Good morning Farmer Family …
US farm markets made moderate inroads on Wednesday.
Corn prices settled up by 0.67%.
Soybeans were 0.3% higher.
Soybean meal also bounced, ending up by 0.1%.
Soybean oil prices, in contrast, gave back 0.51%.
Chicago SRW wheat prices rallied double digits, posting 2% gains.
Kansas City wheat prices settled up 1.16%.
Minneapolis spring wheat closed up by 0.98%.
The U.S. Department of Agriculture’s increased U.S. corn and soybean ending stocks more than analysts expected, initially pressuring prices.
The USDA also showed less ethanol, and some soy crush drop, but that was mostly expected.
Also, the USDA made cuts to its forecast for Argentina’s soybean crop, but the reduction was less than other private estimates.
However, South American weather continues boosting prices, as rain in Brazil continues to delay soybean harvest, which competes with the United States on the global export stage.
Also, the longer they wait to get soybean harvest, the longer they’ll have to wait to plant that second corn crop.
On this wake, Conab on Wednesday cut its forecast for the country’s second corn crop, citing delays to soy harvesting.
Wheat markets, on their part, remained underpinned by worries about drought in hard red winter wheat growing areas in the United States, heightened by weather forecasts showing the zones may miss out on ample precipitation expected in other U.S. grain belts.
A band of rain and/or snow later this week, stretching from Arkansas to Michigan, will indeed deliver up to 1” or more additional moisture between Thursday and Sunday.
The agency’s new 8-to-14-day outlook predicts more seasonally wet weather is likely for the central U.S. between February 15 and February 21, with seasonally warm conditions probable for the eastern Corn Belt.
Meantime, ethanol production spilled moderately lower in the week ending February 3, with a daily average of 1.000 million barrels versus 1.028 million barrels per day in the prior week, according to the latest data from the U.S. Energy Information Administration on Wednesday.
However, that marked the 4th consecutive week of +1m barrel per day production.
Ethanol stocks, meantime, eased fractionally lower, dropping by 25k barrels to 24.417 million.
In this context, corn basis bids were steady to weak after softening 2 to 5 cents across five Midwestern locations on Wednesday.
Soybean basis bids were steady to mixed after moving as much as 4 cents lower at an Ohio elevator and as much as 5 cents higher at an Illinois river terminal.
Commodity funds were net buyers of CBOT corn, soybean, wheat, and soymeal futures contracts, and were net sellers of soyoil.
On this morning, soybean prices swung between losses and gains.
Wheat and corn were also subdued after advancing in the previous session.
Notably, the most-active soybean contract on the Chicago Board of Trade was down 0.3% at $15.15-3/4 a bushel, as of 06:10 GMT, after rising 0.3% to $15.23-1/2 earlier in the session.
CBOT wheat edged up 0.2% to $7.66-1/2 a bushel.
CBOT corn dipped 0.3% to $6.76-1/4 a bushel.
In energy markets, oil prices struggled for traction on Thursday.
Thus, Brent crude futures gained 5 cents to $85.13 a barrel by 07:05 GMT, while U.S. West Texas Intermediate (WTI) crude futures slipped 2 cents to $78.45 a barrel.
Both benchmarks, however, have gained more than 6% so far this week.
U.S. crude oil inventories have continued to exceed expectations as rose last week to their highest since June 2021, helped by higher production, the Energy Information Administration said on Wednesday.
U.S. gasoline and distillate inventories also rose last week as demand remained weak.
Federal Reserve officials on Wednesday said more interest rate rises are on the cards.
But the prospect of stronger demand from China lent support to oil prices.
Also, BP Azerbaijan declared force majeure on Azeri crude shipments from the Turkish port of Ceyhan on Feb. 7 after a massive earthquake struck Turkey and Syria early on Monday.
The disaster had halted operations at Ceyhan and disrupted crude oil flows from Iraq and Azerbaijan.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, snapped its five-day losing streak on Wednesday, as gains in the capesize segment offset a decline in rates for smaller vessel segments.
The overall index, indeed, rose 2 points to 603.
Notably, the capesize index gained 31 points, or 7%, to 474, its biggest daily percentage gain in seven weeks.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $250 at $3,927.
The panamax index was down 11 points, or 1.27 %, at 856, its lowest since June 12.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, lost 102 points to 7,704 points.
The supramax index fell 16 points to 651.
In equity markets, on Wednesday, the S&P 500 fell 1.1% to 4,117.86 and the Nasdaq fell 1.7% to 11,910.52.
The Dow Jones Industrial Average gave back 0.6% to 33,949.01.
Stocks were under pressure Wednesday the entire day as a chorus of hawkish Fed comments reinforced the outlook that the Fed will need to keep raising interest rates and keep rates higher for longer to curb inflation.
Weakness in technology stocks also weighed on the overall market as Alphabet sank more than -7% on concern its new artificial intelligence chatbot Bard may yield incorrect responses.
Mixed earnings reports Wednesday also weighed on stocks.
Lumen Technologies plunged more than -20% after forecasting full-year adjusted Ebitda below consensus.
Also, Jack Henry & Associates closed down more than -9% after reporting weaker-than-expected Q2 revenue.
Illumina fell -7%, and Trimble fell more than -5% after forecasting full-year adjusted EPS below expectations.
Entertainment giant Walt Disney rose 5.5% in afterhours trading after it reported surprisingly good fiscal first-quarter financial results, but it gave up nearly all of that gain after it said it will cut about 7,000 jobs as part of a “significant transformation” announced by CEO Bob Iger.
The job cuts amount to about 3% of the entertainment giant’s global workforce.
Chipotle Mexican Grill fell 5% after it reported weaker profit and revenue for the latest quarter than Wall Street expected.
On this morning, shares were mixed in Asia.
Benchmarks declined in Tokyo, Seoul and Sydney but rose in Hong Kong and Shanghai.
Notably, Tokyo’s Nikkei 225 fell 0.1% to 27,584.35 and the Kospi in Seoul was little changed at 2,483.16.
Australia’s S&P/ASX 200 declined 0.5% to 7,490.30.
In Mumbai, the Sensex gained 0.1%.
Shares fell in Bangkok, Taiwan and Singapore.
Hong Kong’s Hang Seng index gained 1.3% to 21,557.09, while the Shanghai Composite index advanced 1% to 3,266.14.
In currency trading, the U.S. dollar slipped to 131.29 Japanese yen from 131.42 yen.
The euro rose to $1.0740 from $1.0714.
Going back to analyzing the other agricultural markets …
In Canada, it is no surprise that Statistics Canada’s Dec. 31 grain stocks were reported higher than one year ago, with a sharp rise in production achieved in 2022 following drought conditions in the previous year.
Stocks rose by 27.7% to 62.181 million metric tons (mmt).
Stocks of all-wheat in the country rose 32.6%, to 22.294 mmt.
However they are 5.2% below the five-year average.
This is the second-lowest stocks seen in the past seven years.
Noatbly, wheat stocks (excluding durum) rose 30.2% from one year ago to 18.599 mmt, while 2.4% below the five-year average.
At 15.172 mmt, farm stocks rose 38.3%, to 15.172 mmt, while are still the second-lowest stocks seen in six years and below the five-year average of 15.654 mmt.
Over the past five years, the January-through-July disappearance has averaged 14.560 mmt, which would lead to ending stocks just slightly lower than is currently forecast by Agriculture and Agri-Food Canada (AAFC).
Wheat stocks as a percent of crop year supplies are calculated at 59%, up 1% from one year ago while below the five-year average of 62%.
Durum stocks were reported at 3.695 mmt as of Dec. 31, up 45.9% from the previous year.
However they are 17.4% below the five-year average.
That was below the level of pre-report estimates, and the second-lowest stocks seen in 15 years.
During the past five years, an average of 3.4 mmt has disappeared during the January-to-July period, while this average pace of movement would tighten stocks to a level slightly below the current AAFC forecast.
Durum stocks as a percent of crop year supplies are calculated at 61.4%, down from 66% one year ago, while below the five-year average of 69%.
Canola stocks were estimated at 11.356 mmt, up 29.3% from one year ago, but 15.9% below the five-year average for this date.
This is the second-lowest stocks seen in the past 10 years.
Farm stocks swelled by 42.3% to 9.741 mmt, while remained 2 mmt or 17% below the five-year average for this date.
The average disappearance during the January-to-July period over the past five years is 10.873 mmt, which would result in stocks that are slightly higher than the current AAFC forecast.
Canola stocks as a percent of crop year supplies are calculated at 59.5%, up from 56.2% one year ago while below the five-year average of 61.2%.
Barley stocks of 5.072 mmt are up 60.9% from one year ago, but 1.2% below the five-year average and the third lowest stocks reported for this date in the past 20 years.
Domestic use appears to be roughly 848,000 metric tons higher than the same five-month period in 2021-22 due to increased availability, which has sharply reduced the need for imported corn.
Over the past five years, use over the January-through-July period averages 4.277 mmt, which would lead to tighter stocks than is currently forecast by AAFC.
Barley stocks as a percent of crop year supplies are calculated at 48%, up from 40% one year ago while below the five-year average of 50%.
Soybean stocks as of Dec. 31 were reported at 3.654 mmt, up 14% from one year ago, but 6% lower than the five-year average.
Even an average pace of movement will tighten stocks to tight levels, as currently forecast by AAFC.
Over the past five years, an average of close to 3.4 mmt has disappeared during the January-to-July period.
Corn stocks as of Dec. 31 were estimated at 11.862 mmt, up 2.9% from Dec. 31, 2021, and 3.4% higher than the five-year average.
This is the highest stocks reported in five years.
As a percentage of total crop year supplies, Dec. 31 stocks are at 68.7%, up sharply from 50.3% last year while above the five-year average of 61%.
From South America, Brazilian farmers are expected to produce a smaller second corn crop because of soy harvesting delays that may force them to sow it outside the ideal climate window, Brazil’s food supply and statistics agency Conab said on Wednesday.
Conab now projects Brazil’s second corn crop at 94.9 million tonnes in the 2022/2023 cycle, down from 96.2 million tonnes in a January forecast.
Conab said less than 12% of the second corn area has been planted in Mato Grosso.
At the same time Conab slightly rose its forecast for Brazilian soy production in the season – to 152.89 million tonnes.
Meantime, the agency said Brazil will export 47 million tonnes of its 2022/2023 million corn, 2 million tonnes more than forecast in January.
Conab also expects strong Brazilian soybean exports this season, projecting sales of 93.9 million tonnes.
According to Brazil’s grain exporters’ association ANEC, February soybean exports are seen between 7.6Mt and 9.7Mt.
January exports were limited by low supplies due to harvest delays.
On Wednesday, the government also revised overall Brazilian corn exports for January, lowering the estimate to 6.16 million tonnes from a preliminary 6.34 million tonnes.
Brazil is forecast to export 50Mt of corn in the current season, according to the February WASDE.
That’s up from the USDA’s January estimate of 47Mt and is higher than the 48.9Mt outlook for the US.
China became the main destination of Brazilian corn exports in January by volume, surpassing traditional importers like Japan, Iran and Spain, according to revised trade data released by the government on Wednesday.
Brazil sold 983,684 tonnes to China in the period, the second full month of corn trading action following Beijing’s authorizations for Brazilian sales of the cereal in late November.
The South American country already ships most of its soybeans to China.
Until recently, China used to import approximately 70% of U.S. corn and 29% of Ukrainian corn, Brazilian grain exporters group Anec said on Wednesday.
But after Russia – Ukraine war started, China sought new suppliers.
Last year, China was already the destination of 1.16 million tonnes of corn from Brazil, with almost the totality shipped in December.
In 2023, despite the increase in domestic corn production, China will import a estimated 20 million tonnes, Anec said.
By value, Brazilian corn exports to China totaled $271.4 million in January, representing about 15% of the $1.773 billion total exported for the month, according to revised trade data.
Japan, Brazil’s second biggest corn buyer by volume and first biggest by value last month, paid $275.2 million for 975,858 tonnes, the new trade data showed.
In Argentina, Argentina’s Rosario grains exchange on Wednesday cut its 2022/23 soybean harvest estimate to 34.5 million tonnes from the previous 37 million tonnes, which would mark the lowest production of the grain in the last 14 years.
The report’s corn harvest forecast was also trimmed to 42.5 million tonnes from 45 million tonnes.
The exchange noted high levels of discouragement in the sector, as there are no significant rains forecast for the next 10 to 15 days amid a new heat wave.
Soybean harvest will fall to 41.00 million tonnes, down from 45.50 million tonnes estimated in January, the USDA said in its latest monthly demand and supply report.
The country’s corn harvest was pegged at 47 million tonnes, 5 million lower than the January outlook.
Meantime, Argentina’s agriculture secretariat on Wednesday reported updated sales data for its soy, corn and wheat campaigns.
Notably, Argentina farmers have sold 80.9% of their soybean harvest, 77.9% of corn crops and 55.5% of wheat.
In Europe, little evolution yesterday on Europnext.
European wheat prices rose in late trade, in the wake of US markets, but traders said it remained pressured by strong competition from the Black Sea region.
In its February WASDE report, the USDA raised its wheat harvest forecasts for the European Union, Russia and Ukraine by 500,000 tonnes each, to 37 million, 43.50 million and 13.50 million tonnes respectively.
Algeria’s state grains agency OAIC was believed to have resumed buying milling wheat.
Initial prices were likely to indicate that wheat could be sourced from several suppliers including the western European Union, eastern EU/Black Sea region and Russia.
German wheat exports so far in February were headed by shipments to Morocco.
There are market talks that German wheat was being used to replace tight French supplies.
However, there are some doubts whether Germany or the Baltic region will be used to supply this time, as standard 12% protein wheat for February delivery in Hamburg was offered for sale at a premium of about 10 euros over the Euronext March contract.
In this context, benchmark March milling wheat on Paris-based Euronext finished up 1 euros, at 294.75 euros a tonne.
Refinitiv Commodities Research has pegged 2023-24 EU rapeseed production at 20.4Mt (19.6Mt last year), unchanged from before.
Recent warm weather benefited crop prospects but concerns about dryness in France and Germany were noted.
French farmers drove hundreds of tractors into Paris on Wednesday to protest against pesticide restrictions and other environmental regulations they say are threatening farm production in the European Union’s largest agricultural power.
Euronext said its commodities commitment of traders report, which it had delayed on Wednesday until Feb. 10 at the latest due to technical issues, was delayed until further notice.
The exchange operator said on its website a problem with a third-party software provider prevented some market participants from reporting their daily positions for Feb. 3.
From North Africa, Egypt is in talks to import around one million tonnes of wheat, as well as an unspecified quantity of corn, from Serbia as part of its efforts to diversify its grain supplies, the supply ministry said on Wednesday.
Supply Minister Ali Moselhy spoke with Serbian officials to also supply wheat and corn from Romania and Bulgaria via Romania’s Constanta port, according to the statement.
Egyptian officials also held talks with the European Investment Bank on the financing of a large silo at Damietta port, with 200,000 tonne storage capacity, as well as five smaller field silos in other governorates.
From Ukraine, grain exports in the 2022/23 season, which runs through to June, are down 29.2% to 28.2 million tonnes so far, due to a smaller harvest and logistical difficulties, agriculture ministry data showed on Wednesday.
From Russia, Moscow said yesterday that work to unblock Russian exports under the Black Sea grain deal was unsatisfactory, accusing the EU of failing to deliver on its promises, the TASS news agency reported.
The comments, made by Russian Deputy Foreign Minister Alexander Grushko, reiterated Russia’s previous complaints that the Grain Corridor was not working properly as western nations, mainly the EU, are getting too much grain.
With the expiry of the deal on the horizon we can expect more rumblings like this from Russia.
Germany’s Bayer said on Wednesday it was continuing to supply agricultural products to Russia and hoped for a swift resolution to what it called a technical delay in the country’s sunflower seed imports.
The Izvestia newspaper said on Monday that Western seed producers had suspended sunflower seed shipments to Russia and paused customers’ bids for purchases, citing letters sent by Bayer, Swiss agrochemicals group Syngenta and seed firm Nuseed.
“As announced last year, Bayer continues to supply key agricultural products and solutions for farmers in Russia,” Bayer said.
“At the moment, there are temporary delays in sunflower seed imports. We are hoping for an early resolution of the technical delay and for the timely import of seeds for the upcoming sowing campaign” the company said.
Russia’s agriculture ministry said it did not see any risks for the 2023 sowing campaign and had already stocked up on what it needed, even if Western suppliers stopped shipments, Izvestia reported.
From the Middle Kingdom, China plans to auction off 140.000 t of its state wheat reserves on February 15.
The country has offered a series of similarly sized auctions in recent months.
From South East Asia, India is considering extending a ban on wheat exports as seeks to replenish their state reserves and bring down domestic prices, government sources said.
The current ban was scheduled to be reviewed in April, thus government and industry don’t expect wheat exports to resume until mid-2024.
Although the new season looks promising, slightly warmer than normal patterns in March, when farmers start harvesting, could still shrivel the crop.
Last year, state purchases of wheat fell by 53% to 18.8 million tonnes.
Wheat stocks at government warehouses dropped 47.9% to 17.2 million tonnes on Jan. 1, the lowest for the month in six years.
In 2023, India is expected to harvest a record 112 million tonnes of wheat.
India’s local wheat demand is estimated at around 105 million tonnes, and traders estimate last year’s production dropped to about 95 million tonnes.
In this context, domestic wheat prices hit an all-time high of 32,500 rupees ($393.53) a tonne in January, higher than 21,250 rupees a tonne – the price at which the government will buy the grain from local farmers this year.
From Australia, prices for feed and barley in southern and northern markets have firmed this week as consumer and trade bids lift to pull grain out of grower hands.
In southern Queensland, the sorghum harvest is gathering pace, with truckloads from western regions already delivering at container packers and bulk sites.
Traded volume of wheat and barley remains thin as uninspiring elevator margins temper export demand, and growers are yet to push the button on prompt selling so they can backload fertiliser ahead of winter-crop planting.
Meantime, local markets continued to find strength yesterday.
More wheat buying demand popped up in South Australian port zones.
Sorghum northern markets were stronger at $405/t on the Downs, $440/t delivered Brisbane and $404/t track.
Bar1 Downs was a $400-405/t market and SFW1 $385/t prompt and $395/t for March.
The USDA has revised Australian wheat and barley production up in their February WASDE report.
Australian wheat production was revised up by 1.4Mt to 38Mt and barley was revised up 300,000t to 13.7Mt.
Wheat exports were also revised up by 500,000t to 28Mt.
On the international scene, Algeria’s state grains agency OAIC is believed to have bought around 360,000 to 390,000 tonnes of milling wheat in an international tender this week.
Price estimates on Thursday were around the same as earlier assessments, ranging from $329 a tonne cost and freight (c&f) purchased on Tuesday night to around $332 a tonne c&f bought on Wednesday.
Purchasing had started on Tuesday night, then negotiations were suspended and resumed on Wednesday.
More estimates of tonnes bought and prices are still possible.
Technically supplies are optional origin.
Wheat from the Black Sea region, especially from Russia, was expected to be used to supply a large part of the purchase, traders said.
However, at least one consignment was expected to come from France.
The wheat was sought for shipment in two periods from the main supply regions including Europe: April 1-15 and April 16-30.
If sourced from South America or Australia, shipment is one month earlier.
The Taiwan Flour Millers’ Association purchased an estimated 48,100 tonnes of milling wheat to be sourced from the United States in a tender on Thursday.
The purchase involved various wheat types for shipment from the U.S. Pacific Northwest coast between March 29 and April 12.
The purchase involved 30,650 tonnes of U.S. dark northern spring wheat of a minimum 14.5% protein content bought at $390.58 a tonne FOB U.S. Pacific Northwest coast.
It also involved 9,300 tonnes of hard red winter wheat of a minimum 12.5% protein content bought at $397.56 a tonne FOB and 8,150 tonnes of soft white wheat of a minimum 8.5% and maximum 10% protein bought at $324.44 a tonne FOB.
The purchase has an additional freight charge of $34.95 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 CHS.
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said on Wednesday that it will seek 70,000 tonnes of feed wheat and 40,000 tonnes of feed barley to be loaded by May 31 and arrive in Japan by July 27, via a simultaneous buy and sell (SBS) auction that will be held on Feb. 15.
FEBRUARY WASDE SUMMARY
USDA reduced their ethanol draw in the corn balance sheet by 25 mbu to 6.69 bbu, but left exports unchanged at 1.925 billion.
That upped the carryout by 25 mbu to 1.267 bbu – the trade was looking for a 1.273 bbu carryout on average.
Globally, USDA cut production 4.5 MMT, mainly from Argentina.
Argentina was forecasted with a 47 MMT crop – compared to the average trade guess of 48.5 MMT.
Brazil was UNCH at 125 MMT.
Despite the lost production, USDA raised global trade by nearly 3 MMT, mostly via a transfer from Argentina to Brazil and a 2 MMT increase for Ukraine.
Global carryout was reported to be 295.28 MMT, from 296.4 last month and 294.9 MMT expected.
In this contyext, USDA left the cash average price forecast for corn unchanged at $6.70.
As for soybean, the domestic soybean S&D tables saw a 15mbu cut to crush, now forecasted at 2.23 bbu.
Ending stocks were 15 mbu looser to 225 as that was the only change.
The trade was looking for 211 mbu on average.
For the products, the lower crush trimmed bean oil production by 65m lbs and meal production by 200k tons.
For the oil, exports were reduced and for the meal domestic use was cut.
The world numbers saw a 5 MMT production trim, primarily from Argentina.
Argentina was shown with a 41 MMT crop, compared to 45.5 MMT last month, 43.9 MMT last year, and 42 MMT expected.
Brazil was left at a record 153 MMT production figure.
Global soybean stocks were 1.49 MMT tighter at 102.3 MMT, but above the 101.8 MMT average trade estimate.
In this context, the U.S. season-average soybean price for 2022/23 is forecast at $14.30 per bushel, up 10 cents from last month.
The soybean meal price is forecast at $450.00 per short ton, up 25 dollars.
The soybean oil price forecast is unchanged at 68.0 cents per pound.
As for wheat, USDA essentially left the domestic S&D tables unchanged from Jan, save for a 2 mbu lighter food use, 1 mbu more seed use, and a 1 mbu looser carryout.
The average trade guess was to see a 12 mbu looser carryout.
While squaring up the numbers, USDA also transferred ~10mbu from SRW exports to white.
USDA’s global S&Ds showed a 2.5 MMT production boost, mainly from Australia (+1.4) and Russia (+1).
Trade was raised by 2 MMT with a 1 MMT boost for China.
Carryout was 950k MT higher on net from January, which was slightly above the trade average guess going in.
In this context, the 2022/23 seasonaverage farm price is forecast $0.10 per bushel lower at $9.00, based on prices received to date and expectations for cash prices for the remainder of 2022/23.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi