Good morning Farmer Family …
US farm markets closed with variable results yesterday.
Corn gains were modest, at around 0.2% higher.
Soybeans, in contrast, tipped back a bit more then 0.2% into the red, by the close.
Soymeal prices stayed red during most of the session, and ultimately closing 1.50% down on the day.
Soybean oil also fell, closing 0.68% weaker.
Wheat fared the best, meantime, though the initial turnaround strength faded at the bell.
Wheat prices, indeed, fell more than 20 cents from their intra day highs at the end of the session, even if they still closed in the black.
Chicago SRW wheat prices, indeed, went home up by 1.57%.
Kansas City HRW wheat prices ended the day 1.48% stronger.
Minneapolis HRS wheat prices closed 1.29% higher.
The strengthening of the dollar always brings a penalizing factor on the American export activity.
Also, the harvest progress remains an element to follow closely, after the late start.
While Hurricane Ian moves closer to Florida, the Midwest and Plains will see little to no additional moisture until Friday, according to the NOAA.
The agency’s 8-to-14-day outlook predicts mostly warmer and drier-than-normal conditions for the central U.S. between October 4 and October 10.
The U.S. Department of Agriculture (USDA) said late Monday the corn harvest was 12% complete, behind the five-year average of 14%.
The soybean harvest was 8% complete, lagging the five-year average of 13%.
Spring wheat harvest was 96% completion through Sunday.
Winter wheat plantings moved from 21% a week ago to 31% through Sunday.
Emergence is now at 9%, vs 2021’s pace of 8% and the prior five-year average of 6%.
On this wake, ahead of the Quarterly Grain Stocks report on Friday, analysts expect to see 21/22’s final corn carryout as 1.495 bbu.
USDA has been expecting 1.525 bbu in their monthly WASDE reports, so this would be about a 30 mbu tightening.
Last year’s count was 1.235 billion bushels.
As for soybean, the trade average guess for soybean’s 21/22 carryout is 243 mbu.
USDA’s September WASDE estimate was 240 mbu.
The full range of pre-report estimates is from 215 to 275 mbu according to a Bloomberg poll, and last year’s stocks were 257 mbu.
As for wheat, analysts surveyed expect Q1 stocks to be 1.793 bbu, between 1.663 and 1.95 bbu.
Last year’s stock was 1.774 billion bushels.
Friday will also mark the official 22/23 wheat production, with traders expecting to see 1.784 bbu on average.
If the averages are realized, implied Q1 use would be 651 mbu (vs last year’s 717 mbu).
In this context, corn basis bids saw some wild swings on Tuesday, jumping as much as 89 cents higher at an Illinois river terminal while tumbling as much as 50 cents lower at an Iowa processor.
Soybean basis bids were mixed after dropping 22 to 50 cents lower at two Midwestern processors while firming 3 to 10 cents higher at three other locations.
Commodity funds were net buyers of CBOT wheat and corn futures contracts, and net sellers of soybeans, soymeal and soyoil futures.
On this morning, Chicago wheat prices edged lower.
Corn and soybeans lost ground, too.
Particularly, the most-active wheat contract on the Chicago Board of Trade was down 0.2% at $8.70 a bushel, as of 03:57 GMT.
Corn lost 0.3% to $6.65-1/4 a bushel and soybean gave up 0.5% to $14.01-1/2 a bushel.
Traders are monitoring the conflict in Ukraine, after an ally of Russian President Vladimir Putin issued a stark new nuclear warning to Ukraine and the West.
In energy markets, oil prices fell more than 1% on this morning, pressured by a strengthening dollar and crude storage builds that offset support from U.S. production cuts caused by Hurricane Ian.
Thus, Brent crude futures fell $1.02, or 1.2%, to $85.25 per barrel by 06:30 GMT, while U.S. West Texas Intermediate (WTI) crude futures were down 97 cents, or 1.2%, at $77.53 per barrel.
Both contracts had risen over 2% in the previous session.
Ahead of Hurricane Ian arrive, personnel were evacuated from 14 production platforms and rigs, according to offshore regulator the Bureau of Safety and Environmental Enforcement.
About 190,000 barrels per day of oil production, or 11% of the Gulf’s total were shut-in and producers lost 184 million cubic feet of natural gas, or nearly 9% of daily output.
Meantime, U.S. crude oil stocks rose by about 4.2 million barrels for the week ended Sept. 23, while gasoline inventories fell about 1 million barrels, according to the American Petroleum Institute.
Distillate stocks rose by about 438,000 barrels.
The report comes ahead of official Energy Information Administration data due on Wednesday at 4:30 p.m. EDT.
On this morning, producers began returning workers to offshore oil platforms after shutting in output.
In Europe, there were reports of several gas leaks from the Nord Stream pipelines.
While the leaks don’t have immediate impact on EU gas supply as they are currently not in use, the EU gas price reacted to the news.
The reason for the gas leak is not clear and many quickked to assume it was the result of an attack nothing has been confirmed yet.
In ocean freight markets, the Baltic Exchange’s main sea freight index, edged down on Tuesday pressured by a dip in rates for the larger capesize vessel segment.
The overall index, indeed, fell 6 points, or about 0.3%, to 1,807.
Particularly, the capesize index fell for a second consecutive day by 35 points, or 1.6%, to 2,160.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and iron ore, were down $291 at $17,916.
The panamax index rose for the first time in 5 sessions, adding 6 points to 1,998.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, rose $55 to $17,982.
The supramax index rose by 14 points to 1,671.
It rose for the 10th consecutive session with upward support coming from “the Atlantic and Asian markets”.
In equity markets, the S&P 500 slipped 0.2% to 3,647.29, its sixth consecutive loss.
The Dow fell 0.4% to 29,134.99, while the Nasdaq composite wound up with a 0.2% gain, closing at 10,829.50.
Small company stocks held up better than the broader market.
The Russell 2000 added 0.4%, to close at 1,662.51.
Major indexes remain in an extended slump, and stocks are heading for another losing month.
Markets, indeed, fear that the higher interest rates being used to fight inflation could knock the economy into a recession.
The S&P 500 is down roughly 8% in September and has been in a bear market since June, when it had fallen more than 20% below its all-time high set on Jan. 4.
Ditto for the tech-heavy Nasdaq.
The Dow’s drop of Monday, put it in the same bear market.
Investors will be watching the next round of corporate earnings very closely to get a better sense of how companies are dealing with inflation.
Companies will begin reporting their latest quarterly results in early October.
U.S. Aug capital goods new orders nondefense ex-aircraft, a proxy for capital spending, rose +1.3% m/m, stronger than expectations of +0.2% m/m and the biggest increase in 7 months.
The U.S. July S&P CoreLogic composite-20 home price index rose +16.06% y/y, weaker than expectations of +17.05% and the smallest increase in 15 months.
The Conference Board’s Sep U.S. consumer confidence index rose +4.4 to a 5-month high of 108.0, stronger than expectations of 104.6.
U.S. Aug new home sales unexpectedly rose +28.8% m/m to a 5-month high of 685,000, stronger than expectations of a decline to 500,000.
The US government will release its weekly report on unemployment benefits on Thursday, along with an updated report on second-quarter gross domestic product.
On Friday, the government will release another report on personal income and spending that will help provide more details on where and how inflation is hurting consumer spending.
Meantime, hawkish Fed comments pushed the 10-year T-note yield up to a 12-year high of 3.990% yesterday.
On this morning, Asian shares tumbled.
Tokyo’s Nikkei 225 index sank 2.1% to 26,020.56 while the Kospi in Seoul lost 2.8% to 2,161.95.
In Sydney, the S&P/ASX 200 gave up 0.8% to 6,442.40.
Hong Kong’s Hang Seng dropped 2.8% to 17,363.08 and the Shanghai Composite index declined 1.3% to 3,053.79.
Taiwan’s benchmark dropped 2.6%.
Surging borrowing costs stoked fears of a global recession, spooking investors into the safe-haven dollar.
“With Asian markets tanking due to the surge in bond yields, a possible economic recession is surely near”, analysts said on this morning.
On this wake, the World Bank has cut its China growth target from 5pc to 2.8pc this year.
Its 2023 outlook is 4.5pc assuming there is some shift on the zero covid policy.
In currency trading, the dollar hit a fresh two-decade peak against a basket of currencies on Wednesday.
On this morning, the dollar fell to 144.73 Japanese yen from 144.81 yen.
The euro was at 95.55 cents, down from 95.92 cents.
From South America, Safras and Mercado estimated that 2% of the 22/23 Brazilian soybean crop was planted as of 9/26.
Ag Rural estimated 1.5% was in the ground.
Those compare to the 0.8% average pace, with Parana well ahead of normal.
Meantime, Safras & Mercado increased its wheat estimates after seeing better-than-expected yields in production areas that include Parana, Goias and Bahia.
They, indeed, are anticipating a record-breaking wheat production of 10.94 MMT this season.
Meantime, Brazil’s Anec now expects the country’s corn exports to reach 7.13 MMT in September, which is 6.4% below the group’s prior estimate made a week ago.
Anec also expects to see the country’s soybean exports reach 3.82 MMT in September in the latest projection issued.
That’s moderately below last week’s estimate of 4.15 MMT.
Anec also expects to see Brazilian soymeal exports reach 2.013 million metric tons this month.
Argentina’s grain producers have sold 65.2% of the 2021/22 soybean harvest so far, the country’s agriculture ministry said on Tuesday.
Particularly, the ministry said that between Sept. 15-21, the country’s producers sold 1.6 million tonnes, a 30.4% decrease if compared to the 2.3 million tonnes sold in the previous week, which had been boosted by a preferential foreign exchange rate for soy exporters.
The slowdown in sales happened after the country’s central bank decided to prevent the purchase of foreign currency for companies that had settled soybeans for the 21/22 season using the preferential exchange rate.
The preferential rate will expire at the end of September.
Meanwhile, producers have already sold 66.7% of the 59 million tonnes of corn for the 2021/22 cycle, an increase if compared to the 61.7% sold in the previous cycle.
Corn planting for the 2022/23 season, already under way, is facing less rainfall than normal, according to the National Meteorological Service, as a result of the La Niña phenomenon.
In Europe, markets were very nervous yesterday.
On Euronext, wheat, corn and rapeseed prices erased the downward movement of the day before without however managing, at the close, to find the recent highs of last week.
Soft wheat exports from the European Union in the 2022/23 season that started on July 1 had reached 8.80 million tonnes by Sept. 25, data published by the European Commission showed on Tuesday.
The total so far this season compared with 8.06 million tonnes reported a week earlier and 8.75 million tonnes by the same week in 2021/22, the data showed.
However, the Commission has said in recent weeks that some of its grain export and import data may be incomplete.
A breakdown of the figures showed France remained the leading EU soft wheat exporting country so far this season, with 3.36 million tonnes shipped, followed by Romania with 1.38 million tonnes, Germany with 913,000 tonnes, Bulgaria with 881,000 tonnes and Poland with 851,000 tonnes.
The Commission listed the five top soft wheat export destinations for 2022/23 as follows:
Algeria 1,259,642 accounting 14.3% share; Morocco 1,134,800, 12.9%; Egypt 778,721 8.8%; Nigeria 602,059 6.8%; Pakistan 489,650 5.6%.
EU barley exports so far in 2022/23 totalled 2.04 million tonnes against 3.12 million a year ago.
Meantime, EU maize imports so far in 2022/23 stood at 6.65 million tonnes by Sept. 25, up from 5.90 million reported a week ago and 81% above a year-earlier 3.67 million tonnes, according to the Commission’s figures.
Spain was the leading EU maize importer so far in 2022/23 with 2.46 million tonnes, ahead of the Netherlands at 802,000 tonnes, Poland with 637,000 tonnes, Portugal with 602,000 tonnes and Italy with 424,000 tonnes, the data showed.
A list of the top five maize suppliers to the EU this season showed a big rise in Brazilian and Ukrainian maize imports within the EU, with the volume from Ukraine more than three times bigger than by the same time last year.
Particularly, Brazil supplied 3,768,316t accounting a share of 56.7%, Ukraine 2,424,621 with a 36.5%, Serbia 171,718 with 2.6%, Canada 126,663 with 1.9%, Moldova 42,603 with 0.6%.
The figures communicated by the Commission in sunflower oil and rapeseed are also announced to be on the rise, while the volumes imported in palm oil show a sharp decline compared to last year.
From the Black sea basin, the annexation referendums in Ukraine organized by the Russian authorities and their results once again strain the situation on the military level.
Its expected that Putin will declare 15pc of the Ukraine to now be Russia.
It’s a pretty odd situation given the areas that fall within the referendum are not clearly defined and one of the possible outcomes once the “election” falls Russia’s way is Putin can then claim the NATO is attacking Russia.
However, interestingly that those regions represents around 30pc of the Ukraine’s wheat acres.
Ukraine is still relatively optimistic that a chunk of winter crop will be planted.
So far, farms in regions controlled by the Ukrainian government have sown 622,000 hectares (about 1.54 million acres) to winter wheat for the 2023 harvest, or 16% of the expected area, the agriculture ministry said on Tuesday.
On this wake, the Ukraine Ag Minister didn’t put an estimate out they did indicate that acres could fall from 4.6mha last year to 3.8mha this year.
Moreover, the announcements for the Russian agricultural workforce to have to respond to the call for mobilization bring new questions about the organization of the harvesting sites and also the sowing to come.
Meantime, according to APK-Inform, the bid prices of corn have been growing during the last two weeks in the ports of the Danube and Great Odesa.
Particularly, traders raised their bid prices of corn for delivery to the ports of the Danube and Great Odesa to 190-215 USD/t CPT-port (180-200 USD/t two weeks ago) or 7200-8350 UAH/t CPT-port.
However, the large carry-over stocks, progress of the harvesting campaign and lack of storing facilities limited gains.
According to APK-Inform, also the indicative FOB prices of Ukrainian wheat and barley increased last week in the deep-sea ports.
Prices were supported by the global market situation, where the upward trend prevailed on concerns about future functioning of the “grain deal”.
From Afghanistan, the Taliban have signed a provisional deal with Russia to supply gasoline, diesel, gas and wheat to Afghanistan, Acting Afghan Commerce and Industry Minister Haji Nooruddin Azizi said.
Russia does not officially recognise the Taliban’s government, but Moscow hosted leaders of the movement in the run-up to the fall of Kabul and its embassy is one of only a handful to remain open in the Afghan capital.
Azizi said the deal would involve Russia supplying around one million tonnes of gasoline, one million tonnes of diesel, 500,000 tonnes of liquefied petroleum gas (LPG) and two million tonnes of wheat annually.
Azizi said the agreement would run for an unspecified trial period, after which both sides were expected to sign a longer term deal if they were content with the arrangement.
He declined to give details on pricing or payment methods, but said Russia had agreed to a discount to global markets on goods that would be delivered to Afghanistan by road and rail.
From the Middle Kingdom, China plans to auction off 41.000t of its state wheat reserves on October 12, including reserves from the 2014-17 crops.
This is China’s first wheat auction of the season, and only flour mills are allowed to offer bids.
From Australia, local current crop markets wheat continued to tick over yesterday.
The eastern states, SA and WA were all firmer by $3-5/t over the course of the day.
Demand for old crop feed wheat remains slow and steady with the odd bid popping up for small volume through October.
Wheat was a touch softer through the trade on the bid side of new crop over the day, with ASX Jan 23 wheat remaining wide bid offer spread 428/441.
Barley markets were largely unchanged.
Canola grower bids were off $10-15/t with further downside seen in offshore markets.
Weather remains relentless across most parts of Australia, as we roll into October.
Growers are still getting their overcast showery weather in the south while parts of the north did see some warmer weather and sunshine yesterday, but with the forecast ramping up again for the next 8-10 days we brace ourselves for more wet weather.
On the international trade scene, Japan issued a regular tender to purchase 62,500t of food-quality wheat from the United States and Canada that closes on Thursday.
Of the total, 46% is expected to be sourced from the U.S.
The grain is for shipment between October 21 and November 20.
Jordan is seeking 120,000 tonnes of wheat in an international purchasing tender with a deadline for offers on Oct 4.
The country had been seeking the same amount in a tender on Tuesday but ultimately made no purchase.
Algeria announced yesterday evening the organization of a call for tenders for the purchase of soft wheat for shipments scheduled for November.
An importer group in the Philippines has issued a tender to purchase around 45,000 tonnes to 50,000 tonnes of animal feed wheat and 45,000 tonnes to 50,000 tonnes of feed barley.
The deadline for submission of price offers is believed to be Thursday, Sept. 29.
Shipment is sought in the full months of January, February and March, 2023.
South Korea’s Major Feedmill Group (MFG) has purchased an estimated 137,000 tonnes of animal feed corn expected to be sourced from South America or South Africa in an international tender which closed on Tuesday.
One consignment of 69,000 tonnes was bought for shipment by Nov. 10 and arrival in South Korea around Dec. 20 at an estimated $333.38 a tonne c&f plus a $1.25 a tonne surcharge for additional port unloading.
Seller was believed to be trading house Cargill with South America the likely origin.
A second 68,000 tonne consignment for arrival in South Korea around Jan. 17, 2023, was bought at an estimated $332.88 a tonne c&f plus a $1.75 a tonne surcharge for additional port unloading.
It can be sourced from either South America or South Africa.
Seller was believed to be trading house Olam.
If South African-origin corn is used for the second consignment, only 52,000 tonnes can be supplied.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
