Daily International Grain Market View

Good morning Farmer Family …

US farm markets saw another mixed round yesterday. 

Corn prices attempted to move higher, but ultimately failed, closing with 0.59% losses.

Soybeans were slightly more firm closing 0.18% higher, with soymeal settled 0.92% in the red, while bean oil prices rallied by 1.65%. 

Wheat prices rallied off the overnight weakness, and ultimately the board showed gains across most contracts.  

Notably, Chicago SRW went home with 1.16% gains. 

Kansas City HRW ended the day with 0.57% gains. 

Minneapolis spring wheat prices went home up by 0.08%. 

Earlier in the trading session, both corn and soybeans found support from dry forecasts in Argentina that could continue to erode yields, while delayed soy harvests in Brazil could push back corn planting.

However, corn prices ultimately ended lower, amid technical selling and end-of-month positioning by investors as on Monday, the corn contracts reached their highest in nearly two weeks.

Soybeans prices, in contrast ended up, though prices were pressured down by a correction in the soymeal.

Ahead of a key USDA report out on Wednesday, analysts indeed think the agency will show a December soybean crush of 188.0 million bushels. 

That would be below November’s volume of 189.4 million bushels and year-ago results of 198.2 million bushels, if realized. 

Also, soyoil stocks are expected to increase to 2.249 billion pounds through December 31.

Wheat, meantime, found support as winter wheat crop conditions across the U.S. plains remained uncertain, improving slightly in Kansas, the top U.S. winter wheat producing state, during January but fell sharply in Oklahoma.

An ice storm is wreaking havoc on parts of the Southwest and Mid-South, but large portions of the Midwest and Plains will see no additional moisture between Wednesday and Saturday, per the latest 72-hour cumulative precipitation map from NOAA. 

The NWS 6-10 and 8-14 day forecasts have above normal odds for precip in the HRW and SRW growing areas. 

Snow is helpful, rain adds up faster but will run off if the ground is still frozen underneath. 

Macro-economic news capped gains, however.

Investors are keenly awaiting the U.S. Federal Reserve Open Market Committee’s (FOMC) decision on interest rates due at 1900 GMT, which is broadly expected to be a 25 basis-point hike. 

While, both the Bank of England and the European Central Bank would raising rates on Thursday.

Also, investors made end-of-month adjustments to their positions.

Earlier this week, soybeans and corn hit their highest in nearly two weeks, while wheat touched a near four-week peak.

In this context, corn basis bids were largely steady to firm after tracking 4 to 8 cents higher across three Midwestern locations on Tuesday. 

A Nebraska processor bucked the overall trend after spilling 5 cents lower.

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

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

On this morning, the most-active soybean contract on the Chicago Board of Trade (CBOT) dipped 0.1% to $15.37-1/4 a bushel, as of 05:06 GMT.

Wheat was slightly down at $7.61 a bushel, while corn lost 0.4% to $6.76-3/4 a bushel.

Soybean prices inched lower on technical selling, even as dry weather in top producer Argentina stoked supply worries and hopes grew that demand would pick up in China after the week-long Lunar New Year holiday.

Corn prices are weighed down by bearish technical action after a rally to their highest since Jan. 18, and traders are uncertain if forecasted rain for Argentina next week will be enough to avoid stressful conditions for the crops.

In energy markets, oil prices rose on Wednesday as signs of slowing inflation in the United States eased fears that the world’s largest oil user may face a recession because of further interest rate hikes and a weaker dollar supported some buying interest.

Notably, Brent crude futures gained 8 cents, or 0.1%, to $85.54 a barrel at 07:27 GMT. 

U.S. West Texas Intermediate (WTI) crude futures rose 20 cents, or 0.2%, to $79.07 a barrel.

Both benchmarks were up for a second day, after gaining more than 1% in the previous session.

Tamer rate hike expectations helped lower the dollar index , which supported oil prices as a weaker greenback makes the commodity cheaper for buyers holding other currencies.

Upgraded global growth forecasts by the IMF and the expectation of strong pent-up demand from China amid higher mobility are also underpinning oil prices.

However, data from the American Petroleum Institute industry group showed crude stocks rose by about 6.3 million barrels in the week ended Jan. 27.

That was a bigger build than the 400,000 barrels that analysts had expected on average.

Also, distillate stocks, which include diesel and heating oil, rose by about 1.5 million barrels, contrary to analysts’ expectations of a 1.3 million barrel drop.

All eyes are now on the meeting on Wednesday of the OPEC+, where producers are expected to endorse their current output targets agreed in November.

OPEC’s oil output fell in January.

Iraqi exports dropped and Nigeria’s output did not recover.

However, oil prices seem primed to navigate a period of heightened volatility.

Indeed, despite OPEC+ is likely to stick to its current production targets, Russia is leaning towards increasing oil exports to Asian buyers at deep discounts, which can disrupt the balance in oil markets.

In ocean freight markets, the Baltic Exchange’s main sea freight index registered its biggest monthly percentage fall in three years, weighed by weaker demand across all vessel segments.

The overall index, indeed, inched 1 point higher at 681 on Tuesday.

But the main index has lost 55% for the month.

Notably, the capesize index lost 1 point at 532, its lowest in nearly five months.

The index has fallen 76.5% for the month, the worst since August 2022.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, decreased $7 to $4,411.

The panamax index fell 8 points to 1,052. It was down 31.5% for the month, marking the fourth consecutive monthly decline.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased by $79 to $9,464.

Among smaller vessels, the supramax index rose 12 points to 670. But it was down 37% for the month, the worst since January 2020.

In equity markets, US stock indexes on Tuesday shook off overnight losses and moved moderately higher.  

An easing of U.S. wage pressures knocked bond yields lower and boosted stocks after Tuesday’s report on the U.S. Q4 employment cost index rose +1.0% q/q, weaker than expectations of +1.1% q/q and the slowest pace of increase in a year.  

The U.S. Nov S&P CoreLogic composite-20 home price index rose +6.77% y/y, slightly weaker than expectations of +6.80% y/y and the smallest pace of increase in 2 years.

The U.S. Jan MNI Chicago PMI unexpectedly fell -0.8 to 44.3, weaker than expectations of an increase to 45.0.

The Conference Board U.S. Jan consumer confidence index unexpectedly fell -1.9 to 107.1, weaker than expectations of an increase to 109.0.

The International Monetary Fund (IMF) revised its 2023 GDP estimate up by +0.2 to 2.9% from a 2.7% estimate in October, citing resilient U.S. consumer spending and China’s reopening.

In this context, expectations are for the FOMC on Wednesday to increase the fed funds target range by 25 bp to 4.50%-4.75%, slowing from last month’s 50 bp rate increase and November’s 75 bp increase.  

Thus, the S&P 500 advanced to 4,076.60 to end January with its third monthly gain in the past four months.

The Dow Jones Industrial Average rose 1.1% to 34,086.04. 

The Nasdaq rose 1.7% to 11,584.55.

On this morning, Asian stock markets were higher.

The Shanghai Composite Index gained 0.1% to 3,258.93 after two surveys showed Chinese factory activity increased in January but still is subdued amid weak global demand and COVID-19 outbreaks that disrupted business.

The Nikkei 225 in Tokyo advanced 0.2% to 27,376.22 and the Hang Seng in Hong Kong added 0.5% to 21,941.96.

The Kospi in Seoul rose 0.8% to 2,444.16 and Sydney’s S&P-ASX 200 was 0.5% higher at 7,512.10.

Singapore declined while New Zealand and other Southeast Asian markets rose.

In currency trading, the dollar fell to 130.04 yen from Tuesday’s 130.21 yen.

The euro declined to $1.0859 from $1.0865.

Going back to analyzing the other agricultural markets …

From Canada, a week from now, Statistics Canada will issue its next crop stocks report. 

Ahead of that report, a group of 10 analysts is estimating that the agency will show all-wheat stocks at 22.3 MMT. 

Analysts also anticipate Canadian canola stocks will come in at 11.7 MMT.

StatCan will release its latest numbers next week on February 7.

From South America, Brazil’s Anec estimates that the country’s corn exports will reach 5 MMT in January. 

That’s 4% below the group’s prior projection it made a week ago.

Anec estimates that the country’s soybean exports will reach 1.22 MMT in January. 

That’s 10% below the group’s prior estimate from a week ago. 

Anec also estimates that Brazilian soymeal exports will reach 1.437 million metric tons this month.

Soybean sales from Argentina’s 2021/2022 harvest covered 80.8% of the 44 million tonne harvest as of last week, slightly below the 83% sold from the previous season at the same time, agricultural ministry data showed on Tuesday.

The U.S. Department of Agriculture’s (USDA) attache in Buenos Aires cut Argentina’s 2022/23 soy crop forecast to 36 million metric tons (MMT), 9.5 MMT below a prior USDA estimate, as dry weather and high temperatures in the last months of 2022 hit the country’s soybean crop.

Argentina will launch measures to help producers hit by a historic drought over its main agricultural region, Economy Minister Sergio Massa said on Tuesday, including a relief fund to tackle considerable losses to the country’s grains harvests.

In Europe, little change in the grain markets yesterday.

Rapeseed prices rose, meantime, in the wake of canola higher.

Traders are focused on central bank decisions this week.

Grain markets lacked clear fundamental direction, with traders setting weather risks and new import demand against availability of competitively priced Black Sea grain.

German traders said Jordan’s wheat tender on Tuesday highlighted cheap Black Sea prices.

Traders said other Black Sea region wheat, including Russian and Bulgarian, was also offered heavily in the tender.

However, Euronext wheat ticked up in afternoon trade in step with Chicago futures as investors reacted to economic data.

In add, in France the loadings are somewhat disturbed by the strikes where the dockers join together against the reforms of the pensions, although the one-day interruption was too short to affect exports. 

Thus, March wheat on Paris-based Euronext was up 0.4% at 288.50 euros ($312.99) a tonne, though held below a two-week peak struck last on Thursday.

In Germany, standard 12% protein wheat for February delivery in Hamburg was offered for sale at a premium of about 11 euros over the Euronext March contract, but with little purchase interest seen.

From Ukraine, Ukraine’s Ag Ministry reported the number ships departing daily had fallen from 2.7 to 2.5, the lowest since the grain corridor started, citing delays by Russian inspectors as the reason. 

Exports totalled about 607,771t in the week to 29 Jan, down from 893,874t the week before. 

Since the trade deal was signed, Ukraine has shipped 19 MMT of grains. 

The grain initiative had 48 days to run under its current agreement, finishing on 19 March. 

From Russia, SovEcon reported Russian on-farm wheat stocks were estimated to be 22.1Mt as of January 1, 2023. 

This was 42pc higher than the average for the past five years. 

The high stocks were expected to support active exports during the second half of 2022-23, placing downward pressure on global prices. 

First half of 2022-23 exports were lower than the four-year average, due to a strong ruble, high freight rates, and the impact of export taxes. 

Given the high levels of wheat stocks and favourable prices for exporters, SovEcon expected record-high export pace in the coming months. 

Exports in the first half of 2023 were forecast to reach 21.3Mt, compared to 10.9Mt during the same period last year. 

From the Middle Kingdom, China’s sow herd increased by 0.6% in December (43.9 million), and the country’s pig herd increased 1.9% in December (452.6 million). 

This is a significant driver of grain needs for the world’s No. 1 soybean importer.

From South East Asia, Malaysian export data from Intertek showed palm oil exports were 251,350 MT for January. 

AmSpec had the number at 1.457 MMT for all palm shipments a 27% drop month/month.

From Australia, local grower depot bids were a fraction higher yesterday. 

Delivered prices for feed wheat were a touch firmer in Victoria. 

SA values were largely unchanged and WA FIS wheat and barley values were a touch stronger by a couple of bucks. 

Trading activity still seemed to be focused on ASW1 and BAR1.

Viterra’s final weekly harvest report noted it received 110,000t into the network last week, with wheat remaining the major commodity delivered. 

The Central region was the busiest with growers delivering 70,000t. 

This took the total received to 8.73Mt for the season. 

Viterra has loaded over 1.85Mt of commodities onto vessels this harvest. 

On the international trade sceneEgypt’s GASC is seeking 60,000t of wheat from any origin in a Feb. 2 tender with shipment for Feb-March. 

The purchase will be within the framework of the Food Security and Resilience Support Program, funded by the World Bank.

Egypt’s state grains buyer has purchased 35,000 metric tons of vegetable oils in a series of international and local tenders that recently closed. 

The purchase is comprised of 25,000 MT of soyoil and 10,000 MT of sunflower oil.

Jordan reportedly purchased 60,000t of wheat at $336.50/t in a tender that closed on Tuesday.

South Korea booked 19k MT of non-GMO soybeans via an international tender.

Leading South Korean animal feed maker Nonghyup Feed Inc. (NOFI) purchased about 80,000 tonnes of animal feed wheat expected to be sourced from Australia and other origins an international tender on Wednesday.

Some 65,000 tonnes expected to be sourced from Australia was bought at an estimated $339.67 a tonne c&f plus a $1.75 a tonne surcharge for additional port unloading.

Seller was believed to be trading house CJ International with shipment from Australia between June 22 and July 11.

A second 15,000 tonnes to be sourced from worldwide origins was bought at an estimated $354.80 a tonne c&f plus a surcharge for additional port unloading.

The seller was believed to be trading house Dreyfus. If the second consignment is also sourced from Australia, shipment is between March 15 – April 15. If sourced from the U.S. Pacific Northwest coast or Canada, shipment was sought between March 28-April 16, if from the U.S. Gulf or Europe between March 8-March 27, from South America between March 3-22 or from South Africa between March 13-April 1.

Leading South Korean animal feed maker Nonghyup Feed Inc. (NOFI) has bought an estimated 117,500 tonnes of animal feed corn in an international tender for up to 138,000 tonnes which closed on Wednesday.

The corn was bought in two consignments which can be sourced from optional worldwide origins. 

But if sellers decide to supply Ukrainian corn they have no contractual right to declare force majeure because of the war.

The first consignment of an estimated 52,500 tonnes for arrival in South Korea around May 5 was bought at an estimated price of $337.99 a tonne c&f plus a $1.50 a tonne surcharge for additional port unloading. 

Seller was said to be trading house Posco.

The second consignment of an estimated 65,000 tonnes for arrival in South Korea around May 15 was bought at an estimated $336.69 a tonne c&f plus a $1.75 a tonne surcharge for additional port unloading. 

The seller was said to be trading house CHS.

For the May 5 consignment, shipment if sourced from the U.S. Pacific Northwest coast was sought between April 1-April 20, shipment from the U.S. Gulf/east Europe was between March 12-March 31, from South America between March 7 – March 26 and from South Africa ship between March 17 – April 5.

Shipment of the May 15 consignment was sought if sourced from the U.S. Pacific Northwest coast between April 11 – April 30, from the U.S. Gulf/east Europe between March 22 – April 10, from South America between March 17 – April 5 or from South Africa between March 27 – April 15.

OAIC Algeria started buying durum wheat, according to a commercial source. 

Initial assessments seems to be around 250k mt to 300k mt, although there was one estimate of 400k mt. 

Estimated prices was believed to be at around $448 to $450 mt c&f for large panamax-sized bulk carriers and between $458 to $459 mt c&f for smaller handyships. 

The news has yet to receive official confirmation.

That’s all, thank you.

We wish you a nice day.

Author: Sandro F. Puglisi

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