Good morning Farmer Family …

US farm markets were mixed to start the week.

Corn prices were mostly steady to close just 0.15% higher at the bell.

Soybeans saw a most upside, finishing the session by 0.88% stronger.

Soymeal led the way with 2% gains on the day. 

Soybean oil prices were 0.96% weaker during the session. 

The wheat complex started the week with double digit losses.

Chicago wheat closed 3.4% in the red. 

Kansas City wheat prices ended the day with 2.73% losses. 

Minneapolis spring wheat prices ended 2.18% weaker. 

As for corn, traders assessed the latest weather forecasts and production trends both in the U.S. and in other countries.  

As for soybeans, lingering questions about US production potential, moved prices up to double-digit gains yesterday.

Wheat prices, on their parts, faded, as Ukrainian exports are improving and Russia looks like it has a big-busting crop for this season.

On the weather side, according to the NOAA, few areas will receive more than 0.25” between today and Friday. 

The agency’s new 8-to-14-day outlook predicts widespread hot, dry weather for the Midwest and Plains between September 26 and October 2.

Meantime, the weekly Crop Progress update from NASS after the sessions close showed that as of September 18, 87% of corn has reached the dented stage, just shy of the five-year average of 88%.

Forty percent is mature, 5% shy of the five-year average. 

Seven percent has been harvested, just behind the five-year average of 8%. 

Corn crop condition was rated 52% good/excellent, down 1% from last week.

USDA’s report noted 42% of soybeans are dropping leaves, behind the five-year average of 47%. 

Just 3% of soybeans have been harvested. 

The five-year average for this time is 5%. 

Soybean crop condition was rated 55% good/excellent, down 1% from last week. 

Spring wheat is 94% harvested, in line with the five-year average.

Twenty-one percent of winter wheat is planted, ahead of the five-year average of 17%. 

Two percent of winter wheat has emerged, on par with the five-year average. 

On the demand side, USDA reported 549,354 MT of corn was shipped during the week that ended 9/15. 

That was up from 474,388 MT last week to set the MY pace at 1.147 MMT. 

Last year saw 403k MT shipped during the week for a season total of 622,041 MT through 9/15. 

As for soybean, the report showed 518,743 MT of soybeans were shipped during the week that ended 9/15. 

That was up from 314,713 MT last week setting the MY total at 912,755 MT. 

That compared to 279,572 MT shipped during the same week last year for a 503k MT pace through 9/15. 

As for wheat, export inspections were 790,145 MT for the week of 9/15. 

Wheat shipments the previous week were 757k MT and were 567k MT during the same week last year. 

The weekly Inspections report listed the season’s total at 7.211 MMT through 9/15, compared to 7.751 MMT last season. 

Separately, USDA reported a private export sale of 136k MT of soybeans to China.  

In this context, corn basis bids were mixed across the Midwest on Monday after moving as much as 12 cents lower at an Illinois river terminal and as much as 30 cents higher at an Indiana ethanol plant.

Soybean basis bids were steady to weak across the central U.S., after tumbling 50 cents lower at an Indiana processor and sliding 2 to 25 cents lower at four other Midwestern locations.

Commodity funds were net buyers yesterday for 2,500 lots of soybeans and net sellers for 8,500 lots of wheat. 

They were corn neutral.

On this morning, U.S. grain futures edged higher in Asian trading.

Soybeans extended gains on Chinese export demand, while corn rose after the USDA report showed a slower-than-expected harvest.

Particularly, the most-traded soybean contract on the Chicago Board of Trade was up 0.2% at $14.64-1/2 a bushel, as of 02:08 GMT.

CBOT corn rose 0.3% to $6.80 a bushel. 

CBOT wheat rose 0.1% to $8.31-1/4 a bushel in choppy trade.

Trading, indeed, was muted, ahead of a series of US central bank meetings this week.

The U.S. dollar remained firmly below a two-decade high versus major peers (read below).

In energy markets, oil prices steadied on this morning after rising in the previous sessionon.

Concerns that further U.S. interest rate hikes this week will curb economic growth and fuel demand, have weighed on oil prices.

Higher oil prices this year curbed demand. 

U.S. vehicle travel in July fell 3.3% from a year earlier, dropping for a second month.

U.S. crude oil stocks are estimated to have risen last week by around 2 million barrels in the week to Sept. 16.

The U.S. Energy Department will sell up to 10 million barrels of oil from the Strategic Petroleum Reserve for delivery in November, extending the timing of a plan to sell 180 million barrels from the stockpile to tame fuel prices. 

In this context, Brent crude futures for November settlement rose just 3 cents to $92.03 a barrel by 0449 GMT.

U.S. West Texas Intermediate crude for October delivery was at $85.76 a barrel, up3 cents. 

The October contract will expire on Tuesday and the more active November contract was at $85.29, down 7 cents, or 0.1%.

However, signs that major producers are unable to meet their output quotas, giving prices some support.

OPEC+, fell short of its oil production target by 3.583 million barrels per day (bpd) in August. 

In July, the group missed its target by 2.892 million bpd.

Also, the impasse over a revival of the Iran nuclear deal is also continuing to keep that country’s exports from fully returning to the market.

In equity markets, US stocks on Monday recovered from early losses and posted moderate gains.  

Apple closed up +2.5% boosting technology stocks.  

Home Depot gained 1.6%, Bank of America rose 1.7% and United Airlines closed 3.3% higher.

Airline stocks rose on signs of more robust travel demand.  

Homebuilding stocks moved higher after KeyBanc Capital Markets upgraded the sector to overweight from underweight. 

On the negative side, the yield on the 2-year Treasury, which tends to follow expectations for Fed action, rose to 3.94% from 3.87% late Friday. 

The 10-year yield, which influences mortgage rates, rose to 3.49% from 3.45%.

Market expectations are for the FOMC on Wednesday to raise its federal funds target range by +75 bp for the third consecutive meeting. 

Monday’s U.S. economic news was bearish for stocks after the U.S. Sep NAHB housing market index fell -3 to a 2-1/4 year low of 46, weaker than expectations of 47.  

The report illustrated reduced confidence among U.S. homebuilders.

Average long-term U.S. mortgage rates climbed above 6% last week for the first time since the housing crash of 2008. 

The higher rates could make an already tight housing market even more expensive for American homebuyers.

Also, losses in drug makers and healthcare stocks weighed on the overall market.

Pfizer fell 1.3% and Welltower slid 2.2%.

In this context, the S&P 500 rose 0.7%, climbing back from a 0.9% slide. 

It closed at 3,899.89.

The Dow Jones Industrial Average rose 0.6% to 31,019.68 and the Nasdaq composite climbed 0.8% to 11,535.02.

Smaller company stocks also gained ground. 

The Russell 2000 closed 0.8% higher.

Meantime, Asian shares mostly rose on this morning.

Japan reported that its consumer inflation jumped in August to 3.0%, its highest level since November 1991 but well below the 8% plus readings in the U.S. 

Core inflation excluding volatile fresh food prices climbed 2.8%. 

The Bank of Japan is set to have a two-day monetary policy meeting later this week, although analysts expect the central bank to stick to its easy monetary policy.

China, left its benchmark lending rates unchanged as it tries to balance supporting its sluggish economic growth against the weakening yuan.

In this context, Japan’s benchmark Nikkei 225 added 0.4% to finish at 27,688.42. 

Australia’s S&P/ASX 200 jumped 1.3% to 6,806.40. 

South Korea’s Kospi added 0.6% to 2,368.52. 

The Shanghai Composite added nearly 0.1% to 3,118.36. 

Hong Kong’s Hang Seng climbed 1.0% to 18,753.53.

In currency trading, the U.S. dollar edged down to 143.36 Japanese yen from 143.22 yen. 

The euro rose to $1.0029 from $1.0024.

From Canada, spring wheat harvest across the Prairies is 57% complete in Manitoba, 68% done in Saskatchewan, and 75% finished in Alberta. 

Saskatchewan Agriculture has their spring wheat yield at 43 bushels per acre, while Alberta Ag is forecasting a 53-bushel yield. 

There was a strong local demand for wheat last week. 

The durum harvest is 90% complete in Saskatchewan and 73% done in Alberta. 

Saskatchewan Agriculture is predicting Saskatchewan yields of 30 bushels per acre.

As we said yesterday, there were very big wheat deliveries to primary elevators in shipping week 6, with over 1 million mt of wheat entering the Canadian grain system. 

Most of this is sitting in visible supplies as just 279.7k mt of wheat was exported over the week. 

Exportable supplies rose to 3.1 million mt. 

Most of this is sitting in primary elevators, but there are 258.8k mt ready to export on the West Coast and another 1.1 million mt sitting in terminals on the Great Lakes.

Canadian wheat prices past week were supported by a weak Canadian dollar. 

There were several “specials” at prairie elevators where common wheat was sold at $11.50 for November delivery. 

Durum bids also improved last week. 

There was a bid at $11.62/bu for October delivery. 

From South America, farmers in Brazil’s top production state of Mato Grosso has begun to plant their 2022/23 soybean crop on irrigated acres, while dryland farmers have mostly opted to wait for more rains before beginning fieldwork. 

The AgRural consultancy estimates that total Brazilian plantings could reach 42.69 million hectars and expects a record production of 148.49 MMT.

In Europe, sharp fall in prices yesterday, in a context of increasingly fierce competition with Black Sea sources, particularly Russian. 

Coceral estimated the EU wheat crop at 140.5 MMT, after a 2.5 MMT trim from their prior estimate. 

Spain and Hungary production accounted for most of the reduction due to heat stress. 

Cocereal European rapeseed output was estimated at 20.7 MMT. 

Meantime, the European organization MARS has estimated corn yields for the EU at 6.39 t/ha against 6.63 estimated last month, which is down 19% compared to the 5-year average, as a result of the water deficit.

On the other hand, the price of bread rose by almost a fifth in the European Union in August.

The average price of bread in the EU was 18% higher in August 2022 than a year earlier, data from the bloc’s statistics office showed on Monday, the highest rise since December 2017 when Eurostat began compiling the statistic.

In August 2021, the average price of bread rose 3% year-on-year, Eurostat said.

Hungary and Lithuania saw highest annual changes in average bread price in August, with increases of 66% and 33% respectively.

The countries with lowest average increases were France at 8%, and the Netherlands and Luxembourg which recorded a 10% rise each.

Bread prices have risen consistently in the EU this year, from an average of 8.3% in February.

Combined prices of bread and cereals increased by 16.6% in August, their highest rise since at least January 1997.

Euro zone inflation hit a record high of 9.1% in August, Eurostat confirmed on Friday, driven by sharply higher energy and food prices.

It also said 2.25 percentage points of the year-on-year change came from food, alcohol and tobacco.

From North Africa, Morocco’s imports of soft wheat are expected to stand at between 4.5 million and 5 million tonnes next year due to drought, according to a France’s wheat professionals group Intercereales.

France alone has exported over 1 million tonnes of soft wheat to Morocco this summer, and is expected to have sold up to 2.5 million tonnes to the North African country by the end of the year.

Drought has slashed Morocco’s 2022 cereals harvest by 67% to 3.4 million tonnes, including 1.89 million tonnes of soft wheat.

Over the past decade, Morocco has averaged imports of 3 million tonnes a year of soft wheat.

Two Moroccan industry sources said soft wheat reserves now cover 5 months of Morocco’s needs.

However, efforts to build additional stockpiles were put off by higher prices in the international market.

Morocco’s soft wheat import bill, indeed, doubled in the first seven months this year to $1.6 billion.

Higher wheat prices propelled the government to double the subsidies budget to 32 billion dirhams this year, from the 16 billion dirhams that was budgeted earlier.

To keep flour prices stable, Morocco maintained the suspension of the customs duty on soft wheat, a decision traders expect to last as long as prices remain high.

From the Black Sea basin, Ukraine expects a 2022 grain crop of 50-52Mt, unchanged from its previous estimate and down from 86Mt last year, the country’s ag ministry said on Monday. 

Meantime, Ukraine’s Agriculture Minister estimates grain exports at 5.45 million tonnes in September, up 1 million from August. 

This remains below the 6 million tonnes on average last year, but the movement is accelerating.

Ukraine’s Ag Ministry reported a total of 165 ships containing 3.7Mt of agricultural products have left Ukraine ports with another ten ships carrying 169,000t set to leave ports. 

Cumulative grain exports since July 1 stand at 6.36Mt, down 46pc from last year’s pace including 3.72Mt corn, 2.06Mt wheat, and 557k tonnes barley.

Wheat production in Russia is confirmed as a record, close to 100 million tonnes. 

Russian consultancy IKAR lifted its 2022 wheat production estimate to 99Mt and exports to 47.5Mt.

Black Sea market analyst SovEcon estimates September grain exports at 4.85Mt, up from 4.20Mt in August, with wheat at 4.3Mt versus 3.5Mt last month.

Russia exported 1 million tonnes of grain last week, up from 640,000 tonnes the previous week, as lower wheat export tax supports traders’ margins.

Meantime, Russian wheat prices rose last week with high demand.

A strong rouble currency and concerns about the extension of the Ukraine grain export deal, pressured prices.

Thus, according to the IKAR, Russian prices for wheat with 12.5% protein content and for supply from Black Sea ports rose by $5 to $317 a tonne free on board (FOB) at the end of last week.

Sovecon sees wheat for immediate delivery at $310-314 per tonne.

As for the other products, price for domestic 3rd class wheat, European part of Russia, excluded delivery was at 12,600 rbls/t ($209.1) +350 rbls (Sovecon).

Price for sunflower seeds was at 23,925 rbls/t -925 rbls (Sovecon).

Price for domestic sunflower oil was at 75,675 rbls/t +3,175 rbls (Sovecon).

Price for domestic soybeans was at 32,400 rbls/t +500 rbls (Sovecon).

Export price for sunflower oil was at $1,270/t unchanged (Sovecon).

Export price for sunflower oil was at $1,120/t +$10 (IKAR).

Price for white sugar, Russia’s south, was at $854.7/t +$48.8 (IKAR).

On the weather side, rains arrived in parts of Russia’s southern, central and Volga regions last week, Sovecon said, adding that farmers had already sown winter grain for the 2023 crop on 7.4 million hectares.

That compares with 8.5 million hectares around the same date in 2021.

From the Middle Kingdom, as we said yesterday, Chinese Custom’s data showed China brought in 1.8 MMT of corn during August. 

That was 44% below Aug 2021. 

Through the calendar year China has imported 16.93 MMT of corn, a 21% drop from 2021’s pace. 

China’s soybean imports from Brazil plunged in August from a year ago, customs data showed on Tuesday, as high prices capped purchases of the oilseed from the South American nation.

Imports from smaller suppliers like Uruguay and the United States both increased, however.

Particularly, China, imported 6.25 million tonnes of the oilseed from Brazil in August, down from 9.04 million tonnes a year earlier, data from the General Administration of Customs showed.

Arrivals from the United States, reached 286,762 tonnes, up from 17,575 tonnes in the same month last year, according to customs data.

China also imported 350,342 tonnes from Uruguay and 197,770 tonnes from Argentina in August, compared with zero cargoes from either a year ago.

However, total imports last month plunged 25% from a year before to 7.17 million tonnes, the lowest for August since 2014.

For the first eight months of the year, China brought in 40.93 million tonnes of Brazilian beans, down from 43.05 million tonnes in the same period of 2021.

Imports from the United States for January to August came in at 18.21 million tonnes, down from 21.63 million tonnes the previous year.

Demand for soymeal from the feed sector has been weak after hog farmers made huge losses earlier this year.

From Australia, current crop hard wheats, H2 and H1, trading in eastern Australia are among the few grades showing signs of life. 

Feed markets are sluggish and growers are now getting to the pointy end of clearing out on farm stocks ready to fill storages again at harvest time.

Crop input costs continue to play a big part in decision making to manage, for example, disease risk in wheat and canola crops. 

Growers in some regions have applied already three or four applications of fungicide amid weather conditions suiting the spread of pathogens.

On the weather side, the BOM issued a flood warning yesterday afternoon for a low pressure system forecast to bring widespread moderate rainfall to inland New South Wales during Wednesday and Thursday. 

Rain is expected to initially develop in the west and is likely to spread through most of the state on Wednesday into Thursday as the low makes its way to the east during the later part of the week. 

The highest falls are likely through the inland, particularly in the Central West and North West Slopes and Plains. 

This rainfall may cause flooding along rivers in parts of the North West, Central West and South West inland catchments from late Wednesday, many of which are experiencing ongoing flooding due to previous rainfall in recent weeks.

On the international trade scene, Saudi’s SAGO bought 556,000t wheat in their international tender that closed on Friday, at an average price of US$372/t C&F for Nov-Feb arrival.

Pakistan has issued an international tender for 300,000t wheat for Oct. 

Iraq’s trade ministry will announce an international tender seeking 300,000t wheat from various origins in the coming days, Iraqi state news agency said on Monday.

That’s all, thank you.

We wish you a good day.

Author: Sandro F. Puglisi

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