Good morning Farmer Family …
US farm markets were lightly mixed yesterday.
Traders have squarred their positions ahead of the highly anticipated quarterly stocks report from USDA, will out this afternoon.
These figures, historically have been cause for market volatility.
Thus, corn prices stayed mostly firm through the session, however ended the day with a 0.15% losse.
Soybean prices closed the session with 0.14% gains, underpinned by a stronger soy oil.
Bean oil price, indeed was 2.99% higher at the bell.
Soybean meal prices weakened by 3.01% meantime.
Wheat prices trended moderately lower.
Chicago, SRW Dec contract went back below the $9 mark, as shedded by 0.77%.
December Kansas City HRW lost 0.95%.
Minneapolis spring wheat ended the day down by 0.67%.
Operators are worried about escalation in Russia-Ukraine war.
Dry conditions in parts of the U.S. Plains could threaten whinter wheat production.
While there is close to zero correlation between pre-dormancy conditions and final yield, the HRW wheat areas are thirsty.
Winter wheat is just over 30pc planted so all the risk is in front of the crop but, according to the USDA drought monitor, 99pc of Kansas is in some kind of drought.
This compares to 49pc this time last year and 97pc last week.
The next foot to drop will be river heights and the probability of barge traffic being affected.
However, this is an ideal harvest weather for spring crops, and this week in much of the U.S. Midwest, analysts expects USDA will show strong harvest progress when updates its crop progress report on Monday.
NOAA’s latest 72-hour cumulative precipitation map shows severe rainfall totals for the Mid-Atlantic and moderate moisture likely for the Rocky Mountain region between Friday and Monday, but the Midwest and Plains are doubtful to see any additional rains during this time.
The agency’s 8-to-14-day outlook predicts more of the same for the central U.S., with seasonally warm, dry weather for the Midwest and Plains between October 6 and October 12.
Meantime, the weekly Export Sales report from USDA had 512k MT of corn was sold for export during the week of 9/22. That was up from 182k MT last week and was 38% above the same week last year. Analyst expectations were for between 250k MT and 800k MT. Mexico was the week’s top buyer. The FAS also recorded 160k MT of 23/24 sales to Mexico.
As for soybean, net sales were 1 MMT in the week of 9/22.
That was 24.7% above the sale from last week and 3% above the same week last year.
China and Mexico were the top buyers with 548k MT and 217k MT respectively.
The week’s exports were 269,200 MT, mostly to Japan and China.
For the products, meal sales were 86,335 MT for 21/22 delivery and 150k MT for 22/23 delivery.
Meal exports were 249.7k MT for a season’s total of 11.5 MMT.
For soybean oil, USDA reported net cancelations of 5k MT for 21/22 and 653 MT for 22/23.
The week’s shipments were 2k MT for a season total of 675.9k MT.
As for wheat, USDA reported 279.8k MT of wheat was booked in the week ended 9/22.
That was 52% above last week and was 4% below the same week last year.
Expectations were for sales between 175k and 500k MT.
Guatemala was the top buyer for the week.
Wheat export shipments were 620k MT for the week for a season total of 7.127 MMT.
Stronger than expected weekly export sales for soybean supported prices, while corn and wheat sales were in line with trade forecasts.
In this context, corn basis bids were steady to mixed after trending 5 to 10 cents higher at three Midwestern facilities while dropping 2 to 25 cents at half a dozen other locations on Thursday.
Soybean basis bids were steady to weak after tumbling 65 cents lower at an Iowa processor and dropping 2 to 25 cents across four other Midwestern locations.
Commodity funds were net buyers of CBOT soyoil and soybean futures contracts, and net sellers of soymeal and wheat futures.
Funds were net neutral on corn futures contracts.
On this morning, Chicago wheat edged higher.
Particularly, the most-active wheat contract on the Chicago Board of Trade was up 0.3% at $8.99-1/2 a bushel, as of 01:36 GMT.
Corn gained ground, up 0.2% to set at $6.71 a bushel.
Soybeans firmed 0.3% to $14.15-1/2 a bushel.
Corn prices are on track to finish September largely unchanged.
Soybeans have lost almost 1% this month.
Wheat, meantime, has risen more than 8% in September, up for a second month in a row.
Howevber, the wheat market is setting to end the third quarter with marginal gains, while corn is climbing 6.7% and soybeans are poised to finish the three-month period ending September in negative territory.
Concerns over supplies from Black Sea region and adverse weather in key exporting countries supported prices.
But prices now have begun to be influenced by growing worries over a global recession.
Global recession, indeed, is a distinct possibility according to 7 out of 10 of the Community of Chief Economists of the World Economic Forum.
In energy markets, oil prices were little changed during Asian trade on Friday, though headed for their first weekly gain in five weeks, underpinned by a weaker U.S. dollar and the possibility that OPEC+ may agree to cut crude output when it meets on Oct. 5.
Thus, Brent crude futures for November, which expire on Friday, inched down 13 cents or 0.15% to $88.36 a barrel by 06:25 GMT, after losing 83 cents in the previous session.
The more active December contract was up 7 cents, or 0.1%, at $87.25.
U.S. West Texas Intermediate (WTI) crude futures for November delivery rose 0.06%, or by 5 cents, to $81.28 a barrel, after falling 92 cents in the previous session.
Both Brent and WTI are on track to rise by about 3% for the week, their first weekly rise since August, after hitting nine-month lows earlier in the week.
For the month of September, Brent is however poised to drop 8.3%, down for a fourth month.
For the third quarter, Brent will likely have plunged 23%, its first quarterly loss since the fourth quarter of 2021.
WTI is set to fall 9.3% in September, also its fourth monthly decline, and to drop 23% during the quarter, the first quarterly slump since the period ending in March 2020 when COVID-19 slammed demand.
The key unknown remains how much demand will drop as global growth slows, although OPEC+, have begun discussing an output cut.
Russia could suggest a cut of up to 1 million barrels per day.
In ocean freight markets, the Baltic Exchange’s main sea freight index, extended its decline for the fourth straight session on Thursday, pressured by falling demand for capesize vessels.
The overall index, indeed, fell 42 points, or about 2.3%, to 1,757.
Particularly, the capesize index fell 153 points, or about 7.3%, to 1,954, its lowest in a week.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore used in construction, were down $1,275 at $16,202.
The supramax index also fell 6 points to 1,674, ending an 11-session wining streak.
The panamax index, in contrast, rose 41 points, or about 2%, to 2,063.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased $366 to $18,567.
In equity markets, US stocks on Thursday closed sharply lower.
Stocks fell on higher T-note yields, which were caused by hawkish Fed comments, record-high inflation in Europe, and stronger-than-expected U.S. economic news.
Particularly, markets slipped after Germany reported September inflation accelerated to 10.9% and Chancellor Olaf Scholz said the world’s fourth-biggest economy faces a “double whammy” as energy prices surge .
As a consequence, the 10-year German bund yield rose +6.1 bp to 2.181%.
Stock markets and the value of the British pound rebounded Wednesday after the Bank of England said it would buy government bonds to support their price.
But markets resumed their slide Thursday after Truss shrugged off criticism and defended her tax-cut plan despite a plea from the International Monetary Fund to reverse course.
Meantime, St. Louis Fed President Bullard said the Fed expects to tighten policy further in the coming months.
It appears that U.S. labor demand is still outpacing supply, and interest rates are still not in restrictive territory.
U.S. weekly initial unemployment claims, indeed, unexpectedly fell -16,000 to a 5-month low of 193,000, showing a stronger labor market than expectations of an increase to 215,000.
U.S. Q2 GDP was left unrevised at -0.6% (q/q annualized).
Also, Q2 personal consumption was revised upward to +2.0% from +1.5%, and the Q2 core PCE deflator was revised upward to +4.7% q/q from 4.4% q/q.
Consequentially, the 10-year T-note yield rose +2.6 bp to 3.757%.
The yield on a two-year U.S. Treasury, or the difference between its market price and the payout at maturity, widened to 4.2% from Wednesday’s 4.14%.
Weakness in technology stocks also weighed on U.S. stock indexes.
Apple closed down by more than -5% after Bank of America Global Research downgraded the stock to neutral from buy.
In this context, the S&P 500 fell 2.1% to 3,640.47.
More 90% of the stocks in the index declined, putting it on track to end September with an 8% loss for the month.
The Dow Jones Industrial Average fell 1.5% to 29,225.61 and the Nasdaq composite lost 2.8% to 10,737.51.
Meantime, Asian stocks sank again on this morning.
In China, surveys of manufacturers by business news magazine Caixin found production and news orders declined.
That was in line with expectations that a Chinese manufacturing boom would fade due to weak global demand.
The Caixin monthly purchasing managers’ index declined from its August level while a separate index by the China Federation of Logistics & Purchasing edged above a break-even point that shows activity increasing.
“The downturn in external demand looks set to deepen,” said Zichun Huang of Capital Economics in a report.
In this context, Shanghai, Tokyo, Hong Kong and Sydney retreated.
Particularly, the Shanghai Composite Index lost 0.2% to 3,034.84.
The Nikkei 225 in Tokyo fell 2.3% to 25,835.54 and the Hang Seng in Hong Kong declined less than 0.1% to 17,154.48.
The Kospi in Seoul lost 0.3% to 2,164.63.
Sydney’s S&P ASX 200 sank 1.2% to 6,479.00 while India’s Sensex opened up 0.3% at 56,596.99.
New Zealand and Southeast Asian markets declined.
In currency trading, the dollar rose to 144.59 yen from Thursday’s 144.43 yen.
The euro rose to 98.07 cents from 97.90 cents.
From South America, Brazil’s Abiove said crushing margins have weakened and turned negative resulting in a reduced daily output.
Several Brazilian soybean processors, indeed, are temporarily ceasing operations after crushing margins turned negative amid weak biodiesel demand and ample soyoil inventories at those sites.
Brazil processes ~202k MT of beans per day under normal circumstances according to Abiove.
Brazil’s Department of Rural Economy (Deral) reports that the state of Paraná has a 2022/23 soybean production potential of around 790 million bushels, which is steady from its prior estimate in August.
Paraná is Brazil’s third-largest soybean production state.
Meantime, Brazil has overtaken the United States as the most competitive shipper of the oilseed to top importer China, the head of rail company Rumo said on Thursday, as Brazil’s cost per tonne in dollars to ship soy to China was lower than that of the United States in the first half of this year.
In Argentina, corn planting is well behind the pace of last year due to a prolonged drought, the Buenos Aires grains exchange said on Thursday, noting that 5.8% of the area expected for the grain had been sown, against 11% last year at the same period.
In Europe, corn and sunflower harvests are progressing, bringing new supplies, but confirming a lower harvest than last year in the mean time.
The dry conditions had a strong impact on the yield.
On this wake, the oilseeds market is experiencing timid progress.
Rapeseed prices on Euronext indeed returned to levels close to those of the beginning of the month although without managing to move above €620/t for the November 2022 deadline at the end of the session.
On the other hand, European grain prices ended slightly down yesterday, mainly under the effect of the rebound in the eurodollar parity.
After a start to the week marked by a new low for the euro/dollar parity, the euro indeed rebounded, and on this morning, went back above 0.98.
However, nervousness remains.
French farmers had gathered 51% of this year’s grain maize crop by Sept. 26, farm office FranceAgriMer said on Friday.
Harvest progress advanced from 26% a week earlier and far exceeds the 2% achieved by the same week last year, the office said in a cereal crop report.
An estimated 41% of maize crops were in good or excellent condition last week, falling from 43% the previous week to a new low in FranceAgriMer data going back to 2011.
The outcome of the drought-diminished maize harvest in France and elsewhere in Europe is being watched closely by the livestock sector, which relies on the grain for animal feed.
Meantime, the escalation of tension in the Black Sea and the risk of a closure of the secure corridor next November, adding more pressure.
In an outcome which would appear unsurprising, the recent vote run by Russia in occupied territory came back with resounding support for Russia.
President Putin will sign agreements on Friday and meet with pro-Russian leaders of Donetsk, Luhansk and the majority of Kherson and Zaporizhzhia.
In fairness, Donetsk and Luhansk have been largely Russian since 2014, however, that hasn’t stopped the West condemning the move.
In response to the annexation, President Zelensky was very clear that any negotiations with President Putin are now off the table.
Adding fuel to the fire, is the finger pointing since NATO announced the damage to both Nord Stream 1 and 2 pipelines was deliberate.
Chances of the export path remaining open in this environment are close to zero.
Meantime, an increase in international tenders was also noted this week, with in particular the Algerian call for tenders for milling wheat for November loading.
The results, however, are important to follow (read more, below) in the face of competition from Russian origins with European origins.
On the other hand, Germany’s coalition government on Thursday agreed not to go through with a controversial levy or surcharge on natural gas consumption, which it was estimated would have cost the country’s chemical industry alone about €4bn/year.
Instead, the government agreed a €200bn package “to brake” the soaring natural gas prices, to be financed through an “economy and stabilisation fund.”
From North Africa, Ali Al-Moselhi, the Egyptian Minister of Supply and Internal Trade said that 3.5 million tons of wheat were imported during the current fiscal year.
In his statements on Tuesday, he explained that the volume of consumption of subsidized bread amounts to 9 million tons of wheat, noting that 4.2 million tons of local wheat have been received, according to the Middle East News Agency.
He pointed out that the strategic reserve of basic commodities is safe and sufficient for several months, noting that the strategic reserve of wheat is sufficient for more than 6 months, and the oil until next May through contracts.
Regarding the Ukrainian wheat shipment that Egypt contracted (63 thousand tons of wheat) before the Russian-Ukrainian crisis, Al-Moselhi explained that the shipment moved from the Ukrainian ports and is on its way to the Egyptian ports.
From Russia, news on Thursday that sanctions-hit VTB Bank has urged President Vladimir Putin to curb the activities of Western grain traders in Russia, has added morre caution about sourcing supplies from Russia and so, about Black Sea grain trade.
Meantime, as of October 5, the export duty on wheat will decrease to 2,119.0 from 2,476.6 rubles per ton a week earlier.
The duty on barley, also will decrease to 1,849.8 rubles from 2,152.6 rubles per ton a week earlier.
Also for corn it will down to 3,295.6 rubles from 3,659.9 rubles a week earlier.
This new duty rates will be in effect through October 11, inclusive.
The duties were calculated based on indicative prices: $308.1 per ton for wheat ($308.2 a week earlier), $282.3 for barley ($281.8), $317.6 for corn ($317.6).
In Ukraine, as of September 30, Ukrainian farmers harvested grains and pulses throughout 6.814 mln ha or 61% of the plan.
Production volume reached 26.1 mln tonnes with an average yield of 3.83 t/ha, the Ministry of Agrarian Policy informed.
Particularly, they harvested:
4.7 mln ha of wheat (99% of plan), crop reached 19.2 mln tonnes so far with yield of 4.1 t/ha;
1.6 mln ha of barley (100%; 5.5 mln tonnes, 3.47 t/ha);
109.4 thsd ha of peas (98%; 250.7 thsd tonnes, 2.29 t/ha);
39.4 thsd ha of corn for grain (0.9%; 152.8 thsd tonnes, 3.87 t/ha);
52.5 thsd ha of buckwheat (45%; 76.7 thsd tonnes, 1.46 t/ha);
32.8 thsd ha of millet (73%; 73.7 thsd tonnes, 2.25 t/ha).
Moreover, farmers harvested 943 thsd ha of sunflower seed area (20%).
Production volume reached 1.565 mln tonnes with the average yield of 1.66 t/ha.
Agrarians reaped 153 thsd ha of soybean.
Production volume reached 375 thsd tonnes of with the yield of 2.45 t/ha.
Rapeseed crop totaled 3.1 mln tonnes harvested from 1.1 mln ha with the yield of 2.88 t/ha.
Meantime, according to APK-Inform, the prices of sunflower meal have been growing in Ukrainian ports (CPT-port) since the beginning of September.
The prices are supported by higher activity of exporters amid improvement of shipments, mainly through unblocked ports of Odesa. Stronger demand from importers pushed the prices up as well.
Over the reporting period, the bid prices of sunflower meal increased by average 35 USD/t to 160-185 USD/t CPT-port as of September 30.
Meantime, rapeseed prices have been declining in the deep-sea ports of Ukraine since mid-September.
The prices were pressured by high number of offers of rapeseed due to bigger crop compared to the last year.
From the Middle Kingdom, China will lower port fees for cargoes by 20% in the fourth quarter of this year to promote stability and smooth flow of industrial and supply chains, the transport ministry said on Friday.
Local governments are also encouraged to offer preferential fees during the COVID-19 prevention and control period, it added.
From Australia, local markets yesterday continued to firm.
As the day went on, and as market prices advanced, most were left largely offer side as bidders got their fill.
Current crop liquidity continued, with Clear Grain Exchange transacting a bit over 9,000t.
Harvest started slowly in Central Queensland and is set to really ramp up leading into the weekend.
Canola harvest has already kicked off in Geraldton zone.
Forecast rainfall of between 20mm and 35mm over the next 8 days is blanketing most of Australia’s growing regions.
Despite early harvest now underway, most is still a long way off.
On the international trade scene, the Korea Feed Association (KFA) purchased about 60,000 tonnes of animal feed corn in a private deal on Friday after previously cancelling an earlier purchase in an international tender.
The corn was believed to have been bought by the KFA’s Busan section from trading house Bunge at an estimated price of $334.88 a tonne c&f based on an estimated premium of 179.64 U.S. cents a bushel c&f over the Chicago December corn contract CZ2 plus a $1.75 a tonne surcharge for additional port unloading.
The corn is expected to be sourced from either South America or South Africa with shipment in the full month of November.
This was below the price of $334.99 a tonne c&f in the KFA’s cancelled tender purchase on Thursday.
An importer group in the Philippines is believed to have bought around 50,000 tonnes of animal feed barley expected to be sourced from Australia in an international tender which closed on Thursday.
The group is believed to have rejected offers and made no purchase of up to 50,000 tonnes of feed wheat also sought in the tender.
Barley price was unavailable.
Shipment was sought in the full months of January, February and March, 2023.
Algeria’s state grains agency OAIC has started purchasing milling wheat in an international tender on Thursday.
The tender was held on an optional-origin basis but reported prices suggested Russian wheat was likely to be supplied.
Some cited a range of $369-$372 a tonne, cost and freight (c&f) included, for prices paid by OAIC while others reported a higher range at $373-$375 a tonne c&f.
The volume initially bought was unclear but was thought to be relatively small.
More detailed assessments are expected later.
The wheat is sought for shipment in two periods from the main supply regions including Europe: Nov. 1-15 and Nov. 16-30.
If sourced from South America or Australia, shipment is one month earlier.
Algeria is usually the largest export market for European Union wheat, with France the main EU supplier.
Russian wheat had been expected to provide competition in the latest tender due to attractive prices.
However, heightened tensions this week surrounding Moscow’s seven-month-old war with Ukraine have revived uncertainty.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
