Good morning Farmer Family …
US farm markets faded on Thursday.
Corn price closed the day session with a 0.59% loss.
Soybean ended 0.64% weaker.
Meal prices were 1.44% lower and bean oil went home down by 1.51%.
The wheat markets also were mostly lower.
Chicago SRW indeed gave back 1.08%, while Kansas City HRW fell by 1.13% on the day.
Minneapolis spring wheat contracts, meantime, were the complex’s outliers as they ended the session 0.33% in the black.
Soybean prices fell, retreating from seven-month highs set a day earlier as forecasts for beneficial rains in Argentina sparked a round of selling.
EIA’s data showed ethanol producers averaged 1.008m barrels of ethanol were produced on average per day through the week that ended 1/13.
That was another 65k barrels per day higher through the week.
Meanwhile, ethanol stocks were 398k barrels lower through the week than the week prior.
However, corn prices also declined on the outlook for Argentine weather.
A daily sales announcement of 195k MT of 2022-23 corn sold to Mexico had kept corn supported early on.
But then pressure on soybeans spilled over into corn as well.
Export prospects for U.S. soybeans are declining, while the U.S. soybean export program is just about over.
Markets shut down in China next week for the Lunar New Year holiday, and Brazil begins harvesting a likely record-large soy crop.
Renewed recession fears from U.S. consumer data also curbed grain markets.
In this context, U.S. producers took advantage of multi-month highs set in both corn and soybean markets this week, selling their products, and that made an additional down pressure.
Wheat prices, meantime, followed corn and soybean lower, once again remaining penalized by the increase in surface areas.
After the session close, indeed, a Farm Futures survey of U.S. planting intentions indicated that producers plan to expand all-wheat seedings for 2023 harvest by 6.8% compared to a year ago, with smaller increases expected for corn and soybean acreage.
Spring wheat plantings (including durum) are seen up 11.9% from 2022.
Meantime, a good moisture has fallen in the last 24 hours in the Plains states, and another shot is over the weekend.
It started with precipitation falling across Nebraska into Iowa on Wednesday night, before moving east.
Meantime, three weather systems will hit the U.S. Great Plains by mid next week.
Traders await the USDA’s weekly export sales report due this afternoon, meanwhile, yesterday commodity funds were net sellers of CBOT wheat, soybean, corn, soymeal and soyoil futures contracts
On this morning, soybean, wheat and corn prices dipped in Asian trading.
Notably, the most-active soybean contract on the Chicago Board of Trade was down 0.2% at $15.11-1/2 a bushel, as of 05:22 GMT, while wheat dropped 0.4% to $7.31-1/2 a bushel.
Corn shed 0.3% to $6.75-1/4 a bushel.
Both CBOT soybean and wheat benchmark prices were on track for weekly declines, while corn was flat for the week.
In energy markets, oil rose on Friday and was heading for a second straight weekly gain about 1.5%.
Brent crude, indeed, gained 38 cents, or 0.4%, to $86.54 a barrel by 0912 GMT.
U.S. crude advanced 74 cents, or 0.9%, to $81.07.
On Thuesday OPEC forecasted the Chinese demand rebound in 2023, as the country continues to dismantle its COVID policies.
On this wake, the International Energy Agency (IEA) said on Wednesday, the lifting of COVID-19 restrictions in China is set to increase global demand to a record high this year
Oil was also supported by hopes that the U.S. central bank will soon downshift to smaller rises in interest rates and by hopes for the U.S. economic outlook.
In this context, oil rose despite U.S. inventory figures this week showing crude stockpiles rose by 8.4 million barrels in the week to Jan. 13 to about 448 million barrels, the highest since June 2021.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, extended losses on Thursday to a fresh two-and-a-half-year low, pressured by a dip in rates for capesize vessels.
The overall index, indeed, was down 73 points, or about 8.4%, at 801, its lowest since June 2020.
Notably, the capesize index fell to a four-month low, losing 214 points, or about 19.3%, to 893, also marking its worst day this month.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $1,778 at $7,404.
The panamax index was down 4 points at 1,071.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, fell by $31 to $9,641.
Among smaller vessels, the supramax index which has not seen a single day of gains since mid-December, fell by 3 points to 654.
In equity markets, on Wall Street, the benchmark S&P 500 index lost 0.8% to 3,898.85 in its third daily decline.
More than 75% of the stocks in the S&P 500 closed lower.
Technology companies, retailers and industrial stocks were among the biggest drags.
Chipmaker Nvidia fell 3.5%, Home Depot dropped 4% and Deere & Co. fell 4.1%.
The Dow Jones Industrial Average retreated 0.8% to 33,044.56.
The tech-heavy Nasdaq tumbled 1% to 10,852.27.
Reports showed weakness in the U.S. housing industry and manufacturing in the mid-Atlantic region, though they weren’t quite as bad as expected and the job market appears healthy.
The Labor Department’s report on Thursday showed claims for state unemployment benefits unexpectedly fell to 190K last week, stronger than expectations of 214K, highlighting labor market resilience that could convince the Fed to continue its aggressive rate hikes.
Fed vice chair Lael Brainard said on Thursday that inflation is still high and the Fed will have to keep interest rates elevated “for some time” to control inflation.
However, U.S. rate futures have priced in a 97.2% chance of a 25 basis point rate increase and a 2.8% chance of a 50 basis point hike at February’s monetary policy meeting.
Today, all eyes are focused on the U.S. Existing Home Sales data.
Economists, on average, forecast that December Existing Home Sales will stand at 3.96M, compared to the previous value of 4.09M.
Meantime, Asian stock markets rose.
The Shanghai Composite Index rose 0.6% to 3,260.04 and the Nikkei 225 in Tokyo gained less than 0.1% to 26,411.94.
The Hang Seng in Hong Kong gained 0.9% to 21,844.98.
The Kospi in Seoul advanced 0.2% to 2,384.47 and Sydney’s S&P-ASX 200 was less than 0.1% higher at 7,439.50.
New Zealand and Southeast Asian markets rose.
China’s Shanghai Composite closed higher amid growing optimism over the country’s economic recovery this year, with markets positioning for a solid boost from the week-long Lunar New Year holiday.
Chinese equities notched a fourth straight week of gains even as the country faces its worst-yet COVID-19 outbreak.
Also, the People’s Bank of China kept its benchmark loan prime rate at historic lows on Friday, keeping liquidity conditions flush for a fifth successive month to shore up local growth.
At the same time, Japan’s Nikkei 225 Stock Index closed higher even after data showed consumer price index inflation rose to a 41-year high in December.
The index’s upward momentum was fueled by gains in the Transport, Retail, and Fishery sectors.
In currency trading, the dollar gained to 128.76 yen from Thursday’s 128.44 yen.
The euro edged up to $1.0836 from $1.0831.
Going back to analyzing the other agricultural markets …
From South America, Southern Brazil has an opportunity to see rain this week.
While dryer conditions in central regions over the past week alleviated excessive moisture seen in Dec, soil moisture levels in the southern state of Rio Grande do Sul, remain at five-year lows, which will likely affect primary (full season) crop development as well as secondary (safrinha) plantings.
Preliminary satellite observations indeed show vegetation densities in Mato Grosso and Paraná at record highs, while those in Rio Grande do Sul are below historical averages.
In this context, according to Refinitiv Commodities Research, good crop conditions in Central-West and Southeast Brazil are more than offsetting persistent dryness in the South.
As a result, 2022-23 maize production forecast raised by 1pc from before, to 127.5Mt (113.1Mt previous year).
Moreover, the first echoes of soybean yields in Brazil confirm high figures.
Argentina’s weather outlook improved.
Rain was near expectations for Cordoba, western BA and northeastern La Pampa.
Argentina will see rain the greatest amounts between Friday into Saturday, then again early next week.
Lack of rainfall in Argentina, had slowed the planting of both corn and soybean crops.
On Thursday the Buenos Aires grains exchange said corn planting advanced to 88.6% of an expected area of 7.1 hectares, while soybean planting advanced to 95.5% of the 16.2 hectare area.
Early this month the Exchange had said corn production would shrink to as low as 37.8 million tonnes in a worst case scenario.
In this context, the Buenos Aires grains exchange on Thursday pegged estimate for Argentina’s 2022/2023 corn harvest to 44.5 million tonnes.
In September, the exchange had forecast 50 million tonnes of corn this cycle.
Last week, Argentina’s Rosario Grains exchange also cut its 2022/23 corn harvest estimate to around 45 million tonnes, from 55 million previously.
Meantime, the Buenos Aires Stock Exchange is expecting Argentina’s wheat exports to fall over 60% to 5.9 MMT, which is an 8 year low.
In Europe, the fall in prices continued for all products yesterday in a market context that only includes bearish news for the moment.
Russia’s export activity remains the main factor for the downturn at the moment.
Rapeseed remained in turmoil after the remarks of the German Minister of Ecology who asks for a reduction in the rate of incorporation of biofuels to fight against competition with food.
To this must be added the massive imports from Canada and Australia, ignoring the sustainability of French production.
From Russia, Russian Railways reported Oct-Dec grain shipments via railways totalled 5.3Mt, up 40pc from the same period in the previous year.
However, SovEcon estimated January Russian wheat exports at 3.7Mt, down from 4.3Mt in December 2022.
The decline in wheat sales reflected higher export taxes, low business activity around the New Year and unfavourable weather conditions.
Total 2022-23 exports were still forecast to reach 44.1Mt (USDA 43Mt).
The Russian Minister of Agriculture estimating exports of all grains at between 55 and 60 million tonnes for this campaign.
However, SovEcon noted that the forecast may be revised if Russia decided to restrict wheat exports.
Such restrictions may be implied by the statement of Putin, who earlier this week expressed concern about the pace of food exports and stressed the need to have ample reserves.
From Ukraine, Ukraine’s Ag Minister has said that the delayed harvest of the 2022 corn crop could lead to around a 10pc loss of the remaining corn left in the field.
There was around one-third of the corn crop left in the field at the beginning of winter, with that figure cut in half since, but corn quality is deteriorating.
Meantime, Ukraine’s Ag Ministry reported 13.8 MMT of corn was exported for the season through 1/16 – a volume that remains 6.1% higher yr/yr.
Ukraine exported 8.9 MMT of wheat according to the ag ministry data.
From Kazakhstan, according to APK-Inform, since the beginning of 2023, the export prices of milling wheat have been decreasing in the country due to pressure from cheaper Russian origin.
The demand from the main importers is decreasing.
Thus, the offer prices of Kazakh milling wheat are announced at 295-298 USD/t DAP Saryagash.
While the offer prices of Russian wheat are at 270-275 USD/t DAP.
From the Middle Kingdom, China’s health authority said COVID-19 patient critical care demand had peaked, with 40pc fewer people in hospital on 17 January than on 5 January.
From Australia, the country exported 104,492 tonnes of malting barley, 471,347t of feed barley and 120,306t of sorghum in November, according to the latest export data from the Australian Bureau of Statistics.
On malting, Mexico and Vietnam held the top two spots with 30,000t and 29,743t respectively, followed by Peru on 17,153t, and the monthly total was up 24pc from the October figure of 84,655t.
November feed barley exports were almost triple the October figure of 162,034t, with Saudi Arabia on 253,606t accounting for 46pc of the total; Qatar on 65,125t and Jordan on 62,788t were the second and third biggest customers.
China on 113,370t accounted for 94pc of November’s sorghum exports, with Taiwan on 5219t and The Philippines on 1318t the second and third-biggest markets.
Meantime, the market give up a few dollars yesterday.
There were still squeezes in the market, though where shorts were sharing specific parcels in specific areas.
Freight availability was still causing havoc, rates pushing +20c for the entire eastern crop now, despite lower fuel values.
On the weather side, there is 15-50mm on the 8-day forecast for most sorghum growing regions which will be welcome, although the showers in southeast NSW and Vic will be a pain for those still trying to finish harvest.
On the international trade scene, Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), on Thursday said it had bought 50,000 tonnes of Romanian corn in an international tender.
The cargo was sold by Ameropa BV at a price of $339 a tonne on a cost, insurance, and freight (CIF) basis.
This was GASC’s first ever international tender for yellow corn.
Supply Minister Ali Moselhy said the corn will be sold to the private sector via Egypt’s new commodities exchange in an effort to address a feed shortage and inflation.
The tender sought price offers on either a cost and freight (C&F) or CIF basis for Feb. 10-25 shipment.
Payment will be at sight and funded by the International Islamic Trade Finance Corporation.
Japan bought 78,000t milling wheat in their regular weekly tender, including 28,000t from the US and 50,000t from Canada.
Tunisia’s state grains agency is believed to have purchased about 125,000 tonnes durum wheat in an international tender which closed on Thursday.
It was said to have been bought in five consignments of 25,000 tonnes to be sourced from optional origins.
Three consignments were said to have been bought from trading house Casillo at an estimated $489.49, $492.68 and $494.49 all per tonne c&f.
One consignment was bought from Viterra at $493.09 a tonne c&f and one from Amber at $492.29 a tonne c&f.
Shipment in the tender was sought between Feb. 15 and April 5 depending on origin supplied.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
