Good morning Farmer Family …
The escalation in conflict between Russia and Ucraine over the weekend, generated new concerns about availability of Black Sea shipments.
That caused wheat prices to jump substantially higher yesterday.
Chicago SRW wheat price, indeed, got to within a half of a penny of their daily 70 cent limit, then prices backed off during the afternoon, but the board still closed 6.56% higher on the day and above the $9/bu mark.
Kansas City HRW wheat price ended the day with 5.73% gains, closing to above the $10/bu mark.
Minneapolis spring wheat price closed 4.78% higher, and prices are now +$10/bu through Sep ’23.
Prices soared after Russia launched multiple missiles on targets in Kyiv and other Ukrainian cities in response to destroyed a bridge linking Russia and Crimea, and now operators doubt that the export deal will be renewed in November.
Before this escalation UN Secretary-General Antonio Guterres and his team were working to expand and extend the agreement for a year.
In this context, other grains followed suit too.
Corn captured double-digit gains as was up 2.2%, while soybeans firmed more then 0.5% higher.
Meal prices ended the day 1.25% higher.
Bean oil prices turned red and closed on 0.81% losses.
The focus in the soybean market is indeed shifting to South America as the U.S. harvest progresses.
Due to the Columbus day, Export Inspections data, and Crop Progress data covering the week through October 9, will be released tomorrow afternoon and night respectively.
Thanks to mostly favorable weather across the central U.S. this past week, USDA is likely to show solid harvest progress.
In this context, corn basis bids were mostly steady across the central U.S., but did tilt 5 cents higher at an Illinois processor while trending 4 to 13 cents lower at two other Midwestern locations.
Soybean basis bids were steady to weak across the central U.S. after trending as much as 15 cents lower at an Illinois river terminal land falling 2 to 10 cents at four other Midwestern locations.
Commodity funds were net buyers of CBOT corn, soybean, wheat and soymeal futures contracts on Monday, traders said. They were net sellers in soyoil futures.
On this morning, Chicago wheat prices slid, retreating from a three-month high scaled in the previous session, although concerns over Black Sea supplies provided a floor under the market.
Corn and soybeans rose for a third consecutive session.
Particularly, the Chicago Board of Trade most-active wheat contract lost 0.8% to $9.31 a bushel, as of 02:47 GMT.
Corn added 0.1% to $6.99 a bushel and soybeans gained 0.3% to $13.78 a bushel.
Investors are taking positions ahead of the U.S. Department of Agriculture’s (USDA) monthly World Agricultural Supply and Demand Estimates and Crop Production reports due on Wednesday.
Markets are worried that the USDA may raise soybean yield or acres in the report, as they have in past years, while some analysts anticipate a downward revision in corn production.
In energy markets, oil slid more than 1% on Tuesday, extending losses of nearly 2% in the previous session, as recession fears and a flare-up in COVID-19 cases in China raised concern over global demand.
World Bank President David Malpass and International Monetary Fund Managing Director Kristalina Georgieva warned on Monday of a growing risk of global recession and said that inflation remains a continuing problem.
Oil also came under pressure from a strong dollar, which hit multi-year highs on worries about increases to interest rates and escalation of the Ukraine war.
Thus, Brent crude fell $1.41, or 1.5%, to $94.78 a barrel by 08:20 GMT.
U.S. West Texas Intermediate crude dropped $1.54, or 1.7%, to $89.58.
In ocean freight markets, the Baltic Exchange’s main sea freight index fell on Monday, pressured by a dip in the capesize and panamax vessel segments.
The overall index, indeed, was down 17 points, or 0.9%, at 1,944.
Paricularly, the capesize index lost 55 points, or 2.3%, at 2,341.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel making ingredient iron ore used in construction, was down $456 at $19,418.
The panamax index snapped a four-session winning streak and fell by 7 points, or 0.3%, to 2,228.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, was down $68 at $20,048.
The supramax index rose for the fifth straight session, adding 8 points to 1,714.
In equity markets, yesterday Wall Street has been roiled by worries over stubbornly hot inflation.
Qualcomm Inc. lost 5.2% and Broadcom Inc. dropped 5%.
Applied Materials shed 4.1% while Lam Research Corp. declined 6.4%.
In this context, the benchmark S&P 500 fell 0.7%, closing at 3,612.39 and extending its losing streak to a fourth day.
The Dow Jones Industrial Average lost 0.3% to 29,202.88 and the Nasdaq composite fell 1% to 10,542.10.
The Russell 2000 fell 0.6% to 1,691.92.
U.S. bond trading was closed.
Investors will potentially get a more detailed picture of the Fed’s thinking on Wednesday when the central bank releases minutes from its latest policy meeting.
Wall Street will also get important updates on inflation and more insight into how that is impacting retail sales.
The closely watched report on consumer prices will be released on Thursday and a report on retail sales is due Friday.
On this morning, Asian shares were mostly lower, as losses in technology-related shares weighed on global benchmarks.
Taiwan dropped 4% after reopening from a holiday in the first trading session since the U.S. imposed new limits on exports of semiconductors and chip-making equipment to China.
TMSC, the world’s biggest chipmaker, plunged 7.8%.
Japan’s Nikkei 225 declined 2.5% in morning trading to 26,439.97. South Korea’s Kospi lost 2.2% to 2,184.87.
Both markets also were reopening after holidays on Monday.
Hong Kong’s Hang Seng dropped 1.4% to 16,984.41.
The Shanghai Composite gained 0.4% to 2,986.11, while Australia’s S&P/ASX 200 edged 0.1% higher to 6,671.90.
In China, technology shares were hit by renewed selling after steep losses on Monday.
Chip equipment maker Naura Technology sank 10% and Hwatsing Technology dropped 9.6%.
In currency trading, the U.S. dollar slipped to 145.73 Japanese yen from 145.75 yen.
The euro cost 96.84 cents, down from 97.04 cents.
From South America, Argentina’s BAGE reported 13% of the 2023 early corn crop was in the ground, trailing last year’s 24% pace.
Brazilian soybeans were 9.6% planted according to AgRural, slightly behind last year’s pace.
“Erratic weather” is keeping some equipment out of fields, according to the country’s Agrural consultancy.
“Constant rains and high humidity continue to predominate in Parana, Santa Catarina and Mato Grosso do Sul states, preventing further advances of the machines,” Agrural noted in a statement.
Most experts are still predicting a record-breaking effort this season.
In Europe prices soared too yesterday.
Geopolitics factors therefore remains the key driver in our markets, which disrupts any fundamental analysis.
Thus in spite demand on the physical market is currently very sluggish, resulting in a deterioration of the bases, futures sharply soared.
Wheat price jumped by 16.25 €/ton to close at €364.25/t.
Corn rose €10.25/ton closing at 346.75/t.
Rapeseed prices gained €13/ton ending to €642.5/t.
From a meteorological point of view, sowing conditions in France are favourable.
However, the shortage of fuel is starting to pose problems on farms in France, at a time when the needs are high to carry out sowing work.
Deliveries indeed are often limited to 2,000 l, which remains insufficient given current needs.
Meantime, France’s farm ministry on Tuesday trimmed its forecast for the country’s 2022 grain maize production, excluding crop grown for seeds, to 11.15 million tonnes from 11.33 million projected last month.
The drought-affected harvest was now seen 26.6% lower than last year’s bumper crop and 18.4% below the average of the past five years, the ministry said in a report.
The ministry’s new crop forecast was based on a projected yield of 8.18 tonnes per hectare (t/ha), down from 8.44 t/ha estimated last month.
The harvested area was pegged at 1.36 million hectares by the ministry.
For soft wheat, the ministry cut its estimate of the summer harvest to 33.69 million tonnes from 34.12 million expected last month.
The revised estimate was down 4.8% from last year and 3.6% under the five-year mean.
From Russia, Russian wheat prices rose slightly last week.
A weakening of the rouble against the dollar and limited supply offers from the domestic market, pushed prices higher.
Farmers prefer to sell feed wheat and gradually increase offers.
In this context, according to the IKAR, Russian prices for wheat with 12.5% protein content and for supply from Black Sea ports were at $327 per tonne free on board (FOB) at the end of last week, up $2 from a week earlier.
According to Sovecon, wheat prices for immediate delivery was at $324-328 per tonne compared to $318-322 a week ago.
Price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 12,625 rbls/t ($202.7) +75 rbls (Sovecon).
Price for sunflower seeds was at 22,100 rbls/t -400 rbls (Sovecon). Price for domestic sunflower oil was at 73,325 rbls/t unchanged (Sovecon).
Price for domestic soybeans was at 30,675 rbls/t -1,000 rbls (Sovecon).
Export price for sunflower oil was at $1,240/t +$20 (Sovecon).
Export price for sunflower oil was at $1,130/t +$50 (IKAR).
Price for white sugar, Russia’s south, was at $871.4/t -$78 (IKAR).
Farmers have sped up winter grain sowing last week, planting around 11.6 million hectares.
That was however down from 12.3 million hectares at the same date a year ago.
Meantime, Russia kept grain exports steady at 900,000 tonnes last week, according to port data.
($1 = 62.3000 roubles).
From the Middle Kingdom, Dalian Corn Prices were 1.4% higher after their holiday break to 2,821 yuan/MT (~ $10.17/bu).
The Dalian No2 Soybean Prices traded higher, ending a net 0.05% in the black to 5,575 yuan/MT (~ $21.21/bu).
Their domestic No.1 Soybeans had gapped lower to start, but rallied back for a net 0.05% loss on the day to 5,964 yuan/MT (~ $22.63/bu).
China announced their corn import TRQ as 7.2 MMT – unchanged from last year.
As for wheat, China announced their 2023 wheat TRQ as 9.366 MMT – which is unchanged from this year.
The Chinese yuan traded weaker against the dollar on Monday, with a 0.54% stronger quote of 13.975 cents/yuan.
On 9/28 the yuan was at the weakest mark relative to the dollar since at least 2010.
From Australia, after a sluggish start to the week the local markets close yesterday remained wide bid offer spread amid still plenty of uncertainty.
Offshore markets started to rally late in the day, and the dollar softened, but neither bid nor offer side was willing to meet.
Today will be interesting to see what moves are passed through into the market and if we see more liquidity pick up.
WaterNSW reported Burrendong Dam was 139.3 per cent capacity and rising.
Releases from Burrendong Dam were around 30,000ML/day, as at 5am Sunday.
The BOM has released its long-range forecast for Australia’s upcoming severe weather season outlook warning October to April increased risk of widespread flooding for eastern and northern Australia and an increased risk of an above-average number of tropical cyclones and tropical lows.
Widespread rains in Australia’s eastern grain producing states is likely to hit the quality of the wheat crop which is scheduled to be harvested at the end of the year.
Wheat quality downgrades in Australia are set to deepen concerns over global food supplies.
“Nearly half the wheat crop, or around 6-7 million tonnes, is at risk of quality downgrades in NSW ,” said Ole Houe, director of advisory services at agriculture brokerage IKON Commodities in Sydney.
“We could end up having large volumes of feed quality wheat on the east coast.”
On the international trade scene, Turkey’s state grain board TMO started buying animal feed barley in an international tender on Tuesday, with about 225,000 tonnes bought initially.
The tender sought a total 495,000 tonnes and more is expected to be purchased later on Tuesday.
Purchases in TMO’s tenders are provisional, subject to final confirmation in the coming days and can be cancelled completely.
Supplies already in warehouses in Turkey can be offered in the tender.
The tender sought shipment in two periods – Oct. 21 to Nov. 15 and Nov. 25 to Dec. 20 – to a series of Turkish ports.
Purchases were made in dollars per tonne c&f with port of delivery or price ex-warehouse.
Particularly, for shipment between Oct. 21-Nov. 15, Viterra offered, C&F Iskenderun, 50,000t at $327.40.
Viterra, also offered 25,000t at $334.90, warehouse Mersin.
Grainflower offered 25,000 t, C&F Derince, at $327.00.
Aston offered, C&F Tekirdag, 25,000 at $323.90.
Viterra offered, C&F Izmir, 50,000t at $329.80.
Nibulon offered, warehouse Bandırma, 25,000t at $326.80.
MKM offered, C&F Samsun, 25,000t at $321.90.
Taiwan’s MFIG purchasing group has issued an international tender to buy up to 65,000 tonnes of animal feed corn which can be sourced from the United States, Brazil, Argentina or South Africa.
The deadline for submission of price offers in the tender is Wednesday, Oct. 12.
Price offers are being sought for one consignment of yellow corn at a premium over the Chicago March 2023 corn contract CH3.
Shipment is sought between Dec. 5 and Dec. 24, 2022, if the corn is sourced from the U.S. Gulf, Brazil or Argentina.
If sourced from the U.S. Pacific Northwest coast or South Africa, shipment is sought between Dec. 20, 2022, and Jan. 8, 2023.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
