Good morning Farmer Family …
US farm markets, closed with little changes yesterday.
Corn worked lower, with prices settled by 0.91% in the red.
Soybean prices, were unable to move the needle much in either direction as were up just 0.11%.
Meal price weakened by 0.02% on the day.
Bean oil stayed in the black by +2.36%.
Wheat prices were still more modest as Chicago SRW ended the day 0.15% higher, Kansas City HRW were only fractionally lower by 0.03%, and spring wheat prices closed just 0.1% higher.
Harvest pressure kept corn prices in check.
Soybean rebounded a bit, underpinned by strengths from the soyoil market, after a Russian kamikaze drones hit tanks with sunflower oil at one of the terminals in the Ukrainian port city of Mykolaiv late on Sunday.
Traders in the wheat market closely watched development in the Black Sea region.
Prices rose early in the session as Russia told a United Nations representative that the extension of a Black Sea grain deal was dependent on the West easing restrictions on Russia’s own agricultural and fertilizer exports.
But then the wheat market gave up most of those gains when an U.N. spokesman said officials held “positive and constructive” discussions in Moscow on expanding the deal.
Slow US export sales has been a concern for operators.
The USDA’s weekly inspections data had 448,423 MT of corn shipments for the week that ended 10/13.
That was similar to 457k MT last week, but was down sharply from the 1.05 MMT shipped during the same week last year.
Mexico and China were the top destinations for the week – each with +140k MT.
The MY total shipment reached 3.29 MMT, compared to last season’s 4.17 MMT pace.
As for wheat, exports were at 231,842 MT, tumbling 62% and missing trade expectations.
MYTD wheat exports are now 24,131 MT ahead of last year’s pace with 9.36 MMT shipped.
As for soybean, data showed 1.882 MMT of soybeans were shipped for the week that ended 10/13.
That was almost double the previous week, but lags compared to 2.45 MMT from the same week last year.
China was the top destination with 72% of the total.
USDA had the season’s total as 4.67 MMT through 10/13, compared to 6.035 MMT during last year’s campaign.
The monthly U.S. soybean crush dropped to a one-year low in September and fell short of most analyst estimates, while soyoil stocks thinned to a two-year low by the end of the month, according to National Oilseed Processors Association (NOPA).
Particularly, NOPA members, crushed 158.109 million bushels of soybeans last month, down 4.5% from the 165.538 million bushels processed in August but up 2.8% from the September 2021 crush of 153.800 million bushels.
The crush had been expected to dip to 161.627 million bushels, according to the average of estimates from analysts.
The crushing pace, at 5.27 million bushels a day was the slowest since last September, according to NOPA data.
Meantime, soy oil supplies among NOPA members as of September 30 dropped to 1.459 billion lbs, the lowest since September 2020, down from 1.565 billion lbs at the end of August and 1.684 billion lbs a year ago.
Soyoil supplies at the end of September were expected to have declined to 1.522 billion lbs.
This week, USDA reports that 69% of winter wheat has been planted, as compared to last week’s 55% and the five-year average of 68%.
Winter wheat’s emergence is at 38%, behind the five-year average of 44%.
After the sessions close, USDA’s weekly Crop Progress data showed 94% of the corn crop had reached maturity, 2% points ahead of the 5-yr average.
Harvest progressed 6% to 45% complete as of 10/16.
The 5-yr average pace is 40% harvested.
Crop condition was rated 53% good/excellent.
As for soybean, USDA’s report indicates 96% of soybeans are dropping leaves, ahead of the five-year average of 94%.
As of Oct. 16, 63% of the soybean crop has been harvested, well ahead of the five-year average of 52%.
Soybean crop condition was rated 57% good/excellent, just two points over the five-year average.
This week, USDA reported that 69% of winter wheat has been planted, as compared to last week’s 55% and the five-year average of 68%.
Winter wheat’s emergence is at 38%, behind the five-year average of 44%.
However, dry weather in U.S. growing regions, are discouraging farmers who have not yet planted from trying, while it threatening crops already in the ground from developing properly.
According to the report, 65% of acres have very short/short topsoil moisture conditions and subsoil moisture conditions.
However, weather outlooks through the end of month are indicating potential shifts toward wetter conditions and warmer temperatures.
Nearly no rain indeed is expected to fall outside of the Great Lakes region between today and Friday, per the latest 72-hour cumulative precipitation map from NOAA.
But the agency’s 8-to-14-day outlook predicts the return of seasonally wet conditions for nearly all of the Midwest and Plains between October 24 and October 30, with warmer-than-normal temperatures likely for the easternhalf of the country.
In this context, corn basis bids were steady to mixed to start the week after moving as much as 10 cents higher at an Illinois processor while falling as much as 7 cents at an Iowa processor.
Soybean basis bids were steady to firm after moving between 2 and 45 cents higher across five Midwestern locations.
Commodity funds were net buyers of CBOT wheat and soyoil futures contracts.
The funds were net sellers of corn and net even in soybeans and soymeal futures.
On this morning, Chicago corn prices lost more ground and soybeans slid, with prices of both commodities coming under pressure from the rapidly advancing U.S. harvest.
Wheat lost ground on expectations that the key Black Sea shipping lane will remain open for Ukraine grain exports despite escalation of war.
Thus, the most-active corn contract Chicago Board of Trade was down 0.3% at $6.81-1/4 a bushel, as of 03:39 GMT.
Soybeans gave up 0.4% to $13.80-1/4 a bushel and wheat dropped 0.8% to $8.54 a bushel.
In energy markets, oil prices climbed on Tuesday, bolstered by a weaker U.S. dollar and supply woes, although gains were capped by the spectre of lower fuel demand from China.
Brent crude futures, indeed, rose 82 cents, or 0.9%, to $92.44 per barrel by 06:43 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained 86 cents, or 1.0%, to $86.32 per barrel.
EU proposed extra energy measures, to swerve immediate gas price cap.
Meantime, dozens of LNG-laden ships are queueing off Europe’s coasts unable to unload.
Expectations that China will stick to a loose monetary policy to help its economy, lent some support to oil prices.
However, China’s fuel demand outlook, weighed on sentiment after the world’s top crude oil importer delayed the release of its economic indicators, originally scheduled to be out on Tuesday.
No date for a rescheduled release has been given.
On the supply side, U.S. crude oil stocks were expected to have risen a second consecutive week and are estimated to have increased by 1.6 million barrels in the week to Oct. 14.
Output in the Permian Basin of Texas and New Mexico, the biggest U.S. shale oil basin, is forecast to rise by about 50,000 barrels per day (bpd) to a record 5.453 million bpd this month, the Energy Information Administration said.
Meantime, U.S. could sell oil from emergency reserve this week.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index, rose on Monday, on higher rates for capesize and panamax vessel segments.
The overall index, indeed, rose 5 points, or about 0.3%, to 1,843.
Particularly, the capesize index rose 20 points, or 0.92%, to 2,186.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredi-ent iron ore used in construction, were up $168 to $18,133.
The panamax index snapped a five-session falling streak, adding 7 points, or about 0.3%, to 2,088.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, rose $67 to $18,796.
The supramax index was down 12 points at 1,678.
In equity markets, US stocks on Monday rallied sharply on strong quarterly bank earnings and lower bond yields.
Gains in bank stocks were positive for the overall market after Bank of America and Bank of New York Mellon reported stronger-than-expected quarterly revenue.
Also, support from a rally in European stocks and government bonds boosted U.S. stock indexes after UK Chancellor of the Exchequer Hunt announced that UK Prime Minister Truss’s package of unfunded tax cuts would be unwound (read more below).
Gains in technology stocks were bullish for the overall market.
Lower bond yields Monday supported gains in technology stocks.
The 10-year T-note yield fell -0.5 bp to 4.013% on positive carry-over support from a rally in European government bonds.
The 10-year T-note yield moved back above 4% late Monday as inflation expectations increased after the 10-year breakeven inflation rate jumped to a 1-month high.
In contrast, Monday’s U.S. economic news was negative for stocks after the Oct Empire manufacturing survey general business conditions fell -7.6 to -9.1, weaker than expectations of -4.3.
In this context, the S&P 500 Index closed up +2.65% to 3.677,95 points, the Dow Jones Industrials Index closed up +1.86% to 30.185,82 points, and the Nasdaq 100 Index closed up +3.46% to 10.675,80 points.
Meantime, Asian equities advanced on Tuesday as risk appetite got a boost from an upbeat start of corporate earning season in the United States and a reversal in the United Kingdom’s financial policy.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.43%, while Japan’s Nikkei was up 0.6%.
Beijing delayed the release of economic indicators scheduled for publication this week, including its third-quarter gross domestic product data due on Tuesday.
The data was expected to show that China’s GDP expanded 3.4% in the period from July to September, according to analysts, as recent supportive government policies have started to impact the economy.
In his nearly two-hour address at the Communist Party congress on Sunday, Xi Jinping defended his hard-line reign and presented himself as the leader who saved the nation from the pandemic and who can guide the country through danger and uncertainty.
His defence of the controversial zero covid policy is an indication that they will not be moving away from it soon.
However, most Asian stocks markets recorded gains, with Philippine equities marching to their sixth session of straight gains, up 1.3%.
Singaporean shares remained the only outlier, hovering around the 3,000-mark.
Particularly, the Nikkei index rose as much as 1.7% in early trade.
But then it pared some gains and fell below the 27,000 psychological barrier, before rebounding and closing up 1.42% at 27,156.14.
Hong Kong stocks ended with healthy gains.
The Hang Seng Index jumped 1.82 percent, or 301.68 points, to 16,914.58.
The Shanghai Composite Index dipped 0.13 percent, or 3.98 points, to 3,080.96, while the Shenzhen Composite Index on China’s second exchange added 0.36 percent, or 7.27 points, to 2,005.08.
The S&P/ASX 200 index rose 1.7% with all sectors but one closing in positive territory.
The benchmark had fallen 1.4% on Monday.
New Zealand’s benchmark S&P/NZX 50 index rose nearly 0.6% to 10,847.3, in spite the country’s annual inflation accelerated 7.2% in the third quarter, exceeding expectations and sitting just below a three-decade high.
In currency trading, the U.S. dollar index – which measures the greenback against six major peers, including sterling, the euro and the yen – was down 0.1% at 111.99, after hitting its lowest level since Oct. 6.
Sterling paused on Tuesday, after surging almost 2% the day before, as improved investor sentiment sent the safe haven U.S. dollar lower against major peers following the UK’s dramatic U-turn on its fiscal plans.
The Bank of England (BoE) is likely to further delay the start of its sales of billions of pounds of government bonds to help stabilise government bond markets after Britain’s failed “mini budget”, the Financial Times reported.
On Monday, new finance minister Jeremy Hunt scrapped most of Prime Minister Liz Truss’s economic plan and scaled back her energy support scheme, making a historic policy U-turn to try to stem a loss of investor confidence.
After Monday’s almost 2% rally, sterling was down 0.1% against the U.S. dollar to $1.1340 at 0815 GMT.
Improved risk sentiment has bolstered the euro to $0.9872, its highest since Oct. 6, with a fall in energy prices also supporting the single currency.
A key European benchmark for gas price fell to its lowest level in four months.
On this morning, the euro was last up 0.1% to $0.9855.
In the meantime, the weakening dollar brought little respite to the battered Japanese yen , which traded near a 32-year trough to the dollar at 149 yen, putting the major psychological barrier of 150 in focus.
The dollar-yen pair has strengthened around 3% in October, following the Bank of Japan’s first yen-buying intervention since 1998 on Sept. 22.
Japanese Finance Minister Shunichi Suzuki said, following the recent Group of Seven gathering, that “there wasn’t any discussion on what coordinated steps could be taken” about currency volatility.
The UK news saw the risk-sensitive New Zealand dollar , already lifted by hotter-than-expected consumer inflation data, extend its surge, up 1% to $0.5691.
The Aussie dollar also got new life from developments in Britain, strengthening by 0.1% to $0.62990.
From South America, Brazilian soybean planting progress jumped from 10% a week ago to 24% through October 12, per the latest estimates from the country’s AgRural consultancy.
Particularly, Brazilian farmers planted six million hectares.
That puts current progress slightly ahead of year-ago results of 22%.
Total plantings are expected to improve 3.4% year-over-year reaching 42.89 million hectares.
Consequentially, barring weather issues, Brazilian farmers may reap a record soybean crop of more than 152 million tonnes.
In Europe, we had sharply drop in prices yesterday on Euronext in a context where geopolitics still remains at the center of the scene.
Wheat prices lost ground due to a lack of competitiveness with Russia, but also with Romania.
Export activity is slowing down on new business.
Wheat prices were also burdened, by a jump in the eurodollar parity, with the euro rebounded by almost 1%, thus mechanically pulling all European quotations downwards.
However, German export premiums remained strong, with a brisk port loading programme coming of past sales, while high-quality wheat supplies were reduced by drought this summer.
In this context, sellers of standard 12% protein wheat for October delivery in Hamburg were seeking a premium of about 13 euros over the Euronext December contract.
Meantime, the high temperatures prevailing in France, accompanied by rains, allow a rapid emergence of autumn sowing.
These are way ahead of the normal for the season.
Rapeseed prices, on their part, dropped in the wake of canola.
From Russia, the Russian position not to renew the secure corridor in the Black Sea has, once again caused tension in the market.
Officials governement indeed, has reportedly told the UN that an extension of the Black Sea grain deal was dependent on Russia being able to boost its own agricultural and fertiliser exports.
At a meeting in Moscow, Russia’s deputy defence minister Alexander Fomin told UN Under-Secretary-General Martin Griffiths that extending the deal, “directly depends on ensuring full implementation of all previously reached agreements.”
In spite Russia continued to attack Ukraine’s capital yesterday with Iranian-made drones, continuing thus its campaign of strikes against Ukrainian energy infrastructure and civilian targets, U.N. spokesman Stephane Dujarric said officials held “positive and constructive” discussions in Moscow on expanding the deal.
Meantime, Russia kept grain exports steady at 910,000 tonnes last week, according to port data.
Russia’s Sovecon consultancy estimates that the country’s wheat exports will reach 4.4 MMT, which will be a month-over-month increase of 7.3%, if realized.
It would also be the largest monthly tally in more than a year.
Meantime, farmers have already planted winter grains on 13.8 million hectares compared to 14.6 million hectares around the same date a year ago.
However, it expects Russia’s central regions to cut the winter grains area substantially this year due to recent heavy rains.
In this context, according to the IKAR, Russian wheat prices fell last week amid stagnant export demand.
Particularly, Russian prices for wheat with 12.5% protein content and for supply from Black Sea ports were at $323 per tonne free on board (FOB) at the end of last week, down $4 from a week earlier.
Price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 12,925 rbls/t +300 rbls (Sovecon).
Price for sunflower seeds was at 21,675 rbls/t -425 rbls (Sovecon).
Price for domestic sunflower oil was at 72,675 rbls/t -650 rbls (Sovecon).
Price for domestic soybeans was at 30,325 rbls/t -350 rbls (Sovecon). Export price for sunflower oil was at $1,240/t unchanged (Sovecon).
Export price for sunflower oil was at $1,140/t +$10 (IKAR).
White sugar, Russia’s south was at $779.7/t -$91.7 (IKAR)
In Ukraine, the country’s Ag Ministry reported 19.2 MMT of wheat was pulled from 100% of expected area finishing the 22/23 harvest.
Last season’s crop was 32.2 MMT according to their data.
USDA had a 20.5 MMT output for Ukraine in their October WASDE.
On the other hand, the autumn sowing is very late and therefore raises fears about the potential 2023 harvest.
Meantime, Ukrainian grain exports in the first 17 days of October were just 2.4% lower than in the same period of 2021 despite the closure of several seaports and the war.
In this context, Ukraine’s major agricultural company Nibulon has completed the first stage of its new grain export terminal in the Danube port of Izmail, the head of the company, Andriy Vadaturskyy, said on Monday.
Ukraine operates three relatively small Danube ports that help the country to continue grain exports.
From the Middle Kingdom, China sold 41,359 tonnes of wheat, or 100% of the total offer, at an auction of its reserves held on Oct. 12, the National Grain Trade Center said in a statement on Monday.
The average selling price of the wheat, which was from the 2014, 2015 and 2016 crops, was 2,854 yuan ($396.63) per tonne, it said.
On the other hand, China’s soybean stocks are set to tighten further as delays in shipments from the United States deepen shortages of soymeal, keeping prices at record highs.
There are some ships, indeed, carrying up to three million tonnes of U.S. soybeans which were scheduled to arrive this month and in November.
However it’s likely the delivery to get delayed by about 15 to 20 days.
Soymeal cash prices in Dongguan, Guangdong province climbed to an all-time high of 5,680 yuan per tonne last week, compared with 3,500 yuan ($486.6) at this time last year.
However China’s soybean imports are likely to fall to their lowest in more than two years this month, having dropped in September and August.
($1 = 7.1926 Chinese yuan).
From South East Asia, India has sufficient stocks of rice and wheat.
Particularly, at the beginning of the next fiscal year on April 1, India’s wheat stocks at state warehouses are expected at 11.3 million tonnes, and rice stocks are seen at 23.7 million tonnes.
On April 1, the government aims to keep at least 4.5 million tonnes of wheat and 11.5 million tonnes of rice to run the world’s biggest food welfare programme and meet any emergency requirements.
Consequentially, the government will sell wheat in the open market if needed to control prices, the most senior civil servant at the Ministry of Consumer Affairs, Food and Public Distribution, said on Monday.
Food inflation, which accounts for nearly 40% of the consumer price index basket, rose 8.60% in September, compared to 7.62% in August.
Retail food prices accelerated due to a rise in the prices of cereals and vegetables.
From Australia, markets are few and far between now through new crop and even on old crop delivered.
Logistics issues in eastern Australia are a nightmare and will remain to be for the next week or even 2 if it continues to rain.
Old crop site liquidity remains active on Clear Grain Exchange.
ASX Jan 23 East Coast remains wide bid offer spreads.
As we said yesterday, Rabobank has released its latest winter crop forecast with wheat production to come in at 35.5mmt (down 2pc on last year).
Barley production is expected to reach a record 14.8mmt (up 7pc on last year) and canola is forecast to reach a record 7.2mmt (7pc increase on last year).
The report notes that WA and SA are set to break production records and VIC was set for a record year until last week’s rain event.
With NSW hardest hit by excess rain throughout the season, the state’s grain and oilseed production is expected to come in 28pc below last year, at 13.6Mt.
On the international trade scene, Turkey’s state grain board TMO has issued an international tender to purchase about 495,000 tonnes of milling wheat.
The deadline for submission of price offers in the wheat tender is Oct. 21.
Wheat shipment is sought in two periods, from Nov. 1 to Nov. 22, and between Nov. 21 and Dec 13.
Red milling wheat is sought in a series of consignments to the Turkish ports of Derince, Iskenderun, Mersin, Izmir, Bandirma, Tekirdag, Samsun, Trabzon and Karasu.
Wheat already in warehouses in Turkey can also be offered in the tender.
The TMO reserves the right to buy up to 5% more or less than the tender volume at its own discretion.
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 97,482 tonnes of food-quality wheat from the United States, Canada and Australia in regular tenders that will close on Thursday.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
