Good morning Farmer Family …
US farm markets mostly fell on Tuesday.
Corn prices backed off 0.4%.
Soybeans settled 0.34% in the red.
Meal prices ended the day down by 0.6%.
Soy oil ended the day 0.43% in the black after working red through midday.
Chicago SRW ended the day 0.76% in the red.
Kansas City HRW wheat prices also ended in the red by 0.69%, although the benchmark stayed above the $9/bu mark.
Minneapolis spring wheat was fractionally mixed at the close, posting a 0.13% gain.
Corn and wheat prices had tested modest gains overnight.
Traders continued to monitor war risks to Black Sea grain supplies.
News that military officials in Ukraine issued a warning on Tuesday of a high risk of naval mines drifting around the port of Odesa kept attention on potential disruption to grain trade as fighting in Ukraine intensifies.
However, ultimately both grains spilled into the red following some technical selling, with worries about a global recession adding to bearish sentiment.
U.S. consumer prices accelerated in January, suggesting that the Fed will maintain its fight against inflation.
Thus, macroeconomic concerns hung over the grains as well as other markets.
Also, the United States said it was “disappointed” in the Mexican government’s announcement on Monday which walked back a deadline to ban genetically modified corn for animal feed and industrial use in the country, but retained its plans to ban the corn for human consumption.
Soybean eased, on profit takings, after reaching an eight-month high a day earlier.
The advancing of a likely record-large soy crop in Brazil, added more down pressure.
Soymeal also shedded after hitting its highest level since 2014.
Prior to the next monthly report from the National Oilseed Processors Association (NOPA), which will be released later in the day, analysts expect the group to show a January soybean crush of 181.656 million bushels.
That would be 2.3% higher than December’s tally, if realized, but still 0.3% lower year/year.
Individual trade guesses ranged between 176.980 million and 187.0 million bushels.
Meantime, after a lucrative 2022 export season, the prospects don’t feel as certain for 2023.
“According to the World Agricultural Outlook Board, USDA’s export volume forecasts for the 2022/23 marketing year are 22%, 8%, and 3% lower for corn, soybeans, and wheat, respectively, than in the year prior.”
In this context, corn basis bids were steady to mixed after rising 3 to 10 cents higher at two Midwestern locations while fading 2 cents lower at an Indiana ethanol plant on Tuesday.
Soybean basis bids firmed 2 to 3 cents higher at two interior river terminals and eased a penny lower at an Ohio elevator while holding steady elsewhere across the central U.S..
Commodity funds were net sellers of CBOT soybean, wheat, soymeal and corn futures contracts and net buyers of soyoil futures.
On this morning, Chicago soybean prices lost more ground, with pressure from freshly harvested record Brazilian crop entering the market.
Wheat and corn also ticked lower, although risks to Black Sea supplies from the ongoing war in Ukraine limited decline.
Thus, the most-active soybean contract on the Chicago Board of Trade fell 0.4% to $15.31-1/2 a bushel, as of 03:19 GMT.
Wheat gave up quarter of a cent to $7.85-3/4 a bushel and corn fell 0.2% to $6.81-1/4 a bushel.
In energy markets, oil prices extends losses on Wednesday.
Brent crude futures indeed slid $1.08, or 1.3%, to $84.48 per barrel by 07:29 GMT, while U.S. West Texas Intermediate (WTI) crude futures shed $1.14, or 1.4% to $77.93.
U.S. crude inventories rose by about 10.5 million barrels in the week ended Feb. 10, according to the American Petroleum Institute (API) figures on Tuesday.
The build was much larger than the 1.2 million-barrel rise that analysts had expected, potentially pointing to a drop in fuel demand.
Gasoline stocks also rose by about 846,000 barrels, while distillate stocks rose by about 1.7 million barrels.
This is the eighth week of stocks building.
Meanwhile, a Federal Reserve official said on Tuesday the U.S. central bank will need to keep gradually raising interest rates to beat inflation after data showed that U.S consumer prices accelerated in January.
Also weighing on crude prices was a U.S. Department of Energy (DOE) announcement this week that it would sell 26 million barrels of oil from the nation’s strategic reserve, which is already at its lowest level in roughly four decades.
Also, China’s top state-owned refiners have reportedly resumed purchases of discounted Russian oil.
Japanese oil refiners could also buy Russian crude if needed, potentially curbing their appetite to take oil from other sources.
Prices drew some support, limiting losses, after the OPEC which said global oil demand will rise this year by 2.32 million barrels per day (bpd), or 2.3%, raising the forecast from February by 100,000 bpd.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, fell to a near three-year low on Tuesday on capesize’s worst single-day drop in nearly six months.
The overall index, indeed, was down 53 points, or 8.6%, at 563, lowest since early June 2020.
Notably, the capesize index lost 152 points, or about 28.5%, to 382.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, fell $1265 to $3,167.
The panamax index fell 15 points, or about 1.7% to 848.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, were down $133 at $7,631.
The supramax index snapped its seven-day-long losing streak, edging up 2 points at 627.
In equity markets, US stock indexes Tuesday settled mixed, under early pressure from U.S. Jan consumer prices that rose more than expected.
U.S. Jan CPI indeed eased to 6.4% y/y from 6.5% y/y in Dec but was stronger than expectations of 6.2% y/y.
Also, the Jan core CPI fell to 5.6% y/y from 5.7% y/y in Dec but was stronger than expectations of 5.5% y/y.
That will keep the pressure on the Fed to keep raising interest rates.
As a result, the two-year Treasury has shot to its highest level since November, egged on last week by a stronger-than-expected report on the U.S. jobs market.
Notably, the two-year yield rose to 4.61% from 4.52% late Monday.
It initially zig-zagged up, down and back again after the release of the inflation report.
Meanwhile, the 10-year yield, which helps set rates for mortgages and other loans, rose to 3.75% from 3.70%, after rising to a 6-week high of 3.795%.
Stocks, however, staged a rebound in late trading Tuesday and recovered most of their losses, with the Nasdaq pushing into positive territory after Philadelphia Fed President Harker said CPI data shows inflation is coming down slowly and the Fed needs to maintain its 25 bp rate hike path.
He also said policymakers were “close” to nearing the point where interest rates were restrictive enough.
Thus, on Wall Street, the benchmark S&P 500 index edged down less than 0.1% to 4,136.13.
The Dow Jones Industrial Average lost 0.5% to 34,089.27 while the Nasdaq gained 0.6% to 11,960.15.
On this morning, Asian stock markets fell.
Tokyo, Shanghai, Hong Kong and Sydney declined.
Notably, the Shanghai Composite Index lost 0.3% to 3,282.60 and the Nikkei 225 in Tokyo gave up 0.5% to 27,476.75.
The Hang Seng in Hong Kong tumbled 1.3% to 20,840.78.
The Kospi in Seoul retreated 1.4% to 2,430.57 and Sydney’s S&P-ASX 200 sank 1% to 7,356.80.
India’s Sensex opened down less than 0.1% at 61,022.03.
New Zealand and Jakarta advanced while Singapore and Bangkok declined.
In currency trading, the dollar gained to 133.11 yen from Tuesday’s 133.06 yen.
The euro declined to $1.0718 from $1.0739.
Going back to analyzing the other agricultural markets …
From Central America, the Mexican Economy Ministry said on Monday that it was eliminating its January 2024 deadline for ending its imports of GM corn used to feed animals.
The country buys about 17 million tonnes of mostly GM yellow corn from the United States each year, mostly for animal feed.
Mexico will still prohibit use of GM corn for human consumption, such as flour, dough, or tortilla made from the grain.
About 20% of Mexican corn imports from the United States is white corn for food products.
Also, it will still move forward with its plan to ban imports of the herbicide glyphosate, with a transition period in effect until March 31, 2024.
In a January meeting with Mexican officials, the U.S. Trade Representative’s (USTR) office said it was considering taking action under the U.S.-Mexico-Canada Agreement (USMCA) over the dispute, which threatens billions of dollars in corn trade.
The United States had given the Mexican government until Tuesday to explain the science behind its proposed bans.
The National Corn Growers Association, a U.S. industry group, expressed concern over Monday’s decree.
The United States said on Tuesday it was “disappointed” in the Mexican government’s announcement.
From South America, Brazilian soybean output will reach an estimated 153 million tonnes in the 2022/2023 cycle, down 400,000 tonnes from a previously forecast of 153.4 million tonnes, agribusiness consultancy Agroconsult said on Tuesday.
The revision reflects a severe drought in Rio Grande do Sul state, Agroconsult said.
Agroconsult, indeed, said it cut average yields estimates for Rio Grande do Sul to 38 60-kilo bags per hectare from 51.5 bags per hectare forecast before the crop tour began.
However, a Brazilian soybean harvest at 153 million tonnes, is still the largest on record if realized.
South American crop consultant Michael Cordonnier left its Brazilian soybean crop estimate at 151Mt noting early yields in Mato Grosso are “good” and will likely compensate for any potential losses in southern Brazil.
Meantime, he cut its Brazilian corn crop estimate by 2Mt to 123Mt, citing safrinha corn planting delays and the possibility not all intended acres will be seeded.
In this context, the South American country, which is poised to reap more than 300 million tonnes of grains in the 2022/2023 season, will faces a grain storage deficit of 117 million tonnes this cycle.
Meantime, Brazil’s Anec estimates that the country’s corn exports will reach 2.12 MMT in February.
That’s around 8% below the group’s prior projection from a week ago.
Anec also estimates that the country’s soybean exports in February will reach an impressive volume of 9.39 MMT.
That’s still slightly below the group’s prior projection from a week ago, however.
Anec also expects to see Brazilian soymeal exports reach 1.860 million metric tons this month.
In Argentina, drought-stricken crops could bring in 23% fewer export dollars this season versus a year earlier, the Buenos Aires grains exchange said in a report on Tuesday.
The agriculture sector’s export revenues from the 2022/2023 harvest are expected to fall to $33.39 billion, the exchange said.
Recent rains brought some relief to parts of Argentina’s agricultural regions, but the risks are far from over, the exchange said, adding that the drought could trim $3.31 billion from the government’s strained tax intake.
“The impact could be even greater if rainfall does not return to normal in the remainder of the season and if the risk of early frosts becomes real, given the delays in planting progress,” the report said.
The grains exchange forecasts 2022/23 soybean and corn production, crops whose harvest begins in April, at 38 million tonnes and 44.5 million tonnes respectively.
Dr Cordonnier cut Argentine soybean crop estimate by 2Mt, to 36Mt, and corn by 1Mt, to 43Mt.
In Europe, grain prices traded at around a one-month high on Euronext due increasing tensions in the Black Sea export zone.
In such a geopolitical context, wheat crystallizes the attention of most.
However, the issue is mainly about maize, as imports from Ukraine are essential to balancing the Community balance sheet.
Hence the minimal gap now observed between wheat and corn on Euronext.
In this context, March milling wheat on the Paris-based Euronext settled up 0.3% at 299.50 euros ($321.06) a tonne, while corn rose at 298 euros.
Wheat earlier rose to 301.50 euros, setting a one-month high for a third straight session, but failed to close above 300 euros, as the expiry of options against March futures on Wednesday was leading to technical adjustments.
Signs of an escalation in fighting in Ukraine have raised doubts about grain supply, while overall market attention is on the renewal of the safe shipping channel for Ukraine.
However, large volumes of Ukrainian grain continue to be exported by land especially to Romania, Poland and Hungary with rail and road transport prices starting to return to pre-war levels.
Thus, this renewed war concerns have only countered recent price pressure came from cheaper Black Sea origins, although without big results.
Indeed, despite Germany standard 12% protein wheat for February delivery in Hamburg was offered for sale at a premium of about 10 euros over the Euronext March contract, there were little purchase interests.
Meantime, in France, the farm ministry made a slight upward revision to its estimate of 2023-24 area sown to soft wheat, while making a sharper upward revision for rapeseed.
The winter soft wheat area was now seen at 4.76Mha (4.75Mha in December).
The new estimate was up 2pc compared with the area harvested in 2022 and slightly higher than the 5-year average.
For 2023-24 winter rapeseed, area planted was increased to 1.34Mha (1.29Mha in December) and is now 9pc above last year’s level and nearly 11pc above the five-year average.
Barley area was also revised up to 1.34Mha (1.30Mha in December) which is 3.7pc up from last year and 7pc above the five-year average.
For durum wheat, used to make pasta, the ministry kept unchanged its estimate of winter crop sowing for this year at 233,000 hectares, 4.8% less than last year and 12.6% below the five-year mean.
For the 2022 harvest, estimated grain maize output, excluding crop grown for seeds, was kept at 10.58 million tonnes, 30% below 2021.
French wheat and barley crops were in very good shape ahead of winter.
But crops are now facing a dry February, raising some market concerns ahead of the key spring growing season.
In Germany, in contrast, generally mild, rainy weather was seen as favourable for crops.
In this context, In this context, Farm office FranceAgriMer on Wednesday lowered its outlook for French soft wheat exports this season, leading it to raise its stocks forecast for the European Union’s biggest producer.
In a supply and demand outlook for major cereal crops, FranceAgriMer indeed cut its estimate of soft wheat exports outside the European Union to 10.45 million tonnes from the 10.60 million tonnes forecast in January.
The office had increased its non-EU export outlook in the two previous months, citing strong sales to North Africa.
Traders, however, have reported a lull in new demand since January.
FranceAgriMer also trimmed its forecast of 2022/23 French soft wheat exports within the EU to 6.59 million tonnes from 6.64 million previously.
As a result, it increased its projection for French soft wheat stocks at the end of the season on June 30 to 2.46 million tonnes, down from the 2.33 million tonnes forecast last month, though that would be 11% below 2021/22 ending stocks.
In contrast, the office increased its outlook for French barley exports this season, including a 350,000 tonne upward revision for non-EU shipments now projected at 2.8 million tonnes.
After a slow start to the export campaign, traders have reported large sales of French barley to China for shipment from January.
Forecast French barley stocks at the end of 2022/23 were cut to 1.56 million tonnes from 1.97 million tonnes last month.
For maize (corn), the office trimmed its stocks forecast to 2.23 million tonnes from 2.30 million tonnes, as an upward revision to intra-EU exports offset a reduced outlook for domestic feed demand.
On the other hand, after a week of absence, Euronext published on Tuesday its commitments of traders(COT) data delayed from last week in fallout from a ransomware attack on financial data firm ION Group.
Notabily, non-commercial market participants slightly lifted their net short position in Euronext’s milling wheat futures and options in the week to Feb. 3.
Non-commercial participants, which include investment funds and financial institutions, indeed, raised their net short position to 46,629 contracts from 46,354 a week earlier, the data showed.
Commercial participants trimmed their net long position to 28,217 contracts from 28,947 a week earlier.
In Euronext’s rapeseed futures and options, non-commercial market participants reduced their net short position to 32,906 contracts from 33,476 a week earlier.
Commercial participants increased their net long position in rapeseed to 32,030 contracts from 31,885 a week earlier.
From North Africa, Egypt will import 1m mt of wheat from Serbia via Constanta.
Egyptian officials have signed an agreement with Serbian officials allowing the import of 1 million mt of Serbian wheat, which will be shipped from the Romanian port of Constanta to the Egyptian ports of Alexandria and Damietta.
The announcement comes after a meeting of the Egyptian Minister of Supply and Internal Trade, Ali Al-Moselhy, and an official delegation from Serbia.
In addition to wheat imports, officials discussed the potential to supply Egypt with yellow corn and poultry.
Earlier this year, Egyptian officials discussed the signing of a long-term contract with Germany to import more German wheat.
Al-Moselhy expressed his gratitude for the fruitful cooperation between the two countries regarding the recent supply of two shipments of German wheat.
Last month, Egypt’s Minister of Supply and Internal Trade said that the strategic reserve of wheat in the country is sufficient for just over 5 months until next May 7, enough to cover internal demand with the local wheat harvesting season beginning in April.
From Ukraine, Ukrainian farmers may face a shortage of fertilisers for 2023 spring sowing and a lack of them could sharply reduce the harvest, a top agriculture official said on Tuesday.
Most Ukrainian fertiliser plants were stopped due to the conflict and the first deputy farm minister Taras Vysotskiy said in a statement that production at two remaining plants had fallen to 1.1 million tonnes in 2022 from 5.2 million tonnes in 2021.
Part of the needs were covered by imports which rose to 4.3 million tonnes last year from 1.4 million tonnes a year before, Vysotskiy added.
The decrease in fertiliser purchases total around 1.2 million tonnes.
The agriculture ministry has not issued the 2023 grain harvest outlook, while the economy ministry estimated the harvest at 49.5 million tonnes, compared with around 51 million tonnes in 2022.
Producers, however, see the output even smaller at 35 million tonnes to 40 million tonnes in 2023, including 12-15 million tonnes of wheat and 15-17 million tonnes of corn.
From Russia, last week Russia’s outstanding wheat export sales hit 2.9 million metric tons (MMT), according to data from the National Commodity Exchange (NCE) processed by SovEcon.
This is the highest number since the reporting system was introduced in 2021 in order to calculate weekly floating tax rates on grain exports.
Traders must report data on deals they make, based on which the export tax and indicative price are calculated.
The increase in sales is driven by strong demand for Russian wheat amid record-high harvest.
Russian wheat has regained its competitive edge amid rally in CBOT and Euronext in recent weeks.
The spread between Euronext French wheat prices and Black Sea rose to around $17-18 from $0-5 in January.
As a result, demand from importers rose substantially.
This week, however, the volume of outstanding sales decreased to 2.3 million tons but it’s still a high volume for this time of the season.
SovEcon estimates Russia’s total February grain exports at 4.3Mt.
That is compared with 4.4 MMT in January 2023 and 2.8 MMT in February 2022.
It included 3.7Mt wheat (3.8Mt January 2023 and 2.5Mt February 2022).
In 2022 Russia harvested record-high wheat crop of 104.4 MMT, compared to 76.0 MMT a year earlier.
The Russian 2022-23 Winter Crops are assessed as good and satisfactory, according to the Ministry of Agriculture of the Russian Federation.
About 95% of winter crops are in good and satisfactory condition.
The central Black Earth Region and as well the Southern part of Russia with the large area of Winter Crops are getting some good snow cover what should help to bring the moisture level up as some of the region where missing some of the latest precipitation.
The Ministry of Agriculture of the Russian Federation discussed the readiness of the regions for the upcoming work in the fields, “the situation in the regions is not the same, but we see a positive outlook for the coming active growing season” said.
“The feeding of winter crops is gradually beginning in the south of the country, and other regions will soon join this work”.
From South East Asia, according to the USDA attaché in New Delhi, “India’s upcoming rabi (winter sown, spring harvested) crop acreages have been boosted to record levels on adequate 2022 monsoon rains in October and generally favorable weather conditions.
The Indian government will continue providing free food grains to about 813.5 million beneficiaries between January and December 2023 under the National Food Security Act (NFSA).
On January 25, 2023, the government announced to offload 3 million metric tons (MMT) of wheat onto the domestic market between January and March 2023, to help control rising wheat prices.
USDA attaché estimates market year (MY) 2022/2023 wheat production lower at 100 MMT, along with exports at 5.7 MMT and ending stocks coming in at 10.2 MMT.”
India’s 2023 wheat production is likely to rise 4.1% to a record 112.2 million tonnes, the government said on Tuesday, as higher prices prompted farmers to expand crop-growing areas with high-yielding varieties and the weather remained favourable.
Higher wheat output could help the world’s second-biggest producer of the grain in replenishing depleted inventories and bringing down prices from record levels.
India’s rapeseed production in 2023 could jump 7.1% from a year earlier to a record 12.8 million tonnes, the government said.
A rise in rapeseed output could help the world’s biggest edible oil importer reduce overseas purchases of palm oil , soyoil and sunflower oil.
From Australia, wheat in eastern Australia firmed a couple of dollars. Track SA barley firmed to A$320/t.
Canola found some more buying interest in Port Lincoln and Adelaide zones.
On the international trade scene, Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said it received no offers for feed-quality wheat or barley in a simultaneous buy and sell (SBS) auction that closed late on Wednesday.
The ministry had sought 70,000 tonnes of feed wheat and 40,000 tonnes of feed barley to be loaded by May 31 and arrive in Japan by July 27.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
