Good morning Farmer Family …
US farm markets started the week mixed but mostly weaker.
Corn prices eased around 0.2% lower.
Soybeans ended the day with a 0.27% losse, dragged down by meal which was 1.53% weaker.
Soy oil price, in contrast, was up 0.28% on the day.
Wheats faded their morning gains and closed fractionally mixed but mostly lower.
Notably, Chicago SRW wheat prices were 0.27% in the red at the bell.
Kansas City wheat prices ended the session with 0.42% losses.
Minneapolis spring wheat held onto fractional to 0.03% gains for the close.
Grain traders remained cautious ahead of quarterly grain stocks, annual crop production, U.S. winter wheat seeding and monthly World Agricultural Supply and Demand Estimates (WASDE) reports, all scheduled for release on Thursday.
Notably, USDA is expected to cut its corn and soy production outlook for drought-hit Argentina but also raise its estimate of U.S. grain and soybean supplies.
Meantime, the USDA reported its weekly grain export inspections for corn, soybeans and wheat.
From report, emerged that US exports have struggled to compete in the global marketplace with cheaper South American supplies.
Notably, data showed 397,585 MT of corn was shipped for export during the week that ended 1/05.
That was down from 683k MT last week and compares to 1.023 MMT from the same week last year.
Mexico was the No. 1 destination.
USDA had the accumulated corn exports at 9.998 MMT through 1/05, well behind last year’s 14.1 MMT pace.
As for soybean, the report showed 1.438 MMT of soybeans were shipped through the week that ended 1/05.
That was down by 37k MT from the prior week, but was up by 452k MT from the same week last year.
China was by far the No. 1 destination.
Accumulated soybean exports were listed as 30 MMT according to the weekly data, that is a 5.3% lag from last year’s pace.
As for wheat, USDA reported 201,673 MT of wheat was shipped during the week that ended 1/05.
That was up from 86k MT during the prior week but was 33k MT below the same week last year.
The weekly update had 12.09 MMT of wheat shipments accumulated for the season through 1/05.
That was slightly below last year’s pace so far.
Meantime, grain traders were also monitoring developments in Brazil, where supporters of far-right former President Jair Bolsonaro stormed government buildings on Sunday.
The Brazilian real weakened against the dollar on Monday, making the country’s crop exports even more affordable than U.S. supplies on the global market.
In this context, corn basis bids were steady to weak across the central U.S. after sliding 2 to 15 cents lower at three Midwestern locations on Monday.
Soybean basis bids were mostly steady across the central U.S. on Monday but did trend 5 cents higher at an Ohio elevator and 9 cents higher at an Illinois river terminal
Commodity funds were net sellers of CBOT corn, wheat, soybean and soymeal futures contracts, and net buyers of soyoil futures.
On this morning, Chicago soybean futures lost more ground.
Wheat fell for a third consecutive session while corn slid.
Notably, the most-active soybean contract on the Chicago Board of Trade was down 0.7% at $14.77-1/2 a bushel, as of 04:02 GMT, wheat gave up 0.9% to $7.35 a bushel and corn fell 0.4% to $6.50 a bushel.
In energy markets, oil edged lower on Tuesday.
Brent futures for March, indeed, fell 33 cents to $79.32 a barrel, a 0.4% drop, by 07:19 GMT.
U.S. West Texas Intermediate crude dipped 29 cents, or 0.4%, to $74.34 per barrel.
Both benchmarks climbed 1% on Monday, after China opened its borders over the weekend for the first time in three years.
However, expectations that further interest rate hikes in the United States, will slow economic growth and limit fuel demand weighed on prices.
China issued a second batch of 2023 crude import quotas, raising the total for this year by 20% from the same time last year.
However, analysts warned that China’s demand revival may play limited role to drive up oil prices under the global economic downward pressure.
Separately, analysts expects U.S. crude oil stockpiles fell 2.4 million barrels past week, with distillate inventories also seen slightly down.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, ended a six-session losing streak on Monday, as an uptick in capesize rates outweighed losses in panamax and supramax segments.
The overall index, edged up nine points, or 0.8%, to 1,139.
Notably, the capesize index gained 84 points, or 5.56%, to 1,596.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $694, at $13,237.
The panamax index extended its fall for the 11th consecutive day, dropping 49 points, or 3.77%, to 1,250, a four-month low.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, fell by $441 to $11,252.
Among smaller vessels, the supramax index fell 14 points to its lowest in two and a half years to 825.
In equity markets, on Wall Street, the benchmark S&P 500 dipped 0.1% to 3,982.09.
The Dow Jones Industrial Average lost 0.3% to 33,517.65 while the Nasdaq composite gained 0.6% to 10,635.65.
Forecasters expect Thursday’s report to show inflation slowed to 6.5% in December from November’s 7.1%.
That is down from June’s 9.1% peak but well above the Fed’s 2% target.
Thus, Fed officials say rates will have to stay elevated for an extended period of time to end upward pressure on prices.
Meantime, warnings are also coming for what look to be lackluster corporate profits, as companies contend with higher labor and other costs.
On this morning, stock markets were mixed in Asia.
Shanghai and Tokyo rose.
Hong Kong and Sydney retreated.
Notably, the Shanghai Composite Index rose 0.3% to 3,167.06 while the Hang Seng in Hong Kong shed 0.6% to 21,260.84.
The Nikkei 225 in Tokyo gained 0.9% to 26,212.28.
The Kospi in Seoul edged up less than 0.1% to 2,350.81 while Sydney’s S&P-ASX 200 lost 0.2% to 7,135.30.
New Zealand and Bangkok gained while Singapore and Jakarta retreated.
In currency trading, the dollar gained to 131.84 yen from Monday’s 131.56 yen.
The euro declined to $1.0728 from $1.0750.
Going back to analyzing the other agricultural markets …
From South America, harvesting of Brazil’s 2022/2023 soybean crop had reached 0.04% of the national planted area on Thursday last week, compared with 0.2% at the same time a year earlier, agribusiness consultancy AgRural said on Monday.
The consultancy cited disruption to field work because of wet conditions in states including top soybean grower Mato Grosso.
Additionally this year, the soy harvest in Parana state will start later because of lengthening of the crop cycle.
In Rio Grande do Sul, where planting of the last soybean areas is still in progress, the hot and dry weather is worrying farmers.
Brazil’s west and south should get rain during the second half of this week and into the weekend, offering some improvement for crops.
However, if hot and dry weather persist throughout January, Brazil’s soybean production potential will be reduced in Rio Grande do Sul, AgRural said.
In the rest of the country, the crop is developing well so far and good soybean yields are expected.
In mid-December, AgRural estimated Brazil’s soy production at a record 153.6 million tonnes for 2022/2023.
A new estimate will be released in mid-January.
Meantime, USDA attaché forecasted for the 2022/23 season, a soybean planted area expansion to 43.3 million hectares (ha) and a soybean production to 153 million metric tons (MMT).
The attaché also revised up its soybean export estimate for 2022/23 to 97 MMT, a new record.
USDA attaché maintained the 2021/22 harvested area estimate at 40.9 million ha and the production estimate at 126.6 MMT.
The attaché revised up the 2022/23 crush forecast to 51.5 MMT based on available supplies and increased demand for soybean products.
Crush demand will ultimately be impacted by the new administration’s biofuel mandate policy, which is expected to be decided by March 2023.
Meantime, Brazil’s Safras & Mercado consultancy estimates that advance sales of the country’s 2022/23 soybean crop have reached around 29% of the total expected production.
That is moderately below the prior year’s pace of 37% so far.
Potential economic and political disruptions may have more farmers holding onto their stored grain, per some experts.
Meantime, Brazil has harvested 2.3% of the country’s center-south corn area, below the 3.1% at the same time last year.
In other news, the first vessel carrying 68,000t of Brazilian corn has already been cleared by Chinese customs authorities for entry at a port in Guangdong province.
In Argentina, according to World Weather Inc, the country remained hot and dry across the weekend.
Light scattered rain is expected during the middle of this week as a cool front cuts across the country, but the moisture will not be enough to seriously change the drought situation.
In this context, the Rosario Grains Exchange showed that 2.5m HA of soybeans in the “zona nucleo” are in poor condition, with another 600k HA of the same zone in very poor condition.
Total Argentine plantings were listed at 17.1m HA, but Rosario Grains Exchange hinted at upcoming reductions.
Buenos Aires Grain Exchange, meantime, reported that for the week ending January 4, the 2022-23 wheat harvest was 100pc complete, yielding 12.3Mt vs 22.4Mt in the previous year, with an average yield estimate of 2.3t/ha vs 3.4t/ha.
In Europe, grain markets fell yesterday, partially on consequence of the strengthening of the euro against the dollar.
Rapeseed, meantime, fell sharply in the wake of the decline in palm prices, as a consequence of the strengthening of the Ringgit against the dollar.
Egypt’s call for tenders falls within the framework of aid from the World Bank and could therefore concern only a small volume.
Traffic has returned to normal on the Suez Canal after an incident over the weekend with a freighter that broke down.
From Russia, according to SovEcon, Russian July-December wheat exports are estimated at 22.8 MMT, which is rather modest, compared to 24.8 MMT in 2020/21.
Exports were hindered by strong ruble and expensive freight.
Since November USDRUB rose to 69.9 from 61.7, reflecting smaller exports and bigger imports.
However, the consultancy expects Russia’s 2023 January-July wheat exports to reach 21.3 million tonnes (Mt), a new record-high volume for the second half of the season.
As a results, total 2022-23 exports are forecast to reach a record 44.1Mt.
Shipments will be supported by the weakening of the ruble and lower competition with the EU, noting that France has already shipped around 80pc of its total export program, compared to 50-60pc on average.
Also, active shipments, backed by a bumper Russia’s crop, are likely to put pressure on global prices.
Indeed, Rosstat estimates the 2022 wheat crop at 102.7 MMT vs 76 MMT a year earlier.
The country’s on-farm wheat stocks as of December 1, 2022 have also hit record-high level of 25.6 MMT vs 16.1 last December.
In Ukraine, unusually warm weather for December and early January could have a negative impact on Ukrainian winter wheat and rapeseed crops, which may lead to lower yields.
The abnormally warm weather indeed negatively affects the hardening of winter crops and this is dangerous for poorly developed winter crops.
Warm weather also promotes the development of diseases and pests.
Meantime, the country has exported almost 23.6 million tonnes of grain so far in the 2022/23 season, down from the 33.5 million tonnes exported by the same stage of the previous season, agriculture ministry data showed on Monday.
The volume included around 8.6 million tonnes of wheat, 13.3 million tonnes of corn and about 1.7 million tonnes of barley.
From Pakistan, faced with a bevy of problems that include high inflation and severe flooding late last year, Pakistan’s southwestern province of Balochistan could faces a severe wheat shortage.
The country’s food minister recently called for other provinces to provide short-term assistance.
The government has planned to import 750,000 tonnes of wheat from Russia by March 30.
So far, 350,000 tonnes of wheat from Russia and other countries arrived at the Karachi port.
Another shipment of 450,000 tonnes of wheat from Russia would be imported through Gwadar.
However, Pakistan currently faces a serious flour crisis due to the worsening economic situation, shortage of foreign exchange and destruction of wheat crops in the recent floods.
People are standing in long queues to buy a single bag of flour.
The price of flour reached Rs130-160 per kilo.
The 10kg bag of flour provided by the federal government at the utility stores and the cheap flour bag by the Sindh government at a cost of Rs650 have disappeared from the market.
The four mill owners blame the crisis on the dwindling national stocks that affected the supply.
However, the national food security ministry rejected the claims of depleting stocks, saying that 4.437 million tonnes of wheat was available, which was sufficient to meet the country’s requirement till April – when the new crop hits the market.
Besides, 1.3 million tonnes would be imported, a source said.
Balochistan depended on Punjab and Sindh for wheat supply, but both the provinces had banned export of the commodity.
After the increase in government supplies, the hoarders have started bringing their stashes in the markets and quoting much lower rates to the flour mills.
As a results, wheat price crashed in the open market in the province by a whopping Rs750 per 40 kilos, on Monday, while the flour situation had eased.
From South East Asia, India’s wheat production is set to jump to a record after all-time high prices prompted farmers to expand planting areas with high-yielding varieties and good weather conditions.
Noatbly, this year production could rise to 112 million tonnes.
The weather in key wheat-producing states such as Uttar Pradesh, Madya Pradesh, Punjab and Haryana has been favourable with temperatures hovering below normal levels.
The current cold wave is good for the crop’s growth.
Farmers have opted for newer high-yielding varieties which are more resilient to climate change.
Farmers have planted wheat on 33.22 million hectares since Oct. 1, when the current sowing season began, up nearly 1% from a year earlier.
Malaysian palm oil futures dropped more than 3% on Tuesday to their lowest in more than two weeks, dragged by weaker rival oils and waning demand worries.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange fell 158 ringgit, or 3.84%, to 3,960 ringgit ($905.76) a tonne during early trade — its lowest since Dec. 23.
Exports from Malaysia during January 1-10 tumbled by half from the same week in December to 235,529 tonnes, cargo surveyor Amspec Agri said.
Malaysia’s December palm oil end-stocks fell 4.09% from the month before to a four-month low of 2.19 million tonnes, Malaysian Palm Oil Board (MPOB) data showed.
Production shrank 3.68% to 1.62 million tonnes, while exports ticked down 3.48% to 1.47 million tonnes.
From Japan, the country plans to cull more than 10 million chickens because of the spread of bird flu, a record for the peak infection season that runs from October to May, an agriculture ministry official said on Tuesday.
With the latest avian flu case detected at a poultry farm in Miyazaki in southwestern Japan on Tuesday, the total number of chickens to be culled in the 2022 season reached 10.08 million, exceeding the 9.87 million in the November 2020 to March 2021 season.
The number of outbreaks has reached 57, outpacing the 2020 season’s record 52 and the number of prefectures affected rose to 23 from 2020’s 18, which was the highest ever, said the ministry official, who oversees animal health.
From Australia, local markets tracked sideways again yesterday, with Western Australian values steady, while bids on the east coast were steady with a stronger AUD taking the sting out of the weaker buy-side interest.
On the international trade scene, South Korea’s Major Feedmill Group (MFG) has purchased an estimated 68,000 tonnes of animal feed corn expected to be sourced from South America in an international tender on Tuesday.
It was bought at an estimated at $339.79 a tonne c&f plus a $1.50 a tonne surcharge for additional port unloading.
The corn is for shipment from South America between Feb. 10 and March 1, with arrival in South Korea around April 10.
Seller was believed to be trading house Viterra.
The lowest offer presented at an Egyptian state purchasing tender for wheat on Tuesday was $337 per tonne for 60,000 tonnes of Russian wheat on a cost and freight basis.
The offer was presented by Aston.
Egypt’s state grains buyer the General Authority for Supply Commodities (GASC) is seeking an unspecified amount of wheat in an international purchasing tender as part of a World Bank-funded food security programme.
GASC said the tender was to supply 30,000, 40,000, 50,000, 55,000 or 60,000 tonnes on a C&F basis for shipment from Feb. 10-25 from any origin in the tender book. The wheat will be paid for at sight.
Turkey’s state grain board TMO issued an international tender to purchase about 24,000 tonnes of crude sunflower oil.
The deadline for submission of price offers in the tender is Jan. 13.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
