Good morning Farmer Family …
Most markets were closed yesterday for New Year holidays.
Meanwhile, European wheat prices started the first session of new year in negative territory.
The activity was very thin.
However, wheat March contract, managed close unchanged to €309.25 per tonne at the bell.
Corn price closed €0.5/t up to €296/t, while rapeseed was €0.5/t weaker by the close.
Wheat prices were pressured by expectations of more tough export competition from Russia.
Relatively high global prices, a weaker rouble, and record stocks on the domestic market, will likely continue supporting Russian shipments.
The last weeks of December saw very cheap sales offers of Russian, Ukrainian and other Black Sea region wheat.
Among those, the purchase of 200,000 tonnes of Russian wheat by Egypt.
The risk premiums ship from the Black Sea region are increasing, however, the differential remains high.
On this wake, Sovecon increased its 2022/23 Russian wheat export forecast by 0.2 million tonnes to 44.1 million tonnes, with the consultancy, expects record or near-record monthly export volumes in the second half of the July-June season.
Additionally, concerns about U.S. weather conditions had eased.
As a results, on the market there is a gap between buyers and sellers in some areas.
Notably, standard 12% protein wheat for January delivery in Hamburg was offered for sale at a premium of about 15 euros over the Euronext March contract, with buyers at 12 euros over.
As for rapeseed, the world economic situation remains very much linked to the Covid epidemic and the situation in China.
While operators initially welcomed the relaxation of sanitary rules in China, there are now concerned about the spread of the disease in a country where the vaccination rate is poor.
From the Black Sea basin, in the first half of the current campaign, Ukrainian wheat exports fell by 47% to 8.38 MMT compared to last year, and by 69% to 1.62 MMT for barley.
In July-November 2022/23 MY, Romania, Spain and Turkey were the key destinations for Ukrainian barley.
They bought 1 mln tonnes of barley, or 70% of the overall export.
APK-Inform sees barley export from Ukraine in 2022/23 MY at 2.4 mln tonnes under the optimistic scenario, down 58% y/y.
As for corn, Ukrainian exports have increased by 15.7% to 12.52 MMT to date.
Ukraine total grain exports reached 22.61 MMT, down 29.8% from last year.
According to APK-Inform, the prices of Ukrainian corn were growing in December.
The prices were supported by limited supply of corn from farmers, who were waiting for more attractive prices and stable purchases by traders, despite seasonal decline of demand from European buyers and slow export via the “grain corridor”.
Moderate demand from processors limited the development of the upward price trend.
Notably, in December, the bid prices of corn increased by 200-300 UAH/t to 5100-6500 UAH/t CPT-port.
However, the Ministry of Agrarian Policy expects certain changes in the structure of planted areas in Ukraine during the spring planting campaign, the First Deputy Minister of Agrarian Policy and Food of Ukraine Taras Vysotsky said.
In particular, an increase in the area planted under oilseed crops – rapeseed, soybeans, sunflower seed – is predicted.
This is due to the fact that the cost of one tonne of oilseed is higher, and the cost of logistics per tonne is lower.
However, according to APK-Inform, the bid prices of exporters for rapeseed have been declining in Ukraine since mid-December.
The prices are pressured by weakening of trade activity amid easing of demand from importers, although the number of offers from Ukrainian farmers decreased significantly, as they had been active sellers at the start of the season, when the demand from European buyers had been strong.
Over the reporting period, the bid prices of rapeseed decreased by average 20 EUR/t to 360-410 EUR/t FCA as of December 30.
From South America, Brazil President Luiz Inacio Lula da Silva has decided that a federal tax exemption for fuels will last one year for diesel and biodiesel, and two months for gasoline and ethanol, a decree published in the official gazette showed on Monday.
Lula had already announced the measure after taking office on Sunday, but the deadline for each fuel was still unclear.
The exemption from federal taxes on fuel represents a revenue waiver of 52.9 billion reais ($9.87 billion) per year.
The real was down nearly 1.5% against the dollar after the move was announced.
($1 = 5.3595 reais).
From Australia, harvest deliveries to GrainCorp are near 10Mt.
Deliveries continued strongly throughout New South Wales and Victoria over the festive season, with more than 2 million tonnes (Mt) of grain received since the last Harvest Update issued on December 19.
Primary areas of receival activity have been the Junee, Temora, Wyalong and Cunningar regions in southern NSW and the Wimmera, southern Mallee, Central and North East regions in Victoria.
Drier and warmer conditions also helped growers in northern NSW harvest their remaining crops.
The receival activity in this area is beginning to wrap up, with growers looking ahead to summer-cropping opportunities.
A large outload program continued across the GrainCorp network during the festive period to create capacity for more receivals.
This will be sustained throughout January, with up to 200,000t to be outloaded per week.
Some sites, particularly those in northern NSW, are open by appointment only now and growers are encouraged to communicate with their local site managers regarding opening hours, deliveries and segregations.
Watching this week’s market, today in the afternoon, we will get US Export Inspections.
USDA will also release their month Grain Crushings, Fats & Oils and Cotton Consumption reports.
Tomorrow morning, we will get the report about the Kansas wheat crop conditions.
On Thursday, the EIA will release their weekly ethanol production and stocks report.
The US Weekly Export Sales report will be delayed until Friday morning.
In energy markets, oil prices held in a narrow range on Tuesday.
Brent crude futures, indeed, recovered from their early weakness, when prices fell by $1 a barrel, rebounding to $86.29 a barrel by 07:37 GMT, an increase of 38 cents, or 0.44%.
U.S. West Texas Intermediate crude was at $80.77 a barrel, up by 51 cents, or 0.64%.
The outlook for demand was clouded by a weak manufacturing activity survey from China.
The Caixin/Markit manufacturing purchasing managers’ index, indeed, fell to 49.0 in December from 49.4 in November.
The index has stayed below the 50-point mark that separates growth from contraction for five straight months.
Also, came a warning from the head of the International Monetary Fund that the global economy faced a tough year ahead.
Managing Director Kristalina Georgieva, indeed, said on Sunday that the United States, Europe and China – the main engines of global growth – were all slowing simultaneously, making 2023 tougher than 2022 for the global economy.
Oil prices had settled more than 2% higher on Friday, with Brent and WTI ending 2022 up 10.5% and 6.7% on a year before, respectively.
Supporting prices, President Vladimir Putin banned the supply of crude and oil products from Feb. 1 for five months to nations that abided by the price cap, although his decree also included a clause that allowed him to overrule the ban in special cases.
Meantime, Russian crude has been diverted to India and China from Europe.
On this wake, Moscow planned to increase diesel exports from the Baltic sea port of Primorsk to 1.81 million tonnes in January, but exports from Tuapse were expected to fall to 1.333 million tonnes.
In equity markets, benchmarks in Germany and France closed higher Monday.
Meantime, on this morning, Asian stock were mixed ahead of updates on U.S. employment amid fears of a possible global recession.
The Shanghai Composite Index gained 0.2% to 3,094.12 and the Hang Seng in Hong Kong added 0.6% to 19,906.65. Japanese markets were closed for a holiday.
Seoul’s Kospi shed 0.8% to 2,208.36 after South Korea’s 2022 exports fell 9.5% from the previous year and the country recorded its biggest trade deficit ever.
Sydney’s S&P-ASX 200 lost 1.6% to 6,927.20 after Australian house prices fell 1.1% and an index of manufacturing activity decline.
India’s Sensex opened up 0.5% at 61.167.79.
Singapore declined while Bangkok and Jakarta advanced.
New Zealand markets were closed for a holiday.
In currency trading, the dollar declined to 130.17 yen from Monday’s 130.80 yen.
The euro edged down to $1.0669 from $1.0700.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
