroads, meantime, after Russian President Vladimir Putin said export corridors do not seem to be accomplishing the intended goal of reducing food costs and providing grain to nations in need during the high cost times, claiming only 2/80 vessels delivered grain to poorer countries and thus, he would discuss amending the landmark grain deal with Ukraine to limit the countries that can receive cargo shipments.
In this context, CBOT SRW closed up by 3.34%.
Kansas City HRW prices went home 2.21% stronger.
Minneapolis spring wheat prices were 1.15% higher at the bell.
Crop ratings were unchanged this week for corn and soybeans, with 54% and 57% of crops respectively rated as good to excellent.
The spring wheat crop is reported at 71% complete, compared to an average of 83% to date.
Winter wheat planting progress was a bit behind 2021’s pace of 5% but mirrors the prior five-year average.
Ahead of the WASDE report scheduled for Monday, estimates show analysts expect USDA to lower the corn yield by an average of 3 bpa to 172.4.
As for soybean, the average of estimates is 51.5 bpa going in, which would be a 0.4 cut.
As for wheat, analysts expect to see a looser carryout on average compared to August.
The average estimate going in is 8.1 mbu above the 610 from August, though estimates range from a 40 mbu increase to a 16 mbu decrease.
NASS informed that they has sufficient data to include acreage survey responses from FSA in their Crop Production report essentially a month early.
As for corn, acreage estimates range 800k lower to 300k higher for a trade average production guess of 14.089 bbu.
USDA’s August output forecast was 14.359 bbu.
Traders anticipate seeing between 700k additional bean acres to 600k fewer.
As for output, analysts expect on average 4.5 bbu, a 31 mbu trim from August.
Meantime, rainfall will be variable across the central U.S. for the next several days.
South Dakota, Nebraska, Iowa, Minnesota and Wisconsin have the best chance to pick up the largest amounts between today and Sunday.
The agency’s outlook predicts seasonally wet weather building in the Northern Plains between September 14 and December 20, with warmer-than-normal conditions likely for most of the U.S.
FAS would be unable to publish weekly export sales data this week, but expected to resume regular reporting on Thursday, Sept. 15.
Meantime, private exporters reported to the USDA having sold, 257,400 metric tons of corn for delivery to Mexico.
Of the total, 226,920 metric tons is for delivery during the 2022/2023 marketing year and 30,480 metric tons is for delivery during the 2023/2024 marketing year.
Census data, meantime, showed 4.583 MMT of corn was exported during July.
That was down from 5.476 MMT during the same month last season.
As for soybeans, the monthly Census data confirmed 2.323 MMT were exported in July, up from 948k MT last year.
Of that, 539k MT were to China.
As for wheat, Census’s wheat exports were 1.516 MMT in July.
That was down from 2.203 MMT US exports in July 2021 (-31.2%).
In this context, yesterday corn basis bids were steady to mixed after climbing 10 to 38 cents higher at two processors while sliding 2 to 5 cents lower at three other Midwestern locations.
Soybean basis bids tumbled 30 cents lower at two Midwestern processors while holding steady elsewhere across the central U.S..
Commodity funds were net buyers of CBOT wheat and soymeal futures contracts, and net sellers of soybean, corn and soyoil futures.
On this morning, Chicago wheat futures extended gains to a fourth consecutive session, trading close to a near two-month high hit in the previous session.
Soybeans edged higher, although gains were limited.
Particularly, the most-active wheat contract of the Chicago Board of Trade (CBOT) added 0.3% to $8.46-3/4 a bushel, as of 02:11 GMT after climbing on Wednesday to its highest since July 11 at $8.73-1/2 a bushel.
Corn rose 0.3% to $6.73-1/4 a bushel and soybeans were up 0.4% at $13.89-1/4 a bushel.
Traders, however, will be cautious ahead of the next USDA report to be released next Monday at 6 p.m..
In energy markets, oil prices rose by as much as $1 per barrel on Thursday after dropping below key technical support levels in the previous session.
The energy standoff between Europe and Russia focused investor minds on how tight fuel supply may become.
The European Union has proposed a price cap on Russian gas and Putin warned that such a move would cause Moscow to cut off all energy supplies.
Thus, Brent crude futures gained 63 cents, or 0.7%, to $88.63 per barrel by 06:28 GMT.
U.S. crude futures were up 70 cents, or 0.9%, at $82.64 per barrel.
Oil prices yesterday closed at their lowest since early February.
The potential impact of any deal or reinstating an accord between the West and Iran on Tehran’s nuclear programme would be significant, they noted.
An agreement would see sanctions on Iranian oil exports lifted.
Britain’s new Prime Minister Liz Truss will on Thursday scrap the country’s fracking ban and will seek to make more use of its reserves in the North Sea, the Telegraph newspaper reported earlier.
Meanwhile a number of central banks around the world are expected to begin a new round of interest rate hikes to fight inflation.
Prices, however, drew support from Russian President Vladimir Putin’s threat to halt the country’s oil and gas exports if price caps are imposed by European buyers.
Russia’s Gazprom has already halted flows from the Nord Stream 1 pipeline, cutting off a substantial percentage of supply to Europe.
In ocean freight markets, the Baltic Exchange’s main sea freight index firmed on Wednesday as a jump in rates for the panamax segment offset declines in larger capesizes.
The overall index, indeed, was up 19 points, or about 1.7%, at 1,133 points.
Particularly, the capesize index fell by 72 points, or about 10%, to 656 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 $595 to $5,442.
The panamax index was up for the fifth consecutive session, gaining 164 points, or 11.6%, at 1,577 points, marking its biggest gain in nine months.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, was up $1481 to $14,196.
The supramax index, which has not seen a single day of gains since two weeks, lost 5 points to 1,482.
In equity markets, US stocks on Wednesday rallied sharply.
Bond yields fell.
The yield on the 10-year Treasury, which influences interest rates on mortgages and other loans, fell to 3.27% from 3.34% late Tuesday.
The two-year Treasury yield, which tends to track expectations for Fed action, fell to 3.45% from 3.51%.
Cleveland Fed President Mester, said she doesn’t have a recession in her baseline outlook.
The Fed Beige book said, “the outlook for future economic growth remained generally weak, with contacts noting expectations for further softening of demand over the next six to twelve months.”
Price levels “remained highly elevated,” but nine of 12 Fed districts reported some degree of moderation in their rate of increase.
A rally in renewable energy stocks, airlines, and cruise operators supported the overall market.
On the negative side, Wednesday’s China trade news showed China Aug exports and imports were weaker than expected.
Another negative factor for the overall market was weakness in energy stocks, after the price of WTI crude on Wednesday plunged more than -5% to a 7-3/4 month low.
Wednesday’s U.S. economic news was bearish for stocks.
The July trade deficit of -$70.7 billion was wider than expectations of -$70.2 billion, which has negative implications for Q3 GDP.
In this context, on Wall Street, the S&P 500 rose 1.8% or 71.68 points to 3,979.87, its biggest single-day gain in four weeks, with roughly 95% of the stocks in the benchmark index closing higher.
The Dow Jones Industrial Average rose 1.4% or 435.98 points to 31,581.28, and the tech-heavy Nasdaq climbed 2.1% or 246.99 points to 11,791.90.
Smaller company stocks outgained the broader market, driving the Russell 2000 index 2.2% higher or 39.68 points to 1,832.
The indexes are now all in the green for the week, a welcome respite for traders after a slump in recent weeks that erased much of the market’s gains from a July and early August rally.
Wall Street watchers, however, cautioned that the market is likely to see more volatility in coming weeks ahead of the next Federal Reserve interest rate policy update scheduled for Sept. 21.
Meantime, Asian benchmarks mostly rose this morning.
Japan’s benchmark Nikkei 225 surged 2.3% to finish at 28,065.28. Australia’s S&P/ASX 200 gained 1.8% to 6,848.70.
South Korea’s Kospi edged up 0.3% to 2,382.88.
Hong Kong’s Hang Seng slipped 0.8% to 18,897.29, while the Shanghai Composite fell 0.2% to 3,239.64.
Somewhat reassuring to market watchers was Japan’s revised seasonally adjusted real gross domestic product, or GDP, for the second quarter, which was revised upward to an annual rate of 3.5% growth, better than the initial estimate at 2.2%.
Data showed private consumption and business spending are holding up in the world’s third-largest economy, which has managed to grow for three quarters straight.
The on-quarter growth for GDP, or the sum of the value of a nation’s products and services, was revised upward to 0.9% from 0.5%.
The annual numbers show how the economy would have grown if the quarterly rate were to continue for a year.
Investors are also watching for what may happen on interest rates at the European Central Bank’s meeting, as well as for comments from U.S. Fed Chair Jerome Powell, later Thursday.
In currency trading, the U.S. dollar edged up to 143.60 Japanese yen from 143.74 yen, while is quite stable at 0.9920 against the euro and 62.30 against the rouble.
From Canada, Canada’s Manitoba Agriculture, Food and Rural Development report for the week ending 6 Sep said fine conditions allowed for good harvest progress, although well behind normal following earlier delays to seeding, high humidity and frequent rains.
Winter wheat harvest was 98pc complete (69pc last week, 100pc year ago), spring wheat 31pc (2pc, 82pc), barley at 24pc (less than 1pc, 90pc), and canola at 1pc (less than 1pc, 32pc).
Crop conditions were seen as good to very good in most parts of the province, while forecasts for warm, sunny weather should be favourable for harvesting over the coming week.
Meantime, according to the latest data from Statistics Canada, the country’s total wheat stocks through July 31 have spilled 38% lower to 3.671 MMT, of which 565k of durum wheat.
Quarterly stocks data from StatsCan, indeed, showed 7.591 MMT of wheat was used from March 31 through July 31.
Last year, during the same quarter, Canada had drew down wheat stocks from 16.88 MMT to 5.953 MMT, of which 813k was durum wheat.
As for canola, Canada’s StatsCan data showed canola stocks were 875k MT on July 31st, tumbling nearly 51% lower from year-ago.
That implied a quarterly use of 4.291 MMT from the March +5 MMT supply.
Last year saw stocks tighten from 7.81 MMT to 1.776 MMT.
From South America, AgRural reported the Brazilian first crop of 22/23 corn was 9% planted as of 9/1 for the Center-South region.
Harvest of 2nd crop there reached 98% complete.
Meantime, Brazil’s Anec expects to see the country’s corn exports reach 6.31 MMT in September, which would jump 148% above year-ago results, if realized.
Brazil’s Anec estimates that the country’s soybean exports in September will reach 3.92 MMT.
That would be a year-over-year decrease of around 17%, if realized.
Brazilian soymeal exports are expected to reach 2.048 million metric tons this month.
In Argentina, an agreement between exporters, the Central Bank and the Economy Ministry, will mean that farmers will be offered a preferential exchange rate of ARS200 per USD in an effort to boost soybean sales.
Consequentially, Argentine farmers sold a total of 2.13 million tonnes of soybeans on Monday and Tuesday, surpassing in just two days the 667,000 tonnes sold last week after the government established a preferential exchange rate for soybean exports, the Rosario Stock Exchange said Wednesday.
The agreement will be in place until the end of September.
In Europe, yesterday’s market news was dominated by Putin’s remarks.
Thus, once again geopolitic factors influenced grain prices.
Wheat rose €10/t for Dec deadline, to reach its highest level in over a month.
Corn lifted €8.5/t in Nov contracts.
Rapeseeds in contrast, gave ground yesterday, despite inventories in Canada as of July 31 showing below expectations.
The economic recession, indeed, remains a factor limiting the rise, both for grains and oilseeds.
This year’s French soft wheat harvest produced 33.60 million tonnes, growers group AGPB said on Thursday.
That compared with the farm ministry’s most recent estimate of 33.87 million tonnes issued in early August.
Meantime, per latest data from Euronext on Wednesday, non-commercial market participants raised their net long position in Euronext’s milling wheat futures and options in the week to Sept. 2.
Particularly, non-commercial participants, which include investment funds and financial institutions, increased their net long position to 74,185 contracts from 68,747 a week earlier, the data showed.
Commercial participants upped their net short position to 91,151 contracts from 82,382 a week earlier.
Commercials’ short positions accounted for 63.1% of the total short position, while commercial long positions accounted for 47.7% of total long positions.
Non-commercial short positions represented 36.9% of total short positions, while non-commercial net long positions accounted for 52.3% of the total longs.
In Euronext’s rapeseed futures and options, non-commercial market participants cut their net short position to 21,565 contracts from 22,435 a week earlier.
Commercial participants lowered their net long position in rapeseed to 21,552 contracts from 22,524 a week earlier.
From the Black Sea basin, as we said yesterday, President Vladimir Putin has said he would discuss amending the export corridor deal to limit the countries that can receive shipments from Ukraine.
“If we exclude Turkey as an intermediary country, then almost all the grain exported from Ukraine is sent not to the poorest developing countries, but to European Union countries” he added.
“Once again, developing countries have simply been deceived and continue to be deceived.”
“It is obvious that with this approach, the scale of food problems in the world will only increase … which can lead to an unprecedented humanitarian catastrophe.”
Putin also reiterated the need to reverse the trend of higher food prices.
Separately, Putin discussed removing Russian export quotas as harvest prospects are very good.
Meantime, Ukraine’s Foreign Minister Dmytro Kuleba in a statement denied the claims.
“In total, two-thirds of the ships sent are directed to Asia, Africa, and the Middle East,” the statement said.
As of September 6, permits for the passage of more than 200 vessels have already been granted as part of the “grain initiative”, reports Interfax-Ukraine with reference to UN data.
“The total tonnage of grain and other food products exported from three Ukrainian ports reached almost 2.213 mln tonnes. A total of 204 ships were allowed to move for now, including 108 ships arriving in Ukrainian ports and 96 ships departing from them”, – the message said.
On September 6, the Joint Coordination Center (JCC) granted permission to leave Ukrainian ports for 5 vessels carrying a total of 129.538 thsd tonnes of grain and other food products.
“The vessels Dignity (8.2 thsd tonnes of sunflower seed), Eliana (5.2 thsd tonnes of sunflower oil) and Kaptan Cevdet (2.472 thsd tonnes of soybean) will head to Turkey. The Seaguardian will deliver 62.266 thsd tonnes of barley, wheat and sunflower seed to Spain, and the Super Henry will transport 51.4 thsd tonnes of wheat to Kenya”, – the UN said.
About 280,000 tonnes of agricultural products will be exported in the near future from Ukrainian ports for the World Food Programme (WFP) under the UN-brokered deal, the Ukrainian infrastructure ministry said late on Wednesday.
Ukraine, says around 2.37 million tonnes of food have already left its Black Sea ports, including 1.04 million tonnes for Asian countries and 470,000 tonnes for African states.
“Thanks to partners from the United Nations, another 190,000 tonnes of grain have already been purchased for further export to the states of the African continent,” the ministry said in a statement. It gave no details on the other 90,000 tonnes of food to be exported.
The first exports from this tranche will be on the bulk carrier KARIA ANGEL, a vessel chartered by WFP that is undergoing inspection in Istanbul, it said.
“After verification, it will be put to load 30,000 tonnes of wheat in the port of Chornomorsk,” the ministry said.
Turkish President Recep Tayyip Erdogan, however, has accused Western nations of provoking Russia, as he hailed Ankara’s policy of “balance” regarding Russia’s war in Ukraine.
President Erdogan is expected to meet President Putin at a regional summit in Uzbekistan next week.
Chinese President Xi Jinping will also reportedly attend.
Meantime, senior U.N. and Russian officials met in Geneva to discuss Russian complaints that Western sanctions were impeding its grain and fertilizer exports despite the deal to boost Russian and Ukrainian shipments.
United States and others have stressed that Russian food and fertilizer is not subject to sanctions imposed over Moscow, but Russia has asserted there has been a chilling effect on its exports.
Meantime, Russian consumer prices fell for a ninth straight week.
A seasonal drop in fruit and vegetable prices, a sluggish consumer demand and the rouble’s strength over the past few months, weighed on price levels .
Particularly, the consumer price index dipped 0.13% in the week to Sept. 5 after easing 0.16% a week earlier, the federal statistics service Rosstat said on Wednesday.
Annual inflation slowed to 14.08% as of Sept. 5 from 14.31% a week earlier, the economy ministry said.
The inflation pattern may open the door to a cut in the central bank’s key interest rate next week, at the Sept. 16 board meeting, likely to 7.5% from 8%.
Despite the recent incremental declines in the CPI, prices for nearly everything, have soared since Feb. 24.
In the year-to-date, indeed, prices for foreign-made cars, sanitary pads and soap have jumped by around 40%, with the headline consumer price index up 10.24% compared with a 5.32% increase in the same period of 2021, Rosstat data showed.
However, President Vladimir Putin said on Wednesday that inflation was expected to reach 12% this year.
Also, he said the economy will shrink by around 2% this year, a shallower contraction than previously thought, as Russia has overcome the worst impact of Western sanctions.
From Ukraine, the agriculture ministry said last week farmers had started the 2022 sunflower harvest.
This year, Ukraine is likely to reduce its sunseed harvest sharply to around 10.7 million tonnes from 16.6 million tonnes in 2021 due to hostilities in many regions.
Also, Ukraine’s sunflower seed exports in the new 2022/23 September-August season could fall by 29% to 1.1 to 1.2 million tonnes if its Black Sea ports remain open, analyst APK-Inform said on Wednesday.
However, if the ports are shut, exports of sunseeds may be preferred over grain.
That mean 2022/23 sunseed exports could rising to up to 3 million tonnes from 1.63 million last season, APK-Inform said.
Kazakh farmers have harvested 11.2 million tonnes of grains so far this season, up from 8.6 million tonnes at the same time last year, the deputy agriculture minister said on Wednesday.
Grain yield has grown to 1.2 tonnes per hectare this year from 0.84 tonnes last year, he added.
From the Middle Kingdom, Chinese Customs data confirmed August soybean imports from all sources were 7.17 MMT, down ~25% from 9.5 MMT in August 2021.
That was the lowest August tally since 2014.
Analysts attributed the drop to poor crush margins and waning soymeal demand for hog production.
Cumulative soybean imports in 2022 are down 8.6% from a year ago, with 60.83 MMT.
Meantime, USDA’s Ag attache in Beijin sees higher biodiesel blending in China for 22/23.
Their biofuel programs have been mostly ignored during Covid procedures, but USDA offices in Beijing see record biodiesel exports – namely to the EU, for 22/23.
Biodiesel production was forecasted 32% higher yr/yr at 2.4b L, with a 44% increase to 2.125b L of exports in 2022.
From Australia, values for feed wheat have fallen in the past week with wet weather, and more on the forecast, widening SFW’s discount to higher grades.
The likelihood of low-protein wheat being over-represented in the New South Wales crop is growing with every rain event, and consumers are largely sitting out of the market in the hope that the spread widens further.
A widespread 25-50mm is forecast in the coming days across southern Qld, NSW, Vic and south eastern SA and 10-25mm is forecast for the Eyre Peninsula and southern WA.
While this will be welcomed by some it is going to create more problems for already saturated areas.
Accumulation for sorghum exports continues at full tilt, but prompt buying for barley and wheat shipments has slowed as buyers eye cheaper new-crop values and Newcastle battles ongoing logistics issues.
On a positive note, the Australian Rail Track Corporation (ARTC) has announced it will reopen the Moss Vale-Unanderra line on October 4.
Meantime, local markets remained steady yesterday across the boards. Current crop AH2 wheat n Victoria traded late in the by on Clear Grain Exchange.
On the international trade scene, South Korea’s MFG purchased 135k MT of animal feed corn, likely sourced from South America or South Africa, in an international tender that closed yesterday.
The grain is for arrival in late December.
South Korea also purchased 65k MT of animal feed wheat, likely sourced from Australia, in a private deal that closed yesterday.
The grain is for shipment between January 10 and February 5.
Jordan purchased 60k MT of wheat via tender.
Japan hopes to purchase 70k tonnes of feed wheat and 39k mt of feed barley in a simultaneous buy-and-sell auction that will occur on September 14.
The grain is for arrival in late February.
The Taiwan Flour Millers’ Association purchased an estimated 55,375 tonnes of milling wheat to be sourced from the United States in a tender that closed on Thursday.
The wheat was bought in one consignment comprising various types for shipment from the U.S. Pacific Northwest coast between Nov. 2 and Nov. 16.
It included U.S. dark northern spring wheat of a minimum 14.5% protein content bought at $405.28 a tonne FOB U.S. Pacific Northwest coast.
The purchase also involved hard red winter wheat of a minimum 12.5% protein content bought at $437.16 a tonne FOB and soft white wheat of a maximum 9.5% protein bought at $380.02 a tonne FOB.
The consignment has an additional freight charge of $40.85 per tonne for ocean shipping from the U.S. Pacific Northwest coast to Taiwan.
The seller of the dark northern spring was trading house CHS, while ADM sold the hard red winter and soft wheat.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
