Daily International Grain Market View

Good morning Farmer Family …

US farm markets were mostly lower yesterday, as new demand concerns, led to a round of technical selling.

Corn losses were modest, at around 0.4%, but it was the third consecutive session in the red. 

Soybean cuts were a bit more severe, with prices closing nearly 1% lower.

Front month soymeal prices closed the day with 2.24% losses – taking Dec meal to under $400/ton at the days low, it closed above that mark. 

Bean oil extended its bounce by 2.84%, moving the Dec contract, to the highest print since June.

Wheat, on the other hand, has turned in variable losses, with exception of spring wheat, able to recover from morning losses.

Particularly, Chicago SRW wheat contract ended 1.34% weaker. 

Kansas City HRW ended the session 0.79% lower. 

Minneapolis HRS wheat prices ended the day off the lows posting just 0.08% higher. 

The USDA reported on Monday US corn harvest was 45% complete, while soybean harvest was 63% complete.

Despite rapidly advancing U.S. corn and soybean harvest, overseas sales have taken a hit.

Consistently high prices, indeed, are slowly eroding demand across the board.

U.S. export prospects, have been complicated by a strong dollar and due low water levels on the Mississippi river, a major route for transporting grain to U.S. Gulf export terminals. 

On the other hand, South American countries, with Brazil in first line, are plenty willing to pick up the slack.

Anec, indeed, raised its forecast for the country’s soybean and corn exports during October (read more below), a time when U.S. shippers typically dominate the market as the bulk of the Midwest crop is harvested.

Meantime, operators were still monitoring talks about keeping the United Nations-backed shipping corridor open from Ukraine’s Black Sea ports. 

In this context, corn basis bids have been steady to mixed on Tuesday after rising as much as 30 cents higher at an Iowa river terminal and slumping as much as 8 cents lower at an Iowa processor.

Soybean basis bids were largely steady across the central U.S., but did trend 2 cents higher at an Ohio elevator.

Commodity funds were net sellers of CBOT soybeans, wheat, corn and soymeal futures contracts, and net buyers of soyoil contracts.

On this morning, Chicago corn rose for the first time in four sessions and soybeans edged higher on bargain buying, although concerns over slowing demand continued to kept a lid on prices.

Wheat prices gained ground, recouping some of last session’s losses.

Particularly, the most-active corn contract on the Chicago Board of Trade added 0.3% to $6.83-1/4 a bushel, as of 3:23 GMT, while soybeans rose 0.3% to $13.74-1/2 a bushel.

Wheat gained 0.9% at $8.57 a bushel.

In energy markets, oil prices climbed on Wednesday, paring losses from the previous session.

Brent crude futures for December settlement, indeed, rose 22 cents, or 0.2%, to $90.25 a barrel by 06:20 GMT.

U.S. West Texas Intermediate crude for November delivery was at $83.50 a barrel, up 68 cents, or 0.8%. 

WTI’s front-month contract expires on Thursday and the more active December contract was at $82.66, up 59 cents, or 0.7%.

In the previous session, Brent fell by 1.7% and WTI by 3.1% to their lowest in two weeks on reports of U.S. President Joe Biden’s plans to release more barrels from the Strategic Petroleum Reserve.

To plug the gap, indeed, US President will announce a plan later on Wednesday to sell off the remainder of his release from the SPR and detail a strategy to refill the stockpile when prices drop, a senior administration official said.

Particularly, in December, the administration plans to sell 15 million barrels of oil from its reserves, the final tranche of the 180 million barrels release announced earlier this year.

Meantime, U.S. crude oil stockpiles fell by about 1.3 million barrels for the week ended Oct. 14, according to market sources citing American Petroleum Institute figures on Tuesday, while analysts expected to have an increase for a second consecutive week, rising by 1.4 million barrels. 

Gasoline inventories declined by about 2.2 million barrels while distillate stockpiles dropped by 1.1 million, the sources said.

Inventory data from the Energy Information Administration, is due at 10:30 a.m. (1430 GMT) on Wednesday.

On this morning, investors jumped into riskier assets, as risk sentiment was lifted by upbeat U.S. corporate earnings and rising equity markets.

Also, there were some signs of renewed demand from China.

Private mega refiner Zhejiang Petrochemical Corp, indeed, won additional crude oil import quota for 2022 of 10 million tonnes and state-run ChemChina received a further quota of 4.28 million tonnes. 

That is equal to about 104 million barrels.

In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index, tracking rates for ships carrying dry bulk commodities, rose on Tuesday helped by gains in the capesize and panamax segments.

The overall index, indeed, rose 32 points, or 1.7%, to 1,875.

Particularly, the capesize index rose 61 points, or about 2.8%, to 2,247.

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 up $498 to $18,631.

The panamax index rose 48 points, or 2.3%, to 2,136.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, rose $424 to $19,220.

The supramax index was unchanged at 1,678.

In equity markets, US stocks on Tuesday extended Monday’s gains.  

Better-than-expected quarterly earnings from Goldman Sachs and State Street have improved market sentiment and lifted the overall market.

Most of the Q3 corporate earnings results released thus far beating expectations.  

Consequentially, Goldman Sachs rose 2.3%, which helped to lift other lenders. 

Lockheed Martin jumped 8.7%, giving other military-related stocks a boost. 

General Dynamics rose 3.8%, Northrop Grumman gained 6.7% and Raytheon Technologies added 3.4%.

However, stocks fell back from their best levels as bond yields climbed from lower levels, when inflation concerns raised after Tuesday’s economic news.

Sep manufacturing production, indeed, rose +0.4% m/m, stronger than expectations of +0.3% m/m.  

Conversely, the Sep capacity utilization rate rose +0.2 to a 14-year high of 80.3%, higher than expectations of 80.0%, which has negative inflation implications.  

Also, the U.S. Oct NAHB housing market index fell -8 to a 2-1/4 year low of 38, weaker than expectations of 43.

On this wake, came the hawkish comments from Atlanta Fed President Bostic, which said, “the inflation is high, in fact, it’s too high and we need to get that under control.”

In this context, the S&P 500 gained 3,719.98.

The Dow Jones Industrial Average rose 1.1% to close at 30,523.80. 

The Nasdaq composite advanced 0.9% to 10,772.40.

On this morning, Asian stock markets were mixed as investors were cautious on China amid the ongoing Party Congress.

Tokyo advanced while Shanghai and Hong Kong declined. 

Particularly, the Nikkei 225 in Tokyo gained 0.4% to 27,257.38, while the Shanghai Composite Index lost 0.7% to 3,060.20. 

The Hang Seng in Hong Kong lost 2% to 16,576.17.

The Kospi in Seoul declined 0.6% to 2,237.44 and Sydney’s S&P-ASX 200 advanced 0.4% to 6,803.80.

India’s Sensex opened up 0.7% at 59,357.90. New Zealand and Southeast Asian markets advanced.

Meantime, U.S. Treasury yields, rose slightly on Wednesday after edging lower.

The yield on benchmark 10-year notes edged up 3 basis points to 4.0317% while the yield on two-year notes climbed to 4.4543%, compared with the previous close of 4.4370%.

In currency trading, the U.S. dollar firmed 0.2% on Wednesday against a basket of major currencies. 

It hit another fresh 32-year high of 149.34 yen overnight, before stabilising at 149.28 amid risk of intervention from the Japanese authorities.

Sterling gained 0.12% against the greenback to trade at $1.1333 after easing slightly in the previous session.

The UK, which has been roiled by a historic crisis in the government bond market, will report inflation readings for September later in the day, with annual inflation likely running at a double-digit rate of 10% last month.

That would likely pressure the Bank of England to hike more aggressively.

The BoE said on Tuesday that it would start selling some of its huge stock of British government bonds from Nov. 1, but would not sell this year any longer-duration gilts.

A surprising strong inflation report from New Zealand on Tuesday prompted markets to sharply revise up the expected tightening pace for the Reserve Bank of New Zealand.

From South America, Brazil’s Safras and Mercado reported 19.1% of the 22/23 soybean crop has been planted as of 10/14. 

That is up from 9.7% last week, but trailing 21% last year. 

AgRural estimated 24% of the crop was planted through 10/14, up from 10% last week and 22% last year. 

AgRural reported the Brazilian 1st crop corn was 46% planted as of 10/14. 

That was up 7% points through the week and is 1% point ahead of last year’s pace. 

In this context, USDA attaché increased its forecast for soybean planted area to 42.8 million hectares for (marketing year) 2021/22, up previously from 42.5 million hectares. 

Brazil continues to expand its area due to record high domestic soybean prices. 

On this wake, USDA attaché also forecasts a record harvest at 148.5 million metric tons (MMT), increased from 144 MMT previously with planting starting earlier this year as well. 

The attaché increased the export forecast in 2022/223 to 95.7 MMT, an increase from 92 MMT. 

Post revised imports downwards due to ample supplies, now forecast at 300,000 metric tons (MT) for 2022/23. 

For 2022/23, the attaché revised the forecast for soybeans destined for processing upward to a record of 50 MMT based on strong demand for Brazilian soybean products, especially oil.”

Meantime, Brazil’s Anec expects the country’s corn exports to reach 7.18 MMT in October, which is moderately above its prior forecast from a week ago.

Anec also expects the country’s soybean exports to reach 3.77 MMT in October, which is slightly higher than its prior forecast from a week ago. 

Brazilian soymeal exports may come in at 2.038 million metric tons this month.

In Argentina, Argentina’s union for grain inspectors threatened to walk out over disagreements with an agro-export company in protests that could disrupt the country’s critical grains exports sector.

The union, is in conflict with food exporting company Desdelsur SA over what it says is a breach of a contract.

Although October sees less traffic than other months in grains exports, a disruption to exports could still be costly for Argentina’s struggling economy.

Meantime, Argentine grains producers have sold 69.99% of the 44 million tonne 2021/22 soybean harvest so far, the country’s agriculture ministry said on Tuesday, more than a year earlier even as weekly sales plummeted after a preferential exchange rate for exporters ended.

A year earlier, producers had sold 68.4% of the harvest.

Particularly, between Oct. 6 and 12, producers sold just 55,000 tonnes of soybean.

Producers also sold 68.9% of the 2021/22 corn crop, surpassing the 64.8% recorded at this time last harvest.

Meantime, corn planting for the 2022/23 cycle has already started.

However, the Rosario grains exchange has said the sown area is the lowest in six years, as a consequence of harsh droughts and frosts.

Separately, about 5.37 million tonnes of 2022/23 wheat harvest have been sold so far, or 33.5% of the expected 16 million tonne-harvest. 

In Europe, we saw a sharp decline in grain prices yesterday on Euronext, in a context of optimism on the agreement with Russia on an extension of the grain deal. 

However, there were still little news this morning about the progress of talks between the UN and Russia, while drone attacks on Ukrainian electricity installations continued, leading to interruptions in the supply of electricity to almost a third of the country.

Corn prices, for their part, continued to be put under pressure by the sustained rate of imports into Europe after European corn harvests, suffered from extreme drought this summer.

Germany’s 2022 harvest of corn, indeed, will fall 20.2% on the year to an estimated 3.54 million tonnes, just for exemple.

Meantime, according to the European Commission, EU soft-wheat exports in the season that began 1 July reached 10.41Mt as of Oct. 16, similar to the 10.46Mt exported last year. 

EU barley exports are at 2.32Mt, compared with 3.89Mt a year earlier. 

EU corn imports have more than doubled to 8.39Mt compared to 4.08Mt last year.

European Union soybean imports during the 2022/23 marketing year have reached 3.29 MMT through October 16, which was slightly below last year’s pace so far. 

EU soymeal imports were also trending below year-ago levels, with 4.56 million metric tons.

Rapeseed imports were posted at 1.99 million tonnes, against 1.39 last year to date.

From North Africa, Egypt’s grain production rose by 4.4% year-on-year (YoY) to 23 million tons during fiscal year (FY) 2020/2021 due to increases in the production of wheat and sweet corn, the Middle East News Agency (MENA) reported on October 15th, citing a report by the Central Agency for Public Mobilization and Statistics (CAPMAS).

Particularly, wheat production grew by 8.1% YoY to 9.8 million tons in FY 2020/2021 from 9.1 million tons.

It is worth noting that Egyptian agricultural exports reached a volume of around 4.491 million tons during the period from January 1st until August 24th.

From Russia, the country cut grain export by 13% y/y since the start of the current season to 16.8 mln tonnes, president of Russian Grain Union Arkadiy Zlochevskiy said.

“From July 1 to October 15, Russia exported 16.8 mln tonnes, down by almost 13% y/y. The delay is significant, while the supply is huge. The export is essential, and by faster pace”, – he said.

He noted that the export pace speeded up in October, and Russia shipped 2.45 mln tonnes of grain during the first half of the month.

“We hope to export about 5 mln tonnes in October, while the required volume would be 6 mln tonnes”, – A. Zlochevskiy explained.

He said that the further export would be complicated due to the weather, which usually worsens in December-January and lead to bottlenecks in ports and freeze of shallow ports and rivers.

“We have large carry-over stocks this year and record production. Optimal export should be not less than 60 mln tonnes. The current pace of shipments does not allow to perform this”, – A. Zlochevskiy supposes.

He added that the number of countries importing grain from Russia has declined to 39 so far in 2022/23 MY, compared to 70 the year ago.

“There are no shipments to Nigeria, Cameron, Congo. Supplies to Turkey decreased by 1.5 mln tonnes, as they turned to Ukrainian origin. At the same time, the export to Saudi Arabia, Algeria and Pakistan increased”, – he noted.

On this wake, Russia wants to export its grains, fertilisers and ammonia too as a part of extention of grain deal, Turkish President Recep Tayyip Erdogan’s spokesman Ibrahim Kalin has said. 

He also said he had conveyed Russian concerns to US National Security Adviser Jake Sullivan.

In this context, Turkey is asking an extension of the agreement on the grain corridor for 3 months, 6 months or a year.

But at the same time, it is not yet possible to say whether the agreement will be extended and for how long.

Meantime, there are several outbound ships need to be inspected in Istanbul under the old deal.

At least 12 were checked each day from Friday through to Sunday. 

That’s up from seven to nine a day earlier in the week. 

The number of inspection teams increased to five on Friday. 

However, the backlog of inbound and outbound vessels awaiting checks stood at 131 as of Tuesday, although down from 156 on Friday, a spokesperson for the Joint Coordination Centre said.

In Ukraine, strikes in Mykolayiva on Sunday hit a Viterra sunflower-oil terminal. 

“Fortunately there were no injuries, and we are currently assessing the extent of the damages,” a spokesperson for Viterra said. 

Meantime, Ukraine’s agriculture ministry revised up its forecast of the area to be sown for the 2023 winter wheat harvest to around 4 million hectares from the previous outlook of 3.8 million hectares, ministry data showed on Tuesday.

The ministry said farmers had sown 2.5 million hectares of winter wheat as of Oct. 18, or 61% of the expected area.

On the other hand, Ukrainian grain shipments have been posted since the start of the campaign at 10.8 million tonnes, ie down about 35% compared to last year. 

Meantime, according to APK-Inform, the indicative FOB prices of Ukrainian wheat were mostly stable in the Black Sea ports last week.

Unclear future of the “grain deal”, the increase in military tension, large-scale missile attacks on southern and other regions of Ukraine at the beginning of the week, and delays in the arrival of ships limited the demand for Ukrainian grain. 

Seasonal factor and lack of storage capacity, expensive and congested logistics, high insurance risks and freight costs added pressure on the prices.  

Consequentially, the indicative offer prices of 12.5% and 11.5 % wheat for delivery in October-November stayed at 315-330 and 310-325 USD/t FOB. 

The offer prices of feed wheat decreased slightly to 260-280 USD/t FOB (265-280 USD/t FOB last week).

From the Middle Kingdom, China’s state planner said on Wednesday it will release its sixth batch of frozen pork from reserves, following rising hog prices recently.

The National Development and Reform Commission (NDRC) also said in a statement it would work on securing hog supply and stabilising prices, and continue to release pork reserves.

From Australia, local markets were largely unchanged yesterday. Wheat may have been a touch firmer. 

Not much has changed in terms of current month access to grain supply. 

The ASX eastern wheat contract traded small volume at A$493/t. Bids to canola growers were down $10/t. 

The forecast rainfall event has begun with reports of 140mm being received in Emerald, Central Queensland last night. 

The front is expected to move through Qld and northern NSW today before extending over the rest of NSW, Vic and SA over the coming week. 

The timing is very concerning for saturated areas of NSW and Vic. 

On the international trade scene, two groups of South Korean flour mills bought a total of about 77,000 tonnes of milling wheat to be sourced from the United States in two international tenders on Tuesday.

The purchases both included several different wheat types, all bought on an FOB basis. Trading house United Grain Corporation sold both consignments.

The first consignment was an estimated 45,000 tonnes.

The first purchase was soft white wheat of about 9.5% to 10.5% protein content bought in the low $340s per tonne, soft white wheat of 8.5% protein also bought in the low $340s a tonne, hard red winter wheat of 11.5% protein bought in the mid-$410s a tonne and northern spring/dark northern spring wheat of 14% protein bought in the low $400s a tonne.

The first consignment was for shipment from the United States between Dec. 16 and Jan. 15.

The second consignment involved an estimated 32,000 tonnes for shipment Jan. 1-31.

The second purchase involved soft white wheat of about 9.5% to 10.5% protein content bought at just over $340 a tonne, soft white wheat of 8.5% protein bought in the high $340s a tonne, hard red winter wheat of 11.5% protein bought around $415 a tonne and northern spring/dark northern spring wheat of 14% protein bought at about $403 a tonne.

The Jordan wheat tender no. 50.2022.66 closing Tuesday 18/10/2022 had got 4 participants: CHS, Cargill, Ameropa and Buildcom.

MIT purchased 60k from CHS to be shipped fhMarch at 374 $ C&F.

Other prices linup were: Cargill at 383.10 $, Ameropa at 385.90 $ and Buildcom at 383.83 $.

Iraq’s state grain buyer has issued a fresh tender to buy 50,000 mt of hard wheat from all origins except Russia, an official document showed on Tuesday.

Leading South Korean feedmaker Nonghyup Feed Inc. (NOFI) has issued an international tender to purchase up to 95,000 tonnes of animal feed wheat and 60,000 tonnes of feed barley.

The deadline for submissions of price offers is also Wednesday, Oct. 19.

The wheat is sought in two consignments which can be sourced from worldwide origins except Argentina, Pakistan, Denmark, China, India and eastern Europe.

The first wheat consignment of about 30,000 tonnes is for arrival in South Korea around Dec. 20. 

Shipment is between Nov. 16-Dec. 5 if sourced from the U.S. Pacific North West coast, Australia or Canada; Oct. 27-Nov. 15 if from the U.S. Gulf or western Europe, Oct. 22-Nov. 10 from South America or Nov. 1-Nov. 20 from South Africa.

The second consignment of up to 65,000 tonnes is for arrival around April 2023. 

Shipment in 2023 is between March 17-April 5 if sourced from the U.S. Pacific North West coast, Australia or Canada; Feb. 25-March 16 if from the U.S. Gulf or western Europe, Feb. 20-March 11 from South America or March 2-March 21 from South Africa.

The barley is sought in two 30,000 tonne consignments from worldwide origins excluding eastern Europe.

The first consignment is for arrival in South Korea around Dec. 20. Shipment is between Nov. 16-Dec. 5 if sourced from the U.S. Pacific North West coast, Australia or Canada; Oct. 27-Nov. 15 if from the U.S. Gulf or Europe and Oct. 22-Nov. 10 from South America.

The second consignment is for arrival in South Korea around April 20, 2023. Shipment is between March 17-April 5 if sourced from the U.S. Pacific North West coast, Australia or Canada; Feb. 25-March 16 if from the U.S. Gulf or Europe and Feb. 20-March 11 from South America.

That’s all, thank you.

We wish you a good day.

Author: Sandro F. Puglisi

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