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Daily International Grain Market View

Good morning Farmer Family …

US farm markets jumped on Thursday.

Corn prices ended 1.15% gains.

Soybean prices closed up by 1.4%. 

The soymeal market led the way to soy strength as prices were 2.49% higher for the session. 

Soy oil prices closed up 0.41%.

The wheat markets saw the most upside, led by the Kansas City HRW market up 2.55%. 

Chicago SRW also pushed higher with 1.52% gains, while Minneapolis spring wheat was weaker, as closed up by 0.93%. 

A broad set of stocks and commodities jumped higher yesterday, after strong U.S. economic data and better-than-expected export data triggered an ample round of technical buying. 

Notably, USDA reported wheat export sales were 500,249 MT for the week that ended 1/19. 

That was up 6 percent from the previous week and 84 percent from the prior 4-week average.

Japan and Mexico were the top buyers for the week. 

By class white wheat led the charge with nearly 200k MT. 

However, accumulated wheat commitments were 16 MMT as of 1/19, which remains 7% under last year’s pace. 

As for soybean, the report showed 1.146 MMT of old crop beans were sold during the week that ended 1/19. 

That was the high end of estimates, and was 16% above last week and 11% higher yr/yr. 

China was the week’s top buyer, with 940k MT booked including 386k MT switched from unknown. 

The season’s commitments were sitting at 86% of the WASDE forecast – compared to 79% last year.

Exports of 1,900,300 MT, however, were down 8 percent from the previous week, though up 11 percent from the prior 4-week average.

Separately, private exporters reported to the USDA having sold 106,000 metric tons of soybeans for delivery to China during the 2023/2024 marketing year.

USDA reported meal bookings at 303,934 MT for the week of 1/19. Soybean oil export sales were 2,231 MT – which was a 5-week high but still 89% below the same week last year. 

Corn export sales, in contrast, had a 20% drop from last week, at 910,400 MT. 

However, that was up 46 percent from the prior 4-week average, and was within the range of estimates. 

Corn export shipments were reported at 912.6k MT for the week, leaving the accumulated export at 12.012 MMT of the season. 

Grain markets were also supported by reports that Ukraine grain production could be down sharply again for the coming year.

In add, the USDA said on Thursday it saw Russia’s official wheat crop estimate as “not feasible”.

Notably, Mark Jekanowski, chairman of the USDA’s World Agricultural Outlook Board, told the Argus Media’s Paris Grain Conference that the agency’s analysis of weather and previous crops did not support such a high crop as Russia estimated.

In this context, corn basis bids were mostly steady across the central U.S. on Thursday but did trend 5 cents higher at a Nebraska processor.

Soybean basis bids remained steady across the central U.S..

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

On this morning, Chicago soybean and corn prices firmed, while wheat ticked lower, although all three were poised for weekly gains.

Notably, the most-active soybean contract on the Chicago Board of Trade gained 0.1% at $15.25 a bushel, as of 04:31 GMT, corn rose 0.1% to $6.83 a bushel and wheat gave up 0.5% to $7.48-1/2 a bushel.

For the week, soybeans were up 1.2%, corn and wheat have added around 1%.

However, gains in corn and soybeans were limited by the upcoming South American harvest.

In energy markets, oil prices rose for a second session on Friday.

Notably, Brent futures gained $1.15, or 1.3%, to $88.62 a barrel by 09:30 GMT. 

U.S. crude also rose by 1.3%, gaining $1.01 to $82.02.

Both benchmarks advanced by more than 1% on Thursday and are heading for a third straight week of gains.

U.S. economic growth, grew by a faster than expected 2.9% in the fourth quarter.

Middle distillate refining margins were more than expected.

In China, critically ill COVID-19 cases are down 72% from a peak early this month while daily deaths among COVID-19 patients in hospitals have dropped by 79% from their peak, pointing to a normalisation of the Chinese economy and boosting expectations of a recovery in oil demand.

The Fed’s next decision on interest rates will be made at meeting over Jan. 31 and Feb. 1 against a backdrop of a dip to inflation and gross domestic product that was more than expected.

However, gains on U.S. crude were capped by a 4.2 million barrel build in stocks at Cushing, the pricing hub for NYMEX oil futures, this week.

In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, fell to a fresh two-and-a-half year low on Thursday, pressured by thin capesize demand.

The overall index, indeed, was down 26 points, or 3.7%, at 677, lowest since June 4, 2020.

Notably, the capesize index lost 82 points, or 13%, to 549, on its worst day in a week, also a two-and-a-half year low.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $680 at $4,551.

The panamax index rose 10 points, or about 1%, at 1,045.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, were up $91 at $9,409.

Among smaller vessels, the supramax index fell three points to 645.

In equity markets, stocks climbed on Wall Street to their highest level in nearly eight weeks after the Commerce Department reported the U.S. economy expanded at a more than expected annual pace in the last quarter, ending 2022 with momentum despite higher interest rates and widespread fears of a looming recession. 

Notably, U.S. Q4 GDP rose +2.9% (q/q annualized), stronger than expectations of +2.6%.  

The Q4 core PCE deflator rose +2.9%, right on expectations and the weakest report since Q1 of 2021.

U.S. Dec durable goods orders rose +5.6% m/m, stronger than expectations of +2.5% m/m and the biggest increase in nearly 2-1/2 years. 

Dec capital goods new orders nondefense ex-aircraft and parts fell -0.2% m/m, right on expectations.

U.S. Dec new home sales unexpectedly rose +2.3% m/m to 616,000, stronger than expectations of a decline to 612,000.

U.S. weekly initial unemployment claims unexpectedly fell -6,000 to a 9-month low of 186,000, showing a stronger labor market than expectations of an increase to 205,000.

On the earnings front, reports from some big tech-oriented companies helped build optimism.

Notably, Tesla jumped 11% after the electric-vehicle maker reported stronger profit for its latest quarter than analysts expected. 

Seagate Technology rose 10.9% after it reported better revenue and earnings than anticipated.

Steelmaker Nucor was also among the top-performing stocks in the S&P 500, rising 8.4% after beating Wall Street’s profit and revenue forecasts.

Chevron rose 4.9% after it raised its dividend and approved a program to buy back up to $75 billion of its stock. 

As a result, the S&P 500 climbed 1.1% to clinch its highest finish since Dec. 2, at 4,060.43. 

The Dow climbed 0.6% to 33,949.41, and the Nasdaq composite gained 1.8% to 11,512.41.

But a stronger-than-expected economy, particularly in the job market, could push the Fed to keep rates higher for longer to ensure inflation really is crushed.

Thus, more swings may still be ahead.

On this morning, Asian shares advanced in the wake of Wall Street.

Notably, Japan’s benchmark Nikkei 225 rose nearly 0.1% to finish at 27,382.56. 

Australia’s S&P/ASX 200 added 0.3% to 7,493.80. 

South Korea’s Kospi gained 0.6% to 2,484.02. 

Hong Kong’s Hang Seng rose 0.3% to 22,634.93.

Markets remained closed in Shanghai for the Lunar New Year holidays.

Meantime, in Tokyo, data showed the core consumer price index was up 4.3%, slightly higher than expected and higher than the Bank of Japan’s target of 2%.

In currency trading, the U.S. dollar edged down to 130.18 Japanese yen from 130.23 yen. 

The euro cost $1.0873, down from $1.0890.

Going back to analyzing the other agricultural markets …

From South America, a storm front is expected to bring rains in a large part of Argentina over the next week, the Buenos Aires Grains exchange said on Thursday.

That should help farmers in the planting stage.

Polar winds are also expected to blow through the country, the exchange said, and Argentina’s mountainous areas and the southeast of Buenos Aires could see a light frost. 

Meantime, the BAGE reported corn condition ratings for Argentina at 12% good/excellent, from 5%, and 39% poor, improved from 47% last week by recent rains. 

The Argentine soy crop was rated 4% points higher on Buenos Aires Grains Exchange’s good/excellent rating this week, to 7%. 

The portion of the crop rated poor was at 54%, improved from 60% last week. 

In Europe, sotocks markets rose yesterday, driven in particular by stronger than expected US growth figures for the fourth quarter of 2022 and, to a lesser extent, by the stabilization of the euro below 1.09 against the dollar. 

Grain markets also showed a rebound.

Prices on Euronext rose, after a sharp decline recorded at the start of the week.

Traders had indeed seen the recent slide as overdone in a wheat market still facing supply risks from war in Ukraine.

Also, rumours that importers in Morocco, the biggest export destination for European Union wheat so far this season, were back in the market, supported prices.

Thus, Euronext wheat rose sharply.

Notably, March wheat on Paris-based Euronext settled up 1.5% at 288.75 euros ($313.58) a tonne, after earlier hitting its highest since Jan. 13 at 291.25 euros.

Thus prices returned to last week’s levels. 

It was a third straight daily rise as the contract moved away from Monday’s low of 278.75 euros, a weakest front-month price since February last year.

Corn prices has also adjusted upwards, benefiting from the firmness of wheat prices.

The strongest rebound, however, was recorded in rapeseed after drop recorded in recent days. 

Although traders are unconcerned by MARS weather warnings in Europe, recent frosts could cause some winterkills. 

Poland’s weather remained unusually mild, with temperatures slightly above freezing and showers across the country. 

The conditions were boosting soil moisture but the absence of snow is seen as a risk if temperatures fall.

The European Commission on Thursday left unchanged most of its monthly forecasts for last year’s grain harvests in the European Union with usable production of common wheat, or soft wheat, still expected at 126.4 million tonnes.

In supply and demand data, the Commission also maintained its forecast for soft wheat exports in the 2022/23 season at 34.0 million tonnes.

However, competition from cheaper Black Sea supplies has curbed EU export demand, so far.

There is also a lack of demand especially from Polish industry which seems to have enough stocks for the next 4 to 6 weeks, with some buyers waiting for a further slide in prices.

The flow of Ukrainian grains into EU, especially corn, is slowing down due to low prices offered here.

The Commission’s estimate for maize usable production was kept at 52.1 million tonnes and estimated barley output was unchanged from December at 51.6 million tonnes.

In oilseeds, the Commission also kept its forecasts unchanged with the EU’s usable production of rapeseed, the bloc’s main oilseed crop, still estimated at 19.6 million tonnes.

Sunflower seed production, which like maize was hit by torrid summer weather, was also unchanged at 9.2 million tonnes.

However, geopolitically concerns rose, after new Russian strikes hit kyiv and the Odessa region yesterday, increasing the risk linked to the conflict in Ukraine. 

Thus, exporters from Western Europe remain very vigilant, in the face of price trends in the Black Sea, departing from Russia of course, but also from Romania and Bulgaria. 

In this context, in Poland, 12.5% protein wheat fell about 5 zloty on the week to around 1,340 zloty (283.8 euros) for February delivery to ports.

German wheat offers were unchanged at €13/mt premium on Euronext March contract.

From North Africa, the Government of Morocco continues to subsidize bread wheat imports based on a fixed flat-rate premium. 

This measure is valid until April 30, 2023, and is intended to maintain low bread prices and encourage stock building. 

According to the USDA attaché, the country has no changes for production, supply, and demand estimates for MY 2022/2023.

Egypt will sign long-term contracts with Germany to import more German wheat, announced the Egyptian Ministry of Supply and Internal Trade in a statement on Monday.

The contracts include the approval of “Egypt’s conditions” regarding the requirements for “moisture contents,” the statement added.

The agreement between both countries came during the participation of Ali Al-Moselhi, Minister of Supply and Internal Trade, in the Berlin-held Global Forum for Food and Agriculture 2023 – (GFFA 2023), in the presence of more than 70 ministers of agriculture.

From South Africa, farmers are expected to plant maize over an area 3% smaller than last year, the government’s Crop Estimates Committee (CEC) said on Thursday.

Notably, the CEC forecast a 6.3% drop in the area planted for white maize, and a 1.9% increase in the area planted for yellow maize. 

Overall farmers were expected to plant 2.544 million hectares of maize, down from 2.623 million hectares the previous year.

From Levant, according to the USDA attaché, Turkey’s production of wheat, corn, barley and rice in MY 2022/23 are all forecast higher compared to the previous year. 

However, even with these projected increases in production along with the government interventions aimed at curbing inflation, Turkey continues to face record food prices. 

Among these interventions, the government has extended the zero duties on certain imported grains and pulses, while continuing to purchase and sell domestic and imported wheat, barley, and rice at discounted prices. 

Meantime, there are concerns that dry weather conditions over the past few months might persist and negatively impact wheat and barley yields next year.

From Ukraine, the country’s corn and wheat production is set to fall for a second year in 2023, with corn output not expected to exceed 18 million tonnes and wheat production 16 million tonnes as farmers reduce planting due to the war, a grain sector group said on Thursday.

Ukraine’s agriculture minister said last month that 2022 corn production could fall to 22 million-23 million tonnes from 41.9 million tonnes in 2021.

Wheat production is estimated to have fallen to about 20 million tonnes last year.

From Russia, for the first half of 2022/23 MY, Russia exported 22.7 mln tonnes of wheat, and for the entire season this indicator may amount to 44.3 mln tonnes, analytical center SovEcon said on January 26.

“For the first six months of the 2022/23 season, Russia exported 22.7 mln tonnes of wheat, up by 0.2 mln tonnes y/y. The export pace in the last months of 2022, which was higher than average, allowed exporters to compensate for a sluggish start to the season”, – the analysts noted.

They also recalled that monthly export of Russian grain lagged behind the average pace in July-September 2022 “due to an expensive ruble, high taxes and freight rates”.

Starting from October, the export “began to overtake the average indicators, and Russian wheat regained its competitiveness compared to offers from the European Union”.

In particular, there was a significant acceleration of the supply to Algeria, which has been among the top three buyers of Russian wheat in recent months according to SovEcon.

Russia shipped more wheat to Algeria in July-December 2022/23 MY than in all other export seasons.

The Ministry of Agriculture of Russia has not yet changed its wheat export forecast for the current MY, keeping it at 39.5 mln tonnes.

From the Middle Kingdom, China corn production in MY2022/23 is revised up slightly based on National Bureau of Statistics data indicating a better harvest in the North China Plain which more than offset smaller yields in the northeast. 

Feed mills have resumed mixing more corn in feed rations as higher prices for wheat and sorghum reduce demand for corn alternatives. 

At the same time, Brazilian corn is now available and priced competitively with domestic corn. 

Sorghum imports are forecast down significantly in MY2022/23 with a smaller U.S. crop and high prices. 

From South East Asia, according to the USDA attaché, Bangladeshi wheat harvested area and production forecasts for MY 2022/23 remain unchanged at 310 thousand hectares and 1.10 million MT, respectively, equal to the USDA projection. 

However, attaché’s MY 2022/23 corn production forecast increased to 4.85 million MT. 

Retail prices of wheat flour and corn hit record highs in December 2022, due to higher international prices, appreciation of the U.S. dollar, and high inflation. 

The attaché decreased the wheat import forecast to 5 million MT, leaving the corn import forecast unchanged at 2.2 million MT.

From Australia, local markets were closed yesterday for the Australia Day public holiday.

Meantime, widespread rain of 15-50mm is on the 8-day forecast for northern NSW and Qld. 

It will be a pain for sorghum crops that are ready for harvest but will benefit later crops. 

The rain will be very unwelcome for those still grinding away with winter crop harvest in southern Vic. 

Meantime, according to the USDA attaché, Australia is set for a third consecutive record grain crop, and strong exports. 

Notably, wheat production is estimated to have reached a record 37 million metric tons (MMT) in marketing year (MY) 2022/23, while barley is estimated to achieve 13.5 MMT of production, the fourth largest on record. 

The wheat and barley results were strongly supported by near ideal conditions in Western Australia and South Australia, but this was partially offset by excessive rains in much of the grain-growing regions of New South Wales and Victoria in September and October 2022. 

Wheat exports in MY 2022/23 are forecast to reach a record 28 MMT. 

For the summer crops, sorghum production in MY 2022/23 is estimated to achieve 2.9 MMT and, if realized, would be the third largest on record. 

On the international trade scene, Iraq’s trade ministry bought 150,000t Australian wheat for April shipment, reportedly at US$445/tonne C&F.

Leading South Korea’s animal feed maker Nonghyup Feed Inc. (NOFI) purchased around 11,000 tonnes of animal feed wheat expected to be sourced from the United States in a private deal on Thursday after earlier making no purchase in an international tender for feed wheat.

Price in the private deal was estimated at $350 a tonne c&f for unloading in one port.

It was for shipment from the U.S. Pacific Northwest coast between March 10-March 30 for arrival in South Korea in April.

Seller was believed to be trading house Agrocorp.

Lowest offer in an international tender earlier on Thursday for 20,000 tonnes of feed wheat was believed to be $351.50 a tonne c&f plus a $1.75 a tonne surcharge for additional port unloading also for April arrival in South Korea.

That’s all, thank you.

We wish you a nice day.

Author: Sandro F. Puglisi

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