Good morning Farmer Family …

US farm markets rose yesterday.

Corn trading ended with 1.82% gains.

Soybean prices were 4.1% higher by the close. 

Meal prices rallied 5.12%. 

Soy oil prices closed 1.02% higher.  

Following a weaker start to the week, also the wheat complex on Thursday lifted prices back up by double digits. 

Indeed, Chicago SRW wheat price went home 2.45% stronger on the day. 

Kansas City HRW wheat price was up by as much as 2.96% in the front month. 

Minneapolis spring wheat prices closed 2.17% higher.

For the week, however, wheat rigth now is down 2.5%, corn has given up almost 1.3% and soybeans have lost more than 3%.

Soy and wheat prices rose sharply, rebounding from multi-month low, on signs of a pick-up in demand following the recent decline in prices and forecasts for hot weather in the United States.

Corn prices also regained ground after falling earlier in the week.

Weather service Maxar in a report on Thursday said its 6-10 outlook indicated drier weather in the central and northeastern Midwest although rains in the Delta and southeastern Midwest should improve moisture for corn and soybean crops there.

Meantime, U.S. weekly export sales report showed 57,914 MT of old crop corn was booked during the week that ended 7/28. 

That was down from 150k MT of sales last week and below the 68k MT from the same week last year. 

Japan and Mexico were the top old crop buyers, partially offset by cancelations from Unknown. 

For new crop corn, the weekly update showed 256,685 MT were booked. 

That is up from 194k MT last week and was within the range of estimates. 

The total new crop book reached 7.857 MMT. 

Corn export shipments from the week were 1.02 MMT for a MY total of 56.4 MMT. 

That is 11% behind last year’s pace and is 91% of the WASDE forecasted total. 

China and Mexico were the week’s top destinations. 

As for soybean, the report had net cancelations of 11k MT for old crop bean bookings. 

Analysts were expecting as much as 100k MT of cancelations. 

Purchases from China and Mexico were being offset by reductions from Unknown and Bangladesh. 

For new crop, the USDA reported 410,580 MT were sold. 

That was within the 200k to 700k MT expected range and took the forward book to 15.26 MMT. 

Weekly shipments were marked at 527,605 MT, mostly to Mexico. 

Through 7/28 accumulated exports reached 53.896 MMT compared to 59.316 MMT during last year’s record campaign. 

For the products, the report showed old crop meal sales of 186,642 MT and 1,321 MT of soy oil. 

For meal that was at the top end of the range and took the 21/22 commitments to 11.597 MMT. 

For soy oil, that was at the bottom the expected range and left commitments at 693k MT. 

As for wheat, the report had 249,923 MT of wheat sold for the week that ended 7/28. 

That was within the 200-500k MT expected, but nearer the low end. 

White wheat was the top seller for the week with over half of the total. 

HRW also had 1/3 of the total. 

All wheat export shipments were marked at 288,415 MT for a season’s total export of 2.49 MMT. 

In this context, corn basis bids were largely steady across the central U.S. but did shift 18 to 30 cents lower at two Midwestern locations.

Soybean basis bids were largely steady across the central U.S. on Thursday but did tilt substantially lower at an Iowa river terminal and an Iowa processor.

Commodity funds were net buyers of soybeans, wheat, corn, soymeal and soyoil futures contracts. 

On this morning, Chicago wheat futures climbed for a second consecutive session.

Corn rose for a third straight session.

Soybeans also extended their gains.

Particularly, wheat was up 0.7% at $7.87-3/4 a bushel, as of 03:13 GMT. 

Corn rose 1% to $6.12 a bushel, while soybeans added 0.3% to $14.22-1/4 a bushel.

In energy markets, oil prices rose on Friday, bouncing off their lowest levels since February in the previous session.

Brent crude, indeed, rose 55 cents, or 0.6%, to $94.67 a barrel by 06:30 GMT, while U.S. West Texas Intermediate crude was up 65 cents, or 0.8%, at $89.19 a barrel.

Oil prices have come under pressure this week as the market fretted over the impact of inflation on economic growth and demand, but signs of tight supply kept a floor under prices.

Supply concerns are expected to ratchet up closer to winter with the European Union sanctions banning seaborne imports of Russian crude and oil products set to take effect on Dec. 5.

For now, signs of an economic slowdown capped price recovery. 

Recession worries have intensified following the Bank of England’s warning of a drawn-out downturn after it raised interest rates by the most since 1995 (read below).

In freight marktes, the Baltic Exchange’s main sea freight index dipped for a ninth straight session on Thursday, led by tumbling capesize rates as demand for all vessel segments fell.

The overall index, which factors in rates for capesize, panamax and supramax shipping vessels, indeed, shed 128 points, or 7.4%, to 1,603 points, marking its worst day since May 27.

Particularly, the capesize index dropped 310 points, or 17.3%, to its lowest level since April 20, at 1,480 points.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, fell by $2,571 to $12,271.

The panamax index was down 22 points at 1,983 points.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $198 to $17,849.

The supramax index fell 58 points to 1,747 points.

In equity markets, U.S. stock indexes on Thursday settled mixed. 

Concern about global growth increased after the Bank of England (BOE) voted 8-1 to raise its benchmark rate by +50 bp to 1.75% and warned the UK economy is heading for a recession that will start in Q4 this year and last for a year under the weight of soaring inflation.

China on Thursday fired 11 missiles near Taiwan as a result of House Speaker Pelosi’s visit to Taiwan, of which five landed inside Japan’s exclusive economic zone.  

In addition, China said it canceled a meeting between Foreign Minister Wang Yi and his Japanese counterpart over a G-7 statement expressing concern about China’s “threatening actions” around Taiwan.

Also, a plunge of more than -16% in Fortinet Thursday led cybersecurity stocks lower and weighed on the overall market.  

U.S. economic data Thursday was neutral for stocks.  

U.S. weekly initial unemployment claims rose +6,000 to 260,000, right on expectations. 

Also, the U.S. June trade deficit of -$79.6 billion was slightly narrower than expectations of -$80.0 billion.

A positive was a -3.5 bp decline in the 10-year T-note to 2.670%.

In this context, on Wall Street, the S&P 500 index closed 0.1% lower to 4,151.94 on Thursday.

The Dow Jones Industrial Average fell 0.3% to 32,726.82. 

The Nasdaq composite rose 0.4% to 12,720.58.

Investors are now focused on the U.S. employment report to be released later in the day, which is expected to show nonfarm payrolls increased by 250,000 jobs last month, after rising by 372,000 jobs in June. 

Any signs of strength in the labour market could feed into fears of aggressive steps by the U.S. Federal Reserve to curb inflation.

Meantime, Asian stock markets rose on Friday.

Shanghai, Tokyo, Hong Kong and Sydney advanced. 

Japanese June labor cash earnings rose 2.2% over a year ago, though forecasters warned that strength was unlikely to last. 

Half-yearly bonuses are paid in June.

The Reserve Bank of India raised its benchmark interest rate by a half percentage point to 5.4% on Friday.

RBI Gov. Shaktikanta Das projected that inflation would reach 6.7% in the fiscal year ending next March, and that the economy would grow at a 7.2% annual pace.

Indonesia’s economy grew by a stronger-than-expected 5.4% over a year earlier in the latest quarter.

In this context, the Shanghai Composite Index advanced 0.3% to 3,198.11 while the Hang Seng in Hong Kong rose less than 0.1% to 20,192.36.

The Nikkei 225 in Tokyo gained 0.8% to 28,143.55.

The Kospi in Seoul added 0.9% to 2,494.65 and Sydney’s S&P ASX 200 advanced 0.4% to 7,003.00.

India’s Sensex rose 0.5% to 58,568.12. 

New Zealand declined while Southeast Asian markets rose.

Jakarta advanced 0.2%. 

In currency trading, the dollar gained to 133.45 yen from Thursday’s 132.91 yen. 

The euro declined to $1.0230 from $1.0249.

From Canada, harvest has just begun in the province of Saskatchewan. 

These few fields are mainly in west central and southwest regions where crops are further ahead in development. 

Parts of these regions received rainfall and this has delayed further harvest activities such as combining and desiccating. 

In the eastern regions harvest is at least seven-10 days away, since crops are behind in development and in some areas are just now beginning to fill with seed, although some earlier seeded crops are close to being ready for desiccation. 

Rainfall varied significantly across the province last week with some areas getting nothing and others experiencing large, localized storms that resulted in flooding and crop damage. 

The Unity area received 53 mm, the Briercrest area 49 mm, the Avonlea area 40 mm, the Mayfair area 37 mm, the Lake Lenore area 24 mm, the Bulyea area 17 mm and the Swift Current area 9 mm. 

Cropland topsoil moisture is rated as four per cent surplus, 64 per cent adequate, 25 per cent short and seven per cent very short. 

Hay and pasture land topsoil moisture is rated as two per cent surplus, 65 per cent adequate, 20 per cent short and 13 per cent very short. 

Pasture conditions are rated as 16 per cent excellent, 41 per cent good, 25 per cent fair, 12 per cent poor and 6 per cent very poor. 

From South America, Argentina’s 2022/2023 wheat crop got a much needed boost last week when rains eased drought conditions afflicting key agricultural areas, the Buenos Aires Exchange said on Thursday.

Persistently dry conditions in recent months have pushed the exchange to cut its estimate for the country’s planted wheat area five times, down to 6.1 million hectares (15 million acres) from the 6.6 million hectares initially expected in May.

Last week’s rain over Argentina’s central and southern agricultural areas slowed the deterioration of wheat plants that have already begun growing, while promoting the growth of plants “that presented delays due to the lack of humidity and low temperatures,” the exchange said in its weekly report.

The exchange, however, warned that the panorama for farmers is still a concerning one. 

According to Norway’s Yara, fertilizer deliveries to Brazilian farmers will stabilize or fall in 2022.

Factors driving a potential reduction include higher prices.

Brazil imported 23.6 million tonnes of crop nutrients including potash and formulated products containing NPK through July, a 15.5% rise compared with the same period a year ago. 

By value, the import bill rose 175.3% to $16.1 billion, according to government data.

Even amid a surge in imports, Brazilian deliveries of fertilizers in May dropped 4.7% to 3.2 million tonnes.

Brazilian farmers delayed fertilizer orders this year, affecting port unloading operations on the eve of Brazil’s planting season. 

A fall in fertilizer applications is a possibility.

In Europe, markets posted a net rebound for all products yesterday.

Strong international demand and critical weather conditions are reigniting the upward trend.

France has suffered from still extreme temperatures in recent days and few rains yesterday bring almost no relief to the current water stress situation.

December milling wheat on Paris-based Euronext settled up 1.6% at 323.00 euros ($327.91) a tonne.

The EU drought impact on corn production, see many estimates well below the USDA’s 68 million tonnes.

More hot and dry weather is forecast in the coming weeks in key growing regions, including France, and is expected to cause further damage to crops already stressed by a dry spring and sweltering temperatures.

On this wake, per latest weekly estimates from farm office FranceAgriMer, France’s corn crop condition deteriorated sharply for a third consecutive week, as an estimated 63% of the grain maize crop was in good or excellent condition in the week to August 1, down from 68% the previous week.

This week’s rating compares to a year-earlier score of 90%.

Meantime, spring barley, was 99% harvested by August 1, while soft wheat was harvested at 100%.

Germany’s wheat harvest was making rapid progress in dry weather. 

Good volume results were reported with overall decent quality, but with lower protein content in some northern regions.

Protein levels are sometimes 1% down on last year’s levels which could be bad for export supplies.

Rapeseed prices, on their part, are still showing much volatility.

Note, however, that recession fears once again plunged crude oil prices into the red yesterday. 

The barrel of Brent and WTI were at their lowest level since early February when Euronext closed.

From the Black Sea basin, the Kremlin said on Thursday the deal to unblock Ukraine’s grain exports from the Black Sea was not a “one-time mechanism,” and that it hoped it would continue to work effectively. 

Turkish President Erdogan will meet Russian President Putin today in Sochi and will discuss performance of Istanbul agreement.

There will be an exchange of opinions about the first voyage with grain from Odessa.

“In broad terms, this is a good opportunity to assess efficiency of operations of the mechanism created owing to Istanbul agreements,” Mr Peskov said in a statement.

Meantime, three ships loaded with grain left Ukrainian ports on Friday under the recently concluded safe passage deal, the Turkish defenсe ministry said.

Particularly, two grain ships set off from Chornomorsk and one from Odesa, with a total of about 58,000 tonnes of corn.

The Panama-flagged Navistar, carrying 33,000 tonnes of corn bound for Ireland, departed from Odesa.

The Maltese-flagged Rojen, carrying 13,000 tonnes of corn, departed from Chornomorsk port bound for Britain. 

The Turkish-flagged ship Polarnet, carrying 12,000 tonnes of corn, set off from Chornomorsk for the Turkish Black Sea port of Karasu.

Meantime, the Turkish bulk carrier Osprey S, flying the flag of Liberia, was expected to arrive in Ukraine’s Chornomorsk port on Friday, the regional administration of Odesa said. 

It would be the first ship to arrive at a Ukrainian port during the war.

Ukraine has called for the grain deal to be extended to include other products, such as metals, the Financial Times reported.

Meantime, Ukrainian farmers have threshed 17.5 million tonnes of the 2022 grain harvest so far with the average yield of 3.64 tonnes per hectare, Ukrainian grain traders union UGA said on Friday.

The union’s statement said the volume included 12.6 million tonnes of wheat with an average yield of 3.6 tonnes per hectare and 4.4 million tonnes of barley with a yield of 3.38 tonnes per hectare.

The UGA said that farmers also harvested 2.5 million tonnes of rapeseed with a yield of 2.68 tonnes per hectare.

The ministry said farmers had harvested 4.8 million hectares of grain and the area included 3.5 million hectares of wheat, 1.3 million hectares of barley and 101,000 hectares of peas.

It said Ukraine’s southern Odesa and Mykolaiv regions had almost completed the 2022 wheat harvest.

From Russia, according to the agriculture ministry, Russia may not reach its expected harvest of 130 million tonnes of grain due to weather factors and a lack of spare parts for foreign equipment.

“Taken together, all of this creates risks in terms of reaching the grain harvest figure of 130 million tonnes,” the ministry said.

It also said that if it does not meet the planned volumes, it will have to revise its export plans of 50 million tonnes.

Meantime, suppliers offered Russian wheat at lower prices this week in Asia, but most millers were unwilling to sign deals in the face of economic sanctions against Moscow, Singapore-based traders said.

Russian wheat with 11.5% protein was offered around $405-$410 a tonne, including cost and freight (C&F), to Southeast Asia, they said.

“Russian crop looks good and prices are very attractive, but buyers are not willing to take chances with Russian supplies as cargoes might get into trouble, even though food is not under sanctions.”

From the Middle Kingdom, China is on track to be the leading international buyer of U.S. agricultural products for a third consecutive year, as the total value of US exported goods reached record levels in the first half of 2022.

Data published by the U.S. Census Bureau Thursday, indeed, showed U.S. agricultural and related product exports to China reached $17.5 billion between January and June, up 15% from last year’s record for the period.

Soybeans accounted for 29% of this year’s value of exports to China, corn 18%, cotton 11% and sorghum 9%.

The exported cost of U.S. corn to China in H1 2022 was 21% higher than in H1 last year, soybeans 23% higher and cotton 34% higher.

The 9.7 million tonnes of U.S. corn shipped to China in H1 2022 is down 24% from last year, though it would have been by far a full-year record in any other year. 

H1 soy exports at 8.8 million tonnes were up 15% on the year and cotton shipments of 800,000 tonnes were up a whopping 71%.

However, for the current 2021-22 marketing year that began Sept. 1, through June, corn and soybean shipments to China from USA were down 33% and 20%, respectively. 

Cotton shipments were down 10% between August 2021 and June 2022.

U.S. pork shipments to China in H1 2022 plunged 53% on the year to 460,300 tonnes.

By contrast, China increased U.S. beef import, as H1 2022 exports by volume surged 49% from H1 2021. U.S. beef and beef product exports to China in H1 of 120,500 tonnes, amassing over $1 billion in value, the fifth largest item of the year behind soybeans, corn, cotton and sorghum.

That makes China the third largest destination for U.S. beef so far in 2022 behind Japan and South Korea.

From South East Asia, flour millers in India have asked the government to scrap a 40pc import duty on wheat to soften local prices that have jumped 12-16pc in the past fortnight, according to Anjani Agarwal, president of the Rollers Flour Millers’ Federation of India.

Malaysian palm oil prices gained on Friday tracking Chicago soyoil, but the market was set for a 9% weekly loss on expectations of rising supplies.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange gained 74 ringgit, or 1.94%, to 3,895 ringgit ($874.30) a tonne by the midday break.

Malaysia’s palm oil inventories at end-July likely jumped to an eight-month high due to improving production and soaring imports.

But production worries due to workers shortages are raising concerns about the quality of the processed crude palm oil and yields are on the decline.

Exports from Malaysia during Aug. 1-5 rose 24.5% from the same week in July.

From Australia, current crop markets continue to fall away with lack of buying demand. 

Wheat and barley markets remain largely offer side. 

Export pace continues to drop off for August and September. 

New crop wheat markets were softer with grower multi-grade bids off $3-5/t, barley bids were off $5-10/t and canola remained volatile with new crop bids down $25/t.

Flood warnings were issued for NSW central and southwest catchments. 

There is potential for widespread minor and major floods after very heavy rainfall on Thursday. 

Catchments of concern include the Upper Murray, Lachlan and Mitta Mitta Rivers.

On the international trade scene, Iranian state agency the Government Trading Corporation (GTC) is believed to have purchased between 180,000 tonnes to 240,000 tonnes of milling wheat in a tender which closed on Wednesday.

The wheat was expected to be sourced from Russia.

It was believed to have been bought in three to four consignments for September/October shipment.

Trader estimates of the price were between 438 and 440 euros ($446.30 to $448.30) C&F Iranian ports. Iran traditionally declines to buy wheat in U.S. dollars.

It estimated the country will need to import between 5 million to 6 million tonnes of wheat in the marketing year starting this June.

FAO Food Price Index – July 2022

The FAO world price index declined again in July, edging further away from record highs hit in March.

FAO food price index, which tracks the most globally traded food commodities, indeed, averaged 140.9 points last month versus a revised 154.3 for June. 

The June figure was previously put at 154.2.

The July decline was the steepest monthly fall in the value of the index since October 2008, led by significant drops in vegetable oil and cereal indices, while those of sugar, dairy and meat also fell but to a lesser extent.

The vegetable oil, sugar, dairy, meat and cereal price indices all fell month-on-month in July.

Nevertheless, the world price index remained 16.4 points (13.1 percent) above its value in the corresponding month last year. 

Particularly, the FAO Cereal Price Index averaged 147.3 points in July following a fall of 19.1 points (11.5 percent) from June, but remained 21.0 points (16.6 percent) above its July 2021 value. 

International prices of all the cereals represented in the index fell. 

Leading the decline, world wheat prices fell by as much as 14.5 percent in July.

The maize price index fell 10.7% in July.

Spillover from weakness in wheat and maize markets also pressured sorghum and barley prices downwards, respectively, by 12.8 percent and 12.6 percent. 

Nevertheless, international wheat prices were still 24.8 percent above their values in July last year. 

International prices of coarse grains declined for the fourth consecutive month, down 11.2 percent, but remained 12.1 percent above their values a year ago.

The FAO Vegetable Oil Price Index averaged 171.1 points in July, down 40.7 points (19.2 percent) and marking a 10-month low. 

The sharp drop was driven by falling world prices across palm, soy, rapeseed and sunflower oils. 

International palm oil prices declined for the fourth consecutive month in July.

In the meantime, world soy and rapeseed oil quotations fell on, respectively, protracted sluggish demand and expectations of ample new crop supplies. In the case of sunflower oil, international prices dropped markedly amid subdued global import demand, despite continued logistics uncertainties in the Black Sea region. Lower crude oil prices also exerted downward pressure on vegetable oil values.

The FAO Dairy Price Index averaged 146.4 points in July, down 3.8 points (2.5 percent) from June, but still 29.7 points (25.4 percent) above its value in July of last year. 

International quotations for skim milk powder registered the steepest decline, followed by those of butter and whole milk powder, principally reflecting lacklustre market activities in Europe due to the summer holidays.

Furthermore, most buyers were well covered for their immediate needs, which, in tandem with weak demand from China and high dairy prices, led to declines in the demand for spot supplies, weighing on international quotations. 

Meanwhile, world cheese prices remained stable, as high internal sales in European tourist destinations compensated for weaker global import demand.

The FAO Meat Price Index* averaged 124.0 points in July, down 0.6 points (0.5 percent) from June, marking the first month-on-month decline following six consecutive monthly increases. 

In July, world quotations for ovine meat dropped steeply, due to increased export availabilities from Australia amid high slaughter and expectations of increased lamb supplies, faced by lower import demand. 

Meanwhile, international bovine meat prices fell, reflecting increased export availabilities from major producing regions compared to global demand, while weak overall import demand kept pig meat prices stable despite the tight supply of slaughter hogs, especially in the United States of America. 

By contrast, international poultry meat prices reached an all-time high, underpinned by firm global import demand and tight global supplies on Avian influenza outbreaks in the northern hemisphere.

FAO Cereal Supply & Demand July 2022

FAO’s forecast for global cereal production in 2022 has been raised by 7 million tonnes in July from the previous month and is now pegged at 2 792 million tonnes, however, still 0.6 percent short of the world output in 2021.

The month-on-month increase predominantly rests on a 6.4-million-tonne upward revision made to the coarse grain production forecast, with the world output seen reaching 1 501 million tonnes in 2022, only 0.5 percent below the 2021 outturn. 

The forecast for world wheat production in 2022 has been lowered only fractionally in July to 770.3 million tonnes, remaining 1.0 percent lower year-on-year. 

The forecast for world cereal utilization in 2022/23 has been lifted, up 9.2 million tonnes to 2 797 million tonnes, but is still 1.7 million tonnes (0.1 percent) below the 2021/22 level, mostly reflecting lower feed use. 

Following an upward revision of 6.1 million tonnes since the previous forecast in June, utilization of coarse grains is anticipated to remain near the 2021/22 level of 1 504 million tonnes in 2022/23, with a rise in food consumption balancing reduced feed use, especially in North America and the European Union. 

Despite a 2.0-million-tonne upward revision this month, the forecast for the 2022/23 global wheat utilization is still pointing to a slight (0.3 percent) decline from 2021/22. 

At 854 million tonnes, FAO’s forecast of world cereal stocks at the close of seasons in 2023 is up 7.6 million tonnes from the previous month but still points to a year-on-year contraction of 0.6 percent (5.0 million tonnes). 

At this level, the global cereal stock-to-use ratio would fall from 30.7 percent in 2021/22 to 29.8 percent in 2022/23. 

The forecast for global coarse grain inventories has been raised by 6.0 million tonnes from the previous report on higher maize stock expectations, but are still seen heading for a 1.0 percent (3.6 million tonnes) decline below their opening levels, led by a fall in barley stocks. 

Following a 7.7-million-tonne upward revision this month, global maize stocks are forecast to remain near their opening levels in 2022/23. 

The forecast for the 2022/23 global wheat inventories has been lifted by 1.5 million tonnes since last month, up to 299 million tonnes, now near opening levels. 

FAO’s latest forecast for world trade in cereals in 2022/23 stands at 468 million tonnes, up 4.8 million tonnes from last month but representing the lowest level in three seasons and a decrease of 11.4 million tonnes (2.4 percent) from the 2021/22 volume. 

Accounting for the bulk of the decline, trade in coarse grains is forecast to contract by 4.1 percent (9.5 million tonnes) in 2022/23 (July/June) from the 2021/22 estimated level. 

FAO’s forecast for global maize trade in 2022/23 stands 3.0 percent lower than the 2021/22 level. 

At 191 million tonnes, world wheat trade in 2022/23 is also forecast to contract by 1.3 percent from 2021/22. 

That’s all, thank you.

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

Author: Sandro F. Puglisi  

Comments are closed.