Good morning Farmer Family …
US farm markets incurred in a round of end-of-month liquidation by investment funds, on Tuesday.
Corn prices fell to their lowest level in more than six months, down 2.06%, posting losses of 7.3% during February, their biggest monthly decline since June.
Soybeans notched the biggest declines on Tuesday, falling 2.23%, its biggest daily decline since Dec. 1.
For the month, soybeans shed 3.8%, their first monthly decline since September.
The rest of the soy complex was also in the red, with soymeal posting significant losses of around 3%, while soyoil prices faded 0.5% lower.
Wheat prices attempted a turnaround but ultmately also declined.
Chicago SRW, indeed, ended the session with 0.63% losses, and posted a monthly drop of 7.3%, its fifth straight monthly decline.
Kansas City HRW went home 0.52% in the red for the session.
Minneapolis spring wheat was firmer but still ended the day 0.2% lower.
Soybeans were the most vulnerable to yesterday sell-off as wheat and corn had already fallen sharply since the start of 2023, while the soybean market had to catch up.
Additionally, soybean and meal markets sharply lower, reflecting harvest pressure from Brazil which supplies became available on the global marketplace, and disappointing US export inspection numbers.
As for corn, prices fell also because the Biden administration is expected to approve higher biofuel blending rates for the Midwest.
The approved rulemaking, however, is not expected to take effect until summer of 2024.
Also, in view of the price levels that should be used for 2023 crop insurance in the USA, corn appears to be relatively profitable for farmers, with an anticipated increase in surface areas.
NASS Crop Progress data from Texsas showed 5% of the 23/24 corn crop was planted as of 2/26.
That is 1% point ahead of the average pace.
meantime, USDA reported the week’s corn shipments at 572,622 MT in the week of 2/23 and accumulated shipment at 14.308 MMT, compared to 23.205 MMT at the same point last year.
As for wheat, rain in parts of the U.S. winter wheat belt kept the wheat market under pressure.
Loads of wet weather is on its way to the Mid-South and Ohio River Valley between Wednesday and Saturday, with a large portion of these areas set to gather another 2” or more during this time, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s new 8-to-14-day outlook predicts more seasonally wet weather for the central U.S. between March 7 and March 13, with colder-than-normal conditions likely for the Midwest and Plains.
The USDA crop progress report had 2023-24 winter wheat crop conditions at 27 Feb mixed.
The good/excellent rating of Kansas fell 2pc in the four weeks from from 30 January but other states’ crops improved.
Kansas rated 19pc good/excellent (21pc 30 January, 26pc year ago), Colorado 29pc (38pc, 21pc), Oklahoma 36pc (17pc, 9pc), Illinois 82pc (69pc, 59pc), Montana 21pc (16pc, 21pc), Nebraska 19pc (22pc, 36pc), North Dakota 46pc (41pc, 18pc) and South Dakota 23pc (22pc, 24pc).
Meanwhile, Ukraine is working to get Black Sea safe passage deal extended and optimism over a Russia-Ukraine export deal pressured both corn and wheat markets.
On the international trade scene, Turkey’s state grain board, TMO, has provisionally purchased an estimated 790,000 tonnes of wheat, mainly Russian origins.
In this context, corn basis bids were steady to firm across the central U.S. on Tuesday, moving as much as 17 cents higher at an Iowa processor.
Soybean basis bids were mostly steady to firm across the central U.S. after improving 2 to 15 cents at five Midwestern locations.
An Iowa processor bucked the overall trend, sliding 5 cents lower.
Commodity funds were net sellers of CBOT soybean, corn, wheat, soymeal and soyoil futures contracts.
On this morning, Chicago wheat prices climbed.
Corn and soybeans rose for the first time in six sessions.
Notably, the most-active wheat contract on the Chicago Board of Trade was up 0.7% at $7.10-1/4 a bushel, as of 02:10 GMT, after dropping to its lowest since September 2021 at $7.02-1/2 a bushel on Tuesday.
Corn rose 0.4% to $6.32-3/4 a bushel and soybeans gained 0.7% at $14.89-1/4 a bushel.
In energy markets, oil prices rose nearly 2% on Tuesday, erasing the previous session’s losses.
Brent crude futures for April , which expired on Tuesday, indeed, settled higher by $1.44, or 1.8%, at $83.89 a barrel.
The more active May contract rose $1.41, or 1.7%, to $83.45.
U.S. West Texas Intermediate (WTI) crude futures gained $1.37, or 1.8%, to $77.05 a barrel.
For the month of February, Brent fell about 0.7%, while WTI dropped about 2.5%.
Expectations of demand recovery in China underpinned gains, with the market awaiting key data over the next two days.
Urals crude exports to China from Russia’s Western ports rose in February from the previous month, on lower freight costs and rising demand.
However, gains were capped by the threat of more U.S. rate increases after stronger-than-expected new orders for core U.S. capital goods in January.
The Organization of the Petroleum Exporting Countries has pumped 28.97 million barrels per day (bpd) this month, according to analysts, up by 150,000 bpd from January, although output is still down more than 700,000 bpd from September.
Meanwhile in the U.S., crude production fell in December to 12.10 million bpd, its lowest since August 2022, Energy Information Administration (EIA) data showed.
However, U.S. crude stockpiles have been growing and were forecast to post a 10th consecutive week of builds, with analysts expecting a rise of nearly half a million barrels last week.
U.S. crude oil inventories rose by about 6.2 million barrels in the week ended Feb. 24, according to American Petroleum Institute figures on Tuesday.
Official U.S. government data on stockpiles is due on Wednesday.
On this morning, Oil prices extended gains for a second session, after a strong jump in manufacturing in China boosted the outlook for global fuel demand.
Brent crude futures for May indeed rose 45 cents, 0.5%, to $83.90 a barrel at 08:00 GMT.
U.S. West Texas Intermediate (WTI) crude for April gained 42 cents, or 0.6%, to $77.47 a barrel.
Data showed China’s factory activity rose for the first time in seven months in February, according to the purchasing manager’s index (PMI) published by Caixin/S&P Global on Wednesday.
Official government PMI data also published on Wednesday showed the fastest expansion in manufacturing since 2012 occurred in February.
In ocean freight markets, the Baltic Exchange’s main sea freight index posted its biggest monthly percentage gain in five months, supported by higher rates across vessel segments.
The overall index, indeed, rose 55 points, or 5.9%, to 990, on Tuesday.
The main index was up 45.4% for the month, the most since September 2022.
Notably, the capesize index rose 28 points, or about 4%, to 729, marking its seventh straight session of gains.
It has risen 37% for the month.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, gained $227 at $6,042.
The panamax index, up for the sixth straight session, gained 104 points, or 7.9%, at 1,421.
The index rose 35.1% for the month, marking its biggest monthly percentage gain in five.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, were up $932 at $12,785.
Among smaller vessels, the supramax index rose 55 points to 1,105.
In equity markets, US stock indexes Tuesday closed moderately lower.
An increase in global bond yields weighed on the broader market.
France and Spain reported an unexpected acceleration in consumer prices, increasing concern that central banks will have to keep raising interest rates.
In this context, the 10-year German bund yield rose to an 11-year high today at 2.712%, and the 10-year UK gilt yield rose to a 4-month high of 3.896%.
However, US stocks recovered from their worst levels as Tuesday’s local economic news was mostly weaker than expected.
Notably, the Feb MNI Chicago PMI unexpectedly fell -0.7 to 43.6, weaker than expectations of an increase to 45.5.
Also, the Conference Board U.S. Feb consumer confidence index unexpectedly fell -3.1 to 102.9, weaker than expectations of a rise to 108.5.
In addition, the Feb Richmond Fed manufacturing survey unexpectedly fell -5 to a 2-3/4 year low of -16, weaker than expectations of an increase to -5.
On the positive side, the Dec S&P CoreLogic composite-20 home price index rose +4.65% y/y, weaker than expectations of +4.80% and the slowest pace of increase in nearly 2-1/2 years.
In this context, after climbing to a 3-1/2 month high Tuesday of 3.981%, the 10-year T-note yield fell -0.4 bp to 3.910%, sparking short covering in stocks.
However, the two-year yield, which moves more on expectations for Fed action, ticked up to 4.81% from 4.78%.
Negative corporate news Tuesday weighed on the overall market.
Norwegian Cruise Line Holdings Ltd closed down more than -10%.
Also, Universal Health Services closed down more than -7%.
In addition, Dish Network closed down more than 6% .
As a result, Wall Street closed out a frigid February with more losses on Tuesday.
The S&P 500 lost 0.3%, locking in a loss of 2.6% for the month and closing at 3,970.15.
The Dow fell 0.7% to 32,656.70 while the Nasdaq edged 0.1% lower to 11,455.54.
Both also sank over the month.
On this morning, Asian shares were higher, after reports on key measures of China manufacturing showed a strong recovery after anti-virus controls were lifted late last year.
Hong Kong’s Hang Seng index jumped 3.8% and Shanghai gained 1%.
Notably, the Shanghai Composite added 32 points to 3,312.35.
In Hong Kong, the Hang Seng gained more than 750 points to 20,552.60.
South Korean markets were closed for a national holiday.
Japan’s benchmark Nikkei 225 picked up 0.3% in afternoon trading to 27,516.53.
Australia’s S&P/ASX 200 edged nearly 0.1% lower to 7,251.60.
Purchasing managers’ indexes issued by a business magazine, Caixin, and the official China Federation of Logistics & Purchasing showed gains in production, exports and new orders.
Business activity is recovering after the ruling Communist Party ended stringent anti-virus restrictions in early December.
That followed a slump in activity that dragged last year’s economic growth to 3%, its second-lowest level since at least the 1970s.
Hong Kong’s own outlook has improved as it also has relaxed pandemic precautions.
Masks will no longer be required both outdoors and indoors, but only some high-risk areas including hospitals and elderly homes can still require their use.
In currency trading, the U.S. dollar inched up to $136.33 Japanese yen from $136.20 yen.
The euro rose to $1.0610 from $1.0583.
Going back to analyzing the other agricultural markets …
From South America, the Brazilian national agricultural agency, Conab, reported at 25 Feb, 2022-23 first (full-season) maize plantings were 100pc complete (99pc previous week, 100pc previous year).
With rainfall curtailing progress in some states, harvesting reached 17pc done (14pc, 23pc).
Second (safrinha) maize sowing was 49pc complete (33pc previous week, 60pc previous year).
Progress is most advanced in Mato Grosso, where there are reports of good initial crop development.
Soybean harvesting progressed to 34pc complete (23pc previous week, 42pc previous year), however humid conditions in Paraná had delayed harvesting and increased the risk of disease.
There was good progress in Mato Grosso, albeit with fieldwork slower compared to last year.
Private analysts 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.
Safras and Mercado also reported 30.3% for the national soybean crop harvested as of 2/24.
That is up from 20.9% last week, and slightly trails the 31.4% average pace.
Mato Grosso was 76% harvested.
Meantime, Brazil’s Anec estimates that the country’s corn exports will reach 1.95 MMT in February, down from the group’s estimate of 1.99 MMT last week.
Anec also estimates that the country’s soybean exports for February will reach 7.73 MMT.
That’s moderately below the group’s prior projection made a week earlier.
In addittion, Anec also expects to see soymeal exports reach 1.279 million metric tons this month.
Ultmately, Anec estimates that the country’s wheat exports will reach 550,000t in February, which is moderately below the group’s prior projection from a week ago.
In Argentina Agrarian Federation showed 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.
Meantime, Argentina has confirmed its first case of bird flu in industrial poultry, its agriculture secretary said on Tuesday, causing it to suspend avian product exports and raising fears the disease could spread and hurt exports from the South American nation.
The case was detected in the southern province of Rio Negro, an area with low poultry density.
Some 25 cases have been confirmed so far, mostly in wild birds.
The first cases were reported in mid-February and caused the country to declare a sanitary emergency, adding some fears on global demand.
Poultry products generate exports for Argentina valued at just over $350 million per year.
In Europe, new decline both in grain and oilseed prices.
Funds seems abandoning the ag commodities sector.
Some fears on global demand came, as avian flu could hit the animal sector.
Climate uncertainties should nevertheless limit the downside potential, as the water deficit in Western Europe is increasing.
On the international scene, Russian origins continued to be very competitive with Turkey would have bought 790,000 t of wheat, mainly from Russia.
Operators are focusing on the extension of the Ukraine grain corridor, which ends on March 18.
Meantime, wheat exports for the EU are displayed on February 26 at 20.47 million tonnes against 19.10 last year to date.
That’s 7.1% higher than last year’s pace so far.
EU barley exports, in contrast, are moderately lower year-over-year, with 3.65 million tonnes, compared with 5.51 last year.
Corn imports are up sharply at 17.95 million tonnes against 11.18.
Rapeseed imports are also up sharply at 5.53 million tonnes against 3.40 last year.
European Union soybean imports, in contrast, are trending moderately below last year’s pace so far after reaching 7.08 MMT through February 26.
EU soymeal imports are also trending lower year-over-year, with 10.17 million metric tons over the same period.
On the supply side, following the ban on neonicotinoids, the CGB (the French Beet Growers’ Union) estimates that the decrease in sugar beet acreage in France could reach between – 6 and – 7 % compared to last year..
That could offset by other spring cultivar.
From North Africa, Algeria must double wheat output to reduce dependency on imports, President Abdulmadjid Tebboune said on Tuesday, partly by raising yields to 3 tonnes per hectare from the current 2 tonnes per hectare.
Algeria’s produced 3.5 million tonnes of wheat in 2022, Agriculture Ministry figures show.
But the country pays an estimated $2.8 billion a year to bring in about 9 million tonnes of the grain, official figures show.
Disruptions to global grain markets showed that countries could not be truly independent without producing their own wheat, Tebboune said.
Egypt succeeded in increasing the land cultivated with wheat to 3,650,000 feddans in 2023, with an annual increase of 250,000 feddans, according to the Director of the Field Crops Research Institute and Head of the National Campaign to Preserve Wheat, Reda Mohamed.
“It is targeted this year to reach about 4 million feddans with a total productivity of 12 million tons, which achieves 55% of consumption locally.” Reda said.
Meantime, Minister of Supply and Internal Trade Ali el Moselhi said on Monday that Egypt’s strategic wheat reserve is sufficient for 4.6 months, adding that local wheat supplies will start in mid April with a target of 4 million tons.
From South Africa, farmers are expected to harvest 1% more maize in the 2022/2023 season than in the previous season, the government’s Crop Estimates Committee (CEC) said on Tuesday.
The CEC estimated the 2023 harvest at 15.615 million tonnes, up from the 15.470 million last season.
The harvest is expected to consist of 8.187 million tonnes of white maize, used for human consumption, and 7.428 million tonnes of yellow maize, used mainly in animal feed.
From Ukraine, Ukrainian Black Sea grain exports were reported at 525,688 MT for the week ending 2/26.
That was down from 760k MT last week and brought the total shipments under the corridors agreement to 22.5 MMT of grain.
The data showed that overall grain exports so far for the 2022/23 season were down almost 26% at 32.3 million tonnes
The volume so far in the July to June season included more than 11.3 million tonnes of wheat, 18.6 million tonnes of corn and about 2 million tonnes of barley.
Agriculture consultancy APK-Inform reported that in recent months Ukraine minimum soil temperatures mostly held above the critical frost damage threshold for 2023-24 winter crops, citing state weather forecasters.
Meantime, the Odesa region was the first to start the spring planting campaign, reported on the website of the Department of Agro-Industrial Development of Odesa Oblast.
In particular, in the Odesa region, it is planned to plant 726.5 thsd ha during spring planting, of which early grains and pulses will through 68.5 thsd ha, cereals – 7.2 thsd ha, corn – 150 thsd ha, sunflowerseed – 410 thsd ha, soybean – 6.5 thsd ha, flaxseed – 15 thsd ha.
From Russia, Russia South’s and Caucasus Region started seeding spring crops.
Dagestan Region was the first in the country to start sowing spring grain crops.
According to the First Deputy Minister, the farmers of Dagestan planned to allocate 225,000 hectares of arable land for spring sowing in the republic.
Grain crops will occupy more than 70 thousand hectares, of which 31 thousand are rice.
The largest areas of spring sowing are in the Kizlyar (36 thousand ha), Khasavyurtovsky (33 thousand ha) and Tarumovsky (16 thousand ha) districts.
“The provision with seeds for spring sowing exceeds 85%.
At present, the application of organic fertilizers and other soil preparation activities are in full swing.
We expect this year to increase the spring crop and, accordingly, to increase the indicators of last year in terms of crop production.
Compared to last year, our farms also bought more mineral fertilizers” the Ministry said.
From South East Asia, India’s meteorological department expected an enhanced probability of heat waves in most parts of the country during the three months ending May 31, according to a senior scientist.
An early onset of hot weather had already pushed electricity demand to near-record levels and led to the farm ministry setting up a panel to monitor the impact on the wheat crop, which was expected to reach a record this year.
On the other hand, India has decided to scrap a duty-free imports quota of 2 million tonnes of crude sunflower oil for the next fiscal starting from April 1, the government said on Wednesday, as the world’s biggest importer of vegetable oils tries to support local oilseed farmers.
The move could lead to higher imports of palm oil, which was earlier attracting taxes even as imports of sunflower oil and soyoil were allowed without any taxes under the quota.
From Australia, Aussie wheat crop is likely to face risks from dry weather due to El Nino weather pattern in the second half of 2023 after three years of record production, a consultancy said on Wednesday.
Australia’s La Nina wet weather system, which caused record rainfall, is fading, the Bureau of Meteorology said on this week.
As of now, however, there is ample soil moisture in most growing parts of the country for the wheat crop.
Wheat planting will start next month.
Meantime, local cash bids remained largely unchanged yesterday.
Kwinana ASW1 was still trading at $360/t FIS, SA AGP1 was trading at levels around $380/t port in the Adelaide zone, while over on the east coast H2 in Port Kembla was bid $430/t track.
Barley markets across the country, like wheat, registered big difference in different zones.
Barley delivered Geelong Melbourne remained around a $365/t market and the Darling Downs was still bid around the $400/t level, March/April.
Canola markets will feel the pinch today with offshore oilseeds prices lower overnight.
On the international trade scene, Japan’s MAFF is seeking 70,000t milling wheat in its regular weekly tender, including 35k each from the US and Canada.
The Taiwan Flour Millers’ Association purchased an estimated 48,975 tonnes of milling wheat to be sourced from the United States in a tender on Wednesday.
The purchase covered various wheat types for shipment from the U.S. Pacific Northwest coast between April 19 and May 3.
The purchase involved 32,550 tonnes of U.S. dark northern spring wheat of a minimum 14.5% protein content bought at an estimated $367.76 a tonne FOB U.S. Pacific Northwest coast.
It also included 9,500 tonnes of hard red winter wheat of a minimum 12.5% protein content bought at $360.76 a tonne FOB and 6,925 tonnes of soft white wheat between a minimum 8.5% and maximum 10% protein bought at $306.26 a tonne FOB.
The purchase has an additional freight charge of $38.73 per tonne for ocean shipping from the U.S. Pacific Northwest coast to Taiwan.
The seller of all the grain was said to be trading house Bunge.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
