Good morning Farmer Family …
US farm markets moved higher on Tuesday.
Corn prices earned the biggest boost, rising 1.52%, and posting their highest price since early November .
Soybeans prices gained across all the complex.
Beans had double digits gains, up 0.79% for the session.
The products led the way with 1.24% gains in soy oil and 1.03% gains in meal.
Wheat prices also experienced mild to moderate gains.
The winter wheats stayed mostly higher through the day, with SRW ended up 1.08% and HRW gaining 1.42%.
Minneapolis spring wheat prices, meantime, were left out of most of the wheat rally, however went home with 0.41% gains at the bell.
The soybean and corn markets got a boost after private exporters reported to the USDA having sold 150,000 metric tons of corn for delivery to Colombia during the 2022/2023 marketing year; and 119,000 metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year.
There was additional support stemming from weekly export inspections data, as the USDA reported corn and soybeans inspected, both above a range of trade expectations.
Notably, the report showed 774k MT of corn was shipped during the week that ended 1/12.
That was up from 401k MT from the prior holiday week, but under the same week last year’s 1.24 MMT shipment.
China and Mexico were again the top destinations.
The weekly report had 10.776 MMT of accumulated corn exports – trailing last year’s pace by 4.55 MMT.
As for soybean, the report showed 2.075 MMT of soybeans were shipped.
That was up from last week’s 1.456 MMT export and was 207k MT above the same week last year.
USDA had the season’s accumulated export at 32.17 MMT through 1/12, compared with last year’s 33.65 MMT pace.
As for wheat, export inspections were at 320,473 MT.
That was up 111k MT from last week, but was down 66k MT from the same week last year.
The Philippines and China were the top destinations for the week.
The weekly report had 12.422 MMT of accumulated wheat exports – trailing last year’s pace by 0.4 MMT.
Meantime, NOPA members reported a 3-yr low for Dec crush, with 177.505 mbu processed.
That’s lower than November’s total of 179.184 million bushels and year-ago results of 186.438 million bushels.
Analysts were looking for 182.9 mbu on average, with the lowest at 174.4.
In spite that, soyoil stocks through December 31 increased to 1.791 billion pounds.
That also was slightly above the trade average guess.
In wheat markets, prices followed the higher trend.
Meantime, remarks by Russian President Vladimir Putin that his country should maintain stocks and not export all its agricultural supplies drew attention to geopolitical risks.
In this context, corn basis bids were steady across most Midwestern locations, but did slide 2 cents lower at an Iowa ethanol plant.
Soybean basis bids were steady to mixed, after jumping 20 cents higher at a Nebraska processor while sliding 2 to 6 cents lower at two other Midwestern locations.
Commodity funds were net buyers of CBOT corn, soybean, wheat, soymeal and soyoil futures contracts.
On this morning, Chicago soybean prices scaled a seven-month peak.
Dry conditions in Argentina continue to be the main story for soybeans.
There is some rain in the forecast over the coming week but it is expected to be below normal.
Also, China is expected to boost purchases in the months ahead as the country reopens.
Corn prices also inched up and hovered close to a two-and-half-month high touched on Tuesday.
Wheat, meanwhile, slid after four sessions of gains.
Notably, the most-active soybean contract on the Chicago Board of Trade rose 0.4% to $15.46-1/2 a bushel, as of 04:42 GMT, climbing to its highest since late June.
Wheat gave up 0.3% to $7.49-1/2 a bushel and corn added 0.1% to $6.85-3/4 a bushel.
In energy markets, oil prices extended early gains to rise around 1% on Wednesday.
Brent crude futures, indeed, climbed 76 cents, or 0.88%, to $86.68 a barrel by 0721 GMT, following a 1.7% rally in the previous session.
U.S. West Texas Intermediate (WTI) crude futures went up 85 cents, or 1.06%, to $81.03, having risen 0.4% on Tuesday.
Both crude futures surged by more than $1 a barrel to hit fresh 2023 highs around midday in Asia, with Brent reaching $87 a barrel and WTI futures hitting $81.42 a barrel.
China’s economic growth slowed sharply to 3% in 2022, missing the official target of “around 5.5%” and marking its second-worst performance since 1976.
However, the data still beated analysts’ forecasts.
OPEC said in its monthly report that Chinese oil demand would grow 510,000 barrels per day (bpd) this year after contracting for the first time in years in 2022, although they kept its 2023 global demand growth forecast unchanged at 2.22 million bpd.
The market was also supported by expectations of a drawdown in U.S. crude stocks by around 1.8 million barrels despite higher oil product inventories.
On the supply-side, oil output from top shale regions in the United States is due to rise by about 77,300 bpd to a record 9.38 million bpd in February, the U.S. Energy Information Administration (EIA) said in a productivity report on Tuesday.
Russia, meanwhile, expects Western sanctions to have a significant impact on its oil product exports and its production, likely leaving it with more crude oil to sell.
The market is also closely watching for more demand data from China in the International Energy Agency’s monthly report due later on Wednesday.
In ocean freight markets, the Baltic Exchange’s main sea freight index tracking rates for ships carrying dry bulk commodities, fell to fresh multi-year lows on Tuesday, weighed down by weaker demand for capesize vessels.
The overall index, indeed, was down 25 points, or about 2.6%, at 921, lowest since early June 2020.
Notably, the capesize index lost 71 points, or about 5.4%, to 1,240, nearly a two-month low.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $587 at $10,287.
The panamax index was up 7 points, or about 0.7%, at 1,078.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, rose by $63 to $9,699.
Among smaller vessels, the supramax index fell for the 18th consecutive session by 12 points to 661.
The first quarter of every year is affected by the seasonal contraction due to the Chinese New Year.
However, there several factors at play including the global economic uncertainty that looms over the sector.
In equity markets, on Wall Street, stock indexes closed mixed Tuesday as investors focused on a busy week of corporate earnings for insight into how much damage inflation is inflicting on the economy.
Notably, the S&P 500 slipped 0.2% to 3,990.97, ending a four-day winning streak.
The Dow Jones Industrial Average fell 1.1% to 33,910.85, mostly because of a 6.4% drop in Goldman Sachs’ shares after the investment bank’s results came in far below analysts’ estimates as dealmaking dried up.
Gains in technology stocks helped the Nasdaq composite eke out a 0.1% gain to 11,095.11, extending the tech-heavy index’s winning streak to a seventh day.
Small company stocks gave back some of their recent gains.
The Russell 2000 index fell 0.1%, to close at 1,884.29.
Investor sentiment could quickly turn as companies report their results for the October-December quarter.
Analysts expect companies in the S&P 500 to report a drop in profits for the fourth quarter from a year earlier.
That would mark the first such decline since 2020.
Several banks reported encouraging financial results last week, but also said a mild recession is likely on the horizon for the U.S. economy.
Bond yields remained relatively stable.
The yield on the 10-year Treasury rose to 3.54% from 3.5% late Friday.
Wall Street will get another inflation update on Wednesday, when the government issues its December report on inflation at the wholesale level, which tracks prices before they are passed on to consumers.
The government will also release retail sales data for December, which could give investors more insight into how inflation is affecting consumer spending.
Meantime, Asian shares advanced Wednesday, with Tokyo gaining more than 2% after Japan’s central bank kept its lax monetary policy unchanged.
With Wednesday’s decision, the BOJ’s key interest rate remains at minus 0.1%.
In this context, the Nikkei 225 in Tokyo gained 2.5% to 26,801.88.
Australia’s S&P/ASX 200 edged 0.1% higher to 7,393.40 while the Hang Seng in Hong Kong gave up early gains to fall 0.2% to 21,609.59.
The Shanghai Composite index edged 0.1% higher to 3,227.85.
Bangkok’s SET gained 0.2% while the Sensex in Mumbai was up 0.6%.
In currency trading, after the BOJ’s announcement, the dollar gained sharply against the Japanese yen, rising to 130.82 yen from 128.17 yen.
The euro slipped to $1.0780 from $1.0790.
Going back to analyzing the other agricultural markets …
From South America, Brazil’s Anec estimates that the country’s corn exports in January will reach 5.18 MMT.
That’s slightly above the group’s prior forecast made a week ago.
Anec is also forecasting the country’s soybean exports in January at 2 MMT, which is slightly higher than the group’s prior estimate from a week ago.
Anec also estimates that Brazilian soymeal exports will reach 1.587 million metric tons this month.
According to Brazil’s ministry of Industry, Trade and Services January 9-15 maize exports are estimated at 1.1Mt, with cumulative marketing year shipments placed at 44.0Mt up 140pc compared to this time last year.
Soybean exports at 250,700 tonnes, cumulative marketing year at 78.1Mt (-14pc).
Meantime, Brazil’s Ag Rural reported the soy harvest was 0.6% finished through 1/12.
That is under the 1.2% harvest pace seen last season.
The Brazilian government believes that it is possible to increase the area planted with grains by 5% each harvest for several years without deforestation, said the Minister of Agriculture, Carlos Favaro, on Tuesday.
However, Brazil’s 2022/2023 summer grain production will outgrow total storage capacity for the first time in 20 years amid expectations of a record soybean harvest, according to government data.
Brazil, indeed, will harvest a combined 189.5 million tonnes of soybeans, corn, and rice in the summer, while it has total storage capacity for 187.9 million tonnes, the data shows.
After Brazil’s soy is harvested, the country sows its second corn crop.
This winter, it will raise production by 12% to an estimated 96 million tonnes of corn.
The situation highlights Brazil’s historical logistical bottlenecks, which this year may be exacerbated by this large winter corn harvest.
In Europe, new erosion of prices yesterday on Euronext still in the same context of competitiveness compared to the Black Sea.
Grain and oilseed prices, however, could benefit today from a fall in the euro and the firmness of the palm.
Export activity from European origins remains sustained.
European Union soft wheat exports during the 2022/23 marketing year, indeed, have reached 17.67 million tonnes through January 15, against 16.67 the previous year.
That is a year-over-year increase of around 6% so far.
Morocco, Algeria, Egypt, Nigeria and Saudi Arabia were the top five destinations.
A breakdown of the EU data showed France remained by far the biggest EU soft wheat exporter this season, with 7.50 million tonnes shipped, followed by Romania and Germany with 2.01 million each, Latvia with 1.62 million and Lithuania with 1.44 million.
EU barley exports so far in 2022/23 totalled 3.06 million tonnes, down 39% against 5.05 million a year ago.
Traders, though, expect barley exports to pick up after large sales of French barley to China for loading from January.
Meantime, EU maize imports were at 15.66 million tonnes, 88% above a year earlier of 8.31 million.
Spain remained the leading EU maize importer so far in 2022/23 with 5.77 million tonnes, ahead of the Netherlands at 1.72 million, Portugal with 1.27 million, Poland with 1.26 million, and Italy with 920,000, the data showed.
The five top maize import origins were Ukraine, Brazil, Canada, Serbia, Russia.
Soybean imports have reached 5.97 MMT through January 15, which is moderately below the prior year’s pace so far.
Soymeal imports have reached 8.72 MMT sligthly down last year pace of 8.88 MMT.
EU rapeseed imports, meantime, are moderately higher year-over-year, in contrast, with 4.24 million metric tons during the same period.
That is compared with 2.89 million last year to date.
The Commission noted that it was still experiencing issues in compiling grain trade figures from Germany and Italy.
Export data submitted by Germany from November may be inaccurate following the country’s switch to a new declaration system, while for Italy import data was available only until November, it said in a note.
In this context, farm office FranceAgriMer on Wednesday increased for a second consecutive month its forecast of French soft wheat exports outside the European Union this season.
The office now projects a volume of 10.6 million tonnes, against 10.3 million tonnes forecast in December and 21% above last season’s level.
It had already increased the forecast by 300,000 tonnes last month, citing brisk demand led by Morocco and China.
As a results, in its monthly supply and demand outlook for major cereal crops, FranceAgriMer reduced its projection of French soft wheat stocks at the end of the 2022/23 season on June 30 to 2.33 million tonnes, from 2.55 million projected in December.
Forecast demand for soft wheat in livestock feed was increased by 50,000 tonnes to 4.35 million tonnes, though projected exports within the EU were trimmed to 6.64 million tonnes from 6.73 million previously.
For barley, the office raised its 2022/23 ending stocks outlook to 1.97 million tonnes from 1.85 million previously, reflecting an upward revision to harvest supply and reduced expectations for feed use and exports.
For maize, forecast stocks at the end of 2022/23 were raised slightly, to 2.30 million tonnes from 2.23 million.
Meantime, The European Union has expressed serious concerns about the $369 billion of investment to tackle climate change in the U.S. Inflation Reduction Act, which entered force this year.
Much of the investment, in the form of subsidies, indeed applies only to local content.
However, the United States and the European Union have signed a tariff rate quota agreement regarding agricultural products.
“The Agreement, once implemented, will enable the United States to preserve its existing access to the EU market for various agricultural commodities following the United Kingdom’s exit from the EU on January 1, 2021”.
It will also “restore favorable market access for multiple U.S. agricultural products, including for U.S. rice, almonds, wheat, and corn.”
From UK, Britain’s wheat imports fell in November and are running well behind last year’s pace, customs data showed on Tuesday.
Wheat imports for the month totalled 67,899 tonnes, down from 128,202 tonnes in October.
Canada was the largest supplier in November, shipping 26,336 tonnes.
Cumulative imports since the start of the 2022/23 season on July 1 totalled 552,347 tonnes, down from 867,097 tonnes in the same period a year earlier.
Canada has been Britain’s largest supplier in the 2022/23 season so far, with shipments of 190,698 tonnes.
Meantime, Britain’s wheat exports in November rose to 112,910 tonnes, up from the previous month’s 72,220 tonnes.
Algeria was Britain’s largest customer in November, receiving 31,500 tonnes.
Cumulative exports since the start of the 2022/23 season totalled 432,151 tonnes, up from 161,151 tonnes in the same period a year earlier.
Spain has been Britain’s largest customer in the 2022/23 season so far, receiving 201,788 tonnes.
From Russia, country’s Federal State Statistics Service (Rosstat) reports that 2022-23 grain harvest estimate is revised up by 2.8Mt, to 153.8Mt (121.4Mt previous year), with wheat up by 1.7Mt, to 104.4Mt (76.1Mt previous year), barley up by 0.6Mt, to 23.5Mt (22.9Mt previous year), and maize trimmed marginally, to 11.8Mt (15.2Mt previous year).
Sunflowerseed harvest estimate cut by 0.8Mt, to 14.5Mt (15.7Mt previous year), while soybean lifted by 1.1Mt, to 5.8Mt (4.8Mt), and rapeseed up at 4.6Mt (2.8Mt previous year).
Meantime, SovEcon has pegged January grain exports at 4.1Mt, including wheat at 3.7Mt (4.0Mt previous month, 1.4Mt previous year) and barley at 0.1Mt (0.2Mt previous month, 0.1Mt previous year).
IKAR raised its forecast for the country’s 2022/23 wheat exports by 3.4% to 45.5 MMT.
However, Putin announced yesterday that he wanted some stabilization in food prices in Russia, hinting that export volumes could be controlled in the event of excessive inflation.
In this context, Putin suggested holding additional wheat stocks domestically could be more beneficial than the export revenue.
Thus, some believe this to be a hint at wheat export quotas in the future.
From Ukraine, according to APK-Inform, the export prices of Ukrainian corn have been growing since the beginning of January.
Corn remains the most active export crop.
The forecast of corn export from Ukraine was increased by 3 mln tonnes to 20.5 mln tonnes.
In this context, traders’ prices of corn varied at 180-220 USD/t СРТ-port in the ports of the Danube and Great Odesa.
Demand increased in the port of Constanta.
The prices of corn for delivery in January-February totaled 275-280 EUR/t DAP/CIF.
The bid prices of corn for delivery in January-February increased to 210-225 EUR/t DAP Poland border, to 215-230 EUR/t DAP Hungarian and Slovakian borders.
They decreased to 210 EUR/t DAP Romanian border.
From the Middle East, Saudi Arabia’s state grains buyer SAGO will become the General Food Security Authority (GFSA), state news agency SPA said on Tuesday, citing a cabinet decision.
The change to the Saudi Grains Organization, will “unite the efforts of government agencies and the private sector to strengthen the food security system,” Ahmed bin Abdulaziz al-Faris, governor of GFSA and previously SAGO, said on Tuesday.
GFSA will work on areas including strategic storage, developing an early warning system for food, food waste and its prevention, and partnerships with countries and international organizations, Faris said.
From the Middle Kingdom, China has the ability and foundation to ensure the safe supply of grain, despite the challenges the market is facing, a National Development and Reform Commission spokesperson told a news briefing in Beijing on Wednesday.
The country is encouraging growers in the northeast to rotate soybeans with corn as well as planting both crops side by side.
It will also expand planting of rapeseed during the winter in the south of the country and develop spring rapeseed in the northwest.
Rapeseed output increased by 810,000 tonnes to 15.53 million tonnes last year
Meantime, China’s agriculture ministry urged farmers on Wednesday to take measures to reduce excess pork output and pressure on prices, fallen below the cost of breeding due to weak consumption.
Notably, average live hog prices dropped for 11 consecutive weeks to 16.3 yuan ($2.40) per kilogramme in mid-January, lower than the breeding cost of 16.7 yuan.
China’s hog farmers had expected demand and prices to rise in December ahead of the Lunar New Year holiday.
Many had raised heavier pigs, hoping to benefit from anticipated price rises.
However, official data showed this week that China’s 2022 pork production hit the highest level in eight years.
China’s sow herd has also been expanding, reaching almost 44 million by the end of 2022, above the ‘reasonable’ range, said Zeng.
Meantime, farmers already responded with an increase in hog slaughter.
Hog slaughter surged 18% in December from the prior month, and was up 7.3% on the year before.
However, demand has been muted.
Thus, the government will organise pork purchasing for state reserves to help support prices.
($1=6.78 yuan).
From South East Asia, India’s soymeal exports could more than double in the 2022/23 marketing year, as drought in top exporter Argentina lifted global prices, prompting buyers to turn to the south Asian country with cheaper rates.
Oil mills have contracted to export around 160,000 tonnes of soymeal for January shipments and another 100,000 tonnes for February shipments, mostly to Asian countries such as Vietnam, Bangladesh, Japan and Nepal.
India’s soymeal exports in the first three months of the 2022/23 marketing year, which started on Oct. 1, jumped 223% to 325,409 tonnes, according to trade body the Solvent Extractors’ Association of India.
Thus, India’s soymeal exports in the current marketing year could rise to 1.5-2 million tonnes, from 644,000 tonnes a year ago.
Meantime, the revival in the exports of the animal feed has boosted soybean crushing in India and the availability of soyoil, which could reduce imports of soyoil and palm oil in coming months.
From Australia, the country exported 1,790,556 tonnes of wheat in November, down 11pc from the October total of 2,006,959t, according to the latest export data from the Australian Bureau of Statistics.
In bulk business, China on 363,607t was the biggest market, just ahead of Indonesia on 345,637t, with The Philippines on 262,410t in third place.
On containerised sales, Vietnam on 67,821t followed by Malaysia on 30,171t and Taiwan on 28,440t were the three biggest markets.
The drop in bulk and boxed wheat exports is believed to reflect the late start to harvest brought on by the mild and wet finish to the growing season, but is well above the 1.63Mt shipped in November 2021, which was up 10pc from the October 2021 total.
Meantime, local market focus remained on feed grains into the export pathway.
Upcountry bids in eastern Australia weakened. WA values also softened over the day.
Growers delivered another 470,000 tonnes into the Viterra network last week taking the total received to 8.45Mt.
Viterra reports that on the Eyre Peninsula, growers reached a significant milestone as they surpassed 3.2Mt of deliveries, breaking the previous record set in 2016-17.
Growers also continued to break records in Central and Eastern regions including Port Giles, Saddleworth and Tailem Bend sites, which were set in the 2016-17, and at Snowtown breaking the 2013-14 record.
On the international trade scene, Egypt’s governmental grain buyer announced it will announce its first-ever corn tender on Thursday.
The grain will be used as feed, and additional volume and shipping details were not immediately available.
Algeria’s state grains agency OAIC has bought milling wheat in an international tender which closed on Tuesday.
Initial purchases reported were around $334.50 a tonne cost and freight (c&f) included.
Estimates of tonnage bought ranged between 510,000 tonnes to 600,000 tonnes.
Traders said a large part of the volume was expected to be sourced from the Black Sea region.
The wheat is sought for shipment in two periods from the main supply regions including Europe: March 1-15 and March 15-31. If sourced from South America or Australia, shipment is one month earlier.
A group of importers in Thailand has issued an international tender to purchase up to 135,000 tonnes of animal feed wheat.
The deadline for submission of price offers in the tender is today Wednesday, Jan 18.
One consignment of about 75,000 tonnes is sought for shipment between Feb. 15 and March 15, while another 60,000 tonne-consignment is sought for shipment between July 1 and July 31.
The wheat can be sourced from country worldwide, except Pakistan, Ukraine and Russia.
In the last reported purchase by Thailand on Jan. 4, an importer group bought about 75,000 tonnes of feed wheat expected to have been sourced from optional origins.
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said on Wednesday that it will seek 70,000 tonnes of feed wheat and 40,000 tonnes of feed barley to be loaded by Feb. 15 and arrive in Japan by March 16, via a simultaneous buy and sell (SBS) auction that will be held on Jan. 25.
The Philippines issued an international tender to purchase 160k mt of feed wheat and 45,000 metric tons of soymeal from optional origins that closes on Thursday.
The grain is for shipment beginning in mid-April.
ODC Tunisia, issued an international tender to purchase 125k mt of durum wheat.
The grain is for shipment beginning late in February, until early April 2023.
The tender will close tomorrow January 19, 2023.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
