Good morning Farmer Family …
US farm markets were mixed, but mostly higher yesterday.
Corn prices worked both directions through the session, but ultimately closed 0.33% lower.
Soybean prices moved from -10.25 cents to +16.25 cents, lefting the market 0.94% higher at the bell.
Meal prices closed 1.24% higher.
Soybean oil prices, meantime, stayed mostly red, settling 0.72% lower at the end of the session.
The wheat market worked higher across the board, with Chicago SRW up 0.92%, Kansas City HRW was 1.14% higher, and Minneapolis spring wheat prices, settling with a 0.72% gain at the close.
Wheat prices rose on concerns that any intensification of Russia’s war on Ukraine could clog the export pipeline from those two major exporters.
Soybean prices also were stronger, closing near session highs on a round of short-covering and bargain buying after five straight losing sessions.
Supporting both soybean and corn markets, private exporters reported to the USDA having sold 100,000 metric tons of corn for delivery to unknown destinations during the 2022/2023 marketing year, and 130,000 metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year.
Corn prices, however, were weaker at the bell, giving up early gains, as rains in Argentina bolstered crop prospects there.
Also, weekly EIA data had 1.012m barrels of ethanol production per day through the week that ended 1/27.
That was a 4k bpd increase from the prior week and was a 5-wk high.
But ethanol stocks were up by 1.5675 million barrels compared to the prior week at 25.077 million barrels.
That was a jump of 7% higher week on week.
On the weather side, more light rain and/or snow will fall on a large percentage of the central U.S. between today and Sunday.
NOAA’s 8-to-14-day outlook calls for more seasonally wet weather for parts of the Midwest and Plains between February 1 and February 7, with much colder weather in store for nearly all of the United States during that time.
In this context, corn basis bids were mostly steady across the central U.S. on Wednesday but did move as much as 5 cents higher at a Nebraska processor and as much as 3 cents lower at an Illinois river terminal.
Soybean basis bids were mostly steady across the central U.S., but did inch a penny higher at an Illinois river terminal.
Commodity funds were net buyers of CBOT soybeans, wheat and soymeal futures contracts and net sellers of corn and soyoil futures.
On this morning, Chicago soybean prices declined, as rains across Argentina’s farm belt boosted crop prospects, easing concerns about supply disruptions resulting from a severe drought.
Wheat lost ground after two days of gains, as snowfall in U.S. Plains improved prospects for the winter crop.
Notably, the most-active soybean contract on the Chicago Board of Trade slid 0.1% to $15.01-3/4 a bushel, as of 03:25 GMT.
Wheat gave up 0.3% to $7.39 a bushel and corn lost 0.1% to $6.73-3/4 a bushel.
In energy markets, oil prices were steady on Thursday.
Notably, Brent crude futures rose 16 cents, or 0.2%, to $86.28 per barrel by 07:45 GMT.
U.S. West Texas Intermediate (WTI) crude futures climbed 31 cents, or 0.4%, to $80.46.
The market awaits to get more clarity on the upcoming EU embargo on Russian refined products and the subsequent reshuffle of trade flows, while OPEC+ delegates head into their next meeting, scheduled on Feb. 1.
Crude inventories edged higher by 533,000 barrels to 448.5 million barrels in the week ending Jan. 20, the Energy Information Administration (EIA) said.
That was substantially short of forecasts for a 1 million barrel rise, though according to the EIA crude stocks are at their highest since June 2021.
However, the rise in inventories capped price gains.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, fell for the seventh straight session on Wednesday, as demand for capesize vessels remained weak.
The overall index, indeed, was down 18 points, or 2.5%, at 703, a fresh two-and-a-half-year low.
Notably, the capesize index lost 54 points, or about 7.9%, at 631, the lowest since early June 2020.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, lost $453 at $5,231.
The panamax index was flat at 1,035 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, were up $5 at $9,318.
Among smaller vessels, the supramax index fell one point to 648.
In equity markets, on Wall Street, the benchmark S&P 500 index lost less than 0.1% to 4,016.22 after rebounding from a morning loss of 1.7%.
The Dow Jones Industrial Average recovered from a similar drop to end up less than 0.1%, to 33,743.48.
The Nasdaq composite fell 20.91 points, or 0.2%, to 11,313.36.
Analysts are forecasting S&P 500 companies over the next couple weeks will report their first drop in quarterly earnings per share since 2020.
Microsoft fell 4.6% early in the day but recovered to end down 0.6%.
Texas Instruments lost 1.1% after the company said it expects weaker demand across all its market outside of automotive.
It was down as much as 3.1% at one point.
Meantime, Asian stock markets were mixed Thursday amid hopes Western economies can avoid a recession despite higher interest rates.
In this context, the Hang Seng in Hong Kong rose 1.9% to 22,464.77 while the Nikkei 225 in Tokyo shed 0.1% to 27,362.75.
The Kospi in Seoul gained 1.5% to 2,465.64.
New Zealand, Singapore and Jakarta advanced while Bangkok and Kuala Lumpur declined.
Markets in China, India and Australia were closed for holidays.
In currency trading, the dollar fell to 129.34 yen from Wednesday’s 129.55 yen.
The euro rose to $1.0921 from $1.0913.
Going back to analyzing the other agricultural markets …
From Central America, Mexico will not be able to completely replace all the corn it imports by 2024, Deputy Agriculture Minister Victor Suarez said on Wednesday, but it hopes to reduce its purchases between 30% and 40%.
Suarez said Mexico is progressing “significantly” in its bid to substitute grain imports, which come almost entirely from the United States.
However, they are not going to be able to produce another 16 million tonnes of corn their needing.
From South America, Brazil has now harvested about 2% of the expected record soybean crop, with Mato Grosso around 6%.
Forecasts for Brazilian production are coming to consensus around 152-153 MMT.
Meantime, scattered rains are in the forecast over the next couple weeks across the country.
According to Refinitiv Commodities Research, 2022/23 Argentina corn production estimates is down 6% from their previus forecast, at 45.29 MMT.
Recent wet weather could prove beneficial, although Refinitiv also noted “there is a chance that some torrential downpours will take place in the northern half of the Pampas sometime early next week.”
Oil World, projected the Argentine bean crop would be only 34 MMT, well below USDA’s 45.5 MMT and the latest Cordonnier figure of 39 MMT.
Meantime, soybean sales from Argentina’s 2021/2022 harvest covered 80.6% of the 44 million tonne harvest as of last week, below the 82.6% sold from the previous season at the same time, data from its agricultural ministry showed Wednesday.
Notably, between Jan. 12-18, producers sold 42,000 tonnes of soy, one of the lowest weekly volumes reported in recent months.
In the meantime, producers have sold 76.3% of Argentina’s 2021/2022 59 million tonne corn harvest, the ministry said Tuesday.
That was below the 78.5% sold from the previous season in the same period.
Also, producers have sold 51.8% of Argentina’s 2022/2023 wheat campaign, which the government has projected at just 13.4 million tonnes.
In Europe, grain markets were firmer yesterday, although still in an uncertain context.
Macroeconomic and geopolitical factors turned again in focus.
Howeverm it is once again the euro which is in the news this morning, posted at 1.0910 against the USD.
The different monetary policies between the USA and Europe contribute to the firmness of the European currency, which could penalizing EU exports.
On the other hand, any German government plans to stop crop-based biofuel production would severely hit farmers and cut rapeseed output, Thomas Mielke, CEO of Hamburg-based oilseeds analysts Oil World said on Wednesday.
Smaller crushings of oilseeds in Germany would lead to a widening of the domestic protein deficit for animal feed and mean increased imports of soybeans and soymeal, Mielke said.
About half of Germany’s rapeseed crop, which in 2022 totalled 3.7 million tonnes, is used to produce biodiesel.
About 3 million tonnes of biodiesel is blended with fossil diesel in Germany each year, with the animal feed rapeseed meal also produced from rapeseed crushings.
German environment minister Steffi Lemke is proposing an end to production of crop-based biofuels in stages by 2030.
This proposal could generate changes in trade flows with more German rapeseed oil going for export.
There would also be a reduction in rapeseed cultivation by farmers.
That also would reduce import demand, intensify the competition with producers in the exporting countries and reduce prices.
Meantime, per latest data published by Euronext on Wednesday, non-commercial market participants extended their net short position in Euronext’s milling wheat futures and options in the week to Jan. 20.
Notably, non-commercial participants, increased their net short position to 42,753 contracts from 37,135 a week earlier.
Commercial participants expanded their net long position to 25,466 contracts from 22,172 a week earlier.
In Euronext’s rapeseed futures and options, non-commercial market participants extended their net short position to 34,522 contracts from 32,364 a week earlier.
Commercial participants increased their net long position in rapeseed to 32,613 contracts from 31,018 a week earlier.
From North Africa, in the first half of 2022/23 MY (July-June) Algeria has imported 1.1 mmt of Russian wheat, SovEcon estimated.
Accumulated Russian exports to Algeria are already two times higher than in 2021/23.
Algeria has increased imports of Russian wheat thanks easing of its import restrictions, in 2021.
France has been traditionally the number one wheat supplier to Algeria.
USDA estimates its imports in 2022/23 at 8.3 mmt.
However, Russia could supply 1.5-2.0 mmt of wheat in the current season to Algeria, as per SovEcon’s estimate, continuing to put pressure on MATIF wheat prices.
From Russia, around 94% of Russia’s winter crops are in a good or satisfactory condition, Russia’s agriculture ministry said on Wednesday.
In some of the country’s key southern agricultural regions, such as Rostov and Volgograd, around 98% of winter crops are in good condition, it added.
In the Krasnodar region, 100% of crops successfully grew through the winter season, the ministry said.
However, the areas planted in the fall are down on last year.
The ministry had indeed previously said a total of 17.7 million hectares was sown for the Russian winter harvest.
That was down from 18.4 million a year earlier.
As of January 1, 2022, the stocks of grains in agricultural organizations of the Russian Federation totaled 35.3 mln tonnes, up by 10.7 mln tonnes (44%) compared to the figure on the same date in 2022, declared the Federal State Statistics Service (Rosstat).
In particular, wheat stocks amounted to 22.1 mln tonnes, up by 8.3 mln tonnes (6.0%) compared with the same date in 2022, corn stocks – 3.6 mln tonnes, down by 87.2 thsd tonnes (2%).
Sunflower seed stocks totaled 2.9 mln tonnes, up by 480.4 thsd tonnes (19%).
From the Middle Kingdom, according to the USDA attaché in Beijing, “corn production in MY (marketing year) 2022/23 is revised up slightly based on National Bureau of Statistics data indicating a better harvest in the North China Plain which more than offset smaller yields in the northeast.
Feed mills have resumed mixing more corn in feed rations as higher prices for wheat and sorghum reduce demand for corn alternatives.
At the same time, Brazilian corn is now available and priced competitively with domestic corn …
With the arrival of the first vessel of Brazilian corn in early January 2023, China will likely turn to Brazil for a substantial amount of its corn imports.”
From South East Asia, India will provide 3 million tonnes of wheat to bulk consumers such as flour millers, as part of efforts to bring down prices, which jumped to a record high.
On Wednesday, indeed, wheat prices in the Indore market – a benchmark – jumped to a record 29,821 rupees ($365.61) a tonne, up nearly 9% so far this month after rising 37% in 2022.
In New Delhi, wheat prices rose nearly 1.5% to a record 32,500 rupees.
The market was waiting for government permission for nearly two months as supplies dwindled at the tail end of the wheat marketing year even as demand surged.
However, the allocation was more than traders’ expectations of around 2 million tonnes.
That could cooling prices.
On the international trade scene, Iraq has bought 150,000 tonnes of wheat from Australia, the Trade Ministry said in a statement on Wednesday.
Jordan’s state grain buyer has issued an international tender to buy up to 120,000 tonnes of milling wheat which can be sourced from optional origins.
The deadline for submission of price offers in the tender is Jan. 31.
Shipment in the new tender is sought in a series of possible combinations in 60,000 tonne consignments in the full months of May and June 2023.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
