Good morning Farmer Family …
US farm markets sold off yesterday.
Corn prices ended the first trade day of the week with 1.48% losses.
Soybean prices suffered double-digit declines closing 1.08% lower at the bell.
Soymeal was 0.39% weaker, while bean oil prices stayed firm 0.11% higher.
Wheat prices, on their part, suffered a heavy setback, as Kansas City HRW was down 3.42%, Chicago SRW settled down by 2.9%, and Minneapolis spring wheat went home 2.74% lower.
Soybean fell touching their lowest in nearly two weeks as rainfall in Argentina’s parched growing areas diminished concerns over crop damage, and as Brazil braces for record-breaking production this season.
Wheat was pressured by rain and snowfall across the U.S. Plains that will aid soil moisture for parched winter wheat crops in the region.
Plenty more moisture is on its way to the Mid-South and eastern Corn Belt between Tuesday and Friday.
Areas farther west and north will be relatively dry later this week, in comparison.
NOAA’s new 8-to-14-day outlook predicts seasonally wet weather for most of the central U.S. between January 30 and February 5, with cooler-than-normal temperatures likely for most of the country next week.
That is very welcome and helps the soil moisture situation heading into the spring.
Corn, meantime, followed wheat and soybeans lower.
Weekly export inspections were lackustre for corn, falling 7%.
USDA’s data, indeed, saw 727,643 MT of corn shipped for the week ending 1/19.
That was below last week’s 779,788 MT shipment and was under the same week last year by 39%.
USDA also marked the accumulated corn export at 11.51 MMT through 1/19.
That was well below last year’s pace of 16.514 MMT so far.
As for soybean, data showed 1.805 MMT of soybeans were shipped during the week of 1/19.
That was a 17.56% decline from the week prior, though was 422k MT above the same week last year.
China was the top destination with 2/3 of the weekly total.
USDA also added 123,382 MT of exports to past reports, which takes the full year export to 34.1 MMT.
Last year’s pace was 35.032 MMT through 1/20.
As for wheat, the report showed 334,217 MT of wheat was shipped during the week that ended 1/19.
That was up 2.6% from last week, but was 83k MT below the same week last year.
South Korea was the No. 1 destination.
The weekly report marked the season’s accumulated export at 12.762 MMT through 1/19, trailing last year’s pace by 477k MT.
Separately, private exporters reported having sold 192,000 metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year.
In this context, corn basis bids were steady to mixed across the central U.S. on Monday, moving as much as 10 cents higher at an Iowa processor and as much as 15 cents lower at a Nebraska processor.
Soybean basis bids were mostly steady across the central U.S., but did trend 3 cents higher at an Illinois river terminal.
Commodity funds were net sellers of CBOT soybean, soymeal, corn and wheat futures contracts, and net buyers of soyoil futures.
On this morning, Chicago wheat ticked higher, as the market recovered from its lowest in 16 months on bargain-buying.
Soybeans and corn prices rose for the first time in five sessions.
Notably, the most-active wheat contract on the Chicago Board of Trade gained 0.5% to $7.23-3/4 a bushel, as of 03:40 GMT, after sliding to its lowest since Sept. 30, 2021 at $7.12-1/2 a bushel on Monday.
Soybeans added 0.3% to $14.94-3/4 a bushel and corn gained 0.4% at $6.68-3/4 a bushel.
From Canada, Agriculture and Agri-Food Canada (AAFC) released first projections for 2023-24 production.
AAFC’s January Outlook for Principal Field Crops report includes supply and demand estimates for the 2023-24 crop year and provides a starting point for discussion for the year ahead.
The largest percentage change is seen in oat acres, which are forecast to fall by 22.3% to 3.059 million acres, which would be the smallest acreage seeded in five years.
AAFC’s current forecast for 2022-23 shows the oat price forecast to fall by 35% from the previous year’s average with a further drop forecast for 2023-24, while ending stocks in 2022-23 are forecast to swell by 262% to the largest held since 2009-10, or 13 years.
The next largest percentage change is seen for flax, with AAFC estimating flax acres climbing by 11% to 865,000 acres.
This forecast may be viewed as optimistic, with flax exports as of week 24 down 50% from one year ago as exporters struggle against competitors, while stocks for 2022-23 are forecast to grow to the largest in five years and forecast to grow further in 2023-24.
The forecast producer return is also shown to fall for a second year in 2023-24.
Looking at the row crops, corn acres are forecast to fall by 1.2% in 2023, with a modest gain in Western Canada acres off-set by a drop in eastern acres.
The forecast 3.580 million seeded acres reflects a drop of 2.3% from the record acres planted in 2013 and only slightly below the five-year average.
Meanwhile, soybean acres are forecast to rise by 6.8% to 5.634 million acres, which would be the largest area seeded in four years and above the five-year average.
Lower input costs are seen favoring soybeans.
Looking at the biggest crops on the prairies, wheat acres (excluding durum) are forecast to rise by 4.1% to 20.171 million acres, which would be the largest wheat area seeded in 10 years.
Producers see opportunity for favorable prices and movement of wheat.
Current USDA forecast show global wheat stocks for 2022-23 the lowest in six years, although when China’s estimated stocks are removed from the total, stocks are the tightest seen in 14 years which continues to buoy expectations for the crop year ahead.
At the same time, durum acres are forecast to fall by 5.6% to 5.673 million acres, the lowest in four years.
The average price for durum estimated by AAFC is forecast to fall by $181/metric ton or 29% in 2022-23, while is currently forecast to fall further in 2023-24 with stocks forecast to grow larger.
Canola acres are forecast to rise by a modest 1.6% to 21.745 million acres, the largest area planted since 2021 and would be the fifth largest area seeded on record.
Industry will be disappointed in this response, which is seen as the average track Vancouver price forecast by AAFC is expected to fall for a second year in 2023-24 while is still higher than the five-year average.
Across all principal field crops, seeded acres are forecast to rise by 0.4% to 77.9 million acres, while average yield is forecast only slightly below the 2022 average.
Production of all principal field crops is to fall by 1.226 mmt to 94.833, while total supplies are forecast to rise by 1 mmt.
Canola production is forecast at 18.5mmt (18.2mmt previous year).
All wheat production forecast at 34.3mmt (33.8mmt previous year), with yields seen steady y/y.
Barley production is forecast at 10Mt, the same as the previous year.
Slightly lower yields are expected to be offset by higher sown area buoyed by high prices.
Forecast exports and domestic use is higher for 2023-24, while stocks of all principal field crops are to rise 590,000 mt to 12.290 million metric tons.
Of all the principal field crops, only stocks of corn, oats and dry beans are forecast to fall year-over-year, while stocks of peas and sunflower seed is forecast to remain unchanged.
Price is forecast lower in 2023-24 for all principal field crops, with the forecast average price for grains and oilseeds shown to fall $10/mt to $40/mt from the current crop year, while the forecast price for pulses and special crops are shown to fall from $40/mt to $655/mt (mustard) in the 2023-24 crop year.
From South America, according to World Weather Inc Argentina received enough rain late last week and during the weekend to provide temporary improvements to topsoil moisture, though more will be needed to break the drought pattern.
Argentina will receive more rains over the next week to 10 days, with rainfall this week expected to be greatest in the northwest.
Brazil, meantime, will continue to see mostly favourable weather, though some centre-south areas will remain too wet, and parts of Rio Grande do Sul will stay too dry.
In this context, Brazil-based consulting firm AgRural trimmed its Brazilian soybean crop estimate by 700,000 MT to 152.9 MMT amid cuts to production forecasts in Rio Grande do Sul, Parana and Mato Grosso do Sul, which were partially offset by small increases in other states.
The firm lowered its Brazilian corn crop estimate by 400,000 MT to 123.9 MMT given drought stress in Rio Grande do Sul.
Both crops would still be record-large.
As of last Thursday, AgRural estimated the country’s soybean harvest was 1.8% complete versus 4.7% on this date last year.
Meantime, Safras and Mercado expects Brazil’s 2023 soy export at 93 MMT up from 78.9 MMT for 2022 – citing a 16% increase to supply availability.
In Europe, another day of sell off for all productsyesterday,
Euronext wheat futures slid to an 11-month low, extending losses from last week as a firm euro and competition from the Black Sea region again weighed on prices.
Physical wheat premiums in France remained firm after brisk exports this season.
Standard 12% protein wheat for January delivery in Hamburg was offered for sale at a premium of about 11.50 euros over the Euronext March contract.
Rapeseed, on its part, once again posted a substantial decline.
The risk of seeing Germany reduce its biofuel incorporation rates remains.
The EU’s Monitoring Agriculture Resources (MARS) January report notes that winter crops were in good condition across much of Europe, and so far, frost damage has been limited.
After a freezing spell in early December, which MARS had viewed as favourable in making crops more resistant, Europe experienced exceptionally mild conditions at the turn of the year that brought some plants out of winter dormancy.
Meantime, temperatures have cooled progressively in the past week, which traders say should be beneficial for crops.
MARS said that forecasts for this week pointed to temperatures below seasonal norms in western Europe but milder than usual conditions in eastern Europe.
Meantime, the fall in prices allowed French origins to regain competitiveness.
Reuters reported that Chinese importers bought five to six panamax cargoes (60,000 tonnes each) of French barley for shipment in the coming months.
The latest sales were believed to have taken place in the past three weeks.
The barley was thought to have been sold for livestock feed rather than malt production.
From the Black Sea basin, according to data from the Joint Coordination Centre, exports under the Black Sea Grain Initiative totalled about 893,874 tonnes in the week to 22 January (490,825 tonnes exported in previous week).
Russian Foreign Minister Sergei Lavrov said on Monday that the terms of the Black Sea grain initiative, which facilitates the export of Ukrainian grain from its southern Black Sea ports, were “more or less being fulfilled”.
However Lavrov, speaking at a news conference during a visit to South Africa, also said that Russia still faced problems exporting its own agricultural products.
From Russia, Russian wheat prices were up slightly last week amid continued demand from domestic exporters.
Russia, indeed, is exporting wheat relatively quickly this month.
Last week, Russia exported 0.80 million tonnes of wheat, compared with 0.67 million tonnes a week earlier.
Sovecon estimates that Russia could export up to 3.7 million tonnes of wheat in total in January.
That is up from the average of 2.7 million tonnes seen in recent years, though it would be a monthly decline of 7.5% and the lowest total since last August, if realized.
Also, according to the Rosstat federal statistics agency, Russia had 22.1 million tonnes of wheat in stockpiles in December 2022, up from 13.8 million tonnes a year earlier.
These figures could remain at record highs towards the end of the 2022-2023 season.
In this context, according to the IKAR, prices for Russian wheat with 12.5% protein content, delivered free on board (FOB) from Black Sea ports, were up $1 last week to $306 per tonne.
As for the other products, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 12,450 rbls/t unchanged (Sovecon).
Price for sunflower seeds was at 26,275 rbls/t +275 rbls/t (Sovecon).
Price for domestic sunflower oil was at 79,000 rbls/t, unchanged (Sovecon).
Price for domestic soybeans was at 32,600 rbls/t +400 rbls/t (Sovecon).
Export price for sunflower oil was at $1,160/t -$20 oil (Sovecon).
Price for white sugar, Russia’s south, was at $711.69/t -$33.37 (IKAR).
($1 = 68.69 roubles).
From the Middle Kingdom, the Chinese yuan value of grain imported by China last year rose by 13.7pc, but the quantity actually declined by 10.7pc compared to 2021 as an appreciating United States dollar pushed up the cost of imports and China’s strict COVID lockdown eroded domestic demand, particularly from the stockfeed industry.
Total imports of grain such as soybeans, corn, wheat, barley and sorghum was 146.9 million tonnes (Mt) in 2022, according to the General Administration of Customs.
While it was less than the previous year, it still rated second to the record 164.5Mt of grain imports in the 2021 calendar year.
The quantity imported was equal to 21pc of domestic grain production and soybeans remained the biggest single item on the Chinese shopping list, making up 62pc of incoming shipments.
Chinese customs data released last week put December corn imports at 870,000t, taking total imports for 2022 to 20.62Mt, down 27.3pc from 28.4Mt in the previous year.
Total soybean imports for 2022 were down 5.6pc year on year to 91.08Mt.
Brazil was the biggest supplier with 54.39Mt, down 6.45pc on 2021 volumes, the second successive annual fall.
Imports for the US slipped by 8.48pc to 29.5Mt and shipments from Argentina fell by 2.08pc to 3.65Mt.
Wheat imports for December last year came in at 1.08Mt, extending total imports for 2022 to 9.96Mt, up 1.9pc year-on-year.
Australia accounted for more than 60pc of that volume and follows a 19.1pc increase in 2021 compared to 2020, where Australia was also the biggest supplier.
The average cost of China’s wheat imports in 2021 was US$312.90/t, 12.8pc higher than the previous year and in the first three quarters of 2022, that number had risen another 18.5pc to an average of US$370.70/t.
December was quite a big month for barley imports with 480,000t clearing customs, elevating full-year imports to 5.76Mt, down a staggering 53.8pc compared to 2021.
On the other hand, sorghum imports of just 100,000t in December was the lowest monthly total for the year, but full-year imports rose 7pc to 10.14Mt.
From South East Asia, Indian wheat prices hit a fresh record high on Monday, following a delay in releasing extra stocks by the government to boost supplies and calm the domestic market reeling from shortages triggered by last year’s lower crop.
Notably, wheat prices in the Indore market – a benchmark – jumped to a record 29,375 rupees ($361.09) a tonne, up nearly 7% so far this month after rising 37% in 2022.
In New Delhi, wheat prices rose nearly 2% on Monday to a record 31,508 rupees.
Local wheat prices could rise by another 5% to 6% unless the government releases stocks in the next 15 days.
Authorities have repeatedly said the government would offer 2 to 3 million tonnes of wheat from its reserves to help flour millers and biscuit makers as part of efforts to cool record-high prices.
($1 = 81.35 rupees).
From Australia, local markets were flat yesterday.
ASX wheat was unchanged at AUD$375/mt.
Prices were also flat on the boards on the east coast with Geelong APW1 a buck lower.
In ocean freight markets, the Baltic Exchange’s main sea freight index fell for the fifth straight session on Monday, as demand across vessel segments remained weak.
The overall index, indeed, was down 23 points, or about 3%, at 740 — its lowest in over two-and-a-half years.
Notably, the capesize index lost 52 points, or about 6.6%, hitting a fresh four-month low of 735.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $435 at $6,094.
The panamax index was down 12 points at 1,048.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, fell by $116 to $9,428.
Among smaller vessels, the supramax index fell 7 points to 645, also an over two-and-a-half-year low.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
