Good morning Farmer Family …
US markets were closed yesterday, because of the U.S. public holiday for Martin Luther King Day.
Meantime, in pre-opening this morning, prices tumbled for all products.
Notably, the most-active soybean contract on the Chicago Board of Trade lost 0.7% to $15.16-3/4 a bushel, as of 04:06 GMT.
Wheat fell 1% to $7.36-1/2 a bushel and corn gave up 0.7% to $6.70 a bushel.
Soybean prices lost ground, with prices dropping for the first time in four sessions, as expectations of an all-time high Brazilian crop and concerns over economic growth in top consumer China weighed on the market.
Wheat also fell, while corn slid from a two-week high.
In energy markets, oil prices were mixed, after China posted its weakest annual economic growth in nearly half a century.
Brent crude futures edged up by 7 cents, or 0.1%, to $84.52 by 07:27 GMT.
U.S. West Texas Intermediate (WTI) crude futures slid 73 cents, or 0.9%, to $79.15.
Brent crude has gained nearly 10% over the past 10 days as optimism over China’s reopening had boosted sentiment.
However, data released on Tuesday showed China’s oil refinery output in 2022 had fallen 3.4% from a year earlier, its first annual decline since 2001, although daily December oil throughput rose to the second-highest level of 2022.
China’s gross domestic product expanded 3% in 2022, badly missing the official target of “around 5.5%” and marking the second-worst performance since 1976.
Also, the outlook for the rest of the global economy is uncertain.
In a bearish survey released at the annual World Economic Forum in Davos, two-thirds of private and public sector economists polled expected a global recession this year, with about 18% considering it “extremely likely”.
A rise in the dollar from seven-month lows also put pressure on oil prices.
Meantime, there is a jump in crude supply from Russia weighing on the market, with seaborne exports having risen to 3.8 million barrels per day last week, the highest level since April.
In ocean freight markets, the Baltic Exchange’s main sea freight index was unchanged on Monday, languishing near the multi-year low touched last week, as a slight uptick in rates for larger vessels countered a fall in the supramax segment.
The overall index, indeed, was flat at 946 points.
Notably, the capesize index gained 12 points, or about 1%, to 1,311.
Average daily earnings for capesize vessels, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $104 at $10,874.
The panamax index snapped its 15-session losing streak, gaining 2 points, or about 0.2%, to 1,071.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, rose by $18 to $9,636.
Among smaller vessels, the supramax index fell 13 points to 673.
In equity markets, yesterday European markets gained after Germany reported inflation cooled in December.
The DAX in Frankfurt gained 0.3% to 15,134.04 and the CAC 40 in Paris also added 0.3% to 7,043.31.
Britain’s FTSE 100 edged 0.2% higher to 7,860.07.
Meantime, Asian shares were mixed this morning after China reported its economy data.
The Chinese economy is gradually reviving after antivirus controls and a real estate slump dragged down growth last year.
The government has begun to soften a crackdown on technology industries and to roll out more support for private businesses and the property sector, seeking to spur a recovery.
However, data reported Tuesday showed growth of the world’s second largest economy slid to 2.9% over a year earlier in December from the previous months 3.9%.
Meantime, investors are watching to see if Japan’s central bank will alter its longstanding policy of keeping its key interest rate at minus 0.1% when it wraps up a policy meeting on Wednesday.
In this context, Hong Kong’s Hang Seng index lost 1.2% to 21,489.18 and the Shanghai Composite index edged 0.2% lower to 3,222.23.
In Seoul, the Kospi lost 0.9% to 2,379.39.
Australia’s S&P/ASX 200 was barely changed, at 7,386.30.
Tokyo’s Nikkei 225 index gained 1.2% to 26,138.68.
Bangkok’s benchmark was nearly unchanged.
In currency trading, the dollar was at 128.87 Japanese yen, up from 128.53 yen.
The euro slipped to $1.0820 from $1.0822.
Going back to analyzing the other agricultural markets …
From Central America, the Mexican government announced on Monday a temporary 50% tax on white corn exports, arguing it is necessary for the grain to remain in the country to guarantee supply and price stability.
The new levy will be in force until June 30.
Mexico is estimated to have produced almost 23 million tonnes of white corn in 2022, according to the most recent data from the Agriculture Ministry.
The vast majority of corn is consumed locally and only a small part is for export.
Mexico, indeed, exported only 238,000 tonnes of white corn between January and October of last year and imported 614,000 tonnes of this type of grain in the same period, data from the ministry shows.
From South America, Brazilian soybean growers will harvest a record soy crop just below 153 million tonnes in the 2022/2023 cycle.
One of the main drivers of the rise in production is a bigger planted area, which analysts believe will reach 43.4 million hectares (107.2 million acres) this season, up from 42.83 million hectares previous forecasted.
That, if confirmed, will represent increases of 21.8% in output and 4.58% in area sowed compared with the past season.
Meantime, rains are expected to return as February approaches, which could limit some damage to crops, improving growing conditions.
In Europe, yesterday continued the erosion in grain prices, with Euronext wheat edged to a 10-month low.
Notably, March milling wheat on Paris-based Euronext was down 0.43% at 287.5 euros ($311.05) a tonne at the bell.
The contract earlier fell to 286.25 euros for its lowest since March 8 and the weakest front-month price, since Feb. ’22.
The euro touched a nine-month peak against the dollar, making European grain more expensive for export.
Competitive offers of Russian wheat in tenders by Turkey and Egypt last week have also weighed on prices.
Cheap prices were again being offered on Monday for shipments through Ukraine’s wartime shipping corridor.
In Germany, standard 12% protein wheat for February delivery in Hamburg was offered for sale at a premium of about 12 to 13 euros over Euronext March, but with little purchase interest visible.
The only bright spot have been market talk that Morocco last week bought about 180,000 to 240,000 tonnes of milling wheat, mainly from France but possibly some to be sourced from Germany, for rapid arrival.
Rapeseed prices also lost ground, with Europe massively importing Canadian and Australian sources, which are more competitive.
($1 = 0.9243 euros)
From North Africa, Egypt’s government will start selling discounted bread to people not enrolled in its bread subsidy programme as it battles accelerating inflation, the supply minister said on Monday.
Notably, people will be able to buy 90g loaves at cost price using pre-paid “debit cards”.
The price was yet to be decided but would be less than 1 Egyptian pound ($0.03), with a trial period starting on Wednesday.
The decision would increase bread sold by the government by up to 10%, Moselhy said.
Egypt’s private sector importers and mills have struggled in past months to pay for hundreds of thousands of tonnes of wheat stuck at ports, causing a spike in bread and flour prices.
The state grains buyer had already started selling flour to private mills, to try to ease internal trade blockages.
In this context, Egypt’s state grains buyer the General Authority for Supply Commodities (GASC) has sold around 300,000 tonnes of wheat via the new Egyptian Mercantile Exchange since its November launch.
The wheat was mostly of Russian origin with some German wheat also sold.
However, Egypt aimed to procure about 4 million tonnes of wheat in its local harvest season which begins in April.
Last year the government said it procured 4.2 million tonnes.
($1 = 29.5900 Egyptian pounds).
From Ukraine, the quality of Ukrainian corn crop has been hit by poor weather conditions, Agriculture Minister Mykola Solskyi said on Monday.
“It is much worse this year, because… we have entered into a lengthy, stretched winter harvest, which is rather difficult,” Solskyi told a news conference.
“There are large swings in temperature, which… is firstly difficult for farmers to work in, secondly it harms quality.”
Estimating potential losses due to the weather, he said: “Depending on the farmer, it might be a loss from a few percent to 10 or 15pc.”
Meantime, Ukraine’s Ag. Ministry reported that as at 11 Jan, cumulative 2022-23 (Jul/Jun) grain exports totalled 24.1Mt (33.8Mt previous year), including wheat at 8.7Mt (16.2Mt previous year), barley at 1.7Mt (5.3Mt previous year) and maize at 13.5Mt (11.9Mt previous year).
From Russia, the country’s 2022 grain crop reached 153.8Mt, including 104.43Mt wheat, Interfax reported, citing the state statistics agency Rosstat.
As for 2022-2023 season’s crop, meantime, the recent cold snap across southern Russia would had only a “limited impact” on winter wheat, despite previous fears that low temperatures could lead to lost crops.
Temperatures five to seven degrees below normal, indeed, probably didn’t last long enough to have a big impact, while they are rising once again now.
Meantime, Russian weekly exports dropped to 760,000 tonnes of grain from 970,000 a week earlier, per latest port data.
Of that, total wheat exports were 670,000 tonnes, down from 860,000 tonnes in the prior week.
SovEcon had estimated Russia’s grain exports would stand at 4.1 million tonnes in January, including 3.7 million tonnes of wheat.
Russia wheat exports in January are 1.53 million tonnes so far.
In this context, Russian wheat prices in mid-January are down slightly. Notably, according to the IKAR, prices for Russian wheat with 12.5% protein content, delivered free on board (FOB) from Black Sea ports, fell $1 last week to $305 per tonne for delivery in the first half of February.
For the other products, export price for sunflower oil was at $1,180/t unchanged (Sovecon).
Meantime prices rose on the domestic market.
Notably, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 12,450 rbls/t +100 rbls/t (Sovecon).
Price for sunflower seeds was at 26,000 rbls/t +375 rbls/t (Sovecon).
Price for domestic sunflower oil was at 79,000 rbls/t + 900 rbls/t (Sovecon).
Price for domestic soybeans was at 32,200 rbls/t +600 rbls/t (Sovecon).
Price for white sugar, Russia’s south, was at $745.06/t +$20.01 (IKAR).
($1 = 68.64 roubles).
From the Middle Kingdom, China’s beef output increased last year by 3% to 7.18 million tonnes, per latest data from the National Bureau of Statistics.
Poultry output rose 2.6% to 24.43 million tonnes and lamb and mutton increased 2% to 5.25 million tonnes.
However, the big surprise was pork output.
China’s pork output in 2022, indeed, increased by 4.6% from 2021 to reach its highest since 2014, official data showed on Tuesday, confounding some expectations for a smaller rise.
Notably, pork output reached 55.41 million tonnes, the highest since 56.71 million tonnes recorded eight years ago.
The 2022 output is compared with 52.96 million tonnes in 2021.
Output was boosted by high fourth-quarter production of 13.91 million tonnes, according to the latest data from the National Bureau of Statistics.
That was up 0.87% from the same year-earlier quarter.
However, it is difficult to reconcile this higher meat production number with the declines seen in feed production and soybean imports.
The data shows that China’s pork production has increased every quarter year-on-year for the last two years despite sluggish demand.
Farmers likely have raised heavier hogs, hoping to benefit from an anticipated recovery in demand and prices.
A rally in prices over the summer encouraged farmers to fatten pigs up more than normal to increase their profits.
But demand remained tepid because of surging COVID-19 cases that kept many people at home, causing prices to plunge.
The average weight of live pigs was still on the high side at about 124.5 kg last week, according to analysts at Huachuang Agriculture.
And that, will continue to pressure prices.
Meat consumption is set to improve, although some believe pork consumption may not recover to the levels prior 2018.
From South East Asia, Malaysian palm oil prices edged up on Monday after last week’s sharp drop.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange, indeed, gained 7 ringgit, or 0.18%, to 3,852 ringgit ($893.11) a tonne, after falling 5.2% last week.
Last week, the market was heavily battered amid fears of anaemic demand and aggressive selling from Indonesia.
Exports of Malaysian palm oil products for January 1-15 fell 36.4% to 401,749 tonnes from 631,401 tonnes shipped during December 1-15, independent inspection company AmSpec Agri Malaysia said.
According to the cargo surveyor Societe Generale de Surveillance, exports of Malaysian palm oil products for Jan. 1-15 fell 28.5% to 453,771 tonnes from 634,618 tonnes shipped during Dec. 1-15.
However, top palm oil exporter Indonesia’s move to restrict shipments and boost domestic biodiesel consumption is set to squeeze global vegetable oil supplies supporting prices.
On this morning, Malaysian palm oil prices firmed again, gaining 9 ringgit, or 0.23%, to 3,861 ringgit ($892.72) a tonne by the midday break.
Palm oil received support from tight supplies as some planters estimated an 11%-15% fall in Jan. 1-15 production from the month before, but the upside was limited by lower exports, weakness in crude oil prices and record soybean crop in Brazil.
From Australia, Graincorp received 438 000 tonnes this week taking the total to 10.8Mt.
The update noted that harvest activity is now mostly complete in Qld and NSW, though receivals are expected to trickle in for another few weeks.
Harvest activity continues steadily across all regions of Vic, particularly around the Wimmera, Central, southern Mallee and north east regions.
Record receivals have been recorded in Natimuk and Nhill, in the Wimmera, and at Donald, in the southern Mallee.
Meantime, local markets started off the week a touch firmer through trade markets and relatively unchanged through the grower cash market.
As harvest across the country is nearing the finish line, grain continues to flow and dribble into the market to keep buyers happy for their short term needs.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
