Good morning Farmer Family …
US farm markets were mixed on Tuesday.
Soybeans grabbed double-digit gains, up 1.41%.
Soymeal and soyoil contracts also improved, up 1.34% and 2.05% respectively.
The wheat markets, in contrast, suffered a setback, as Chicago wheat prices were down by 1.96%, Kansas City HRW ended the day down by 0.25%, and Minneapolis spring wheat settled down by 0.62%.
Soybean and corn prices hit their highest in a week and soyoil touched a one-month peak, as precipitation in Argentina’s crop belt over the next 10 days will remain limited in coverage and intensity, according to the space technology company Maxar.
Thus, those worries, supported prices overshadowing market pressure from field work in Brazil, where farmers are harvesting what is expected to be the largest soy crop on record.
Wheat prices, meantime, suffered variable losses, and corn price saw limited gains, on the heels of a strengthening U.S. Dollar and ample competition on international market.
USDA’s weekly Export Inspections report showed 622,841 MT of corn was exported during the week that ended 2/16.
That was 59k MT more than the prior week.
The season’s total corn export, however, was 13.735 MMT according to the weekly data, which remains 7.9 MMT behind last year’s pace.
As for soybean, the report had 1.578 MMT of soybeans exported during the week that ended 2/16.
That was down from 1.69 MMT last week but was 533k MT above the same week last year.
China was the top destination for the week with over 1 MMT.
USDA also added 268k MT of exports to past reports (including 183k MT to China), for a season total of 41.387 MMT shipped through 2/16.
As for wheat, the report showed 373,429 MT of wheat was exported during the week that ended 2/16.
That was nearly 100k MT lighter for the week and was down nearly 200k MT from the same week last year.
The full season export figure was 14.66 MMT as of 2/16, trailing last year’s 15.08 MMT pace.
Traders continued also to gauge prospects for the continuation of the Black Sea Grain Deal, though President Vladimir Putin’s statements yesterday, which favored in particular Russian production and its export, have bring a reassuring element.
Meanwhile, plenty more rain and/or snow is on its way to the central U.S. later this week.
A band stretching from South Dakota through Michigan is likely to gather the greatest amounts between Wednesday and Saturday, per the latest 72-hour cumulative precipitation map from NOAA.
In fact, Winter Storm Olive will delivery heavy snow, blizzard conditions, ice and other hazards to significant portions of the Plains, upper Midwest and Great Lakes region, according to analysis from the Weather Channel, though the precipitation, is expected to miss drought-hit areas of the southwestern Plains winter wheat belt.
Also, traders await the U.S. Department of Agriculture’s annual two-day Outlook Forum starting on Thursday, in which the USDA is expected to release preliminary forecasts for 2023 plantings and production of major U.S. crops.
In this context, corn basis bids were mostly steady to weak after trending 5 cents lower across three Midwestern locations on Tuesday.
An Iowa processor bucked the overall trend after tracking 3 cents higher.
Soybean basis bids held steady across the central U.S..
Commodity funds were net buyers of CBOT soybean, soyoil, soymeal and corn futures contracts, and net sellers of wheat futures.
On this morning, soybean prices advanced further.
Wheat rose on support from some worries about supplies from Ukraine.
Notably, the most-active soybean contract on the Chicago Board of Trade (CBOT) added 0.3% to $15.48-3/4 a bushel, as of 03:10 GMT, after climbing to its highest since Feb. 13 at $15.49 a bushel on Tuesday.
Wheat rose 0.1% to $7.63-3/4 a bushel and corn gained quarter of a cent at $6.80-3/4 a bushel.
In energy markets, Brent crude oil slipped more than 1% in a volatile session on Tuesday.
Global benchmark Brent crude settled $1.02, or 1.2%, lower at $83.05 a barrel.
U.S. West Texas Intermediate crude (WTI) for March, which expired on Tuesday, fell 18 cents, or 0.2%, to $76.16 a barrel. The second-month contract slipped 19 cents, or 0.2%, at $76.27.
Earlier in the session, the market had rallied, with Brent briefly turning positive, after better-than-expected business activity surveys in Europe and Britain pointed to a less gloomy European economic outlook than previously feared.
Then, the focus in the wider financial market shifted on Wednesday’s release of the minutes of the U.S. Federal Reserve’s latest meeting, after recent data raised the risk of interest rates remaining higher for longer.
As a result, the dollar rose and a stronger greenback which makes dollar-denominated oil more expensive for holders of other currencies, weighed on oil prices.
Separately in the natural gas market, U.S. regulators approved the partial restart of Freeport LNG’s Texas facility, the second-biggest U.S. liquefied natural gas export plant, which was shut after a fire in June.
On this morning, oil prices fell for a third trading session.
Brent crude futures for April delivery, indeed, fell 30 cents to $82.75 a barrel by 07:21 GMT.
West Texas Intermediate (WTI) crude futures for April dropped by 38 cents to $75.98 a barrel.
Other economic reports from the U.S., showed some troubling signs.
Sales of existing homes fell in January to their lowest since October 2010, the 12th monthly drop, which is the longest streak since 1999.
On this wake, a preliminary analyst poll on Tuesday showed a rise in U.S. crude inventories, exacerbating the demand worries.
Those growing recessionary concerns are keeping a lid on oil prices, though the market is cautiously optimistic on China’s demand recovery especially in gasoline and jet fuel.
In fact, is believed that state-owned PetroChina and Unipec had booking 10 supertankers to import oil from the U.S. next month, equal to about 20 million barrels of crude, as signs of rising Chinese demand.
In ocean freight markets, the Baltic Exchange’s main sea freight index, climbed to the highest in more than a week on Tuesday as shipping rates for all vessel segments increased.
The overall index, indeed, was up 42 points, or 7.6%, at 594.
Notably, the capesize index gained 19 points, or 6.7%, at 303.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $159 at $2,513.
The panamax index was up 34 points, or 4.2%, at 843, posting its best day since early October 2022.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, gained $308 to $7,585.
The supramax index rose 80 points, or 11%, to 807.
The index marked its highest percentage gain in a single day, since October 2017.
In equity markets, US stock indexes Tuesday closed sharply lower.
Concern that the Fed may raise interest rates higher for longer, saw the 10-year T-note yield Tuesday jump to a 3-1/4 month high of 3.958%, and the two-year yield rising to 4.72%, closely to its highest level since 2007.
Thus, markets saw a sell off in technology stocks.
Negative corporate news, made an additional pressure overall market, with Nordson down more than -13%, and Home Depot down more than -7%.
Tuesday’s U.S. economic news was mixed.
As we said, on the negative side, Jan existing home sales unexpectedly fell -0.7% m/m to a 12-year low of 4.00 million, weaker than expectations of an increase to 4.10 million.
Conversely, the Feb S&P U.S. manufacturing PMI rose +0.9 to a 4-month high of 47.8, stronger than expectations of 47.2.
In this context, the S&P 500 fell 2% to 3,997.34 for its sharpest drop since the market was selling off in December.
The Dow Jones Industrial Average lost 697 points, or 2.1%, to 33,129.59 while the Nasdaq composite sank 2.5% to 11,492.30.
On this morning, Asian shares declined.
Tokyo’s benchmark Nikkei 225 dipped 1.4% in afternoon trading to 27,102.21.
Australia’s S&P/ASX 200 slipped 0.3% to 7,314.50.
South Korea’s Kospi dropped 1.6% to 2,419.15.
Hong Kong’s Hang Seng slipped 0.3% to 20,461.32, while the Shanghai Composite shed 0.6% to 3,287.64.
New Zealand’s central bank raised its benchmark interest rate by a half-point to 4.75% to try to wrestle down inflation.
The increase, which can raise the borrowing costs for consumers on everything from credit cards to mortgages, comes despite widespread economic pain from a devastating cyclone.
In currency trading, the dollar index on Tuesday rose by +0.29%, with the euro moved moderately lower, down -0.37% and the Japanese yen fell by -0.48%.
On this morning, the U.S. dollar fell to 134.85 Japanese yen from 134.92 yen, while the euro rose to $1.0659 from $1.0653.
Going back to analyzing the other agricultural markets …
From South America, the Brazilian national agricultural agency, CONAB, reported at 19 Feb, the 2022-23 first (full season) maize plantings were 99pc complete, with harvesting at 14pc complete (11pc last week, 20pc last year).
Rains continued to contain the pace of threshing in Minas Gerais and Paraná, with some beneficial, yet irregular, precipitation seen in Rio Grande do Sul.
Second (safrinha) maize sowings were 33pc complete (20pc, 46pc).
Soybean harvest was 23pc complete (15pc, 33pc), with crops maintaining a good condition in Mato Grosso and Paraná despite wet weather.
While there were concerns about crop quality in Mato Grosso do Sul and Minas Gerais, a period of dryness was favourable for threshing in Goiás.
Crop consultant Michael Cordonnier left his Brazilian crop estimates unchanged at 151Mt for soybeans and 123Mt for corn.
Meantime, he cut his Argentine soybean crop estimate another 2Mt to 34Mt.
He noted, “Everything that could go wrong with the 2022-23 soybean crop in Argentina did go wrong – from the worst drought in 60 years to record-high temperatures and now light to moderate frost in what is essentially the middle of summer.”
Dr Cordonnier left his Argentine corn crop estimate at 43Mt, indicating “the weekend frost appeared to hurt soybeans more than corn.”
In this context, the Rosario Grains Exchange forecasts 8.7 MMT of corn exports from Argentina for the March-June window.
That would be down 40% from last year, citing both the lower availability due to drought and the lower seasonal availability due to a shift towards late planting.
In Europe, wheat prices sharply fell yesterday, down €7.50/t and thus returning to levels comparable to a fortnight ago.
The downward movement was less marked on prices for the 2023 harvest.
French export wheat to 3rd countries improved.
As of 21th Feb, France had loaded 510 kt.
Feb loading should be closed to 600 kt.
That means 9 mt loaded from July to Feb, or 86.5 %, based on 10.4 mt potential export and 1.4 mt lefting for coming 4 month (including some farmer retention).
The current price spread between French and Russian or Eastern European origins is gradually narrowing.
However, the Black Sea origins still remain very competitive.
The corn market, on the other hand, has evolved little against wheat.
Some buyers also highlighted the widening price differential between maize and wheat.
French corn ground is off to a dry start as France’s weather monitor, Meteo France, reported a 27-day streak without rain (since January 21st) for the country.
They pegged the nation’s Feb rain total at a 50% deficit, but said the coming growing season will be more meaningful for the yet to be planted corn crop.
The EU’s Monitoring Agricultural Resources unit reported the rainfall deficit as 20% of normal for Spain and Portugal through Feb.
In oilseeds, after significant movements in recent days, rapeseed prices are back above €560/t for the May 2023 deadline.
From Ukraine, Ukrainian Black Sea exports fell 33pc in the week to Feb 19 according to data posted by the Joint Coordination Centre.
Volumes were around 760,189t compared to 1.14Mt the previous week.
Private estimates from Ukraine have the 23/24 grain output at 64.8 MMT, compared to 72.7 MMT in 22/23.
That includes a 17.4 MMT wheat crop, with a 14 MMT forecasted wheat export program.
From Russia, President Putin gave a lengthy state-of-the-nation address yesterday in which he signalled that Russia was prepared to intensify fighting.
He announced that he would suspend Russia’s participation in the New START treaty, the last surviving arms control agreement between Washington and Moscow.
Putin claimed that Western nations had started the war in Ukraine.
He also made comments in relation to Russian agriculture saying that they will export 50-60Mt of grain in 2023 and noted Russia has all the financial resources it needs to guarantee its national security and development despite Western economic sanctions.
President Biden spoke a couple of hours later in Warsaw, saying “President Putin chose this war. Every day the war continues is his choice”.
He accused Putin of committing atrocities on a vast scale.
He vowed that the US and its NATO allies would remain steadfast.
“Our support for Ukraine will not waver, NATO will not be divided and we will not tire,” he said, while noting the real prospect of “hard and very bitter days” ahead.
Meantime, bulk railway transport operator, RusAgroTrans, revised down its Russian 2023-24 wheat number to 79.7Mt based on lower plantings and ice crusts forming in fields due to fluctuating winter temperatures, Interfax reported.
The previous estimate was 81.5Mt. Wheat exports were seen at about 37.5Mt in 2023-24, compared to 46Mt for the current year.
From the Middle Kingdom, China will further expand the scope of its trial of the industrial application of genetically modified corn and soybeans, the Ministry of Agriculture and Rural Affairs said on Tuesday.
China has plans to conduct a large-scale trial of GMO corn and will likely plant around 660,000 acres this season as the country hopes to become less reliant on foreign grain imports.
Currently, China’s corn yields are only at around 60% of U.S. yields.
The country recently released a rural policy blueprint that stresses the importance of national food security and its intention to “anchor the goal of building a powerful agricultural country.”
China will also stabilise soybean acreage by all means available, the ministry added.
From South East Asia, the arrival of the newly harvested wheat crop has started in India.
Wheat harvest started in states such as Gujarat, Madhya Pradesh, Uttar Pradesh and Maharashtra.
The daily arrival of wheat in the mandis has ranged between 300-500 bags and is expected to increase in the next fortnight. The total arrival of wheat in the mandis from February 1-16 was 358,897 kg, 19% higher than 302,720 kg a year ago.
“The arrivals have increased as the wheat sowing started early this year compared with last year and the increase in day temperatures resulted in early maturity of the crop”.
Wheat prices have been in the range of ₹2,300-2,500 per quintal against the minimum support price (MSP) of ₹2,125 per quintal for the 2023-24 marketing season.
“The prices in the mandis have corrected with the arrival of the new crop and the government’s decision to offload wheat from its own stock”.
India, indeed, will offer a further 2 million tonnes of wheat in the open market to cool down prices, the government said on Tuesday.
The government has so far decided to offload a total of 5 million tonnes of wheat this year.
From Australia, local cash grower bids in eastern Australia and SA were slightly firmer.
WA ASW1 was a touch softer.
Barley values were mixed, a touch firmer in Vic for BAR1 and Darling Downs barley remained firm.
Canola bids were back down by $5-10/t in what is a roller-coaster market at the moment.
A softer AUD this morning should see bids hold here today in local markets.
Parts of NSW were smashed by storms yesterday, intense rainfall, hail and damaging wind caused flash flooding in parts of the Central West.
On the international trade scene, Iraq’s state grains buyer has issued a tender to buy around 200,000 tonnes of milling wheat with participation restricted to a limited number of trading houses.
The deadline for submission of price offers was believed to be Feb. 23.
The deadline was regarded as a starting point for price negotiations with a decision possible later.
The wheat can be sourced only from the United States, Australia and Canada.
Volumes in Iraq’s tenders are nominal and the country often buys more than sought in the tender.
TMO Turkey issued an international tender to purchase up to 790 000 t of milling wheat from optional origins that closes on February 28.
Traders believe this unusually large tender to be connected with the country’s increased needs following a devastating earthquake earlier this month.
The grain is for shipment starting in early March.
TMO Turkey, is also tendering to buy 48.000 t of crude sunflower oil.
Algeria issued an international tender to purchase up to 40.000t of corn, likely sourced from Argentina, that closes on Wednesday.
The grain is for shipment in early April.
Jordan’s state grains buyer purchased about 60,000 tonnes of hard milling wheat to be sourced from optional origins in an international tender which closed on Tuesday.
It was bought from trading house Grain Flower at an estimated $333 a tonne c&f for shipment in the first half of July.
Other trading houses also participated in the tender.
Their estimated offers in dollars per tonne c&f were: Agro Chirnogi $338, Nibulon $335, Viterra $353, Ameropa $337.50, The Andersons $340.90, Buildcom $348, Cerealcom Dolj price unavailable, Cargill $346.30 and CHS $336.40.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
