Good morning Farmer Family …
US farm markets were mixed again in midweek trading, but mostly higher.
Wheat prices continued to push higher as the focus remained over Ukraine’s ongoing production, and export challenges.
Thus December Chicago SRW wheat prices gained 1.37%, December Kansas City HRW rose 1.42%, and December Minneapolis spring wheat added 0.72% by the close.
Corn and soybean prices, in contrast, each fell 1.52% and 1.61% lower respectively at the bell.
A round of technical selling partly spurred by Tuesday’s selloff on Wall St., coupled with a looming rail workers strike that could begin later this week, weighed on prices.
Meal prices ended the session just 0.16% higher.
Bean oil prices closed with 2.6% losses.
Potential US rail strike stoppages will impact North Dakota, South Dakota, Minnesota and Nebraska from where grain would be hauled via rail to PNW ports for export and industry sources say it is already happening.
The National Grain and Feed Association has rail customers reporting at least one railway would start halting grain shipments on Thursday morning, a day ahead of the potential work stoppage.
The Fertiliser Institute says hazardous material delivery to railheads has already been halted citing, for example, ammonia fertiliser.
EIA reported ethanol production during the week that ended 9/9 averaged 963k barrels per day.
That was down from 989k bpd last week and was a 22wk low.
Ethanol stocks shrank 295k barrels to 22.843 million – a 12 wk low.
Ahead of the next monthly National Oilseed Processors Association (NOPA) report, out today, analysts think the group will show an August soybean crush totaling 166.110 million bushels.
If realized, it will be 2.4% below July’s total but 4.6% above August 2021 totals and would be the second-biggest August crush on record.
The FAS will release their weekly Export Sales report today using the older system after a 4-week break.
Ahead data release, analysts expect USDA to show 300-900k MT of corn was sold during the week of 9/8.
As for soybean, traders expect sales from the week that ended 9/8 were between 300k MT and 1 MMT for soybeans, fewer than 250k MT of meal, and fewer than 30k MT of soy oil.
As for wheat, traders expect wheat bookings from the week that ended 9/8 were between 200,000 and 550,000 MT.
The report will also include data from the unreported weeks.
Data for weeks ending on August 18 and August 25 will be combined and released under week ending August 25.
Data for weeks ending on September 1 and September 8 will be listed individually.
In this context, corn basis bids were steady to weak after crumbling 8 to 65 cents lower across five Midwestern locations on Wednesday.
Soybean basis bids were steady to weak, tumbling as much as 70 cents lower at an Indiana processor and falling 1 to 30 cents lower at four other Midwestern locations.
The funds were net sellers in corn for 9,000 lots and in soybeans for 9,500 lots.
They were net buyers for 4,000 lots of wheat.
On this morning, U.S. wheat futures climbed to a nine-week peak.
Soybeans and corn prices rose after two days of losses.
Particularly, the most-traded wheat contract on the Chicago Board of Trade was up 1.1% at $8.81-1/2 a bushel, as of 02:07 GMT.
CBOT soybeans rose 0.6% to $14.63 a bushel, while CBOT corn gained 0.2% to $6.83-1/4 a bushel.
In energy markets, oil prices edged higher on Thursday.
Brent crude futures was up by 2 cents to $94.12 a barrel by 03:24 GMT, while U.S. West Texas Intermediate crude rose 18 cents, or 0.2%, to $88.66.
The market has been focussing on the demand side of late but has probably priced too big a fall in actual demand while forgetting supply can still be somewhat problematic, analysts said.
The increasing likelihood of the U.S. rail stoppage due to an ongoing labour dispute is also adding support to the market.
The International Energy Agency (IEA) said Wednesday it expects widespread switching from gas to oil for heating purposes, saying it will average 700,000 barrels per day (bpd) in October 2022 to March 2023 – double the level of a year ago.
That, along with overall expectations for weak supply growth.
But data released by the Energy Information Administration showed U.S. crude and distillate inventories rose more than expected in the most recent week, suggesting weaker fuel demand and putting a lid on oil prices.
Also, expectations of further U.S. interest rate hikes will continue to cloud the market and limit the rebound of oil prices.
In ocean freight markets, the Baltic Exchange’s main sea freight index, extended gains on Wednesday, helped by an uptick across all vessel segments led by a jump in the larger capesize segment.
The overall index, indeed, was up 187 points, or about 13.3%, its largest gain in over seven months, at 1,595.
Particularly, the capesize index gained 486 points, or about 45%, to hit its highest in over a month at 1,565.
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 $4,025 to $12,977.
The panamax index was up 71 points, or about 3.4%, at 2,145, hitting its highest in over two months.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, gained $643 at $19,309.
The supramax index rose for second consecutive session after snapping 12-day falling streak, gaining 21 points to 1,505.
In equity markets, the S&P 500 added 0.3% Wednesday to 3,946.01, while the Dow inched 0.1% higher, to 31,135.09.
The Nasdaq gained 0.7% to 11,719.68, and the Russell 2000 picked up 0.4% to close at 1,838.46.
Traders now see a one-in-four chance the Fed may hike its benchmark rate by a full percentage point next week, quadruple the usual move, according to CME Group.
The broader U.S. economy has been slowing, but consumers have remained resilient and the job market remains strong.
Wall Street will get another update on inflation’s latest impact on spending when the government releases its retail sales report for August on Thursday.
The market is also monitoring U.S.-China tensions and war in Ukraine.
Also, as we said, business and government officials are bracing for the possibility of a nationwide rail strike at the end of this week that could paralyze an already discombobulated supply chain.
Biden administration officials are scrambling to develop a plan to keep goods moving if the railroads shut down.
Meantime, shares were mostly higher in Asia on Thursday after the wobbly day of trading on Wall Street.
Shanghai’s benchmark lost 1% to 3,204.93 after China’s central bank left its benchmark lending rate unchanged.
Tokyo’s Nikkei 225 index gained 0.5% to 27,946.20.
In Hong Kong, the Hang Seng index was 0.5% higher, at 18,941.04, while the Kospi in Seoul edged 0.1% higher to 2,413.07.
Australia’s S&P/ASX 200 added 0.6% to 6,869.60.
In currency trading, the dollar rose to 143.42 Japanese yen from 143.16 yen late Wednesday.
The euro weakened to 99.73 cents from 99.77 cents.
From Canada, Manitoba Agriculture, Food and Rural Development reports that winter wheat harvest is 100pc completed (98pc last week, 100pc year ago), spring wheat 57pc (31pc, 90pc), barley 64pc (24pc, 96pc) and canola 11pc (1pc, 63pc).
It said many farmers were pleasantly surprised by slightly higher than expected spring wheat yields to date.
Canadian Western Red Spring wheat is mostly grading N1, with protein ranging between 13.5pc-14.8pc.
Canola has suffered flea beetle damage and early planting stress on the earliest sown crops reducing yields compared to late sown.
Meantime, yesterday StatsCan reported their September production estimate.
As for corn it was 14.86 MMT, compared to 14.82 MMT in August and 14.6 MMT expected.
As for soybean, StatsCan reported their soybean production as 6.505 MMT in the September release.
That was up from 6.38 MMT estimated in August and was at the top end of estimates.
Canola output is seen as 19.1 MMT – compared to 19.5 MMT last month and 19.9 MMT expected.
September’s wheat production estimate from StatsCan raised output by 130k MT relative to August to 34.702 MMT.
Last year Canada produced 22.3 MMT, and the trade average guess was for 34.5 MMT.
Durum wheat production, however, was reduced by 360k MT to 6.117 MMT.
From South America, Abiove on Wednesday revised its 2022 soy production estimate for the country to 126.9 million tonnes, 0.2% higher than in August, according to a statement.
Abiove also upped its 2022 domestic soybean crushing estimate to 48.9 million tonnes, reflecting strong soymeal and soyoil demand.
Abiove’s soybean export forecast for this year rose to 77 million tonnes, 200,000 tonnes more than in August.
On the eve of sowing what could be a record 150 million-tonne soybean crop , Brazilian farmers are optimistic and wont sell.
Spot and future crop sales, indeed, are not going well.
Last week, consultancy Datagro estimated 16.2% of Brazil’s 2022/2023 expected soy crop had been traded in, 9.1 points below a historical average.
Argentine soybean farmers have sold around 57pc of the 2021/22 crop, the agriculture ministry said on Tuesday citing data from last week, reflecting the boost from the preferential foreign exchange rate.
China has reportedly bought around 30 cargoes from Argentina when it would normally be buying from the US.
In Europe, France’s Ag Ministry lowered its forecast for 2022-23 French wheat exports outside the EU by 300,000t to 10.0Mt, still up 13.8pc from 2021-22.
The export forecast within the EU was increased by 110,000t to 7.13Mt.
Average protein content in this year’s French soft wheat harvest reached 11.4%, down from 11.9% last year, results from a quality survey by farm office FranceAgriMer and crop institute Arvalis showed on Wednesday.
Particularly, the two organisations estimated 73% of the 2022 crop above the 11% protein threshold, against a five-year average of 92%, while 42% was above 11.5%, against a five-year average of 72%.
For test weights, the survey said 87% of the soft wheat harvest was above 76 kilos per hectolitre, up from a 5-year average of 77%, while 96% of the crop had Hagberg falling numbers above 240 seconds, up from an average of 86%.
Meantime, per the latest data from the European Commission, 2022/23 EU corn imports are trending 63% above last year’s pace so far, with 5.14 MMT.
European Union 2022/23 soybean imports reached 2.36 MMT through September 11, which is slightly below last year’s pace so far.
EU soymeal imports are also down slightly year-over-year, with 3.04 million metric tons over the same period.
European Union’s 2022/23 soft wheat exports reached 7.54 MMT through September 11.
That is 5.6% above last year’s pace so far.
EU barley exports are running significantly below last year’s pace, in contrast, with 1.95 MMT since the beginning of July.
Meantime, per latest data from Euronext, non-commercial market participants increased their net long position in Euronext milling wheat futures and options in the week to Sept. 9.
Particularly, non-commercial participants, expanded their net long position to 92,221 contracts from 74,185 a week earlier.
Commercial participants similarly increased their net short position to 109,109 contracts from 91,151 a week earlier.
In Euronext rapeseed futures and options, non-commercial market participants also lifted their net short position to 26,309 contracts from 21,565 a week earlier.
Commercial participants raised their net long position in rapeseed to 25,528 contracts from 21,552 a week earlier.
From North Africa, Egypt’s state grains buyer will require wheat suppliers to register with the country’s commodities exchange before November.
GASC added in a letter sent to traders that it will not buy from unregistered suppliers from the start of November.
Egypt’s new commodities exchange was set to start full operations in 2022.
From Ukraine, winter wheat area is expected to reach 4Mha, 15pc below last year’s area according to an agriculture ministry statement.
Ukraine had planted 841 000ha of canola as of 12 September, 87pc of the Ministry forecast of around 1Mha, slightly below progress at the same time last year.
Barley area is expected to fall 33pc to 645,000ha.
Meantime, the pace of grain exports from Ukraine has risen so far in September but volumes are still well below last season’s levels.
Ukraine, indeed, exported 1.5Mt of grain in the first 13 days of this month, according to the agriculture ministry, although that is 34pc less than the same period last year.
U.N. chief Antonio Guterres said he was hopeful a U.N.-brokered Ukrainian grain export arrangement would be maintained and expanded to include Russian ammonia, despite Moscow’s criticism of the deal.
Despite the success so far of the food and fertilizer export deal, Guterres said an end to the Russia-Ukraine war was “still far away.”
From Russia, according to Russian Grain Union, Russia exported 1.323 mln tonnes of wheat in the first ten days of September, which is 28.3% less than in the same period last year.
Shipments of barley decreased by 41% to 133.5 thsd tonnes, corn – by 67% to 10 thsd tonnes.
Director of RGU’s Analytical Department Elena Turina noted that the decline in export is primarily due to a reduction in shipments to Turkey.
“The export to Turkey fell by 440 thsd tonnes or 72%”, – she specified, noting that this can be explained by the substitution of Russian grain with Ukrainian origin within the framework of the “grain deal”.
At the same time, Egypt is increasing purchases of Russian grain. In general, the geography of shipments is expanding.
“A large consignment of more than 53 thsd tonnes was shipped to Djibouti.
The export to Pakistan, Tunisia, Algeria are stable. Moreover, Algeria is replacing French wheat by Russian origin. This trend has been observed since the end of the last season”, – E. Turina said.
Russian grain has not yet been shipped to the countries of Central and South Africa so far in 2022/23 MY.
“There are no deliveries to Mozambique, while 52 thsd tonnes of wheat were sent there a year ago. A year ago, 70 thsd tonnes were exported to Nigeria and 40 thsd tonnes to Congo. This year, there have been no deliveries to these countries yet. This is due to the growth of logistics costs, limited supply of ships. The fact that Turkey has sharply increased the fee for the passage of ships through the Bosphorus has also affected shipments”, – the analyst noted.
From Australia, spring is already wet across the entire Australian grainbelt.
The past 7 days have been wet in southern Qld, NSW, Vic and SA with a widespread 15-50mm falling over the week and there is more rain on the way for NSW, Vic and southern SA. WA has been relatively dry with less than 10mm being received by most except the southern coastal region.
Refinitiv Commodities Research decreased its estimates for 2022/23 Australian wheat production by around 1% after cooler-than-normal conditions may lead to some freeze/frost damage, although overall conditions are good based on the latest satellite imagery of vegetation densities.
However, as yield prospects improve on late-season rain, protein in wheat is looking like it will be hard to find, and the southern market’s only significant move this week has been a nominal $10-per-tonne upgrade for ASW, the lowest-protein milling wheat.
In northern markets gains of $10/t were also quoted in barley new crop delivered Darling Downs.
A National Day of Mourning has been declared for September 22 to commemorate the life of Queen Elizabeth II.
In Victoria, this will precede the AFL Grand Final holiday, and trade sources say forecast rain, plus next week’s public holidays, have a few loads being sought in an otherwise flat market.
Meantime, local markets found some strength yesterday with a softer Aussie dollar assisting things.
New crop wheat bids were up $4-5/t, barley a touch stronger on the bid side and canola grower bids also were up $5-10/t.
Wheat basis continues to weaken and new crop liquidity remains thin.
Eastern Australian current crop protein wheat remains well bid.
On the international trade scene, Jordan MIT booked 60k MT Barley from Bunge for SH April 2023 shipment at $316 PMT CFR Aqaba port.
Australian Grain Export, Cargill and Viterra participated.
Yesterday’s price was -$7.5 vs what MIT booked two weeks ago for SH Feb shipment.
Next tender for Mar/Apr 23 shpts.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
