Good morning Farmer Family …
US farm markets were mixed but mostly higher yesterday.
The wheat complex saw the biggest gains as, Chicago SRW was 1.13% stronger, Kansas City HRW rose 1.26%, and Minneapolis spring wheat gained 1.27%.
Corn also moved moderately higher, capturing gains of around 0.7%.
Soybeans failed to follow suit, easing 0.02% lower.
Soymeal prices closed 0.8% weaker.
Bean oil, in contrast, traded 1.28% higher by the close.
Harvest pressure and expectations for bin-busting crops in South America, are putting corn and soybean markets into a dilemma, while worries that a current Black Sea shipping deal won’t be renewed are pushing up wheat prices.
The Weekly Export Sales report will be released this afternoon, as was delayed due to recognition of Indigenous Peoples’ Day (formerly Columbus Day) on Monday.
Analyst expectations range for corn from 300-900k MT.
As for soybean, analysts expect between 600k and 1.4 MMT of soybeans were sold.
Meal bookings range from net 50k MT to 300k MT for both 21/22 and 22/23.
Total bean oil sales are expected between 10k MT of cancelations and 20k MT of net new business.
As for wheat, the trade is looking for sales to range 200,000 to 500,000 MT.
Meantime, USDA announced two private export sales yesterday, with a 264k MT soybean sale to China and a 242k MT sale to unknown destinations.
On the other hand, EIA says US ethanol output averaged 932k barrels per day last week, which was 43k barrels per day more than the prior week.
Stocks were 178k barrels higher to 21.863m barrels.
In this context, corn basis bids were mostly steady to weak after tumbling as much as 25 cents at an Indiana ethanol plant and softening 2 to 5 cents at three other Midwestern locations.
An Iowa ethanol plant bucked the overall trend after tracking 2 cents higher.
Soybean basis bids were mixed after rising 5 to 15 cents higher at four Midwestern facilities while softening 3 to 10 cents lower at two other locations.
Commodity funds were net buyers of CBOT wheat, corn, soybean and soyoil futures, and net even in soymeal futures.
On this morning, on Chicago wheat and corn eased, while soybeans edged higher.
Particularly, the most active wheat contract on the Chicago Board of Trade (CBOT) was down 0.8% at $8.85 a bushel by 09:38 GMT.
CBOT corn ticked down 0.4% to $6.95 a bushel while soybeans edged up 0.2% to $13.98-3/4 a bushel.
A rise in the dollar, weighed on U.S. grain markets.
Investors also wrestled with macroeconomic uncertainty after a higher than expected U.S. inflation reading.
There are hopes of progress in negotiations after a meeting on Thursday between Russian President Vladimir Putin and Turkish counterpart Tayyip Erdogan and as U.N. officials continued consultations over the deal.
The wheat contract has gained around 1% so far this week.
Soybeans and corn have added more than 2% this week.
Wheat climbed, on news that Russia delivered a list of concerns about its Black Sea export corridor deal to the United Nations.
UN officials are due in Moscow on Sunday to discuss the renewal of the agreement.
Corn and soybean were underpinned by expectations of lower U.S. harvests.
Meantime, there is a lower demand outlook for US products, particularly on export side, as the USA will likely face stiff competition with South American crop shipments.
In energy markets, oil prices were stable on Friday as support from a large cut to the OPEC+ supply target and a weaker dollar were countered by global recession fears and weak oil demand in China.
Thus, Brent crude futures were down 31 cents, or 0.3%, at $94.26 a barrel at 0924 GMT while U.S. West Texas Intermediate (WTI) crude futures fell 25 cents, or 0.3%, to $88.86.
The Brent and WTI contracts both were down about 4% over the week, despite settled about 2% higher on Thursday.
Particularly, yesterday Brent crude futures for December delivery rose $2.12 to $94.57 a barrel, a 2.29% gain, while U.S. crude rose $1.84, or 2.1%, to $89.11 per barrel.
Distillate stockpiles, which include diesel and heating oil, fell by 4.9 million barrels in the week ended Oct. 7, the U.S. Energy Information Administration said, far exceeding expectations for a drop of 2 million barrels and bringing inventories to 106.1 million barrels, lowest since May.
That prompted investors to shrug off a surprise 2 million build of gasoline stocks and a larger-than-expected near 10 million barrel rise in crude inventories.
The EIA warned this week that most U.S. households will pay more to heat their homes this winter.
Meantime, the U.S. dollar this week dropped from recent highs, making dollar-denominated commodities cheaper for holders of other currencies.
China, has been fighting COVID flare-ups.
The IEA downgraded its oil demand growth estimates slightly for this year to 1.9 million bpd and by 470,000 bpd in 2023 to 1.7 million bpd.
OPEC on Wednesday cut its outlook for demand growth this year by 460,000 bpd to 2.64 million bpd, citing the resurgence of China’s COVID-19 containment measures and high inflation.
It lowered its 2023 oil demand forecast by 360,000 bpd to 2.34 million bpd.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index fell for the sixth consecutive session on Thursday to mark its worst day since mid-September, as rates slipped across all vessel segments.
The overall index, indeed, fell 55 points, or about 3%, to 1,818.
Particularly, the capesize index fell 105 points, or about 4.8%, to 2,094.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel making ingredient iron ore used in construction, fell $876 to $17,365.
The panamax index lost 59 points, or 2.8%, to a 10-day low of 2,088.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, dropped $527 to $18,796.
The supramax index was down 12 points at 1,696.
In equity markets, on Wall Street, the S&P 500 rose to 3,669.91 after a swing of five percentage points from its lowest point during the day.
The Dow Jones Industrial Average rose 2.8% at 30,038.72.
The Nasdaq composite climbed 2.2% at 10,649.15.
Thursday morning stocks initially tumbled, but stocks recovered from early losses and closed sharply higher as a short-covering in stocks emerged after the 10-year T-note yield fell below 4%.
The 10-year T-note yield soared to a 14-year high of 4.075% after the U.S. Sep core CPI rose more then expected, bolstering expectations for the Fed to raise interest rates by 75 bp at the Nov 1-2 FOMC meeting.
However, with the 75 bp rate hike already priced in, thus the 10-year T-note fell back the rest of the day and finished at 3.96% from 3.90% late Wednesday.
The two-year yield, which moves more on expectations for Fed action, rose to 4.48% from 4.29%, but it crossed above 4.50% earlier in the morning.
U.S. Sep CPI rose +0.4% m/m and +8.2% y/y, stronger than expectations of +0.2% m/m and +8.1% y/y.
Sep CPI ex-food & energy rose +0.6% m/m and +6.6% y/y, stronger than expectations of +0.4% m/m and +6.5% y/y with the +6.6% y/y gain the fastest pace of increase in 40 years.
U.S. weekly initial unemployment claims rose +9,000 to a 6-week high of 228,000, showing a weaker labor market than expectations of 225,000.
Meantime, Asian stock markets surged on Friday.
Japan’s market benchmark soared by an unusually wide margin of 3.4%.
Hong Kong gained 3.3% and Shanghai also rose.
Tokyo’s Nikkei 225 jumped 3.4% to 27,141.18 and the Hang Seng in Hong Kong gained 3.3% to 16,935.67.
The Shanghai Composite Index added 1.7% to 3,067.65 and the Kospi in Seoul rose 2.4% to 2,214.48.
Sydney’s S&P-ASX 200 advanced 1.8% to 6,759.40.
New Zealand and Southeast Asian markets also rose.
In currency trading, the dollar rose to 147.34 yen from Thursday’s 147.17 yen.
The euro gained to 97.92 cents from 97.85 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.
Meanwhile, producers have already sold 68.6% of the 2021/22 corn harvest that reached 59 million tonnes, above the 64.4% sold in the same period for the 2020/21 cycle.
Corn planting for the 22/23 cycle has already begun, with drier weather expected due to the impact of the La Nina weather pattern.
This season’s soy harvest was 44 million tonnes, down from 46 million tonnes in the previous cycle.
Argentine grains producers have sold 69.8% of the 2021/22 soybean harvest so far, the country’s Ministry of Agriculture said on Thursday, just ahead of the 68.4% sales at the same point a year ago even as weekly sales slow.
Between Sept. 29 and Oct. 5, producers sold 375,000 tonnes of soybeans, below the 1.7 million tonnes sold in the previous week when the government had introduced a preferential exchange rate mechanism for soy exporters which ended on September 30.
Meantime, Argentina’s two major grains exchanges cut their forecasts for the upcoming wheat harvest on Thursday as drought and low temperatures hit the crop, with little relief in sight for key farming regions and scant rains forecast in weeks ahead.
The Rosario grains exchange, pegged the 2022/23 wheat harvest at 16 million tonnes.
That is a 500,000-tonne cut from the entity’s previous formal forecast.
A separate 2022/23 wheat crop estimate also issued on Thursday, from the Buenos Aires grains exchange, forecast a harvest of 16.5 million tonnes, down from the exchange’s prior forecast of 17.5 million tonnes.
Meantime, the country’s producers have already formally declared overseas sales of 2022/23 wheat of 8.85 million tonnes, official data show.
Domestic wheat consumption from the 2021/22 harvest totaled 7.6 million tonnes, government data show.
There is an existing export cap of 10 million tonnes for the season’s wheat harvest.
In Europe, grain prices have found their way back up against a backdrop of renewed tension in the Black Sea.
Farmers are also concerned that fuel shortages resulting from oil refinery strikes in France could disrupt sowing and harvesting.
Farm office FranceAgriMer slightly increased its forecast for French soft wheat exports outside the European Union in 2022/23, but said the war in Ukraine made the outlook uncertain.
In Germany, a busy programme of ship export loadings in German ports continued to underpin premiums, but in thin trade.
Sellers of standard 12% protein wheat for October delivery in Hamburg were seeking a premium of about 14 euros over the Euronext December contract against 9 euros over last week.
Rapeseed, on the other hand, evolved in a dispersed order, despite the revival of the soybean complex and crude oil prices.
Meantime, French farmers have almost finished harvesting this year’s drought-affected maize crop and are making swift progress in sowing winter wheat and barley, data from farm office FranceAgriMer showed on Friday.
Farmers had gathered 83% of this year’s grain maize crop by Oct. 10, compared with 67% a week earlier and only 14% in the same week last year, FranceAgriMer said in a cereal report.
The harvest remained 28 days ahead of last year’s pace and 18 days ahead of the five-year average, it said.
Analysts expects a smallest French maize harvest in three decades.
Meantime, soft wheat sowing for next year’s harvest accelerated, with 21% of the expected area drilled by Monday, compared with 3% a week earlier and 11% a year ago, FranceAgriMer said.
For winter barley, 37% of the expected crop area had been sown, compared with 8% a week earlier and 22% a year ago.
Meantime, the Czech Republic’s 2022 grain harvest was seen at 7.56 million tonnes in September, above July estimates, data from the Czech Statistics Bureau (CSU) showed on Friday.
Last year, the grain harvest totalled 7.22 million tones.
From Russia, “the Russia Geneva U.N. ambassador warned Moscow submitted concerns to the United Nations over the Black Sea safe passage agreement and may not renew the deal next month unless demands are met.”
Meantime, the Union of Grain Exporters of Russia offers to keep export quota on grain at 25 mln tonnes this season, while the government is considering the possibility of cancelling the quota in 2022/23 MY.
As noted, the Union of the Exporters prefers the compromise solution so that this season’s quota is not restrictive, but remains a limiting measure.
“We think that 25 mln tonnes without division into crops could be a compromise” – said the Union.
According to the Bureau of National Statistics of the Agency for Strategic Planning and Reforms of the Republic of Kazakhstan, as of October 1, the stocks of grains and pulses totaled 18.543 mln tonnes, up by 11.407 mln tonnes compared to the previous month.
By the beginning of October, the total stocks of Kazakh wheat were estimated at 15.09 mln tonnes, including 13.76 mln tonnes of milling wheat, 817.5 thsd tonnes of wheat for seeds, 2.05 mln tonnes of feed wheat.
Also, as of October 1, the stocks of barley totaled 2.32 mln tonnes, rye – 39.5 thsd tonnes, oats – 215.4 thsd tonnes, corn – 202.6 thsd tonnes, rice – 276 thsd tonnes, buckwheat – 62.2 thsd tonnes, millet – 20.9 thsd tonnes.
Meantime, Kazakh grain exporters are facing the shortage of grain wagons, which leads to disruption of contracts for shipment of grain and entails fines.
Consequentially, the request to First Deputy Prime Minister Roman Sklyar to completely cancel fines against shippers of grain and its byproducts for non-fulfillment of the transportation plan and downtime of wagons on stations and other railway tracks, caused by untimely provision of maneuver and main locomotives by KTZ.
From South East Asia, India’s palm oil imports in September jumped to their highest in a year, boosted by strong demand ahead of the peak festival season and a steep discount to rival oils, a leading trade body said on Thursday.
From Australia, weather seems to be the big driver of sentiment on the east coast today.
The entire east coast is experiencing some level of flood impact with minimal reprieve on the way, according to the 14-day forecast.
Limited liquidity was seen on all commodities as the ASX continued its rally to A$483/t.
Domestic truck freight rates have reportedly taken as sharp bounce in southern Queensland as demand builds.
With recent weather events, there is the potential for harvest to be running at the same time in both the north and south of the country.
This will add additional pressure to logistics and long haul availability.
On the international trade scene, the Philippines issued a tender to purchase 165.000t of animal feed wheat from optional origins that closed yesterday.
The grain is comprised of three consignments that will be shipped in January, February and March.
Iraq’s state grains buyer is believed to have cancelled an international tender to buy at least 50,000 tonnes of wheat with no purchase made.
The lowest price offer submitted in the tender was believed to be for wheat to be sourced from Ukraine, traders said on Oct. 5.
There was uncertainty about a wide range of cheap origins which Iraq has not been a major importer from in the past.
Russian wheat was excluded from the tender.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
