Good morning Farmer Family …
US farm markets, continued to be mixed but mostly lower also on Tuesday.
Corn prices got 0.34% gains.
Soybeans closed with 0.24% losses.
Meal price was 0.3% weaker at the bell, while soybean oil faded 1.23%.
Wheat contracts tumbled with winter wheat prices ended the day with double digit losses.
Notably, Chicago SRW closed down by 1.42%, while Kansas City HRW market lost 2.02%.
Minneapolis spring wheat were also red, but the losses were limited to 0.83%.
Traders are awaiting the next World Agricultural Supply and Demand Estimates (WASDE) report from USDA.
Notably, the 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.
That supported corn prices.
Meanwhile, continued the fall in wheat prices, as a consequence of weak export activity, and yet another bounce in the U.S. dollar did not help surely.
Wheat exporters in the United States, ended 2022 on the lowest note in over four decades as short supplies and cheaper overseas competition continued pushing U.S. wheat aside.
The U.S. Department of Agriculture already projects 2022-23 U.S. wheat exports at a 51-year low of 21.1 million tonnes (775 million bushels).
That volume is 26% lower than in 2016-17, the last time the United States was the world’s leading wheat exporter.
The USA are projected at No. 4 in 2022-23 with a record-low 10% share of global shipments.
Also, there are expectations of an increase in surface areas in the USDA report on Thursday.
Analysts are looking for all winter wheat acreage total 34.5m acres.
Last year’s planting was 33.3m acres.
HRW specifically is looking to expand by 800k on average, with a 300k acre boost for SRW.
As for for soybean, prices dipped as investors weighed weather-reduced production in some areas of South America against tepid demand for US supplies.
Notably, survey responses ahead of the WASDE data show the average trade guess for Argentina soy production is 46.5 MMT.
That would be a 3 MMT cut from the current figure if realized.
For Brazil, analysts are looking to see between 151 and 155 MMT in the report with an average expectation of a 400k MT increase.
However, analysts also expect USDA to show US soybean quarterly stocks at 85,24 MMT as of December 1, which is modestly below year-ago totals of 85,78 MMT.
Updated production information is expected to show average yields at 50.3 bushels per acre for a total production of 118,71 MMT.
Meantime, private exporters announced yestyerday to USDA having sold 174,181 t of soybeans for delivery to Mexico during the 2022/23 marketing year.
The soy complex, however, was dragged down by soyoil prices which fell in the wake of other vegoils.
In this context, corn basis bids were mostly steady across the central U.S. on Tuesday but did move 3 cents higher at an Ohio elevator and 5 cents lower at an Iowa processor.
Soybean basis bids were mostly steady across the central U.S., but did tilt 10 cents higher at an Ohio elevator and 3 cents higher at an Illinois river terminal.
Commodity funds were net sellers of CBOT wheat, soybean, soyoil and soymeal futures contracts, and net buyers of corn futures.
On this morning, Chicago wheat prices slid for a fourth consecutive session on Wednesday to trade near last session’s 15-month low.
Corn eased, giving up last session’s gains, while soybeans ticked higher.
Notably, the most-active wheat contract on the Chicago Board of Trade lost 0.4% to $7.27-3/4 a bushel, as of 0259 GMT, after dropping to its lowest since Oct. 2021 at $7.20-1/2 a bushel on Tuesday.
Corn fell 0.1% to $6.54-1/4 a bushel while soybeans gained 0.2% at $14.87-1/2 a bushel.
In energy markets, oil prices were broadly steady on Wednesday.
Moving in and out of negative territory, Brent crude futures were up 53 cents, or 0.7%, at $80.63 a barrel by 09:21 GMT.
U.S. West Texas Intermediate (WTI) crude futures rose 41 cents, or 0.6%, to $75.53 a barrel.
Both contracts rose on Monday and Tuesday, rebounding from a sharp selloff in the first week of 2023.
The oil market has been pulled lower by worries that sharply higher interest rate hikes to tame inflation would trigger a recession and curtail fuel demand.
On this wake, U.S. crude oil stockpiles jumped by 14.9 million barrels in the week ended Jan. 6, per latest data from the American Petroleum Institute (API).
At the same time, distillate stocks rose by about 1.1 million barrels.
Prices gained some support from hopes for fuel demand growth in China.
However, it is dawning on market players that China’s return to normality won’t be enough to propel oil back above $100/bbl on a sustained basis.
In ocean freight markets, the Baltic Exchange’s main sea freight index tracking rates for ships carrying dry bulk commodities, slipped on Tuesday, on lower rates for all vessel segments as panamaxes hit their lowest level in two years.
The overall index, indeed, was down 43 points, or 3.8%, to 1,096.
Notably, the capesize index lost 60 points, or 3.8%, to 1,536.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $496 at $12,741.
The panamax index extended its fall for the 12th consecutive day, dropping 61 points, or 4.9%, to 1,189, lowest since November 2020.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, fell by $547 to $10,705.
Among smaller vessels, the supramax index fell for the 13th consecutive session by 22 points to 803.
In equity markets, on Wall Street, the S&P 500 rose 0.7% to 3,919.25 after drifting between small gains and losses through the day.
The Dow Jones Industrial Average gained 0.6% to 33,704.10, and the Nasdaq composite climbed 1% to 10,742.63.
Investors were hoping for some clues about where the Fed is heading from its chair, Jerome Powell, who spoke at a forum in Stockholm on Tuesday.
But he gave little news about rates.
The next big event for markets is likely Thursday’s update on December U.S. inflation at the consumer level.
Economists expect it to show price gains slowed further, to 6.5% from 7.1% in November and from a peak of more than 9% in the summer.
A worse-than-expected reading could dash the building hopes on Wall Street that the Fed may stop its hikes soon and perhaps even cut rates by the end of the year.
The World Bank said Tuesday the global economy will come “perilously close” to a recession this year in its annual report.
Big U.S. companies will begin showing investors later this week how much profit they made during the last three months of 2022.
Hot inflation has been squeezing customers’ wallets and raising costs for businesses, threatening their earnings.
Meantime, job cuts are continuing also in tech-oriented companies.
On this morning, Asian shares were mostly higher.
The weak yen piqued buying sentiment in Japan, as that boosts the earnings of the nation’s exporters when converting overseas profits into yen.
Shares of Fast Retailing Co., which operates the popular Japanese Uniqlo clothing retailer, rose 1.4% in morning trading after the company announced that it was raising the salaries of its workers by up to 40%.
In this context, Japan’s benchmark Nikkei 225 rose 1.0% to finish at 26,446.00.
Australia’s S&P/ASX 200 gained 0.9% to 7,195.30.
South Korea’s Kospi edged up 1.7% to 2,255.98.
Hong Kong’s Hang Seng rose 0.5% to 21,436.05, while the Shanghai Composite added 0.2% to 3,123.52.
In currency trading, the U.S. dollar rose to 132.52 Japanese yen from 132.13 yen.
The euro cost $1.0736, down from $1.0737.
From South America, CONAB Brazil reports that as at 7 Jan, 2022-23 first (full-season) maize plantings are 90% complete compared to 92% last year, with favourable conditions aiding crop development in Mina Gerais and most parts of Parana.
Meantime, Anec (Brazilian trade group) has revised its Brazilian corn exports estimate for January to 5.024 million tonnes, up from 4.326 million tonnes forecast in the previous week, reflecting a surge in sales to China of over 1 million tonnes for January.
As for soybean, sowings were 99% complete, similar to this time last year.
Recent rainfall favoured crop development in Mato Grosso, Parana (excl. western and central regions), Mato Grosso do Sul and Goias, variable precipitation hampered fieldwork and adversely affected crop establishment in Rio Grande do Sul.
The USDA’s Brazilian attaché has pegged the 2022-23 Brazilian soybean crop at 153.0Mt, 1Mt more than the December USDA number.
Meantime, Brazil’s Anec estimates that the country’s soybean exports in January will reach 1.97 MMT, which is moderately higher than its last estimate from a week ago.
Anec also expect to see Brazilian soymeal exports reach 1.403 million metric tons this month.
Brazil’s Safras and Mercado reported 43.7MMT, or ~36.5% of the expected output, of soybeans were sold by farmers through 1/06, compared to the average 41%.
In Argentina, hot, dry weather is expected across Argentina’s crop belt over the next 10 days, adding stress on an already drought-diminished crop, according to a Commodity Weather Group forecast.
However, the drought in Argentina is likely to break in coming months, though it could be March before rain and soil moisture levels fully return to normal, the Buenos Aires Grain Exchange said on Tuesday.
As a result, the exchange expects the 2022/23 wheat harvest to reach just 12.4 million tonnes, down from the 22.4 million tonnes harvested the prior year.
While the summer season, which began in late December, is likely to bring relief, the fall season could bring El Nino in late March, the exchange said.
Unlike La Nina, the El Nino phenomenon could cause higher-than-usual rainfall in Argentina’s agricultural provinces.
In Europe, yesterday continued the decline in grain prices on Euronext.
Euronext rapeseed prices also fell, even as unusually mild weather could have a negative impact on Ukrainian rapeseed crops.
Europe experienced its second-warmest year on record in 2022, European Union scientists said on Tuesday.
The EU’s Copernicus Climate Change Service said 2022 was also the world’s fifth-warmest year, by a small margin.
C3S records date back to 1950, but other, longer datasets confirm 2022 was the world’s fifth-warmest year since at least 1850.
The last eight years were the world’s eight hottest on record, C3S said.
Copernicus said temperatures in Europe have increased by more than twice the global average over the last three decades.
Combined with a dearth of rain, the heat triggered a widespread drought that initial analysis ranked as Europe’s worst in 500 years.
Low water levels delayed shipping along Germany’s Rhine, while the lack of rain hit hydropower generation and slashed maize and soybean crop yields.
Britain experienced its hottest year on record in 2022, its national weather service said on Wednesday.
However, the competitiveness on the international scene is tough.
The geopolitical premium linked to the conflict in Ukraine has completely disappeared.
To this was added the strengthening of the euro, penalizing EU exports.
Soft wheat exports from the European Union in the 2022/23 season that started on July 1 have reached 16.97 million tonnes, data published by the European Commission showed on Tuesday.
That was only slightly ahead of last year’s pace so far after a strong start.
The Commission said that, due to a technical issue, the data which usually runs until the previous Sunday was only for the current season until Friday, Jan. 6.
The total so far this season is compared with 16.13 million tonnes by the same week in 2021/22, the data showed.
EU barley exports so far in 2022/23 totalled 2.93 million tonnes against 4.98 million a year ago, while EU maize imports were at 15.12 million tonnes, against a year-earlier 7.89 million.
European Union soybean imports during the 2022/23 marketing year are trending moderately below year-ago levels after reaching 5.79 MMT through January 6.
EU soymeal imports are also down year-over-year after reaching 8.26 million metric tons during the same period.
The EU would have imported a total of 3.89 million tonnes of rapeseed since the beginning of the campaign on January 6, against 2.76 last year to date.
From Ukraine, as of January 8, 633 ships with more than 16.9 mln tonnes of Ukrainian food left the ports of Great Odesa under the “grain initiative”.
Corn accounted for more than 46% of the overall export volumes over the reporting period (7.8 mln tonnes), wheat accounted for another 28% (4.8 mln tonnes) and vegetable oil for 6% (1 mln tonnes).
China and Spain were the key destinations, which imported a total of 3 mln tonnes of all goods delivered via the “grain corridor”.
In December 2022, the supplies to China increased significantly that allowed this country to take a leading position among importers.
In particular, almost 940 thsd tonnes of corn and 133 thsd tonnes of meal were exported to China in December.
The total volume of deliveries to China in December amounted to almost 1.1 mln tonnes, which is 68% more than in November (636 thsd tonnes).
In Russia, Russian wheat prices have remained largely unchanged since the start of the year in thin holiday trading.
“Markets are not well shaped yet, we expect them searching new post-holiday equilibriums during (the) current week,” IKAR head Dmitry Rylko said.
Notably, prices for Russian wheat with 12.5% protein content and for supply from Black Sea ports were at $306 per tonne for free on board (FOB) delivery in the first half of February, according to the IKAR.
However, according to Sovecon, trend may change, if the severe frosts would hamper winter crops in southern and central regions of Russia.
Weather is to remain cold for a few more days and we could see some winter kill which can start to happen with topsoil temperature below minus 15°C, Sovecon said.
However, if models are right and it will get warmer after Jan. 11-12 the damage will be limited.
For other products, prices were also mostly unchanged.
Notably, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 12,350 rbls/t unchanged (Sovecon).
Price for sunflower seeds was at 25,625 rbls/t unchanged (Sovecon).
Price for domestic sunflower oil was at 78,100 rbls/t unchanged (Sovecon).
Price for domestic soybeans was at 31,600 rbls/t unchanged (Sovecon).
Export price for sunflower oil was at $1,180/t +$10 oil (Sovecon).
Price for white sugar, Russia’s south was at $725.05/t +$16.52 (IKAR).
($1 = 69.6075 roubles).
From Australia, local markets pulled back on the cash boards yesterday on the bid side for wheat, barley and canola.
Once again the stronger AUD contributing to the softer tone in the market.
Meantime, the March ASX East Coast wheat contract settled at a 6-month low of AUD$378.80/t, barley values in WA are still around the AUD$310/t FIS mark and canola along the East Coast is back around AUD$720-730/t track level.
Viterra’s latest harvest report notes that growers delivered over one million tonnes during the past week, taking the total received to 7.98Mt, with wheat making up the majority.
This is significantly more compared to the same time last season, with a late start and big crop extending harvest into 2023 for many southern Australian growers.
Arno Bay, Port Lincoln and Crystal Brook, broke their season receival records, all previously set in the 2016/17 harvest.
A total of nine Viterra sites have now had a record-breaking season of grower deliveries.
On the international trade scene, Japan issued a regular tender to purchase 90k tonnes of food-quality wheat from the United States and Canada that closes on Thursday.
Of the total, 45% is expected to be sourced from the U.S. The grain is for shipment between February 21 and March 20.
Egypt’s state grains buyer, the General Authority for Supply Commodities, is believed having bought 120,000 tonnes of Russian wheat from Aston at a price of USD 337 C&F in an international tender closed on Tuesday.
Taiwan’s MFIG purchasing group bought about 65,000 tonnes of animal feed corn to expected to be sourced from the United States in an international tender on Wednesday.
It was believed to have been sold by trading house Columbia Grain International.
The corn was purchased at an estimated premium of 219.66 U.S. cents a bushel c&f over the Chicago July 2023 corn contract.
Offers had been sought for corn sourced either from the United States, Brazil, Argentina or South Africa.
Traders said U.S. corn dominated offers in the tender, with a total nine consignments each of 65,000 tonnes submitted including Columbia Grain’s winning offer.
Two offers were submitted each for 65,000 tonnes of Argentine corn, the lowest at an estimated premium of 227.50 U.S. cents a bushel c&f over the Chicago July corn contract.
No offers were reported for Brazilian or South African corn.
The tender sought shipment between March 20 and April 8 if the corn is sourced from the U.S. Gulf, Brazil or Argentina.
If sourced from the U.S. Pacific Northwest coast or South Africa, shipment was sought for April 4-23.
In its last reported tender on Dec. 7, the MFIG group bought about 65,000 tonnes of feed corn to expected to be sourced from Brazil.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
