Good morning Farmer Family …
U.S. farm markets were mixed again, yesterday.
Corn and soybean prices closed higher, with each crop enjoying gains by around 0.35% and 0.7% respectively.
The spillover strength from a broad set of other commodities and stocks tied to easing concerns about the global economy, supported markets.
Soymeal prices, in contrast, were 0.94% in the red on the day, leading the Dec contract to just $1.50 above the $400/ton mark.
Soy oil prices went home 2.65% higher, meantime.
Wheat prices didn’t follow suit, with most contracts facing moderate declines.
Particularly, Chicago SRW wheat prices were down by 0.99%.
Spring wheat prices were also mostly lower by the bell, with losses of as much as 0.38%.
Kansas City wheat prices faded by the close, but posted substantially an unchenged from the previus session.
The dollar index retreated from two-decade highs set last week, softening after Australia’s central bank surprised investors with a smaller-than-expected interest rate hike.
The move calmed fears that higher rates globally would trigger a recession that could dent demand for commodities.
Strength in crude oil helped lift grain prices, given corn’s role as the main U.S. feedstock for ethanol fuel and soyoil’s use in biodiesel.
Seasonal pressure due to corn and soybean harvesting, has capped gains, although traders are awaiting more information about the size of U.S. crops.
After the sessions close, indeed, StoneX raised its estimate of the average U.S. corn yield to 173.9 bushels per acre (bpa), from 173.2 previously, but lowered its corn production estimate to 14.056 billion bushels, from 14.168 billion last month.
For soybeans, StoneX cut its forecast of the U.S. yield to 51.3 bpa, from 51.8 previously, and lowered its soy production estimate to 4.442 billion bushels, from 4.515 billion.
As for the wheat complex, operators continued to monitor tensions between Russia and Ukraine.
Meantime, Chicago soft red winter wheat closed lower on technical selling and profit-taking after the contract touched last week, its two-month high.
Kansas City hard red winter wheat ended flat, underpinned by worries about dry conditions in the Plains hard wheat belt, while sown is under way.
Scattered showers are likely across a solid percentage of the Corn Belt between today and Saturday, but few areas can expect to see much more than 0.25” during this time, according to NOAA.
The agency’s new 8-to-14-day outlook predicts drier-than-normal conditions for much of the central U.S. between October 11 and October 17, with seasonally warm weather likely for the western half of the country.
In this context, corn basis bids were mostly steady to weak after dropping 5 to 17 cents lower across three Midwestern locations on Tuesday.
A Nebraska elevator bucked the overall trend after moving 10 cents higher.
Soybean basis bids were steady to mixed, moving as much as 10 cents lower at an Ohio elevator and as much as 10 cents higher at a Nebraska processor.
Commodity funds were net buyers of CBOT soybean, corn and soyoil futures contracts, and net sellers of soymeal and wheat futures.
On this morning, Chicago wheat prices rose.
Soybeans lost ground, while corn ticked higher.
Particularly, the most-active wheat contract on the Chicago Board of Trade was up 1.3% at $9.15 a bushel, as of 02:53 GMT.
Corn rose 0.3% to $6.84-3/4 a bushel and soybeans gave up 0.1% to $13.81-3/4 a bushel.
Grain shipments from Ukraine are slowing down as escalation of war between Russia and Ukraine is hitting cargo movement.
A further impact on exports from the Black Sea region could arrive as winter is coming and this will reduces the pace of shipments of course.
In energy markets, oil prices were little changed on this morning ahead of a meeting of OPEC+ to discuss a big cut in crude output.
Brent crude, indeed, was up 1 cent at $91.81 a barrel at 06:28 GMT.
U.S. West Texas Intermediate (WTI) crude futures fell 9 cents, or 0.1%, to $86.43 a barrel
Both Brent and WTI, gained more than 3% in the previous session, asBrent climbed $2.94, and WTI rose $2.89 per barrels.
The OPEC+, will meet in Vienna later on Wednesday to discuss output cuts of up to 2 million barrels per day (bpd).
Meantime, U.S. crude oil stocks fell by about 1.8 million barrels for the week ended Sept. 30, according to market sources citing American Petroleum Institute figures on Tuesday.
Thus, capping gains for the day was the stronger dollar.
The United States is pushing OPEC+ producers to avoid making deep cuts.
However, the real impact on supply from a lower output target would be limited as several OPEC+ countries are already pumping well below their existing quotas.
In August, OPEC+, indeed, missed its production target by 3.58 million bpd.
In ocean freight markets, the Baltic Exchange’s main sea freight index jumped to a more than two-month high on Tuesday, propelled by gains across vessel segments, particularly the larger capesizes.
The overall index, indeed, rose 77 points or 4.3% to 1,865 points, its highest since Aug. 1.
Particularly, the capesize index gained 203 points, or about 10%, to also hit an over two-month high of 2,244 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, gained $1,687 to $18,611.
The panamax index was up 28 points, or about 1.3 %, at 2,110 points, a near three-week high.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, were up $246 to $18,987.
The supramax index rose 5 points to 1,668 points.
In equity markets, US stocks on Tuesday rallied sharply for a second day.
Global stock and bond markets rallied too after the Reserve Bank of Australia raised interest rates less than expected, which bolstered hopes that aggressive interest rate hikes by the world’s central banks may be nearing the end.
Australia’s central bank, the Reserve Bank of Australia (RBA), indeed, raised its cash rate target by +25 bp to 2.60%, less than expectations of a +50 bp rate hike.
As a result, the 10-year T-note yield fell to a 1-1/2 week low today at 3.558%.
Stock indexes extended their gains after economic news showed Aug JOLTS job openings fell more than expected.
U.S. Aug JOLTS job openings, indeed, fell -1,186,000 to a 14-month low of 10.053 million, showing a weaker labor market than expectations of 11.088 million
That bolstered hopes the Fed may be close to ending aggressive rate hikes.
A rally in travel and leisure stocks lifted the overall market.
Also, E-commerce stocks surged Tuesday on M&A activity after South Korea’s Naver agreed to Poshmark in a deal worth $1.2 billion.
In addition, Twitter surged 22% after Tesla CEO Musk said he plans to proceed with his proposal to buy Twitter for $54.20 a share.
In this context, on Wall Street, the Dow Jones Industrial Average climbed more 2.8% to 30,316.32.
The S&P 500 surged 3.1% to 3,790.93.
The Nasdaq composite climbed 3.3% to 11,176.41.
Small company stocks also made solid gains, lifting the Russell 2000 advanced 3.9% to 1,775.77.
Meantime, Hong Kong’s share benchmark soared more than 6% on Wednesday as Asian shares tracked gains on Wall Street.
New Zealand’s share benchmark rose 0.8% after its central bank hiked its benchmark interest rate to 3.5%, saying inflation remained too high and labor scarce.
The half-point rate hike was the fifth in a row made by the Reserve Bank of New Zealand since February.
Statistics New Zealand said inflation was running at 7.3% and unemployment at 3.3%.
The rate hike came on the same day the government announced its finances were in better shape than forecast.
The Hang Seng in Hong Kong rose 6.0% to 18,108.69, catching up with gains elsewhere as markets reopened following a holiday Tuesday.
Markets in mainland China remained closed for a holiday.
Japan’s benchmark Nikkei 225 added 0.5% to 27,138.99.
Australia’s S&P/ASX 200 climbed 1.7% to 6,815.70.
South Korea’s Kospi gained 0.4% to 2,217.88.
Analysts said the latest data on South Korea’s inflation may push the Bank of Korea to raise interest rates at its meeting set for next week, but such hikes were expected to slow in pace as inflation is brought under control.
In currency trading, the U.S. dollar rose to 144.19 from 144.12 Japanese yen. The euro cost 99.69 cents, down from 99.87 cents.
From South America, a recent fall in fertilizer prices while soybean quotes remain high has favored Brazilian farmers and even enticed them to buy crop nutrients for the 2023/2024 cycle, which is one year away, an Agrinvest analyst said on Tuesday.
In April, farmers needed the equivalent of 20.4 bags of soybeans to buy 1 tonne of a fertilizer known as SSP.
That ratio has dropped to 10 bags now.
“There has been a big price reduction and this encouraged some purchases for the 2023/2024 crop,” the analyst said.
In the 30 days through the end of September, the price of KCl, MAP and urea fertilizers fell respectively by 13%, 12% and 7% on a cost-and-freight (CFR) basis.
The current drop in price also favors purchase of fertilizers by Brazilian growers of second corn, which is planted after soybeans are harvested in the same areas.
Brazil is a heavy importer of fertilizer.
In spite of Western sanctions on key suppliers like Russia and Belarus, Brazilian imports reached a new record high in the nine months through September.
According to government trade data compiled by Agrinvest, Brazil imported some 30.77 million tonnes of fertilizer in the period, an increase of 4.6% compared with the first nine months of 2021.
Argentina’s grain belt is amid its driest calendar year in nearly a decade and forecasts are keeping that trend around for the next three months, when the country’s corn and soybeans may need rain the most.
According to its agriculture ministry, Argentina’s corn crop was 12% planted as of last Thursday, the slowest for the date in at least five years.
But past data suggests corn yields are not negatively affected by planting delays, which are never historically large, anyway.
The same is true for soybean yields and planting pace, which will not accelerate until November.
However, dryness during the sowing period can reduce overall area, as was likely the case for the current Argentine wheat crop.
Farmers in Argentina are expected to favor planting soybeans over corn this year due to better profit potential, but well below normal soil moisture and a dry outlook could threaten those plans.
Weather models on Tuesday showed some rain chances for key areas over the next two weeks.
But Argentina’s grain belt would still have only a third of this month’s average precipitation by Oct. 19.
In Europe, grain markets did not change much yesterday, while oilseeds, and rapeseed in particular, rose sharply, reaching a high since 15 August, ahead of the winter season, in a context of increased demand for biodiesel.
Exports of wheat from the EU stood at 9.15 Mt on 2 October, compared with 9.48 Mt last year.
France remains the main European exporter with 3.39 Mt followed by Romania with 1.44 Mt exported.
Algeria and Morocco are the main destinations.
EU barley exports are even further behind last year’s pace, with 2.11 million tonnes over the same period.
Meantime, EU corn imports during the 2022/23 marketing year are more than doubling last year’s pace so far, with 7.37 MMT since the beginning of July.
Rapeseed imports into the EU also rose to 1.65 Mt from 1.18 Mt last year.
European Union soybean imports during the 2022/23 marketing year, in contrast, reached 2.9 MMT through October 2.
That is 10% below year-ago results so far.
EU soymeal imports are also trending slightly below last year’s pace after reaching 3.89 million metric tons.
From North Africa, the price of wheat and flour used to make unsubsidised bread has spiked in Egypt, as importers struggle to pay for wheat stuck at ports amid a dollar shortage, according to a Sept. 26 letter from the Federation of Egyptian Industries’ Chamber of Cereals sent to the supply minister.
Around 700,000 tonnes of wheat, indeed, haven’t been released from customs, causing around 80% of mills producing commercially sold bread, pasta, and other goods to “cease activity completely”, .
Since early September, only 2,000-3,000 tonnes of wheat got through customs, the Chamber’s letter said.
Monthly private sector needs are estimated at around 450,000 tonnes, and, according to the Chamber, mills need the immediate release of around 300,000 tonnes.
Private sector imports recently overtook those by the state buyer, which purchases wheat for a large subsidized bread programme.
Thus, Egypt’s importers can no longer replenish their wheat stocks amid a dollar shortage.
That has been caused by a rising import bill, decreasing tourism revenues, and loss of confidence in the Egyptian pound by investors.
In this context, wheat prices rose by around 10% to EGP 9,000 ($458.02) per tonne in the last two weeks,
Some traders reported steeper rises of up to 15%.
Flour also rose by 18% to EGP 11,500 ($585.24) per tonne.
($1 = 19.6500 Egyptian pounds).
From the Black Sea basin, the pace of sowing winter wheat in Ukraine for the 2023 harvest is three times lower than last year’s figures.
Ukraine’s Agriculture Ministry reports that farmers had planted 1.2 million ha of winter grains as of 3 October which is 26pc of the projected area.
This includes 1.1 million ha of wheat (27pc of the planned area) and 96,000 ha of barley (14pc of the projected area).
Winter rapeseed planting is reportedly complete at 989,000 ha.
Local officials and analysts say rains across most of the country and a lack of funds are the main reasons for the delay.
Meantime, Ukraine’s Foreign Minister Dmytro Kuleba has promised that his country will do all it can to send more grain to Africa as he began his African tour this week in Senegal.
On the other hand, according to Russia’s Agriculture Minister Dmitry Patrushev, Russian grain production could increase by 5 million tonnes a year following the annexation of four regions in Ukraine.
Meantime, Russian origin remains the most competitive on the international scene, but with logistical and financial difficulties.
From the Middle Kingdom, according to the USDA attaché in Beijin, China’s MY (marketing year) 2022/23 feed and residual to decrease 1 percent from MY2021/22.
Corn production for MY2022/23 is forecast at 270 MMT (million metric tons), 4 MMT lower than USDA’s official forecast and 2.5 MMT lower than MY2021/22 due to lower planting area and yield losses caused by excessive rains in the northeast.
The Attaché forecasts MY2022/23 corn imports at 18 MMT and estimates MY2021/22 corn imports at 23 MMT, the same as USDA’s official estimate.
Brazil will be eligible to ship corn to China before the end of the calendar year, earlier than previously rumored, following the signing of a phytosanitary protocol.
MY2022/23 rice production is reduced 2 MMT to 147 MMT from attaché’s June estimate, due to the effects of drought and heat on mid and late-season crops.
China’s broken rice imports are forecast down due to India’s export ban and a greater availability of domestic broken rice this season.
From Australia, fixed grade wheat bids firmed slightly yesterday, buyers happy to pay overs for known grades.
Bids to growers otherwise were relatively unchanged.
The market is concerned now about risks for current execution programs given weather forecasts and difficulty getting access to sites.
Most of southern Qld, NSW and Vic are set to receive between 25-100mm.
NSW looks set to receive the higher end of this range over most of the state with isolated pockets forecast to receive up to 150mm which is the last thing needed now for many growers in saturated areas.
On the international trade scene, Algeria’s state grains agency OAIC has issued an international tender to purchase a nominal 50,000 tonnes of durum wheat.
The deadline for submissions of price offers in the tender is Thursday, Oct. 6, with offers having to remain valid until Friday, Oct. 7.
Shipment is sought in three periods between Oct. 16-31, Nov. 1-15 and Nov. 16-30.
Algeria also bought soft milling wheat in an international tender last week.
Tunisia issued international tenders to purchase 150k mt of soft wheat, 100k mt of durum wheat and 100k mt of animal feed barley from optional origins that close today.
The grain is for shipment between November 1 and December 15.
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 97,343 tonnes of food-quality wheat from the United States and Canada in regular tenders that will close on Thursday.
South Korea purchased 65k mt of animal feed wheat, likely sourced from Australia, in a private deal that closed earlier yesterday.
The grain is form shipment in February and March.
Iraq issued a tender to purchase 50k mt of milling wheat from optional origins that closes on this morning.
The country typically buys more than the nominal amount listed, and additional shipping details were not immediately available.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
