Good morning Farmer Family …
US farm markets were closed yesterday due to the President Day holiday.
In this shortened week, operators are focusing on the South American soybean and corn harvest.
Argentina’s corn crop is a key concern, as drought has reduced supplies and availability for exports.
Argentina’s corn exports, indeed, should fall some 40% year-on-year between March and June, the Rosario Grains exchange said on Friday.
Meantime, Brazilian farmers have harvested 25% of the soybean area planted for 2022/23 through last Thursday, agribusiness consultancy AgRural said on Monday, as work in the fields advances quickly in top grain producing state Mato Grosso.
The week will also be animated by the first the U.S. Department of Agriculture’s annual Outlook Forum, in which the government is expected to release preliminary forecasts for 2023 plantings and production of major U.S. crops.
The escalation in fighting in Ukraine and renewed Russian criticism of the shipping corridor from Ukraine underpinned the wheat market last week.
However, Turkish and Russian leaders may soon discuss about Ukraine Grain deal, though there is no date set yet.
In this context, corn prices rose Tuesday
, climbing to their highest in almost one week.
Soybeans gained ground, while wheat ticked lower.
Notably, the most-active corn contract on the Chicago Board of Trade (CBOT) rose 0.3% to $6.79-1/2 a bushel, as of 03:56 GMT.
Soybeans added 0.8% to 15.39 a bushel while wheat lost 0.2% to $7.75 a bushel.
In energy markets, Brent crude rose over 1% on Monday, buoyed by optimism over Chinese demand, continued production curbs by major producers and Russia’s plans to rein in supply
Brent crude, indeed, settled up $1.07, or 1.3%, at $84.07 a barrel.
Volumes, however, were muted because of the U.S. market holiday.
On this morning, Brent oil fell, reversing the previous day’s gain, as fears that a global economic slowdown, and drop in fuel demand, amid aggressive interest rate hikes by the U.S. central bank prompted investors to take profits.
Traders are awaiting the minutes of the latest Federal Reserve meeting, due on Wednesday, as data on core inflation has raised the risk of interest rates remaining higher for longer.
Thus, Brent crude was down 96 cents, or 1.1%, at $83.11 a barrel as of 05:12 GMT.
U.S. West Texas Intermediate crude (WTI) futures for March, which expire on Tuesday, were unchanged at $76.34 a barrel.
The April WTI contract, was up 2 cents at $76.57 a barrel.
In ocean freight markets, the Baltic Exchange’s main sea freight index, logged its best day in nearly two months on Monday on gains in rates for capesize and supramax shipping vessels.
The overall index, indeed, was up 14 points, or 2.6%, at 552.
Notably, the capesize index gained 13 points, or 4.8%, at 284.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, gained $108 to $2,354.
The panamax index, however, was down 2 points at 809, lowest since mid-June 2020.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, lost $25 to $7,277.
The supramax index rose 32 points to 727.
In equity markets, Asian shares were mostly lower Tuesday in quiet trading.
Shares dropped in Tokyo, Sydney and Hong Kong but rose slightly in Seoul and Shanghai.
Notably, Tokyo’s benchmark, the Nikkei 225, shed 0.2% to 27,464.69. Australia’s S&P/ASX 200 slipped 0.2% to 7,336.30.
South Korea’s Kospi gained nearly 0.2% to 2,458.72.
Hong Kong’s Hang Seng dipped 1.6% to 20,561.77, while the Shanghai Composite gained 0.1% to 3,294.37.
Analysts say worries about weakening demand persist in Asia, as companies cope with rising energy and raw material costs and consumers hold back on spending.
In Japan, a preliminary manufacturing indicator, the flash purchasing manager’s index, fell to 47.4 in February from 48.9 the month before.
That was the weakest reading in more than two years.
The latest data from Australia, called the Judo Bank PMI, showed private sector activity remained in contraction for the fifth straight month.
Although exports rebounded with help from China’s re-opening, the sector showed little to no positive momentum.
Unemployment has also risen in Australia.
Thus, the distortions in the Australian economy remain extreme and point only to recession.
In currency trading, the U.S. dollar inched up to 134.38 Japanese yen from 134.26 yen.
The euro cost $1.0676, down from $1.0689.
Going back to analyzing the other agricultural markets …
From South America, Brazilian farmers have harvested 25% of the soybean area planted for 2022/23 through last Thursday, agribusiness consultancy AgRural said on Monday, as work in the fields advances quickly in top grain producing state Mato Grosso.
Harvesting was up eight percentage points from the previous week, said AgRural, while at the same time last year 33% of the Brazilian soy fields had been reaped.
The consultancy last week cut its forecast for Brazil’s soybean output this season to 150.9 million tonnes from 152.9 million tonnes, citing a severe drought in the country’s southernmost state of Rio Grande do Sul.
Even so, that would represent a record high for soybean production in the South American agricultural powerhouse.
AgRural also said Brazil’s second corn planting, was below year-ago levels.
According to the consultancy, 40% of the expected second corn area had been planted in the center-south region as of Thursday, up from 24% a week earlier but below the 53% of a year ago.
In Europe, market activity was quite limited yesterday on the grain market, with prices down slightly.
Euronext wheat traded in a narrow range, while traders are awaiting news on the renewal of a wartime grain export agreement between Ukraine and Russia.
Thus, geo-political factors will again dominate the market drivers this week.
Negotiations would start in a week on extending the initiative.
However, the lack of a risk premium in EU prices seems to show the market expects an extension of the shipping channel, at least in the short term from March.
Thus, May wheat contract on Paris-based Euronext, settled 0.1% lower at 291.25 euros ($311.20)a tonne.
Meantime, standard 12% protein wheat for February delivery in Hamburg was offered for sale at a premium of about 7 euros over the Euronext March contract, with little purchase interest, as Black Sea supplies had once again creating export competition.
In France, however, the market is watching to see if showers forecast later this week will materialise after a month with virtually no precipitation – the longest dry spell on record for wintertime.
A lack of rain in parts of Spain and Italy is causing concern for grain crops, the European Union’s crop-monitoring service said on Monday.
According to the February 2023 issue of the EU MARS Bulletin, winter crops in most parts of Europe remain in fair to good condition.
In most agricultural regions, thermal conditions since the beginning of the year were characterised by a transition from exceptionally warm to more normal winter conditions, yet without distinct cold spells.
Several regions experienced, and some continue to experience, a distinct rainfall deficit.
This is of particular concern in southern and central Spain, northern Italy, western Türkiye and North Africa’s Maghreb region.
No frost-kill damage is expected as winter temperatures return to normal after an exceptionally warm period.
They have revised down 2023 yield expectations for wheat crops across the North Africa, by 15-24 percent compared to the five-year average, while barley is expected to see a 10-30pc decline
As for oilseeds, May rapeseed on Euronext yesterday ended down 1.2% at 557.50 euros a tonne, after a rally on Friday to a one-month high that had surprised traders.
In Ukraine, grain exports are down 28.7% at 30.3 million tonnes in the 2022/23 season so far, hit by a smaller harvest and logistical difficulties due to the war, agriculture ministry data showed on Monday.
The volume so far in the July to June season included about 10.8 million tonnes of wheat, 17.4 million tonnes of corn, and about 2 million tonnes of barley.
Exports at the same stage of the previous season were almost 42.5 million tonnes.
The ministry said grain exports so far in February had reached 3.3 million tonnes as of Feb. 20, down from 4.07 million tonnes in the same period last year.
From Russia, Russian wheat prices were little changed last week on higher exports and increased supplies, while uncertainty remained about whether an accord to allow safe passage for Black Sea grain exports would be extended.
Nearly a year after the start of the Russian-Ukrainian conflict, Vladimir Putin’s speech will be listened to with interest this morning.
Announcements related to grain exports and its position on maintaining the corridor in place from Ukraine will be particularly awaited.
Russian wheat exports were 730,000 tonnes last week, compared with 540,000 a week earlier, according to port data.
In this context, Sovecon said last week that it was increasing its 2022/23 Russian wheat export forecast by 0.1 million tonnes to 44.2 million tonnes.
Meantime, 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 to $299 per tonne last week.
Price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 12,325 rbls/t -175 rbls/t (Sovecon).
Price for sunflower seeds was at 29,000 rbls/t -25 rbls/t (Sovecon).
Price for domestic sunflower oil was at 79,750 rbls/t -1,000 rbls/t (Sovecon).
Price for domestic soybeans was at 33,600 rbls/t -350 rbls/t (Sovecon).
Export price for sunflower oil was at $1,120/t -$20 (Sovecon).
Price for white sugar, Russia’s south was at $722.31/t -$0.67 (IKAR).
($1 = 74.42 roubles).
From Australia, the country exported 883,885 tonnes of canola in December to set a new new monthly record by surpassing the 854,950t shipped in March 2022, according to data from the Australian Bureau of Statistics.
The December figure is up 16 percent from the 761,772t shipped in November, with Belgium on 241,577t the biggest market, followed by Germany on 183,671t and The Netherlands on 129,449t.
Analysts expects 753,000t was on the stem for January.
This represents an impressive start to the 2022-23 marketing year, with the export pace to date 56pc than the same time last year.
However, the early forecast for 2023-24 is for lower planted area compared to 2022-23, likely down 5-15pc across the board.
Meantime, markets kicked off the week relatively unchanged on wheat and barley while canola values lifted $10-15/t across the boards, with Port Kembla track values trading around $760/t throughout the day.
On the international trade scene, Egypt’s GASC is seeking wheat from optional origins in a February 22 tender for April shipment.
The tender will be funded by the World Bank.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
