Good morning Farmer Family …
US farm markets tacked mostly higher, yesterday.
Corn and soybeans found modest gains, moving 0.45% and 0.05% higher, respectively at the bell.
The December corn contract, however, saw a double digit range on the day, while soybeans despite traded mostly lower, bounced back in the afternoon recouping from morning losses.
Soymeal prices, in contrast, were down for the close, printing a 1.01% losses.
Bean oil prices also went home weaker but off the lows, as closed just 0.21% in the red at the bell.
Harvest is progressing for both corn and soybean, helped by the non-rainy weather conditions.
Also, the economic situation is troubled with a risk of recession still very present which penalizes the rebound in prices.
Wheat prices, meantime, surged over worries that Russia is escalating its war in Ukraine.
Ukraine’s president worrying aloud that Russia will impede grain flows from his nation after November.
Thus, Chicago wheat prices rallied 3.64% on the day.
That left December back above the $9/bu mark.
Kansas City wheat prices ended with 3.47% gains.
Minneapolis spring wheat prices were 3.10% higher on the day.
The market awaits direction from the U.S. Department of Agriculture’s quarterly U.S. grain stocks and annual small grains reports, both due on Friday.
Dry conditions persist in the southern U.S. Plains, inhibiting the planting of the 2023 winter wheat crop.
While Hurricane Ian makes landfall Floridians this week, it should be a quiet few days for the central U.S. weatherwise, in contrast.
Little to no rain is expected between today and Sunday, according to the NOAA.
The agency’s new 8-to-14-day outlook predicts more seasonally warm, dry weather for the Midwest and Plains between October 5 and October 11.
Meantime, bearish weekly U.S. ethanol data provided headwinds to corn prices.
EIA, indeed, reported ethanol producers averaged 855k barrels of production per day through the week that ended 9/23.
That was a 19-month low and thus a lowest implied corn consumption.
Meanwhile, ethanol stocks were up on the week, by 190k barrels to 22.691m.
In terms of commercial activity, operators will be attentive to the weekly export sales figures, particularly after the recent phase of appreciation of the dollar.
Ahead of report update that will out this afternoon, analysts surveyed expect USDA to show between 250k MT and 800k MT of corn was sold for export in the week ending September 22.
As for soybeans, traders expect the Export Sales to come in between 250k MT and 850k MT for soybeans.
As for wheat, traders are looking for between 175,000 and 500,000 MT of wheat sales for the week ending September 22.
In this context, corn basis bids were mostly steady to weak across the central U.S. after trending 5 to 29 cents lower at four Midwestern locations.
An Illinois river terminal bucked the overall trend after firming 5 cents higher.
Soybean basis bids were mostly steady to weak after sliding 5 to 20 cents lower at three interior river terminals and falling 23 cents at an Ohio elevator.
An Illinois processor bucked the overall trend after climbing 20 cents higher.
Commodity funds were net buyers of CBOT wheat, corn and soybean futures contracts, and net sellers of soyoil and soymeal futures.
On this morning, Chicago wheat prices edged lower.
Corn and soybean prices slid.
Particularly, the most-active wheat contract on the Chicago Board of Trade lost 0.1% to $9.02-1/2 a bushel, as of 00:39 GMT.
Corn gave up 0.1% to $6.69-3/4 a bushel and soybeans lost 0.1% to $14.06-3/4 a bushel.
In energy markets, oil prices fell on this morning after gaining more than $3 in the prior session.
Brent crude futures, indeed, fell 91 cents, or 1%, to $88.41 per barrel by 06:29 GMT, while U.S. crude futures dropped by 80 cents, or 1%, to $81.33.
Both benchmarks had rebounded, after reaching nine-month lows this week, due a temporary dive in the dollar index and a larger-than-expected drawdown of U.S. fuel inventory raised hopes of a consumer demand recovery.
However, the dollar index trended upward again on Thursday, dampening investor risk appetite and stoking fears of a global recession.
Also, in China, travel during the upcoming week-long national holiday is set to hit the lowest level in years as Beijing’s persistent zero-COVID rules prompt people to stay at home.
Finally, Citi economists have lowered their China GDP forecast from 5% year-on-year growth to 4.6% for the fourth quarter of 2022.
In ocean freight markets, the Baltic Dry index, extended losses for the third straight session on Wednesday falling about 0.4% to 1,799 points.
Particularly, the capesize index, which tracks iron ore and coal cargos of 150,000 tonnes, was down for a third day, decreasing by 2.5% to 2,107 points, moving further away from a near two-month peak hit last week.
Meanwhile, the panamax index, which tracks about 60,000 to 70,000 tonnes of coal and grains cargoes, rose for the second day, adding 24 points to 2,022 points; and the supramax index increased for the eleventh consecutive session, up 9 points to 1,680 points.
In equity markets, US stocks on Wednesday rallied sharply.
The Bank of England said it is committed to buying as many long-dated government bonds, know as gilts, as needed between Wednesday and Oct. 14 to stabilise its currency after the British government’s budgetary plans announced last week caused the sterling to tumble.
The central bank earlier warned crumbling confidence in the economy posed a “material risk to U.K. financial stability.”
The International Monetary Fund took the rare step of urging UK to abandon its plan for tax cuts and more borrowing.
Consequentially, stock indexes recovered from overnight losses.
The 10-year T-note yield Wednesday fell from a 14-year high of 4.015% and fell sharply by -25.2 bp to 3.693%.
The 10-year UK gilt yield fell back from a 14-year high of 4.591% and plunged -49.4 bp to 4.012%.
A rally in health care stocks gave the overall market a boost as Biogen surged more than +39% when it said its Lecanemab drug developed with Eisai Co significantly slowed the progression of Alzheimer’s disease.
U.S. stock indexes initially fell, with Apple down more than -3% .
The U.S. Aug advance goods trade balance deficit of -$87.3 billion was narrower than expectations of -$89.0 billion and the smallest deficit in 10 months.
However, U.S. Aug wholesale inventories rose +1.3% m/m, more than expectations of +0.4% m/m.
Also, Aug retail inventories rose +1.4% m/m, more than expectations of +1.0% m/m.
The buildup of inventories is a negative factor for the economy since it suggests that production will need to slow to match demand.
U.S. Aug pending home sales fell -2.0% m/m, weaker than expectations of -1.5% m/m.
Atlanta Fed President Bostic said, “the lack of progress on inflation thus far has me thinking much more now that we have to get to a moderately restrictive stance. My preference is that we get the fed funds target range to 4.25% to 4.50% by year-end.”
In this context, the S&P 500 surged 2% to 3,719.04.
The Dow Jones Industrial Average rallied 1.9% to 29,683.74.
The Nasdaq composite climbed 2.1% to 11,051.64.
Despite Wednesday’s gain, the S&P 500 is down more than 20% from its Jan. 3 record, that is a bear market.
On this morning, Asian stock markets followed Wall Street higher.
Market benchmarks in Hong Kong, Seoul and Sydney added more than 1%.
Shanghai and Tokyo also rose.
Particularly, the Shanghai Composite Index rose 0.3% to 3,053.33 and the Nikkei 225 in Tokyo gained 0.7% to 26,365.36. The Hang Seng in Hong Kong jumped 1.3% to 17,466.89.
The Kospi in Seoul gained 1.3% to 2,196.97 and Sydney’s S&P ASX 200 rose 1.8% to 6,577.70.
New Zealand and Southeast Asian markets also advanced.
In currency trading, the dollar gained to 144.43 yen from Wednesday’s 143.96 yen.
The euro declined to 96.85 cents from 97.43 cents.
From Canada, harvest progress sits at 47% completed across the province, approximately 3.5 weeks behind the 5-year average of 79% complete by week 39.
Few crops were harvested last week until the weekend, since frequent drizzling rains, high humidity, and overcast conditions prevented harvest operations.
Crops that were harvested before the start of this week were often tough to damp, and had to be artificially dried.
Killing frosts arrived in much of the western side of the province on the morning of September 22nd and much of the rest province saw frost on September 27th.
Some crop injury is expected in green canola and soybeans, but damage is expected to be relatively light.
Unharvested cereals have seen some bleaching and staining from recent wet weather, especially where they lie in swath.
Wheat moisture ranged from 15 to 17%, while straight-cut oats had moisture levels between 13 to 15%.
Wheat yield averages are reported between 60 to 70 bu/acre across the province, but higher near Swan Valley and Roblin, between 75 to 90 bu/acre.
Barley yield averages are reported between 50 to 100 bu/acre, varying widely by seeding date and rainfall.
Oat yield averages are reported between 120 to 130 bu/acre, with some regional differences.
Quality downgrades are expected in the northern parts of the Eastern, Southwest and Interlake regions.
Some soybean crops may be harvested ahead of some cereals and canola this year as farms wait for grain moisture content to drop in those crops.
Corn development has reached R5 (dent) stage, with the milk line moving down the kernel, and black layer starting to form, depending on hybrid.
Light frosts crisped upper leaves in corn crops; no grain damaged noticed in the Central region.
Seed moisture is generally between 30 to 40%.
Meantime, seeding winter wheat has started, primarily on canola stubble.
Seedbed conditions are good, and recent rains have promoted good emergence and growth.
The full coverage MASC deadline for winter cereal seeding passed on September 25, and extended seeding deadline is approaching on September 30.
In South America, soybean production in Argentina is expected to reach 48 million tonnes in 2022/23, the Buenos Aires grains exchange said on Wednesday.
The 15.5% increase over the 2021/22 crop, would come on the back of a larger planted area and at the expense of other crops, such as corn, the exchange said.
The soy area, indeed, is expected to rise by 400,000 hectares to 16.7 million hectares in 2022/23, while local corn area is seen falling to 7.5 million from 7.7 million hectares.
Local corn output, on the other hand, is expected to drop to 50 million tonnes from 52 million, while wheat production is set to fall 21.9% to 17.5 million tonnes as the country is experiencing a severe drought.
In Brazil, meantime, soybean processors have temporarily halted units as crushing margins turned negative, reflecting weak domestic demand for biodiesel and high vegetable oil inventories.
In Europe, grains market, and wheat in particular, surged facing with palpable fears in the Black Sea zone.
The referendums organized in the Ukrainian regions in the hands of the separatists and the sabotage of the Nord Stream 1 and 2 gas pipelines have indeed further intensified the tensions in the region.
The mobilization of part of the Russian population, including farmers, also raises concerns about the next campaign.
Thus, wheat price on Euronext, is back to levels equivalent to last July’s high with the December deadline moved above €350/t.
In corn, prices for the November 2022 delivery are back to flirting with the level of €340/t during this harvest period.
However, the increases both in corn and rapeseed were slowed down by a sharp rebound in the eurodollar parity and still marked fears of recession and contraction in demand.
Fears about consumption, indeed, remain a serious element to monitor in the face of rising prices.
Energy allocation is a major issue in Europe with many countries cutting up to 20pc of supply.
This is reducing crush capacity in some plants which, given the lack of Ukrainian crush, is tempering any sustained seed rallies.
Meantime, non-commercial market participants extended their net long position in Euronext milling wheat futures and options in the week to Sept. 23, Euronext data showed on Wednesday.
Particularly, non-commercial participants, which include investment funds and financial institutions, increased their net long position to 123,804 contracts from 101,052 a week earlier.
Commercial participants similarly upped their net short position to 147,833 contracts from 120,704 a week earlier.
In Euronext’s rapeseed futures and options, non-commercial market participants lowered their net short position to 26,772 contracts from 27,875 a week earlier.
Commercial participants reduced their net long position in rapeseed to 26,314 contracts from 26,102 a week earlier.
From South Africa, farmers are expected to harvest 6.5% less maize in the 2021/2022 season compared with the previous season, the government’s Crop Estimates Committee (CEC) said on Wednesday.
The CEC’s latest summer crop forecast estimates the 2022 harvest at 15.260 million tonnes, down from the 16.315 million tonnes harvested last season.
The harvest is expected to consist of 7.790 million tonnes of white maize, used for human consumption, and 7.470 million tonnes of yellow maize, used mainly in animal feed.
From the Middle East, Oman has about 400,000 tonnes of wheat in storage, enough reserves to cover six months, Oman Flour Mills’ chief operating officer said on Wednesday.
The last wheat shipment to arrive was two weeks ago, a purchase from Ukraine of about 30,000 tonnes after the U.N.-brokered grain export deal, Ibrahim al-Amri told Reuters on the sidelines of an industry conference in Dubai.
Oman Flour Mills processes about 60% of the country’s total annual imports of 800,000 tonnes.
It exports excess production, mostly to Yemen and East Africa.
From the Black Sea basin, as we said, the much-anticipated pushback on the grain corridor finally hit the wires with Russian President Putin blaming the west for being greedy while Ukrainian President Zelensky indicated the corridor may be in jeopardy.
Additionally, yesterday there was also the massive rumour that Russia was considering nationalising its grain industry.
A Russian single desk.
Lots of questions but the market viewed this as an ultimate restriction of supply.
Ukraine’s grain exports are down 41.5% year-on-year in the 2022/23 season so far at almost 8 million tonnes, but the pace of shipments is increasing gradually, agriculture ministry data showed on Wednesday.
Ukraine continues to ship grain across the Danube to the Romanian Black Sea port of Constanta even after some of its own ports reopened, and the new routes are likely to remain, the deputy chief of freight logistics group TTS said on Wednesday.
Since the war started, the group has transported nearly 1 million tonnes of cargo to and from Ukraine, with grains accounting for just under half of the total.
Ukraine has sent roughly 4.5 million tonnes of grains to Constanta since the war started.
Ministry data showed that exports so far in the July 2022 to June 2023 season included 4.49 million tonnes of corn, 2.78 million tonnes of wheat and 669,000 tonnes of barley.
Ukrainian grain exports were 43.2% smaller season on season on Sept. 21, 48.6% on Sept. 9 and 54.5% on Sept. 2.
In Russia, the country in the 2022/23 season can export from 50 to 60 million tons of grain, said the First Deputy Minister of Agriculture of the Russian Federation Oksana Lut at a meeting of the Agrarian Committee of the State Duma of the Russian Federation.
At a meeting with the President of the Russian Federation, an updated forecast was announced for a grain harvest of 150 million tons, including 100 million tons of wheat, which could be a record in Russian history.
According to previously announced estimates, the Ministry of Agriculture estimated the export potential in the 2022/23 season at 50 million tons of grain, including 39.5 million tons of wheat.
From the Middle Kingdom, Dalian soybean prices bounced on Tuesday with a 1% gain to 5,501 yuan/MT (~ $20.80/bu).
That was also a contract high for the October front month contract and the highest print of the front month since June.
The all-time high for the import quality beans was 6,199 yuan/MT in March ’22.
Meanwhile Dalian soybean oil futures continued lower to 9,440 yuan/MT (~ 59.45 c/lb).
The recent extreme was a 7/14 low at 8,656 yuan and a 9/02 high at 10,680 yuan.
Malaysian palm oil futures posted a new low for the year.
Meantime, China has been quiet in corn.
Export sales are not expected to hit the 906,000t weekly pace needed to hit the USDA target.
The impacts of a zero Covid policy have been blamed but it is interesting to note that domestic hog futures price has nearly doubled since making the March lows.
From South East Asia, India’s federal cabinet has extended its free food programme for the poor by another three months, a minister said on Wednesday.
India has spent about $43 billion since April 2020 on the programme known as ‘Pradhan Mantri Garib Kalyan Anna Yojana’ which gives poor families 5 kg of foodgrain a month.
In Indonesia, the country plans to set its crude palm oil reference price at $792.19 per tonne for the Oct. 1-15 period, deputy coordinating economic minister Musdhalifah Machmud said on Wednesday, down from the $846.32 per tonne for Sept. 16-30.
The planned new price will place export tax for palm oil at $33 per tonne.
From Australia, Aussie operators are suffering under quality uncertainty given the excessive rainfall which has kept both the bid and the offer quiet.
The collapsing protein outlook for Australia’s wheat, has domestic and export buyers of new crop largely sitting out of the market as harvest cranks up.
It is already under way for wheat in Central Queensland (CQ) and canola in Western Australia’s Geraldton zone, and volume wheat and barley is expected to hit the bins in Queensland from mid-October.
However, a proliferation of wheat cargoes on nearby export stems indicates demand is hot for Australian wheat, helped by the weaker Australian dollar, but offset by recessionary concerns in many global economies.
While growers and traders are aware the La Niña event could well slow harvest and haulage, big stocks in New South Wales and WA are providing a buffer for consumers and exporters.
Meantime, local markets gained more strength yesterday with both new and current crop values stronger over the course of the day.
Wheat values were up $5-6/t through grower bids, quality wheat bids are running harder than feed wheat still, given the uncertainty around weather and up and coming harvest.
It will be be same old story for the next month it feels.
Viterra held its remainder export capacity auction this week, and reported records were broken.
Across the 6 ports in South Australia 18 exporters have forward booked 7 million tonnes of shipping capacity for the 22/23 season.
Average wait times for vessel loading improved at Geraldton, to 6 days, Kwinana, 17 and Port Kembla, 17 from (19, 25 and 29 days) respectively.
Wait times increased for Albany from 16 to 18 days and Brisbane 4 to 10 days.
There were 18 vessels anchored down from 22 last week and 10 loading.
On the international trade scene, the Taiwan Flour Millers’ Association purchased an estimated 51,800 tonnes of United States-sourced milling wheat in a tender that closed on Thursday.
The wheat was bought in one consignment comprising various wheat types for shipment from the U.S. Pacific Northwest coast between Nov. 10 and Nov. 24.
The purchase involved 32,950 tonnes of U.S. dark northern spring wheat of minimum 14.5% protein content, bought at $440.55 a tonne FOB U.S. Pacific Northwest coast.
The purchase also involved 13,050 tonnes of hard red winter wheat of minimum 12.5% protein content, bought at $456.35 a tonne FOB, and 5,800 tonnes of soft white wheat of maximum 9.5% protein content, bought at $374.04 a tonne FOB.
The consignment has an additional freight charge of $41.24 a tonne for ocean shipping from the U.S. Pacific Northwest coast to Taiwan.
The seller of all the wheat was said to be trading house CHS.
In its previous reported tender on Sept. 8, the association purchased an estimated 55,375 tonnes of milling wheat, also to be sourced from the United States.
The Korea Feed Association (KFA) has issued an international tender to purchase up to 69,000 tonnes of animal feed corn to be sourced from optional origins.
The deadline for submission of price offers in the tender is today Thursday, Sept. 29, with corn arrival in South Korea sought in January 2023.
Iraq’s state grains buyer has issued tenders to buy a nominal 50,000 tonnes of milling wheat.
The deadline for submission of price offers in the tenders is Oct. 10.
The wheat can be sourced from optional origins but Russian wheat cannot be offered.
Volumes in Iraq’s tenders are nominal and the country often buys more than sought in the tender.
Iraq’s Trade ministry had said on Sept. 19, the country would announce an international tender seeking 300,000 tonnes of wheat from various origins in coming days.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
