Good morning Farmer Family …

US Farm markets were mixed, but mostly lower again on Wednesday.

Markets has been dragged down by worries about global demand, as global recession risks emerged.

Meantime, some supply concerns are easing after a U.S. official said Russian food and fertilizer exports are not subject to sanctions.

In this context, wheat prices after tested gains for much of the session, they spilled into the red just before the close. 

July Chicago SRW prices lifted just 0.13% at the bell.

Meanwhile, July Kansas City HRW wheat prices, dropped 0.19% and July MGEX spring wheat prices fell 1.05%.

Soybeans suffered through another round of cuts, losing more than 1.6%.

Chicago soybean prices have tumbled 20% in the past two weeks. 

Soymeal held relatively firm and ended the day mixed but mostly lower with the front month up just 0.26%. 

Bean oil prices gave back another 3.69% on the day, with July trading at levels not seen since April. 

Plunging Indonesian palm oil prices and weaker crude oil weighed a lot the price of the soy oil. 

Nearby corn contracts, in contrast, represented the lone bright spot as traded 0.95% higher by the close. 

However, that is still a net 16 cent loss for the week, with the gap to the $7.80s still unfilled. 

New crop corn futures closed off their lows, and under the round number $7/bu mark on 7 cent losses.

On this wake, Chicago grains futures slumped more than 2% on Thursday.

Supply pressure from early harvesting in the United States and European grain belts also continued to weigh on prices.

Thus, corn lost 2.3% to $6.77-1/2 a bushel, as of 05:06 GMT, after earlier falling to its weakest since Feb. 28 at $6.76.

Soybeans fell 2.3% to $14.42 a bushel, after touching its lowest since Jan. 27 at $14.33.

The most-active wheat contract on the Chicago Board of Trade (CBOT) was down 2.1% at $9.68-1/4 a bushel, after hitting its lowest since March 1 at $9.60-3/4.

In energy markets, oil prices continued to retreat on Thursday.

Like for commodities ag, investors reassessed the risks of recession and the impact ofinterest rate hikes in major economies on fuel demand.

Thus, U.S. West Texas Intermediate (WTI) crude futures fell $1.4, or 1.3%, to $104.78 a barrel by 06:43 GMT. Brent crude futures fell $1.3, or 1.2%, to $110.40.

Both benchmarks tumbled by as much as $3 a barrel in early morning Asian trade, after plunging around 3% in the previous session. 

They are at their lowest levels since mid-May.

The U.S. and European hedge funds have been selling off their positions ahead of the end of the second quarter, which is also cooling investor sentiment.

Data are proving that Russian crude supply is less affected by sanctions than most people have previously estimated and the supply side may see a larger-than-expected increase in the near term.

President Vladimir Putin said on Wednesday that Russia was in the process of rerouting its trade and oil exports towards countries from the BRICS group of emerging economies in the wake of Western sanctions.

On this wake, China’s crude oil imports from Russia in May were up 55% from a year earlier and at a record level. read more

India is providing safety certification for dozens of ships managed by a subsidiary of top Russian shipping group Sovcomflot, enabling oil exports to India and elsewhere.

U.S. President Joe Biden, meanwhile, called on Congress to pass a three-month suspension of the federal gasoline tax to help combat record pump prices and provide temporary relief for American families this summer.

The U.S. Energy Information Administration said its weekly oil data, which was scheduled for release on Thursday, will be delayed due to systems issues until at least next week.

In freight markets, the Baltic Exchange’s main sea freight index fell on Wednesday, pressured by a dip in the capesize and panamax segments.

The overall index, indeed, lost 135 points, or 5.4%, to 2,349.

Particularly, the capesize index dipped 367 points, or 13.5%, to 2,343.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, decreased by $3,047 to $19,430.

The panamax index dropped 54 points, or 1.9%, to 2,797 points.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000-70,000 tonnes, decreased by $486 to $25,170.

The supramax index edged up 4 points to 2,475.

In equity markets, stock indexes Wednesday fluctuated between moderate gains and losses throughout the day in volatile trade and finished slightly lower. 

The Fed Chair Powell pledged to curb inflation and said the U.S. economy is strong enough to handle Fed tightening.  

Last week, the Fed raised its benchmark rate by three quarters of a percentage point, three times its usual margin and the biggest increase in nearly three decades.

Fed policymakers say they anticipate more rate hikes this year and next and at a quicker tempo than previously forecast. 

They say the U.S. central bank’s key rate should reach 3.8% by the end of 2023, its highest level in 15 years.

Consequentially, investors worry U.S. and European rate hikes might derail global growth.

Thus, the S&P 500 declined 0.1% to 3,759.89. 

The Dow Jones Industrial Average gave up 0.2% to 30,483.13. 

The Nasdaq composite slipped 0.2% to 11,053.08.

Asian stock markets, meantime, were mostly higher on Thursday.

The Shanghai Composite Index rose 0.6% to 3,285.99 while the Nikkei 225 in Tokyo gained 0.2% to 26,191.97. 

The Hang Seng in Hong Kong advanced 1% to 21,209.09.

The Kospi in Seoul retreated 0.6% to 2,327.73 while Sydney’s S&P-ASX 200 rose 0.4% to 6,534.10.

India’s Sensex opened up 1.1% at 10,799.50. 

New Zealand, Singapore and Bangkok advanced while Jakarta fell.

In currency trading, the dollar fell to 135.39 yen from Wednesday’s 136.28 yen. 

The euro rose to $1.0570 from $1.0566.

On the weather side, more rain is expected to land on the Northern Plains and upper Midwest between today and Sunday, per the latest 72-hour cumulative precipitation map from NOAA. 

Some areas could see another 0.75” or more during this time. 

NOAA’s newest 8-to-14-day outlook predicts below-average precipitation for the eastern Corn Belt between June 29 and July 5, with seasonally warm weather likely for much of the central U.S..

Meantime, day 7 reports from the KS wheat harvest mentioned some hail damage around North Central’s Ellis County, with harvest pace from 33% to 40% complete. 

Of the non-damaged fields, yields were reported from 25-35 bpa and 11.3% protein. 

In Southeast KS’s Cowley County, self reported yields are running about 20% below normal. 

Markets should continue to show volatility in the coming weeks, and weather conditions will remain to be monitored.

Meantime, corn basis bids were steady to mixed on Wednesday, moving as much as 10 cents higher at an Iowa river terminal and as much as 3 cents lower at an Ohio elevator.

Soybean basis bids were largely steady across the central U.S., but did tilt as much as 10 cents higher at an Iowa processor and as much as 10 cents lower at an Ohio river terminal.

The funds were net buyers yesterday for 4,500 lots of wheat and 3,000 lots of corn. 

They were net sellers for 13,000 lots of soybeans.

From South America, Brazil’s Patria Agronegocios reported 2nd crop corn harvest at 14.7% complete, compared to 8.3% on average. 

Agroconsult estimated the Brazilian 2nd crop corn output at 89.3 MMT, up from 87.6 MMT. 

That’s 1.9% higher than the prior projection Agroconsult offered in May.

That has the total Brazilian corn output as 114.8 MMT, still below some other recent estimates. 

The group also expects Brazilian corn exports to reach 1.693 this marketing year.

Meantime, Brazil’s Anec is now estimating the country’s corn exports will reach 1.758 MMT, which is slightly less than the group’s prediction from a week ago.

Brazil’s Anec also projects the country will export 10,79 MMT of soybeans in June, which is fractionally below is forecast from a week ago. 

Anec also expects to see soymeal exports will reach 2.271 million metric tons this month.

In Europe, markets continued to decline for all products yesterday. 

Well oriented in the first part of the session, European grain prices finally failed to initiate a rebound on Wednesday.

The eurodollar parity has weighed heavily on the trend.

The rapid progress of harvests in the northern hemisphere is also a significant pressure factor.

Also, the risk of a global recession is on the minds of all financial players.

In this context, wheat price wheat fell to 372.5 euros per tonne, practically returning to its level of two months ago, far from its record of May 16 (438.25 euros per tonne). 

Meanwhile rapeseed fell again by more than €20/t to 692.5 euro/MT! 

The mid-May highs were in the lower 880s/MT. 

That represent another 3.8% drop. 

“We are facing the anguish of the crisis, on markets which have hit their highest and which are starting to come back down, awaiting the new harvest ” some analyst said. 

Yields – down 4.7% compared to 2021 in common wheat in the EU, according to the Commission’s latest estimates.

They will be a little worse than last year, but it is still far too early to take action anything.

The heat wave in France and Western Europe, indeed, came at a time when wheat was already advanced and should not have suffered too much.

In other news, the European Commission is still looking at strong measures to reduce the ecological impact of agriculture on the environment, with the aim of reducing the use of pesticides by 50% by 2030.

In this context, non-commercial market participants lifted their net long position in Euronext’s milling wheat futures and options in the week to June 17, data published by Euronext on Wednesday showed.

Non-commercial participants, which include investment funds and financial institutions, raised their net long position to 164,773 contracts from 163,004 a week earlier, the data showed.

Commercial participants similarly increased their net short position to 186,047 contracts from 185,461 a week earlier.

Commercials’ short positions accounted for 68% of the total short position, while commercial long positions accounted for 36% of total long positions.

Non-commercial short positions represented 32% of total short positions, while non-commercial net long positions accounted for 64% of the total longs.

In Euronext’s rapeseed futures and options, non-commercial market participants expanded their net short position to 17,616 contracts from 15,538 a week earlier.

Commercial participants similarly lifted their net long position in rapeseed to 17,132 contracts from 15,371 a week earlier.

From the Black Sea basin, wire reports suggest a Russian missile strike destroyed or damaged two sunflower oil tanks at a terminal in Ukraine‘s port of Mykolaiv earlier on Wednesday. 

Despite the lack of progress on possible maritime corridors to get grain out of Ukraine, analysts estimate between 1.5 and 1.7 million tonnes the quantities of grain (all products combined) which now leave Ukraine each month by road and rail.

The urgency for Kiev remains to evacuate its last stocks to be able to welcome the new harvest. 

“At first we thought they were going to sow only 20% of their crops in Ukraine, then only 40%, now it seems that 80% of the crop has been sown”. 

Now the question is whether they will be able to get these crops out. 

The Ukrainian Ag Ministry, indeed, reported spring crop planting had finished, with 4.6m HA of corn, compared to 5.5m last season. 

As a percentage of all spring crop land, corn was up to 34.3% on the 13.4m HA, compared to 32.5% on 16.9m total HA last year. 

In Russia, the wheat harvest started in southern Russia, with record production forecasts thanks to favorable weather conditions. 

Russia’s SovEcon sees 22/23 wheat output at 89.2 MMT, a 600k MT boost from their prior estimate. 

The UkrAgroConsult estimated Russia’s wheat crop at 85.4 MMT, which was also up by 1.9 MMT from their prior forecast. 

The fact remains that exports remain complicated by logistics and the reluctance of exporters to engage vessels in the Black Sea basin. 

To this must be added a very firm ruble rate at 53 rubles to the dollar, making the Russian origin more expensive, also penalized by export taxes.

On this wake, the United Nations is seeking to limit the impact of the economic sanctions taken against Russia on food and fertilizer flows, in order to avoid a global crisis. 

From the Middle Kingdom, Chinese soybean import data from country of origin showed that 7.8 MMT of their May imports came from Brazil with 1.73 MMT from the U.S. 

That compares to 9.2 MMT and 244k MT last year respectively. 

Of the first 5 months of 2021, China has brought in 20.5 MMT of soybeans from Brazil and 16.77 MMT from the U.S. 

Last year, it was 15.6 and 21.5 MMT respectively. 

Meantime, China’s soybean meal and soyoil futures plunged on Thursday.

The most active soybean meal futures on the Dalian Commodity Exchange fell 5.5% to 3,891 yuan ($580.59) a tonne in their biggest decline since February 2013.

The most active soybean oil contract on the exchange fell 4% to 10,238 yuan a tonne, its biggest fall since last October.

Domestically, soymeal inventories have been rising and pressure has been quite massive.

Global edible oils markets turned bearish in early June, pulling back from high levels reached after a palm oil export ban by Indonesia.

($1 = 6.7018 Chinese yuan renminbi).

From South East Asia, Bangladesh is trying to secure wheat supplies from Russia in a government-to-government deal after it’s biggest supplier India banned exports of the grain last month.

The supply deal with Russia, could help Dhaka in meeting its needs below the elevated global prices, industry officials said.

Bangladesh is holding a virtual meeting with Russia on Thursday to finalise the deal to initially seek at least 200,000 tonnes of wheat.

All the issues, including payment, will be discussed in the meeting.

From Australia, softness in offshore markets and ready availability has contributed to feedgrain prices in south-eastern Australia dropping $15-$25 per tonne in the past week.

In contrast, northern values for white grains have held ground as growers in southern Queensland and northern New South Wales remain frantically busy completing their summer-crop harvest and getting the last of their winter crops in the ground.

This has made grain on farm in the north harder to find this week compared with the south.

Northern feed markets were nominally $5/t softer this week but volumes are low. 

Signs that suppliers are catching up on existing contracts while the consumer is relatively comfortable for the moment. 

A lack of export demand due to full supply chains is also adding some pressure to local values.

Sorghum harvest is finally coming to an end in southern Qld and NNSW after a long and drawn-out couple of months. 

A run of good weather has allowed ground to dry out and grain to dry down in most areas. 

Sorghum harvested before the rain delay was largely of excellent quality and high yields. 

However, roughly one third of the Qld and NSW crop has been downgraded due to sprouting caused by the wet conditions, which will mostly end up in the domestic feed market.

Showers are forecast to develop on Monday over Qld and NSW but are expected to be less than 5mm at this stage.

On international trade scene, a government agency in Pakistan has issued an international tender to purchase and import 500,000 tonnes of milling wheat.

The deadline for submission of price offers in the tender from the Trading Corporation of Pakistan (TCP) is July 1.

Wheat in the tender can be sourced from worldwide origins.

Bulk shipment is sought to Pakistan from August to September 15, 2022.

In a tender in late May, TCP bought 500,000 tonnes of milling wheat at an estimated $515.49 per tonne c&f free out for shipment in June and July.

Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 168,330 tonnes of food-quality wheat from the United States, Canada and Australia in regular tenders that will close on Thursday.

The Algerian call for tenders ended with the purchase of 600 kt of milling wheat at $445/t C&F. 

Tunisia bought 100 kt of wheat at 439.40 $/t C&F as well as 50 kt of barley at 397.90 $/t.

That’s all, thank you.

To all of you, we wish you a good day … and good harvest 2022!

 Author: Sandro F. Puglisi  

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