Good morning Farmer Family …
US farm markets were mixed but mostly lower on Thursday.
Corn prices spilled more then 2% lower.
Soybean prices were also in the red, down 0.34%.
The rest of the soy complex, saw soyoil 1.26% lower, while soymeal picked up 0.1%.
Wheat prices were mixed but mostly lower, as Chicago SRW contracts gone home 0.24% higher.
The hard red wheats, however, fell with Kansas City closing down by 1.63% and Minneapolis giving back 0.68%.
USDA’s Ag Outlook Forum yesterday released their initial estimate for the 2023/24 balance sheet.
In this context, corn prices hit a six-week low, as the U.S. government projected farmers will plant more acres this year and prices will decline.
Soybean prices saw moderate losses primarily on spillover weakness from corn.
Chicago wheat closed higher, after dropping on Wednesday to its lowest since Feb. 7, but the hard red wheats, fell after the USDA projected the biggest wheat area planted since 2016, if realized.
Also, weather conditions weighed on wheat markets, as some additional rain and/or snow is likely in parts of the upper Midwest, Great Lakes region and Mid-South between Friday and Monday, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s new 8-to-14-day outlook predicts seasonally wet weather for most of the United States between March 2 and March 8, with warmer-than-normal conditions likely for the eastern Corn Belt during this time.
Coming back on USDA’s Ag Outlook Forum, corn acreage was estimated at 91 million acres, which would be up from 88.6m this season but close to the average trade guess.
Applying general silage and abandonment and trendline yields has the corn crop at 15.085 bbu.
Analysts were expecting plantings of 90.9 million acres and production of 14.949 billion bushels.
USDA’s Ag Outlook Forum expects the total FSI use at 6.69 bbu, feed and residual as 5.6 bbu, and 2.2 bbu of exports for a 1.887 bbu carryout.
Their projected cash average price for next year was $5.60.
As for soybean, the USDA projected new crop soybean acreage at 87.5 million acres.
That was slightly below trade estimates of 88.6.
Trend yields were pegged at 52 bpa before weather considerations leaving a 4.5 bbu crop – a 5% increase yr/yr.
Major uses were projected at 2.31 bbu for crush and 2.03 bbu for exports, for a 290 mbu carryout and a $12.90/bu average price.
As for wheat, the USDA showed US wheat production at 1.887 bbu, which offset the tighter carry-in for a total 2023/24 supply of 2.575 bbu.
USDA projected wheat acreage at 49.5 million acres vs 48.7 expected.
Trend yields were pegged at an average yield of 49.2 bushels per acre, up 6% from last year’s drought-affected average of 46.5 bushels.
Usage was marked at 1.967 bbu, with 977 mbu for food and 825 mbu for exports.
The ending stocks were marked at 608 mbu for 23/24, slightly tighter than the 650 mbu trade average guess.
Meantime, weekly EIA data showed 1.029m barrels of ethanol was produced daily through the week that ended 2/17.
That was a 10-wk high, and was up 15k barrels/day from the past week.
That also marks the sixth consecutive week that production has stayed above the 1-million-barrel-per-day benchmark.
However, ethanol stocks firmed another 1%, up by 249k barrels to 25.588 million.
Competition for grain and soybean export business added pressure on prices, and there was a lack of bullish news to counteract concerns about demand.
The USDA is slated to issue weekly U.S. grain and soybean export sales data this afternoon.
Meantime, traders estimated the weekly Export Sales for corn will be between 500k MT and 1.3 MMT for old crop with as much as 100k MT for new crop.
As for soybean, analysts expect between 300k and 850k MT for old crop soybeans were sold, with as much as 300k MT for new crop bookings.
Soymeal sales are expected to be below 300k MT, and soybean oil bookings are expected to be below 10k MT.
As for wheat, analysts anticipate the FAS data will show between 150k MT and 500k MT of wheat was sold for export in the week ending Feb 16.
In this context, corn basis bids were largely steady across the central U.S. on Thursday but did tilt 8 cents higher at an Ohio elevator.
Soybean basis bids were steady to slightly weak across the central U.S. after softening a penny lower at an Ohio elevator and an Illinois river terminal.
Commodity funds were net sellers of CBOT corn, soybean and soyoil futures contracts, and net buyers of wheat futures.
Funds were seen as net even in soymeal futures.
On this morning, corn prices edged higher, recouping some of the last session’s deep losses, although the market is poised for a second week of decline.
Wheat is on track for its biggest weekly drop in seven, while soybeans are set to finish the week in the positive territory.
Notably, the most-active corn contract on the Chicago Board of Trade gained 0.3% at $6.61-1/2 a bushel, as of 02:48 GMT, wheat added quarter of a cent at $7.50-3/4 a bushel and soybeans rose 0.2% to $15.30-3/4 a bushel.
For the week, corn is down 2.4%, wheat has lost 3.3% and soybeans are up marginally.
In energy markets, oil prices settled up 2% on Thursday.
Notably, Brent crude futures settled up $1.61, or 2%, to $82.21 a barrel.
West Texas Intermediate crude futures (WTI) settled up $1.44, or 2%, to $75.39 a barrel, ending a sixth session losing streak.
Prices got an early boost from Russia’s plans to cut oil exports from its western ports by up to 25% in March, exceeding its announced production cuts of 500,000 barrels per day.
However, a stronger dollar remained a near-term headwind for crude prices.
The dollar index, indeed, rose for the third straight session, after minutes on Wednesday from the latest U.S. Federal Reserve meeting showed a majority of Fed officials agreed the risks of high inflation warranted further rate hikes.
A stronger greenback makes dollar-denominated oil more expensive for holders of other currencies, hitting demand.
Oil prices also came under pressure after U.S. government data showed the country’s crude oil inventories rose for the ninth time in a row last week, stoking demand worries.
Notably, U.S. crude stocks rose by 7.6 million barrels to about 479 million barrels in the week to Feb. 17, data from the U.S. Energy Information Administration said.
That was more than triple analyst expectations for a 2.1 million-barrel rise.
On this morning, oil prices extended gains for a second session.
Brent crude futures, indeed, rose 67 cents, or 0.8%, to $82.88 per barrel by 04:15 GMT.
West Texas Intermediate crude futures (WTI) rose 61 cents, or 0.8%, to $76.00 a barrel.
However, oil prices are still slightly lower for the week.
In ocean freight markets, the Baltic Exchange’s main sea freight index posted its second-biggest jump ever on Thursday, as rates for all vessel segments rebounded from their multi-year lows, led by capesizes.
The overall index, indeed, was up 142 points, or about 21.1%, at 816, an over one-month high.
The index, extending gains to a fifth session, recorded its biggest jump since mid-June 2020, according to Refinitiv data going back till 1985.
Notably, the capesize index gained 183 points, or about 47%, to nearly a month’s high of 573.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, gained $1,519 to $4,754.
The panamax index was up 218 points, or about 23%, at 1,169 — its highest since Jan. 10.
It posted a record daily percentage increase as far as data goes back to May 1998.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, were up $1,963 at $10,520.
Among smaller vessels, the supramax index rose 68 points to 940, marking its eight consecutive day of gains.
Bumper soybean harvests in Brazil and unsold grains stocks in the United States are set to boost dry bulk shipping rates as buyers, including China, restock after supply shocks last year, leading freight operators said.
New maritime environmental regulations introduced in 2023 are also expected to mean ships slow down speeds to cut emissions, reducing vessel availability.
In equity markets, US stock indexes Thursday recovered from early losses and closed moderately higher.
Strength in technology stocks led the overall market higher, with Nvidia climbing more than +14%.
Also, bond yields fell back from an early advance and moved lower, boosting stocks.
U.S. weekly initial unemployment claims unexpectedly fell -3,000 to 192,000, showing a stronger labor market than expectations of an increase to 200,000.
Also, weekly continuing unemployment claims fell -37,000 to 1.654 million, showing a stronger labor market than expectations of an increase to 1.700 million.
U.S. Q4 GDP was revised lower to +2.7% (q/q annualized) from the previously reported +2.9% as Q4 personal consumption was revised lower to +1.4% from +2.0%.
Also, the Q4 core PCE deflator was revised upward to show a +4.3% q/q increase from the previously reported +3.9% q/q increase.
Thus, stocks garnered support from a decline in bond yields after the 10-year T-note yield fell back from a 3-1/2 month high of 3.974% and dropped -3.5 bp at 3.881%, though T-note prices recovered from early losses after a rally in German bunds.
In this context, the S&P 500 rose 0.5% for its first gain in five days, closing at 4,012.32.
The Dow Jones Industrial Average added 0.3% to 33,153,91, and the Nasdaq composite surged 0.7% to 11,590.40.
On this morning, shares in Asia were mixed.
Benchmarks rose in Tokyo and Sydney but fell in Hong Kong, Shanghai and Seoul.
Notably, Tokyo’s Nikkei 225 index added 1.3% to 27,453.48 and the S&P/ASX 200 in Australia gained 0.3% to to 7,307.00.
India’s Sensex fell 0.2% at 59,467.56.
In Hong Kong, the Hang Seng index lost 1.2% to 20,099.79 while the Shanghai Composite index gave up 0.6% to 3,267.16.
South Korea’s Kospi lost 0.6% to 2,423.61.
Bangkok and Taiwan also declined.
Japan reported its core consumer price index, excluding volatile fresh foods, rose the most in 41 years in January.
But the nominee to head its central bank, economist Kazuo Ueda, told lawmakers he favors keeping Japan’s benchmark interest rate near zero to ensure stable growth.
Ueda is expected to succeed BOJ Gov. Haruhiko Kuroda when he steps down in April after two 5-year terms marked by unprecedented easing.
The change of leadership has prompted speculation about a possible change in the ultra-lax monetary stance, though Ueda sought to dispel such expectations.
In currency trading, the U.S. dollar slipped to 134.66 Japanese yen from 134.70 yen.
The euro fell to $1.0594 from $1.0596.
Going back to analyzing the other agricultural markets …
From South America, adverse weather continues to impact crops there.
More than half of the second corn crop in Brazil’s Parana and Mato Grosso do Sul states will be planted outside the ideal climate window, according to estimates by agribusiness consultancy AgRural on Thursday.
This raises the prospect of the crop being hit by frosts, as the case was in the 2020/2021 cycle, when both states suffered severe losses.
Meantime, Brazil grain exporters’ association, ANEC, estimated Feb soybean exports at 8.3Mt (9.4Mt previous forecast), soymeal at 1.4Mt (1.9Mt), maize at 2.0Mt (2.1Mt) and wheat at 670,400t (489,600t).
Corn and soybean production estimates in Argentina have been lowered again as a result of harsh dry and hot conditions, the Buenos Aires Grains Exchange (BAGE) said in its weekly report.
Corn output is lowered to 41Mt from the previous estimate of 44.5Mt.
Soybean production was also lowered to 33.5Mt, down 4.5Mt from the previous estimate, following early frosts on the western edge of the agricultural area, lack of rain, and the heat registered during the beginning of February.
Refinitiv Commodities Research cut its 2022-23 corn production outlook for Argentina by a further 1pc, to 43.4Mt, amid continued suboptimal conditions across key growing areas of the eastern Pampas in particular.
Similarly, reflecting limited moisture in core producing regions, 2022-23 soybean output seen 2pc lower than before, at 39.5Mt.
In Europe, after the downturn recorded the day before, grain markets rebounded, mainly due to the fall in euro/dollar parity, which fell back below 1.06, while rapeseed extended Wednesday’s losses.
However, prices finally returned to levels quite close to last year with the May 2023 maturity on Euronext trading at €283.75/t, i.e..
The latest tender from Egypt, where Russian wheat was purchased, showed a still significant price differential between European origin, even from the Black Sea ports, and Russian prices.
In this context, the European Commission has also just revised down its export estimates of -2 Mt in soft wheat compared to last month, now counting on an exported volume of 32 Mt for the 2022/2023 campaign.
Barley export volumes, despite the expected shipments, have also been revised downwards by -0.5 Mt to 9 Mt.
In corn, imports are still forecast at 23 Mt, ie still record levels.
In rapeseed, the European Commission is also counting on rising rapeseed imports, from +0.50 Mt to 5.6 Mt, over the current season.
On this morning, data from farm office FranceAgriMer showed that the condition of soft wheat improved for a second week last week, indicating a record dry spell has not yet strained crops in the European Union’s biggest wheat-producing country.
An estimated 95% of soft wheat was indeed rated as good or excellent compared with 93% the previous week and 92% two weeks earlier, according to the office’s cereal report.
The score was also above the 93% registered a year earlier.
For winter barley, 94% of the crop was rated good or excellent, while durum wheat scored 92%.
Farmers made more swift progress in sowing spring barley, with 80% of the expected area drilled by Feb. 20, compared with 58% a week earlier and an average 24% over the previous five years, FranceAgriMer’s data showed.
From Ukraine, the country is likely to export 39.2 million tonnes of grain in the 2022/23 year to June, agriculture consultancy APK-Inform said on Thursday, raising its forecast from 39.09 million tonnes a month earlier.
The exports could include 13.5 million tonnes of wheat, 23 million tonnes of corn and 2.4 million tonnes of barley, the Ukrainian consultancy said in its monthly report.
From Kazakhstan, according to the Ag. Minister, total crop acreage in 2023-24 is seen at 23.4m ha, marginally higher year on year, with some increase seen for grains and sunflowerseed, contrasting with reductions for soybeans and cotton.
From South East Asia, some analysts cut the outlook for India’s 2023-24 wheat production by 1pc, to 108.6Mt, citing extreme heat observed more recently in key producing states, including in Punjab, Haryana, Uttar Pradesh, Madhya Pradesh, and Rajasthan.
From Australia, the ASX Eastern Australia May wheat contract firmed slightly late in the day, to $396/t.
Overall though bids were mostly unchanged.
Road freight rates saw some weakness as rail pathways ramp efficiency.
Track to delivered spread squeezed slightly as a result.
Sorghum harvest is continuing, with the hot conditions bringing crops in earlier.
Quality is reportedly mostly good at his stage but we are yet to see the later sown crop, which is the crop most at risk, hit the bins.
On the international trade scene, South Korea passed on all offers to purchase 138,000t of animal feed corn from optional origins in an international tender closed yesterday.
Some traders had speculated that South Korea opted to wait and see if USDA’s new acreage data would cause prices to fall.
The grain would have been for arrival in June.
On this morning, leading South Korean feedmaker Nonghyup Feed Inc. (NOFI) has issued an international tender to purchase up to 138,000 tonnes of animal feed corn to be sourced from optional origins.
The deadline for submission of price offers in the tender is also Friday, Feb. 24.
Arrival of the corn in South Korea is sought in two consignments of 45,000 to 69,000 tonnes.
Offers are sought both as a flat/outright price and at a premium over the Chicago July 2023 corn contract.
The corn can be sourced from worldwide optional origins excluding Russia, not using loading ports in Ukraine and also excluding supplies from Paraguay.
The first corn consignment is sought for arrival in South Korea around June 15.
If sourced from the U.S. Pacific Northwest coast, shipment of the first consignment is for May 12-31, if from the U.S. Gulf/Europe for April 22-May 11, from South America for April 17-May 6 or from South Africa for April 27-May 16.
The second corn consignment is sought for arrival in South Korea around June 25.
If sourced from the U.S. Pacific Northwest coast, shipment is for May 22-June 10, from the U.S. Gulf/Europe for May 2-21, from South America for April 27-May 16 or from South Africa for May 7-May 26.
The Korea Feed Association has issued an international tender to purchase up to 69,000 tonnes of animal feed corn to be sourced from optional origins.
The deadline for submission of price offers in the tender is also Friday, Feb. 24.
The corn was sought by the KFA’s Busan section for arrival in South Korea around June 20.
Purchase interest by Asian importers was sparked after Chicago corn futures hit a six-week low on Thursday.
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 Feb. 28.
Taiwan issued an international tender to purchase 50.000t of grade 1 milling wheat from the United States that closes on March 1.
The tender seeks a range of several wheat types, including dark northern spring, hard red winter and white wheat and is for shipment starting in mid-April.
Algeria purchased around 38.000t of animal feed corn, which was likely sourced from Australia, in an international tender.
The grain is for shipment in early April.
Egypt’s tender for April 1-15 shipment was filled by 240,000 MT of Russian wheat, at $317.50/t c&f.
Turkey is tendering for 790k MT of milling wheat.
TMO announced a tender to purchase 440 KMT of feed barley for shipment in two periods form 10 Mar to 10 Apr or 11 Apr to 11 May.
Closing date is on 02 Mar.
Jordan’s state grains buyer reportedly purchased about 60,000t feed barley from optional origins, at $295/t c&f for Jul shipment.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
