Good morning Farmer Family …
US farm markets faced another setback on Monday.
Chicago SRW wheat prices ended the session with 1.73% losses.
Kansas City HRW wheat prices closed 2.23% lower.
Minneapolis spring wheat fell 1.81%.
Corn spilled 1.12% lower.
Soybeans incurred losses of 0.7%.
The rest of soy complex was mixed as soyoil tredad 1.75% lower, while soymeal prices moved 0.32% higher.
Wheat prices dropped to their lowest level since September 2021, as rain across key growing areas during the weekend boosted harvest prospects for the U.S. crop.
Rainfall was received on Monday in western HRW wheat areas of the US Plains, with beneficial rains from western Kansas southward into the Texas Panhandle.
The heaviest amounts were seen across eastern HRW areas.
West Texas will reportedly receive some rainfall this week but will stay mostly dry over the next 10 days.
Some 57% of U.S. winter wheat is produced in an area currently experiencing drought, the USDA said last week, down from 59% a month ago and 69% as the year began.
Meantime, condition ratings for winter wheat declined during February in Kansas, but improved in Oklahoma, the U.S. Department of Agriculture (USDA) said on Monday.
Notably, the USDA on Monday rated 19% of the Kansas winter wheat crop in good-to-excellent condition as of Feb. 26, down from 21% at the end of January.
Monthly wheat ratings also worsened in Colorado and Nebraska.
Meanwhile, in Oklahoma, 36% of the state’s wheat was rated good-to-excellent, up from 17% at the end of January.
Good-to-excellent ratings also rose in Texas, Montana and the Dakotas.
Ratings improved in Illinois, where farmers grow soft red winter wheat, with the USDA rated 82% of the Illinois crop as good-to-excellent, up from 69% a month ago.
Optimism that Ukraine Grain Deal will be renewed in the coming weeks pressured both corn and wheat.
Export demand for U.S. grain has indeed slumped.
USDA reported the week’s corn shipments at 572,622 MT from the week of 2/23.
That was down from 623,795 MT the week prior, and was 982,605 MT below the same week last year.
Thet weekly Inspections report had the accumulated corn shipment at 14.308 MMT through 2/23, compared to 23.205 MMT at the same point last year.
Meantime, according to a statement from Mexico’s economy ministry, the United States’ disagreement with Mexico over its plan to limit imports of genetically modified corn is “politically motivated, and compatible with the USMCA deal’s rules”.
Vilsack had said that if talks between the countries through the U.S. Trade Representative (USTR) were not successful, a trade dispute panel under the United States-Mexico-Canada (USMCA) agreement would be the next step.
Trade Representative Katherine Tai spoke to Mexican Economy Minister on Friday.
The two agreed to “transparent and frank dialogue” to strengthen USMCA accords, as the deal threatens billions of dollars of corn trade.
Export concerns, also weighed on soybean prices, as the expanding South American harvest provided more supplies for overseas buyers.
Notably, weekly Export Inspections report showed 690,984 MT of soybeans were exported during the week that ended 2/23.
That was down from 1.58 MMT last week, and was 48k MT below the same week last year.
The weekly Export Inspections data showed 591,725 MT of wheat was shipped during the week that ended 2/23.
That was up from 374k MT last week and from 430k MT during the same week last year.
However, the USDA had still 15.252 MMT of accumulated wheat exports, trailing last year’s pace by 258k MT through 2/23.
Meantime, ahead of a monthly U.S. Department of Agriculture (USDA) report, U.S. soybean crushings likely increased in January to 5.687 million short tons, or 189.6 million bushels.
If the estimate is realized, the crush would be up from the 187.4 million bushels that USDA reported as processed in December and the largest monthly crush since October.
But it would also be down from the January 2022 crush of 194.3 million bushels.
Also, U.S. soyoil stocks as of Jan. 31 likely rose to 2.368 billion lbs.
If realized, the supply would be up from 2.306 billion lbs at the end of December and the largest end-of-month oil stocks since May.
However, it would be below stocks totaling 2.500 billion lbs at the end of January 2022.
The USDA is scheduled to release its monthly fats and oils report at 2 p.m. CST (2000 GMT) on Wednesday, March 1.
In this context, corn basis bids held steady across the central U.S..
Soybean basis bids were largely unchanged across the central U.S., but did shift 5 cents higher at an Illinois river terminal.
Commodity funds were net sellers of CBOT wheat, corn, soybean and soyoil futures contracts.
They were net buyers of soymeal futures.
On this morning, Chicago wheat prices lost more ground, trading close to the previous session’s 17-month low.
Corn dropped to its lowest since early December and soybeans fell for a fifth consecutive session.
Notably, the most-active wheat contract on the Chicago Board of Trade was down 0.4% at $7.07-1/4 a bushel, as of 03:22 GMT, after dropping to its lowest since September 2021 at $7.05-3/4 a bushel on Monday.
Corn slid 0.2% to $6.42-1/4 a bushel, having dropped to its weakest since Dec. 8 at $6.42 a bushel, and soybeans gave up 0.4% to $15.06-1/4 a bushel.
For the month, wheat has lost more than 7%, falling for the fifth month in a row, corn is down 5.5% and soybeans have fallen 2%, on track for first monthly decline in five months.
In energy markets, oil prices slid about 1% on Monday.
Brent futures indeed fell 71 cents, or 0.9%, to settle at $82.45 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 64 cents, or 0.8%, to settle at $75.68.
New orders for key U.S.-manufactured capital goods increased more than expected in January while shipments rebounded, suggesting that business spending on equipment picked up at the start of the first quarter.
Those positive economic data, helped global stock markets to rebound.
However investors braced for interest rate hikes both in the United States and Europe, which could slow economic growth and oil demand.
Losses were limited by oil supply concerns after Russia halted exports to Poland via a key pipeline.
Adding to global oil demand worries, rising Sino-U.S. tensions hammered equity markets in China and Hong Kong while investors awaited policy signals from the upcoming National People’s Congress.
This morning, oil prices rose in Asian trade, supported by hopes a solid economic rebound in China will drive up fuel demand.
Notably, Brent crude futures for April, due to expire on Tuesday, were up by 39 cents to $82.84 per barrel by 07:18 GMT.
The more active May contract rose 63 cents to $82.67 per barrel.
Likewise, U.S. West Texas Intermediate (WTI) crude futures gained 61 cents to $76.29 a barrel.
Brent and WTI futures were both on track, however, for monthly losses of around 2.2% and 3.8% respectively, with WTI likely to hit a four-month streak of declines.
The market will be looking to the latest U.S. oil stocks data due from the American Petroleum Institute industry group on Tuesday and the government’s Energy Information Administration on Wednesday for further demand indicators.
Analysts expect crude stocks grew by 400,000 barrels in the week to Feb. 24, which would mark the tenth consecutive week of builds.
Analysts polled also estimated that gasoline stocks rose by about 700,000 barrels.
Distillate inventories, which include diesel and heating oil, were expected to have decreased by about 500,000 barrels last week.
In ocean freight markets, the Baltic Exchange’s main sea freight index, which measures the cost of shipping goods worldwide, was up for the seventh straight session on Monday, rising about 5.9% to an over one-month high of 935 points, on firmer demand.
Notably, the capesize index, which tracks iron ore and coal cargos of 150,000 tonnes, was up for the sixth straight day, advancing 10.2% to 701 points; and the panamax index, which tracks coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, rose for the fifth straight session, adding 3.6% to 1,317 points.
Among smaller vessels, the supramax index rose 54 points to 1,050 points.
In equity markets, US stock indexes posted modest gains, on Monday.
Positive corporate news was supportive of the overall market.
Monday’s decline in bond yields also supported stocks.
Notably, the 10-year Treasury yield dipped to 3.92% from 3.95% late Friday.
That yield helps set rates for mortgages and other important loans.
The two-year yield, which moves more on expectations for the Fed, slipped to 4.79% from 4.81%.
Yields eased after a report showed that orders for machinery, aircraft and other long-lasting manufactured goods fell by more than economists expected in January.
Notably, the U.S. durable goods dropped by 4.5% last month, reversing a huge December boost from Boeing.
These so-called durable goods orders had increased 5.1% in December.
Thus, the report dented some of the hawkishness built into U.S. interest rates, though they are expected to remain higher for longer.
The Feb Dallas Fed manufacturing outlook level of general business activity fell -5.1 to -13.5, weaker than expectations of -9.3.
Stocks, however, fell back from their best levels after Monday’s U.S. economic news showed the economy remains robust.
Jan capital goods new orders nondefense ex-aircraft, a proxy for capital spending, unexpectedly rose +0.8% m/m, stronger than expectations of unchanged and the biggest increase in 5 months.
Also, Jan pending home sales rose +8.1% m/m, stronger than expectations of +1.0% m/m and the biggest increase in 2-1/2 years.
In this context, the S&P 500 rose 0.3% to 3,982.24 for just its second gain in the last seven days.
The Dow Jones Industrial Average gained 0.2%, to 32,889.09, while the Nasdaq composite climbed 0.6% to 11,466.98.
On this morning, shares were mostly higher in Asia.
Tokyo, Seoul, Sydney and Shanghai advanced while Hong Kong and Mumbai declined.
Notably, Tokyo’s Nikkei 225 index added 0.1% to 27,445.56 and the Kospi in Seoul advanced 0.4% to 2,412.85.
In Hong Kong, the Hang Seng shed 0.6% to 19,836.12 while the Shanghai Composite index surged 0.7% to 3,279.61.
Australia’s S&P/ASX 200 rose 0.5% to 7,258.40.
Shares in Mumbai fell 0.3% while Bangkok’s SET index slipped 0.2%.
Stocks have struggled in February after a strong start to the year.
Robust economic data help calm fears that a recession may be imminent given the dampening impact of more costly borrowing on spending by consumers and businesses.
But they likely mean a longer spell of higher interest rates.
In currency trading, the dollar fell from a seven-week high on Monday, tracking a slide in U.S. Treasury yields.
With February coming to an end after the dollar’s almost 3% climb during the month, investors are consolidating recent positions.
The market, however, awaits this month’s data for U.S. unemployment on March 10 and the consumer price index on March 14, both of which will influence Federal Reserve policy on interest rates and the central bank’s efforts to slow inflation to its target pace.
Thus, until the market gets a look at those data it is going to be reluctant to push the dollar meaningful lower.
Investors will get more information on the state of the global economy this week, with U.S. ISM manufacturing and services survey data for February due on Wednesday and Friday, respectively.
Preliminary euro zone CPI inflation figures for February are due on Thursday.
Meantime, the dollar index, fell 0.513% yesterday but is on track to snap a four-month losing streak.
Notably, the euro rose 0.58% to $1.0609, while the Japanese yen strengthened 0.20% versus the greenback at 136.20.
Sterling rose after British Prime Minister Rishi Sunak struck a new deal with the European Union on post-Brexit trade rules for Northern Ireland on Monday and said it would pave the way for a new chapter in London’s relationship with the bloc.
The pound was last at $1.2059, up 0.96% on the day.
On this morning, the U.S. dollar rose to 136.39 Japanese yen.
The euro slipped to $1.0587 from $1.0609.
Going back to analyzing the other agricultural markets …
In Brazil, farmers have harvested 33% of the soybean area planted for 2022/23 through last Thursday, agribusiness consultancy AgRural said on Monday, up eight percentage points from the previous week.
At the same time last year, however, 43% of the Brazilian soy fields had been reaped.
AgRural also expects the local soybean crop to reach 150.9 million tonnes this season.
Safrinha corn planting advanced to 55pc complete AgRural said, about 8pc behind last year.
However, the top production state of Mato Grosso group may have 20% of its second corn crop planted outside of the ideal climate window, according to farm group Imea.
Brazil’s Safras and Mercado reported the soy harvest at 30.3% as of 2/24.
That is up from 20.9% last week, and trails the 31.4% average pace.
Mato Grosso was reported at 76% harvested
Safras and Mercado had Brazil’s 1st corn crop at 27.6% harvested as of 2/24.
That trails last year’s 39% pace, but is above the 5-yr average pace of 25%.
The 2nd crop planting pace was marked at 39% for the Center-South region, compared to 48.7% on average.
Second corn, which represents about 75% of overall national corn output, is planted after soybeans are harvested in the same areas.
Delays in the soy harvesting, however, are pushing back corn planting.
In Argentina, the BAGE lowered their estimate for Argentina’s soybean crop by 4.5 MMT to 38 MMT.
Meantime, the local Ag. Secretariat reported January soybean crush at 1.9Mt (2.6Mt Dec, 2.5Mt Jan last year), with soyoil output 367,320 tonnes (-27pc m/m) and soymeal at 1.3Mt (-27pc).
Calendar 2022 soybean crush totalled 38.4Mt (42.4Mt previous year).
On the other hand, Argentine Agrarian Federation announced a planned protest for Tuesday, blocking a portion of highway from Rosario to Buenos Aires to protest the financial conditions for farmers – specifically the taxes and exchange rates.
In Europe, while the rapeseed market changed little yesterday, grain prices declined, with a downward movement most noticeable in corn.
Wheat prices closed near one-month lows, on competition from low prices offered for Russian wheat in export markets as traders awaited news about whether the safe shipping corridor for Ukraine’s grain exports will be extended.
Benchmark May wheat, the most active contract on Paris-based Euronext, indeed, closed down 0.5% at 278.50 euros ($294.79) a tonne, close to Friday’s one-month low of 278 euros.
Front-month March closed at a nearly one-year low of 277.75 euros, a price unseen since March 3, 2022.
Meantime, Polish 12.5% protein milling wheat fell about 95 zloty in the past week to around 1,280 zloty (271.5 euros) a tonne for March delivery to ports.
Poland’s wheat export shipments remain active. In Gdynia, a ship is loading 55,000 tonnes for shipment to the Suez Canal and another is loading 33,000 tonnes for an undisclosed destination.
In Szczecin, one ship has sailed for Nigeria with 39,000 tonnes and another with 32,000 tonnes for Angola.
However, the large tender from Turkey for 790,000 tonnes of wheat on Tuesday will be watched closely.
Prolonged dry weather in western Europe was also in focus.
Although there are no damage to crops to now, there are serious concerns about the replenishment of the water tables.
Meantime, Poland has reported outbreaks of African swine fever in five wild boar in the northern part of the country, the World Organisation for Animal Health (WOAH) said on Monday citing Polish authorities.
The deadly hog disease has been spreading in eastern Europe with outbreaks found in the Czech Republic, Hungary, Latvia, Moldova, North Macedonia and Romania, WOAH said in a separate report on the disease.
On the other hand, Consultancy Strategie Grains has increased its forecast for 2023 European Union rapeseed output to 19.6 million tonnes, up from 19.5 million projected a month earlier, it said in an oilseed report.
The forecast was now slightly above last year’s production, also estimated at 19.5 million tonnes.
Rapeseed plants are generally in satisfactory condition, though rain was needed in the western part of the EU, Strategie Grains said, echoing comments by other crop analysts.
Rapeseed stocks in the EU are already expected to rise in the current 2022/23 season, as supply from competitively priced Australian shipments and imports from Ukraine into Poland and Romania have outstripped demand, Strategie Grains said.
Meantime, the French consultancy trimmed its forecast for this year’s sunflower seed harvest to 11.2 million tonnes from 11.3 million previously, but that would be 22% above last year’s crop.
EU soybean output was still forecast at 3.2 million tonnes, up 28% on year.
From Ukraine, Ukraine’s winter grain crops have made it through the 2022/23 cold season safely, state weather forecasters said on Monday.
Ukraine has sharply reduced the area sown with 2023 winter wheat to around 3.8 million hectares from more than six million in 2022 due to the war.
Meantime, Ukraine grain exports are down almost 27% at 31.8 million tonnes in the 2022/23 season so far, agriculture ministry data showed on Monday.
Notably, the volume so far in the July to June season included about 11.2 million tonnes of wheat, 18 million tonnes of corn and about 2 million tonnes of barley.
The ministry also said grain exports so far in February had reached 4.7 million tonnes as of Feb. 27, down from 5.04 million tonnes in the same period last year.
From Russia, consultancy Sovecon estimates that the country’s wheat exports in February will fall to 3.4 MMT .
That would be a monthly decline of 18% and the lowest monthly total since last July, if realized.
Russian wheat exports were 530,000 tonnes last week, compared with 730,000 the previous week, per the latest port data.
As a result, Russian wheat prices fell last week amid a downward trend on global markets, this lower demand from exporters and growing domestic supply.
Notably, prices for Russian wheat with 12.5% protein content, delivered free on board (FOB) from Black Sea ports, were down $3 to $296 per tonne last week, the IKAR agriculture consultancy said.
Other grain and oilseed prices also declined past week.
Price for domestic 3rd class wheat, European part of Russia, excludes delivery, indeed, was at 12,250 rbls/t -75 rbls/t (Sovecon).
Price for sunflower seeds was at 28,425 rbls/t -575 rbls/t (Sovecon).
Price for domestic sunflower oil was at 78,850 rbls/t -9000 rbls/t (Sovecon).
Price for domestic soybeans was at 33,150 rbls/t -450 rbls/t (Sovecon).
Export price for sunflower oil was at $1,040/t -$80 (Sovecon).
Price for white sugar, Russia’s south was at $714.67/t -$7.64 (IKAR).
The market is still waiting for clarity on whether an accord to allow safe passage for Black Sea grain exports will be extended next month.
Russian President Vladimir Putin discussed the Black Sea Grain Initiative, which allows grain to be exported from three Ukrainian ports despite a Russian blockade, with his Turkish counterpart Tayyip Erdogan last week.
The initiative is up for renewal next month, but Russia has signalled it is unhappy with certain aspects of the deal.
($1 = 74.42 roubles).
From the Middle Kingdom, China concluded its auction to sell 140.000t of its imported wheat reserves on February 22.
That was 100% of the grain on offer.
China has offered a series of similarly sized auctions in recent months in an attempt to boost local supplies and push down high prices.
From South East Asia, according to Food Corporation of India (FCI) chairman the 2023-24 wheat crop was in good condition, with procurement expected at between 30.0Mt and 40.0Mt.
According to the director of the Indian Agricultural Research Institute (IARI) the warmer temperatures in Feb were of little cause for concern, with conditions in Mar expected to be more important for the final outcome.
In contrast, India’s rapeseed production could remain steady in 2023 despite a record planting as yields were curtailed by frost and a heat-wave in key producing areas.
Area under rapeseed jumped 7.4% to a record 9.8 million hectares in 2023.
Based on higher area, the government had forecasted rapeseed production could jump 7.1% from a year earlier to a record 12.8 million tonnes.
But weather didn’t support.
Thus India could end up around last year’s production level of 10.5 million tonnes of rapeseed.
However, rapeseed supplies are rising in spot markets as the crop is getting matured early due to the ongoing heat-wave.
Daily supplies are nearly 5% more than the last year due to early maturity and prices in spot markets are ruling below the government fixed price of 5,450 rupees per 100 kg.
Indonesia plans to set its crude palm oil reference price at $889.77 per tonne for the March 1-15 period, an official at the Economic Coordinating Ministry said on Tuesday, up slightly from $880.03 per tonne set for Feb. 16-28.
The price would put Indonesia’s crude palm oil export tax at $74 per tonne for the period, and levy at $95 per tonne.
The decree officially stating the reference price has not yet been published.
From Australia, local canola values were softer yesterday as they followed offshore movements.
Wheat value was pretty much unchanged-to-slightly-softer.
Sorghum track values have firmed again as harvest continues to trickle in, with offshore demand currently driving the bids.
A cold front is bringing cold conditions to the southeast with temperatures in Victoria currently well below average for February.
The front is expected to push up through NSW tomorrow and into southern Qld by Thursday.
While a heatwave warning is in place for much of the WA coast from Augusta to Carnarvon including Perth.
Severe heatwave conditions are expected just north of Perth from today until Thursday.
On the international trade scene, Turkey’s state grain board TMO has started making provisional purchases of wheat in an international import tender on Tuesday with about 300,000 tonnes initially bought which is expected to be sourced from Russia.
The tender seeks a total 790,000 tonnes and negotiations continue for more.
The tonnages purchased in TMO’s tenders are provisional and still subject to final confirmation in coming days.
Purchases can be reduced or cancelled completely.
Below the provisional purchases in the tender with port of unloading/delivery, tonnes sold, seller and price in dollars a tonne cost and freight (C&F) for imports or price delivered ex-warehouse in Turkey.
Iskenderun – 50,000t offered by Arion at $310.90 C&F;
Mersin 50,000t offered by Arion at $310.80 C&F;
Izmir 25,000t offered by Yayla at $316.70 ex warehouse;
Izmir 25,000t, offered by Mova at $316.70 ex warehouse;
Tekirdag 50,000t, offered by Aves at $308.10 C&F;
Bandirma 25,000t, offered by MK Merchant at $308.20 C&F;
Bandirma 25,000t offered by Yayla at $308.10 C&F;
Derince 50,000t offered by Arion at $310.40 C&F.
The shipment period is between March 8 – April 7.
Traders said Russian wheat was among the purchases along with some Ukrainian and a range of other origins, especially from other Black Sea countries.
All the wheat bought was 12% protein content.
As per esteemed market participants, TMO/Turkish Grain Board has cancelled Crude Sunoil tender of by last Friday ( 24 Feb ) due to reportedly higher prices.
Leading South Korean feedmaker Nonghyup Feed Inc. (NOFI) 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 Tuesday, Feb. 28.
Arrival of the corn in South Korea is sought in one consignment of 45,000 to 69,000 tonnes around June 25.
Offers are sought both as a flat/outright price and at a premium over the Chicago July 2023 corn contract CN3.
The corn can be sourced from optional origins excluding Russia, not using loading ports in Ukraine and also excluding supplies from Paraguay.
If sourced from the U.S. Pacific Northwest coast, shipment is sought between May 22-June 10, if from the U.S. Gulf/Europe between May 2-May 21, from South America between April 27-May 16 or from South Africa between May 7-May 26.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
