Good morning Farmer Family …
US farm markets, closed lower on Tuesday.
Corn prices were 1.18% weaker.
That erased more than half of last week’s gains.
Soybeans started the new year with sharp losses, as the March contract was down 2.08% at the bell, reversing most of last week’s gains.
Soymeal fell as well, closing 1.25% in the red.
Bean oil prices closed near their lows for the day on 1.36% losses.
Front month wheat prices fell by over 2%.
Notably, both Chicago soft red winter, and Minneapolis spring wheat, gave back 2.08% on the session.
Kansas City HRW closed 2.11% in the red.
Better-than-expected rains in Argentina over the weekend, coupled with lackluster US export inspection data, has been more than enough reason for sagging grain and oilseed prices in the first session of 2023.
Also, the dollar rallied, making U.S. commodities, including farm products, less attractive to importers.
As a result, a broad-based selling hit a range of markets included ag commodities.
Oil prices tumbled, also pressured by a gloomy economic outlook, while U.S. stocks struggled.
Profit-taking also weighed on grain and oilseed prices after markets posted annual gains in 2022.
Going inside the news, global traders kept their eyes on Argentina weather conditions during the weekend.
Crop stress in northern and eastern Argentina will rebuild to about 60% of the soy and corn area from just under half, Commodity Weather Group said.
However, weather remains a “mixed bag” because conditions are expected to turn drier again, later in the week.
Weekly U.S. grain export inspections were somewhat disappointing, as the USDA reported corn shipments were 667,010 MT for the week that ended 12/29.
That was down from 922k MT last week and down from 760k MT during the same week last year.
China and Mexico were the weeks top destinations.
The MYTD total corn shipments were 9.584 MMT as of 12/29.
That trails last year’s pace by 26.7%.
As for soybean, the USDA reported the weekly soybean export was 1.46 MMT.
That was down from 1.77 MMT last week and compares to 1.62 MMT during the same week last year.
China was the top destination with 908k MT (~62%).
The accumulated inspections reached 28.62 MMT, down 7.1% from last year’s pace.
As for wheat, the report showed 85,672 MT of wheat was shipped during the week of 12/29.
That was down by 228k MT from the week prior and was 145k MT under the same week last year.
USDA reported 11.84 MMT of wheat was shipped for the season through 12/29 – down by 3% from last year’s pace.
On the weather side, most areas east of the Mississippi River will see at least some additional rain and/or snow between Wednesday and Saturday, while areas farther west should remain dry during this time, per the latest 72-hour cumulative precipitation map from NOAA.
Over the winter, the USDA’s National Agricultural Statistics Service releases only monthly reports for select states on crops conditions.
Yesterday, the U.S. Department of Agriculture said condition ratings for winter wheat fell during December in Kansas, the top U.S. winter wheat producer, and in several other drought-hit Plains states, although they improved in Colorado and Oklahoma.
Notably, the USDA rated 19% of the Kansas winter wheat crop in good-to-excellent condition, as of Jan. 1, down from 21% in late November.
Wheat ratings also declined during December in Montana, Nebraska, South Dakota and North Dakota.
Approximately 69% of U.S. winter wheat is produced in an area currently experiencing drought, the USDA said last week.
Nearly 37% of Kansas is in “exceptional drought”, the most severe of five categories in the weekly U.S. Drought Monitor report.
However, in Colorado, 50% of the state’s wheat was rated good-to-excellent, up from 30% by late November.
“Productive snowstorms during the latter half of December improved moisture across the state,” USDA’s Colorado report said.
Ratings improved also in Illinois, as the USDA rated 68% of the state crop as good-to-excellent by Jan. 1, up from 30% in late November.
Updated crop ratings were not available online for Texas, another key wheat state.
The government will resume its weekly U.S. crop progress reports in April.
In this context, corn basis bids were steady to firm across the central U.S. after improving 1 to 5 cents at three Midwestern locations.
Soybean basis bids were steady to mixed across the central U.S., after moving as much as 10 cents higher at an Illinois river terminal and as much as 10 cents lower at a Nebraska processor.
Commodity funds were net sellers for 6,500 lots of corn, 9,000 lots of soybeans and 5,000 lots of wheat.
After the sessions close, monthly NASS data showed 447.397 mbu of corn was used for ethanol production during November.
That was down 0.4% from October’s pull, and was 4.2% lighter yr/yr.
The 2022/23 season’s ethanol pull reached 1.28 bbu through November, trailing last year by 62.1 mbu.
USDA’s December WASDE had a 51 mbu loss programmed in.
Corn used for ethanol is 24% of the current forecast through Q1, needing a 444 mbu/mo average.
The monthly Fats and Oils data showed crushers used 189.464 mbu of soybeans during November.
That was a 3.6% drop from October and a 0.6% lighter crush than Nov ’21.
Through Q1, 553.69 mbu of soybeans were crushed.
That is 2.05 mbu ahead of last season’s pace – with the Dec WASDE forecasting a 41 mbu increase yr/yr.
The MYTD pace is 24.7% of the current forecast, needing a 188 mbu/month pace.
On this morning, soybean price rose, recouping some of last session’s losses.
Corn and wheat prices continued to easy.
Notably, the most-active soybean contract on the Chicago Board of Trade added 0.4% to $14.98-1/4 a bushel, as of 03:35 GMT, corn lost quarter of a cent to $6.70-1/4 a bushel and wheat slid 0.3% to $7.73 a bushel.
In energy markets, oil continued edging lower on Wednesday after slumping in the previous session.
Concerns about weak demand due to the state of the global economy and China’s rising COVID cases, weighed on prices.
Notably, Brent futures for March delivery fell 43 cents to $81.67 a barrel, a 0.5% loss, by 07:00 GMT. U.S. crude dropped 39 cents, or 0.5%, to $76.54 per barrel.
Both benchmarks plunged more than 4% on Tuesday, with Brent suffering its biggest one-day loss in more than three months.
The head of the International Monetary Fund warned that much of the global economy would see a tough year in 2023 as the main engines of global growth – the United States, Europe and China – were all experience weakening activity.
On this wake, U.S. crude oil stockpiles likely rose 2.2 million barrels, though distillate inventories expected down, according to some analysts.
The Chinese government increased export quotas for refined oil products in the first batch for 2023, signalling expectations of poor domestic demand.
Saudi Arabia may further cut the prices for its flagship Arab Light crude grade to Asia in February, as concerns of oversupply continued to cloud the market.
Lending oil some support, the dollar weakened on Wednesday after posting big gains in the previous session.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index on Tuesday posted its worst decline on record, pressured by waning rates across vessel segments due to weak demand from China amid surging COVID-19 cases.
The overall index, indeed, lost 265 points, or 17.5%, to 1,250, its biggest daily percentage drop since 1984.
Notably, the capesize index dropped 626 points, or 27.7%, marking its worst day in more than four months, at 1,635.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, decreased $5,188 to $13,561.
The panamax index fell 97 points, or about 6.3%, to 1,438, its lowest since Sept. 6.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased $869 to $12,944.
The supramax index shed 94 points to $968, its lowest in more than two years.
In equity markets, on Wall Street, the benchmark S&P 500 index lost 0.4% to 3,824.14.
The Dow Jones Industrial Average slipped less than 0.1% to 33,136.37.
The Nasdaq composite dropped 0.8% to 10,386.98.
Technology stocks were among the biggest weights on the market. Apple fell 3.7%.
Shares in the iPhone maker fell nearly 27% in 2022, their first annual decline in four years.
Tesla Inc plunged more than -12% after the electric vehicle maker missed Wall Street estimates for quarterly deliveries.
The energy sector also dropped about -4%, dragged by lower oil prices.
On top of concerns about inflation, investors worry about the impact of Russia’s war against Ukraine and China’s COVID-19 outbreaks.
The U.S. government is due to release December employment figures Thursday.
Those are expected to show a decline in hiring.
Investors hope that will encourage the Fed to lower or delay possible rate hikes.
The central bank’s next policy decision on interest rates is set for Feb. 1.
Investors also are looking for corporate profit reports in mid-January.
Analysts expect earnings for companies in the S&P 500 to slip during the fourth quarter and remain flat for the first half of 2023.
On this morning, in Asia, the Shanghai Composite Index gained less than 0.1% to 3,118.94 while the Nikkei 225 in Tokyo tumbled 1.5% to 25,716.86 on its first trading day of the year.
The Hang Seng in Hong Kong rose 2.3% to 20,615.21.
The Kosp in Seoul added 1.7% to 2,255.98.
Sydney’s S&P-ASX 200 advanced 1.6% to 7,059.20.
India’s Sensex gained 0.2% to 61.294.20.
New Zealand advanced while Southeast Asian markets declined.
In currency trading, the dollar edged down to 130.78 yen from Tuesday’s 131.03 yen.
The euro advanced to $1.0572 from $1.0547.
Going back to analyzing the other agricultural markets …
From South America, Brazilian governmental data shows that the country’s corn exports in December nearly doubled year-ago levels after climbing to 6.41 MMT last month.
That was an 88% increase from Dec ’21 as the record second crop there continues to impact world trade.
Brazilian export data showed 2.019 MMT of soybean exports for December.
That compares to 2.712 MMT for Dec of ’21.
Parts of the grain belt in Argentine have received decent precipitation within the last several days with some areas totaling close to 2 inches (51 mm) over the last two weeks.
Meantime, according to the Buenos Aires Grains Exchange as of last Thursday, some 28% of Argentina’s soybeans were in fair or bad condition, up from 25% a week earlier.
Only 10% was good or excellent, up from 12%.
That compares with 57% good or excellent and 8% fair or bad in the same week last year.
For corn, 28% was fair or bad last week, up from 26% a week earlier and well above the year-ago 8%.
Good or excellent corn totaled 15%, unchanged on the week but much worse than 58% last year.
Those ratings may not account for the most recent rainfall, but any improvement in this week’s conditions could soon deteriorate due to the predicted dry and warm weather combination through mid-month.
La Nina has not yet officially loosened its grip, but whether it does in the next several weeks could be the difference between OK and horrible crops for Argentina.
Although uncommon, it is not unprecedented for La Nina conditions to fade over a period as short as three or four weeks.
In Europe, the start of the year was in the red for grains on Euronext, while rapeseed prices, found support from biodiesel demand and buying interest from China.
Operators posted their fears about the competitiveness of Black Sea sources.
Czech authorities are preparing to destroy up to 220,000 hens on a poultry farm in the west of the country after bird flu was discovered there last week, in the biggest outbreak to date.
Bird flu was reported last Friday at the farm located 150 km (90 miles) west from Prague, which can house up to 750,000 chickens, after an increase of deaths in one of three halls there.
On Tuesday, another case of bird flu was reported at a farm 68 km south of Prague, where 12,000 chickens and 1,000 turkeys will be culled, CTK news agency reported.
Meantime, European Union soft wheat exports during the 2022/23 marketing year are 6% above last year’s pace so far after reaching 16.71 MMT through January 1.
France is Europe’s leading exporter with 6.83 million tonnes, followed by Romania with 1.96 million and Germany with 1.88 million tonnes.
Morocco, Algeria, Egypt, Nigeria and Saudi Arabia are the top five buyers.
EU barley exports, in contrast, are down 43% year-over-year, meantime, with 2.8 MMT.
Meantime, EU corn imports were roughly doubling year-over-year sales, with 14.67 MMT through January 1.
The grain primarily was sourced from Brazil and Ukraine, with Canada, Serbia and South Africa rounding out the top five destinations.
Soybean imports have reached 5.52 MMT through January 1, which is 16% below last year’s pace so far.
EU soymeal imports were also down slightly year-over-year, with 8.29 million metric tons during the same period.
Rapeseed imports stood at 3.73 million tonnes on January 1 against 2.71 million the previous year to date.
From North Africa, Morocco’s trade deficit widened 56.9% to 287 billion dirhams ($27.5 billion) in the first 11 months of 2022 year, mainly as a result of higher energy costs, data from the foreign exchange regulator showed last Friday.
Imports rose 42.3% from a year earlier to 676 billion dirhams, while exports increased 33% to 389 billion dirhams, the regulator said in a monthly report.
Morocco’s energy bill soared the most, up 110% to 141.5 billion dirhams, while the cost of wheat imports more than doubled to 24 billion dirhams after the worst drought in decades.
Morocco, which has the world’s largest phosphates reserves, reported a 54.8% rise in exports of the mineral and its derivatives – including fertilisers – to 108 billion dirhams.
From Russia, Russia’s January wheat exports will remain high.
According to the IKAR, indeed, Russia will export 3.6 million to 3.8 million tonnes of wheat in January.
Sovecon saw January wheat exports at 3.6 million-4.0 million tonnes, while Rusagrotrans saw the supply at 3.6 million tonnes.
The recent weakening of the rouble against the dollar could help wheat exports in the short term.
There is a lot of chatter about the insurance of vessels in the Black Sea in 2023 as reinsurance is likely to be challenging.
However, looking at the impressive line-up of vessels from Russia likely it is not a big deal.
Meantime, prices for Russian wheat with 12.5% protein content and for immediate supply from Black Sea ports were unchanged at $307-$311 per tonne at the end of last week, according to Sovecon.
Domestic trading activity is however low this week, due to Russia’s New Year holidays which end on Jan. 9, while the weather remains favourable for the winter grain sowings after recent rains in the South.
As for other products, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 12,350 rbls/t -25 rbls ($173.9) (Sovecon).
Price for sunflower seeds was at 25,625 rbls/t +200 rbls (Sovecon).
Price for domestic sunflower oil was at 78,100 rbls/t +925 rbls (Sovecon).
Price for domestic soybeans was at 31,600 rbls/t unchanged (Sovecon).
Export price for sunflower oil was at $1,170/t +$20 (Sovecon).
Price for white sugar, Russia’s south, was at $708.5/t -$12.4 (IKAR). ($1 = 71.0000 roubles).
In other news, the customs duty on the export of sunflower oil from Russia in January, as in three previous months, remains zero.
At the same time, the export duty on sunflower meal will by increased by almost 23 times to 1826.9 RUR/t from 79.8 RUR/t in December, Interfax reports.
Indicative prices, based on which the duty was calculated, were announced at 1207.6 USD/t for oil (1178.1 USD/t month ago), 246.2 USD/t for meal (231.1 USD/t).
From Ukraine, over the holiday weekend, 9 vessels exported 432 thsd tonnes of Ukrainian food products to countries of Africa, Asia and Europe through the “grain corridor”, Ukrainian Sea Ports Administration reported on January 3.
“In particular, bulker HONORINE is carrying 27.5 thsd tonnes of Ukrainian grain to Tunisia, bulker VELVET is delivering 57 thsd tonnes of wheat to Bangladesh”, – the message specifies.
Currently, 630 thsd tonnes of agricultural products are being loaded on 19 ships in the ports of Odesa, Chornomorsk and Pivdennyi.
“In the Bosphorus, 94 vessels are awaiting for inspection (69 vessels are empty for loading, and 25 are already loaded with agricultural products).
Vessels are waiting for more than a month on average.
In total, since August 1, 2022, 620 ships have already left the ports of Great Odesa exporting 16.5 mln tonnes of Ukrainian food.
However, on January 3, there were no ships in the Black Sea moving through the “grain corridor” for loading in the ports of Great Odesa, which may be caused by problems with their reinsurance, the head of the monitoring group of the Institute of Black Sea Strategic Studies Andriy Klymenko said.
Starting January 1, indeed, the region of Ukraine, Russia, Belarus and Moldova will not be subject to the extension or conclusion of new contracts in terms of losses/damages caused by military actions. Thus, one of three policies required for marine transportation will not be covered.
That is, it will become (already has become) extremely difficult to charter a vessel to Ukrainian ports (and not only Odesa, but also the Danube ports).
The coordination council, which includes representatives of the Ministry of Agriculture, the Ministry of Infrastructure, the Ministry of Economy, the Ministry of Finance, the Ministry of Foreign Affairs, state-owned railway operator Ukrzaliznytsia, the State Border Guard Service, the State Service on Food Safety and Consumer Protection, the State Customs Service, the State Service for Transport Safety, USPA and specialized associations, has already discussed this problem and (according to reports by mass media) turned to the government with a proposal to allow Ukrainian insurance companies to pay abroad for reinsurance.
However, it should also note that, according to the message of the Ministry of Infrastructure dated January 3, “new ships to call for loading to the ports of Odesa region” are not expected.
From South East Asia, the Indian government is considering selling 2.1 million tonnes of wheat in open market to control food inflation.
A final decision will be taken in the next 10 days, two government officials said on Tuesday.
Notably, the government has about 2.1 million tonnes of surplus wheat over and above the mandated buffer after it decided to discontinue the free foodgrain distribution programme that was operational for 28 months.
Until April, the government will have 3 million tonnes of surplus wheat for intervention, which would be enough to control prices, the official added.
Food price inflation eased to 4.67% in November from 7.01% in October.
However, even though India’s November retail inflation reading came in below the upper end of the central bank’s target band for the first time last year on the back of a softer rise in food prices, wheat is still near its record high, trading at 28,910 rupees per tonne on Tuesday.
Meantime, India’s palm oil imports in December jumped 94% from a year earlier to a record high for the month as palm oil’s higher discount to rival vegetable oils led refiners to raise purchases during the seasonally weak winter period.
Notably, India’s palm oil imports reached 1.1 million tonnes last month.
The imports for December were slightly lower than November purchases of 1.14 million tonnes and compare with an all-time high of 1.26 million tonnes in September 2021.
Meantime, soyoil imports in December fell 36% from a year earlier to 252,000 tonnes, while those of sunflower oil dropped 26% to 190,000 tonnes, the dealers said.
Higher palm oil imports by India, would help top producers Indonesia and Malaysia cut their inventories and support benchmark palm oil prices, which are trading near their highest levels in five weeks.
India’s palm oil imports for the December quarter jumped 16% from the September quarter to a record 3.1 million tonnes, dealers estimate.
However, India’s palm oil imports in January could come down to around 850,000 tonnes.
In other news, India aims to cut spending on food and fertiliser subsidies to 3.7 trillion rupees ($44.6 billion) in the fiscal year from April, down 26% from this year, two government officials said.
Food and fertiliser subsidies alone account for about one-eighth of India’s total budget spending of 39.45 trillion rupees this fiscal year.
The government expects to budget around 2.3 trillion rupees for food subsidies in the coming fiscal year, compared with 2.7 trillion rupees for the current year to March 31, the two officials said.
Spending on fertiliser subsidies will likely fall to about 1.4 trillion rupees, according to one of the officials and a third government official.
That compares with nearly 2.3 trillion rupees this year, the third official added.
The reduction in fertiliser subsidies is also driven by expectations of lower crude oil prices and the government’s revised gas procurement policy for fertiliser companies, which came into effect earlier this month, two of the officials said.
($1 = 82.8775 Indian rupees).
On the international trade scene, a group of importers in Thailand has issued an international tender to purchase up to 75,200 tonnes of animal feed wheat.
The deadline for submission of price offers in the tender is also Wednesday, Jan. 4.
Shipment is sought between April 1-20, 2023.
South Korea’s state-backed Agro-Fisheries & Food Trade Corp. has bought about 6,000 tonnes of food-grade soybeans free of genetically-modified organisms (GMOs) in an international tender for up to 25,000 tonnes which closed on Wednesday.
The soybeans were sought in the tender from any worldwide origins for arrival in a series of consignments between December 2023 and June 2024.
The agency regularly buys supplies with delivery following several years later.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
