Daily International Grain Market View

Good morning Farmer family …

US farm markets were mixed yesterday, but mostly weaker.

Corn worked off the highs in the afternoon round of trading, but prices were still down by 0.4% at the bell. 

Front month wheat prices traded all lower, but ended off their lows. 

Particularly, Chicago SRW wheat contract, went home on 0.97% losses. 

Kansas City wheat price closed 0.29% weaker. 

Minneapolis spring wheat ended the day with 0.26% losses.

Wheat and corn both fell as weak demand on the export market weighed a lot on prices.

Ahead weekly export sales report out this afternoon, analysts are expecting USDA to show wheat export sales were in a range between 200,000 and 550,000 tonnes in the week ended Oct. 13. 

That compares with 211,823 tonnes a week earlier.

Corn export sales were forecast between 250,000 and 775,000 tonnes. 

On the internal front, yesterday EIA data had the average daily ethanol output back above 1m barrels again for the first time since August 5th. 

Ethanol producers averaged 1.016m barrels per day through the week that ended 10/14. 

Ethanol stocks were down by 19k barrels to 21.844 million. 

Meantime, the USDA chief veterinary officer reported that a near-record number of chickens and turkeys have died in this year’s outbreaks of avian flu as a different form of the virus from those which farmers had battled before was transmitted from wild birds. 

Disease-related losses in bird populations, estimated at more than 47 million, have resulted in export restrictions, lower egg and turkey production, and have contributed to record domestic prices of the staples. 

The same subtype is spreading across Europe, causing the worst bird flu outbreak in 50 years.

The soybean market, meantime, saw afternoon strength push beans fractionally higher, exactily by 0.04%. 

Meal prices closed mostly mid-ranged but were still down by 0.02%. 

Soybean oil traded triple digits higher and closed the day near the highs with a 2.76% gain for the Dec contract. 

Dec bean oil has rallied 7.96% from Monday through Wednesday. 

Soybeans ended in positive territory, mainly led up by bean oil.

However, concerns about demand of US products increased recentily, as buyers will likely shift their boughts for soybeans to South American suppliers as soon as possible.

On this wake, grain trader Archer-Daniels-Midland Co projects to increase its soybean exports from Brazil’s 2022/23 crop-year by 11%.

Ahead weekly export sales report, analysts are expecting USDA to show soybean export sales between 1.7 million and 2.8 million.

Meantime, wheat traders are also monitoring drought in Argentina and U.S. wheat belts.

On the other hand, the torrential rain in parts of Australia ahead of harvesting, and the slow planting pace in Ukraine.

In this context, Commodity funds were net sellers of CBOT corn and wheat futures contracts and net even in soybean and soymeal futures. 

They were net buyers of soyoil contracts.

On this morning, Chicago wheat and corn contracts extended losses of previus session, while soybean rose.

Particularly, the most-active wheat futures on the Chicago Board of Trade, dropped 0.3% to $8.38-1/2 a bushel, as of 04:07 GMT, while corn fell 0.1% at $6.77-1/2 a bushel.

Soybeans gained 0.09% to $13.73-3/4 a bushel.

Traders are awaiting the outcome of United Nations-Russia negotiations.

Also, new risks such as droughts in the Argentine and U.S. wheat belts, with heavy rains in some areas of Australia, and a slow start to planting in Ukraine, are rising some additional concerns.

In energy markets, oil prices gained around $1 on Thursday.

Thus, Brent crude futures for December settlement rose 80 cents, or 0.9%, to $93.21 a barrel at 06:10 GMT.

U.S. West Texas Intermediate crude for November delivery (WTI) , which expires on Thursday, rose $1.29, or 1.5%, to $86.84 per barrel. 

The WTI contract for December delivery was last up 1.4%, or $1.16 cents, at $85.68 a barrel.

Bloomberg news reported that China is considering cutting the quarantine period for inbound visitors to seven days from 10 days.

The report said officials are targeting a cut in the quarantine period to two days in a hotel and then five days at home.

U.S. President Joe Biden announced a plan on Wednesday to sell off the rest of his release from the nation’s emergency oil reserve by year’s end, or 15 million barrels of oil.

However, the release is “too small to impact the market”.

EU sanctions on Russian oil imports will likely become the focus of the oil market in coming weeks, thus analysts expects Brent oil futures to average $100 per barrel in Q4 2022.

Meanwhile, global demand for fuel remains uncertain. U.S. economic activity expanded modestly in recent weeks, although it was flat in some regions and declined in a couple of others, the Federal Reserve said on Wednesday.

In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index edged lower on Wednesday as the capesize rates slid, although gains in the panamax vessel segment limited losses in the main index.

The overall index, indeed, was down 4 points, or about 0.2%, to 1,871.

Particularly, the capesize index lost 38 points, or about 1.7%, to 2,209.

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 down $309 to $18,322.

The panamax index rose for the third consecutive day, up 28 points, or about 1.3%, to 2,164.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, rose $255 to $19,475.

The supramax index was unchanged at 1,678.

In equity markets, the S&P 500 fell 0.7% to close at 3,695.16, while the Dow Jones Industrial Average slipped 0.3% to 30,423.81. 

The Nasdaq composite ended 0.9% lower, at 10,680.51.

Small companies fell more than the rest of the market, sending the Russell 2000 index 1.7% lower to 1,725.76.

Stocks were coming off of two days of gains, but trading has been unsteady throughout, as investors have been focusing on the latest round of corporate earnings this week, watching for clues about how companies are dealing with the hottest inflation in four decades and how they intend to operate through the rest of the year and into 2023.

In this context, Netflix soared 13% and United Airlines rose 5% after releasing their quarterly results, while others, including Abbott Laboratories and M&T Bank, sank.

Homebuilder Lennar fell 6% and home-improvement retailer Lowe’s slid 4.8% following a report showed that construction on new homes declined more than expected in September.

Household goods giant Procter & Gamble rose 0.9% after also reporting strong financial results. 

Central governments and banks worldwide are dealing with stubbornly hot inflation. 

Meantime, the yield on the 10-year Treasury, which influences mortgage rates, climbed to 4.13%, its highest level since June 2008. 

It was at 4.02% late Tuesday. 

The yield on the two-year Treasury, which tends to track expectations for future Federal Reserve action, rose to 4.54% from 4.43%.

The three-month Treasury briefly hit 4.01% before inching back to 3.98%. 

Should the three-month Treasury yield rise above that of the 10-year Treasury, what’s known as an inversion, that would be a strong warning that the economy could be headed for a recession.

On this morning, Asian shares were mostly lower.

Tokyo’s Nikkei fell 0.9% to 27,006.96, recovering some lost ground, while the Kospi in Seoul declined 0.9% to 2,216.49. 

In Hong Kong, the Hang Seng shed 1.6% to 16,254.32.

The Shanghai Composite index was flat at 3,044.77 and Australia’s S&P/ASX 200 gave up 1% to 6,730.70.

Japan reported a 14th straight month of monthly trade deficits due to high prices for oil and other commodities and a weakening yen.

Particularly, the Finance Ministry said Thursday that imports rose nearly 46% from the same month a year ago. 

Imports have grown for 20 months straight on-year.

In currency trading, the dollar has gained strength versus currencies worldwide as inflation and recession concerns prompt investors to look for relatively stable investments. 

The yen is now trading at 32-year lows against the dollar, changing hands at 149.93 Japanese yen early Thursday, up from 149.81 yen a day earlier.

The euro slipped to 97.59 cents from 97.73 cents.

From South America, grain trader Archer-Daniels-Midland Co ADM.N projects to grow its soybean exports from Brazil’s 2022/23 crop-year by 11%, amid record production forecasts.

Brazil’s soybean output is estimated at a record 152.4 million tonnes in the 2022/23 season, a 21% increase over last year.

Brazil’s food supply agency Conab expects exports in the 2022/23 season nationwide to reach 95.87 million tonnes, up 22.5% from last cycle.

ADM did not disclose the volume of its planned shipments.

Argentina’s Rosario grains exchange cut its 2022/23 wheat harvest forecast to 15 million tonnes, down from 16 million tonnes estimated last week, it said on Wednesday, after a late frost hit crops already damaged by drought.

Meantime, the Rosario exchange maintained its projections for the 2022/23 corn harvest at 56 million tonnes and its 2022/23 soybean harvest at 48 million tonnes. 

The exchange also said that due to the drought farmers may opt to plant more land in soybeans, a hardier crop than corn, estimating that the planting area for the oilseed could reach 17 million hectares (42 million acres).

Finally, the exchange said producers so far have planted only 12% of the 8 million hectares forecast for corn, 15 percentage points behind the planting rate at the same time last season.

In Europe, grain and oilseed markets were firmer. 

A weaker Eurodollar pushed up prices despite an overall bearish market.

Indeed, despite the escalation of violence in Ukraine and Russian threats, operators are relatively optimistic about a renewal of the secure corridor in the Black Sea next month.

Fears of recession and shrinking demand continued to weigh down international prices, while sowing is progressing clearly in France.

However, after the very low corn harvest in France, at barely 10 million tonnes, as we said yesterday, it was Germany which posted a decline of more than 20% compared to last year at only 3.54 million tonnes.

Meantime, non-commercial market participants reduced their net long position in Euronext’s milling wheat futures and options in the week to Oct. 14, data published by Euronext on Wednesday showed.

Non-commercial participants, indeed, dropped their net long position to 119,991 contracts from 121,668 a week earlier, the data showed.

Commercial participants similarly reduced their net short position to 138,168 contracts from 142,840 a week earlier.

In Euronext’s rapeseed futures and options, non-commercial market participants lowered their net short position to 16,947 contracts from 18,717 a week earlier.

Commercial participants also cut their net long position in rapeseed to 16,919 contracts from 17,729 a week earlier.

From North Africa, Tunisia’s imports of cereals in the first nine months of 2022 jumped by 45.5% to 3.559 billion dinars ($1 billion), the state agricultural observatory said on Wednesday. 

It added that the average of import price of soft wheat rose by 61 percent due to the war in Ukraine.

From Russia, Russia’s Ag Ministry reports that as at 17 Oct the 2022/23 wheat harvest yielded 104.1Mt, with productivity at 3.6t/ha (+28pc on same period last year), barley at 24.3Mt, with yields at 3.1t/ha (+29pc y/y). 

Rapeseed harvest at 4.3Mt, with productivity at 2.2t/ha (+17pc y/y), sunflower seed harvest at 7.1Mt, with productivity at 1.8 t/ha (+13pc y/y), and soybeans at 3.2Mt, with yields at 1.9t /ha (+13pc) 

However, the country wheat output, is expected to drop to 84.8 million tonnes from the record in 2022, according to Russia-focused consultancy Sovecon.

Indeed, heavy rains, relatively low domestic prices of wheat and a strong rouble are expected to cut Russia’s winter grain sowing substantially this autumn.

In this context, Russia’s farm ministry has proposed the country’s grain export quota at 25.5 million tonnes for the period from mid-February to end-June. 

The size of the quota is equal to the one proposed by Russia’s Union of Grain Exporters earlier in October.

Meantime, Russian President Putin declared martial law yesterday in the four regions of Ukraine that Moscow recently annexed but that it does not fully control.  

Pro-Russian authorities can now impose even tighter restrictions such as impose curfews, seize property, forcibly resettle residents, imprison undocumented immigrants, establish checkpoints and detain people for up to 30 days. 

This comes as Moscow fights to hold off Ukraine’s counter offensive. 

On the other hand, Russia will reassess its cooperation with U.N. Secretary-General Antonio Guterres and his staff if Guterres sends experts to Ukraine to inspect downed drones that Western powers say were made in Iran, Russia’s deputy U.N. envoy said on Wednesday.

Russia’s Deputy U.N. Ambassador Dmitry Polyanskiy did not elaborate on what cooperation could be affected.

However, Polyanskiy also told reporters he was not optimistic about the renewal of the U.N.-brokered grain deal.

On internal front, weekly consumer prices in Russia rose marginally for the fourth week running, data published on Wednesday showed, adding weight to analysts’ expectations that the Bank of Russia may decide to end its rate-cutting cycle next week.

Particularly, Russia’s consumer price index rose 0.02% in the week to Oct. 17, the Rosstat federal statistics service said. 

A separate set of Rosstat data published on Wednesday showed the producer price index, a measure of how much suppliers charge clients, staying at 3.8% on annual terms in September, the same reading as in August.

In other data, the economy ministry said annual consumer inflation slowed to 13.10% as of Oct. 17, down from 13.36% a week earlier.

Since the start of the year, consumer prices have risen 10.55%, Rosstat said. 

At the same point in 2021, year-to-date inflation was running at 6.49%.

From Ukraine, as of October 19, the country exported 7.9 mln tonnes of food products since the launch of the “grain corridor”, the Ministry of Agricultural Policy informed.

On October 19, 6 ships carrying in total 86.7 thsd tonnes of agricultural products left the ports of Odesa, Chornomorsk and Pivdenniy for countries of Asia and Europe.

In total, 360 vessels with agricultural products left Ukrainian ports for countries of Africa, Asia and Europe.

Ukraine exported 10.4 mln tonnes of grains, pulses, oilseeds and by-products during 1.5 months of autumn, up by 1 mln tonnes compared to the total volume of three summer months, the Ministry of Agricultural Policy informed.

“Particularly, in October 1-16, Ukraine shipped 3.6 mln tonnes of grain. Since the start of the war, Ukraine exported 23 mln tonnes of agricultural products”, – the ministry informed.

In October, wheat dominated the exports for the first times since the start of the war. 

Wheat shipments amounted to 1.149 mln tonnes by October 16, up by 100 thsd tonnes compare d to mid-September. 

October corn export has reached 1.089 mln tonnes, down by 300 thsd tonnes compared to the first half of September. 

Ukraine shipped 4.6 mln tonnes of wheat and almost twice as much of corn since the war started.

Rapeseed export decreased by 237 thsd tonnes compared to the first half of September to 341 thsd tonnes as of mid-October. 

Sunflower oil shipments decreased from 365 thsd tonnes in mid-September to 265 thsd tonnes in mid-October.

Export of oilseed meals decreased by 14 thsd tonnes to 257 thsd tonnes. 

Barley export totaled 165 thsd tonnes, sunflower seed – 152 thsd tonnes, up by 44 thsd tonnes.

Soybean export decreased by 7 thsd tonnes to 118 thsd tonnes, soybean oil supplies were down by 3 thsd tonnes to 13.4 thsd tonnes.

In the first half of October, the export of agricultural products from Ukraine included 30.7% of corn, 32.37% of wheat, 7.47% of sunflower oil, 4.28% of sunflower seed, 9.61% of rapeseed, 7.23% of meals, 4.64% of barley, 3.33% of soybean, 0.38% of soybean oil. 

Ukraine exported 2.8 mln tonnes of products via ports, 436 thsd tonnes by rails, 318 thsd tonnes by roads and 22.3 thsd tonnes by ferries.

From the Middle Kingdom, China will sell 40,200 tonnes of wheat from its state reserves on Oct. 26, the National Grain Trade Center said on Thursday.

The country sold 41,359 tonnes of wheat at an auction of its reserves held on Oct. 12.

From Australia, feedgrain prices are rallying in Victoria, New South Wales and Queensland as flooding stymies the movement of trucks in inland regions.

Flash flooding has hit central and northern Victoria, while mostly slow-moving water has closed a number of arterial and minor roads in NSW.

Some minor roads in southern Queensland are also closed, and all affected areas are bracing for up to 100 millimetres of rain in the next eight days.

Crops are already late, and those on undulating country are still green and could therefore benefit yield-wise from the coming rain.

However, the quality outlook is of concern, with low protein in wheat a given on plains country.

Concerns about low testweights, as well as mycotoxin risk, in the wettest areas have growers loath to forward sell any of the crop they hope to harvest before the year is out.

In this context, local markets continued to rally also yesterday. 

The damage is still a big unknown and with the rain expected to continue into next week it will not be known for a while yet.

Meantime, ASX Eastern Australia Wheat January 2023 contract traded up to $500/t while some new crop ASW1 cash wheat traded on Clear Grain Exchange at $350 FIS for Dec/Jan delivery. 

Old crop delivered markets continued to soar with prompt demand popping up due to restricted access to grain and the need to keep things moving into next week. 

There are plenty of challenges for the Aussie trade and producers in the coming months.

On the international trade scene, Saudi Arabia’s state grains buyer SAGO has set a tender to purchase 535,000 tonnes of wheat for shipment March-April 2023, it said on its official Twitter feed.

The deadline for submissions of price offers in the tender is believed to be Friday, Oct. 21. 

Results are expected on Monday, Oct. 24.

The tender seeks hard wheat for arrival in 2023 between March 1 and April 25.

The wheat is sought in a series of nine consignments of about 60,000 tonnes.

Three shipments are sought for unloading in Jeddah, three in Yanbu two in Dammam and one in Jazan port.

A government agency in Pakistan has issued a new international tender to purchase and import 500,000 tonnes of wheat.

The deadline for submission of price offers in the tender from the Trading Corporation of Pakistan (TCP) is Oct. 26.

A group of South Korean flour mills led by the miller SPC bought around 30,000 tonnes of milling wheat to be sourced from the United States on Wednesday.

The purchase included several different wheat types and was all bought on an FOB basis with trading house Viterra believed to be the seller.

The wheat was for shipment between Jan. 15 and Feb. 15, 2023.

The purchase involved soft white wheat of about 9.5% to 11% protein content bought in the mid $340s a tonne, soft white wheat of 8.5% protein also bought in the mid $340s a tonne, hard red winter wheat of 11.5% protein bought at just over $412 a tonne and northern spring/dark northern spring wheat of 14% protein bought at about $405 a tonne.

Two South Korean groups had on Tuesday also bought about 77,000 tonnes of U.S. wheat for December 2022/January 2023 shipment.

The purchase included SW (8.5pc – 10.5pc protein) at around $340-350 per tonne fob, HRW (11.5pc) at about $415/t fob and DNS (14pc) at $400/t fob.

Jordan’s state grain buyer purchased 60,000 tonnes of milling wheat from optional origins at $374/t c&f, for Mar shipment and in a separate tender (25 Oct), seeks 120,000 tonnes of milling wheat for Dec/Jan.

Jordan feed barley tender, closing 19/10/2022 got 3 participants: Cargill, Viterra & Olam.

MIT canceled the tender and announced and a new barley tender for next Wednesday is expected with shipping periods sh December 2022 and full January 2023.

That’s all, thank you.

We wish you a good day.

Author: Sandro F. Puglisi

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