Grain Market View – Daily Update

Good morning, Farmer Family …

US farm markets were slashed, on Tuesday.

Corn prices dropped 1.66%.

Soybean prices crumbled by 3.05%, with soymeal eroding 2.39% lower, while soyoil was slashed 5.37%.

Wheat prices also took a sharp turn lower, with Chicago SRW falling by 4.06%, Kansas City HRW tumbling 4.33%, and MGEX spring wheat prices losing 3.06%.

Wheat, corn and soybean prices tumbled, pressured by macroeconomic worries, strong competition for global grain export business and some forecasts for beneficial Midwest rains next month that could bolster production prospects.

On the macroeconomic front, commodity markets are facing headwinds over a global recession.

As a result, equity markets and crude oil prices sagged, also as concerns grew about whether the U.S. Congress would pass the U.S. debt ceiling pact.

Plentiful supplies from Brazil also weighed on prices, generating demand concerns, especially after USDA’s weekly Export Inspections report showed only 1.31 MMT of corn was shipped during the week that ended 5/25. 

That was a 1% decline from last week, and was 7% below the same week last year. 

China was the top destination with 467k MT of the total. 

The weekly report’s data showed just 28.68 MMT of corn has been shipped for the marketing year as of 5/25. 

As for soybean, the report showed 240k MT of soybeans were shipped during the week that ended 5/25. 

That was down 41% from the same week last year but was up from 166k MT last week. 

The season’s total export reached 48.44 MMT as of 5/25. 

That is 2.2% behind last year’s pace. 

As for wheat, the report had 382,031 MT of wheat shipments for the week that ended 5/25. 

That was down from 440k MT last week, but was 37.7k MT above the same week last year. 

Thailand was the top destination for the week with 121k MT. 

The season’s total shipment reached 19.558 MMT with 6 days left to report in the marketing year. 

On the weather side, most of the central U.S. will receive at least some measurable moisture between Wednesday and Saturday, aside from some parts of the eastern Corn Belt, per the latest 72-hour cumulative precipitation map from NOAA. 

Portions of the Southern Plains will see the most rainfall during this time. 

Further out, NOAA’s new 8-to-14-day outlook predicts some seasonally dry weather for the upper Midwest between June 6 and June 12, with cooler-than-normal conditions likely for most of the central U.S.

Meantime, after the sessions close, the weekly Crop Progress report had 22/23 corn planting finished on 92%. 

That was an 11% point advancement through the week and remains 8% points ahead of average. 

North Dakota was shown 72% planted compared to 32% last week and 73% on average. 

National emergence reached 72% as of 5/28, compared to 63% on average. 

The initial NASS condition ratings were 1% VP, 4% P, 26% F, 58% G, and 11% E.

As for soybean, data showed soybean planting advanced 17 ppts to 83% complete as of 5/28. 

That is a full week ahead of the 65% average pace. 

North Dakota planting reached 53% compared to their average 55% pace. 

National emergence was marked at 56%, meaning the initial NASS condition ratings will be available in next week’s report. 

The 5-yr average pace would have 40% emerged as of 5/28. 

As for wheat, the report showed spring wheat planting reached 85% complete as of 5/28. 

That was up from 64% last week and is now only 1ppt behind the average pace. 

North Dakota planting advanced 31% points to now just 2 ppts behind average. 

Emergence was shown 57% nationally. 

As for winter wheat, NASS reported 72% of the national crop was headed including 98% for OK, 95% for TX, and 84% for KS. 

Winter wheat conditions improved more than analysts expected, to 34% as E.

That was up 3% from last week, while analysts on average had expected the rating to rise to 32%.

In this context, corn basis bids were mostly steady across the central U.S., but did tilt 10 cents higher at an Ohio elevator and 10 cents lower at an Iowa processor.

Soybean basis bids were steady to firm across the central U.S., after improving 3 cents at an Ohio river terminal and 10 cents at an Ohio elevator.

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

On this morning, Chicago grain and soybean futures extended losses on Wednesday, with wheat hitting another two-and-a-half year low.

Notably, the most-active wheat contract on the Chicago Board of Trade (CBOT) was down 2.5% at $5.76-1/4 a bushel by 10:51 GMT after touching its lowest since December 2020.

CBOT corn was 1.3% lower at $5.86-1/4 a bushel, moving further back from Friday’s one-month high.

Soybeans gave up 1.2% to $12.81 a bushel after earlier touching their weakest since December 2021.

The wheat market is declining for an eighth consecutive month, down about 10%.

Soybean also was down about 10%, in a second month of losses.

Corn was the strongest, down about 1% after closing sharply lower in April.

From Canada, according to the Alberta Crop Report, for the week ending 23 May, spring crop planting was 85pc complete (55pc previous week, 73pc previous year, 80pc five-year avg), including spring wheat at 93pc (70pc previous week, 83pc previous year), barley at 84pc (54pc, 73pc) and canola at 79pc (39pc, 64pc).

Sowing made rapid progress, with only small disruptions noted due to excessive rains across parts of the province.

Fieldwork was expected to be concluded within the next two weeks, with rapid emergence of crops reported.

Soil moisture conditions were rated at 7pc excellent/excessive, 77pc good/fair and 16pc poor. 

From South America, Brazilian agricultural consultancies AgRural and Safras & Mercado revised upward thier Brazilian corn crop estimates. 

AgRural by 2.3Mt to 127.4Mt, citing better yields with the safrinha harvest now underway and Safras & Mercado by 6.7Mt to 137Mt mainly owing to higher harvest outlook for the second (safrinha) crop owing to favourable weather conditions.  

Brazil’s safrinha (second) corn harvest is barely underway, with 0.8% complete through last Thursday, versus the prior year’s pace of 1.2%.

Meantime, Brazil’s Anec modestly lowered its estimates for the country’s soybean exports in May after offering a new projection of 15.1 MMT. 

Anec also expects to see Brazilian soymeal exports reach 2.218 million metric tons this month.

In Argentina, the first rains of note in a year fell at the end of May in Argentina’s Pampas crop belt, paving the way for wheat planting in the east, the Rosario Board of Trade said, but it noted rain had not reached the west, so more than half of the Pampas was still too dry to plant wheat.

In Europe too, we saw a very sharp drop in prices for all ag commodities, although the wheat market drew some support from talks of the sale of European Union-origin wheat to buyers in the United States, adding to a recent run of deals.

Buyers in the United States are indeed believed to have last week purchased about 60,000 tonnes of European Union origin wheat expected to be sourced about half each from Poland and Germany.

Shipment was believed to be in July.

This bought recent purchases of EU wheat by U.S. importers to a total of an estimated 270,000 to 300,000 tonnes including purchases of about 210,000 tonnes reported on May 23.

The total purchases were said to involve a total of around ten shipments, with around seven from Poland and three from Germany all of around 30,000 tonnes. 

Purchases are believed to involve milling wheat generally of 12.5% and 13% protein.

Shipment was mainly in June, July and August.

However, the European Commission has increased its monthly forecasts for this year’s European Union soft wheat and rapeseed harvests, while lowering its outlook for barley and maize, data posted by the EU’s executive showed.

Notably, for soft wheat usable production in 2023/24 is now expected at 131.5 million tonnes, up from 130.2 million projected in late April and well above 125.7 million harvested last year, the Commission’s data showed.

For rapeseed, 2023/24 output was forecast at 20.2 million tonnes against 20.0 million a month earlier and 19.5 million in 2022/23.

In contrast, the Commission lowered its forecasts for barley production, to 52.0 million tonnes from 52.2 million a month ago, and for maize output, to 64.1 million tonnes from 64.4 million.

The revised 2023/24 forecasts were still above 2022/23 levels of 51.5 million tonnes for barley and 52.1 million for maize.

Like last month, the Commission said in its supply and demand update that it had reduced sharply its cereal production outlook for Spain, which has endured severe drought, with a near 13% cut following a reduction of almost 20% in April.

But it increased its overall cereal crop outlook for top grower France by over 1% and Romania by 4%, it said.

Meantime, projected EU soft wheat exports in 2023/24 were lowered to 32.0 million tonnes from 32.5 million last month, while expected soft wheat exports in 2022/23 were kept unchanged at 31 million tonnes.

As a result, forecast soft wheat stocks in 2022/23 were raised to 19.9 million from 19.6 million last month, reflecting a 0.5 million upward revision to imports now expected at 8.5 million tonnes.

Expected maize imports this season were revised up to 24.5 million tonnes from 24.0 million previously, while forecast maize imports next season were maintained at 17 million tonnes.

Meantime, per latest data published by the European Commission on Tuesday, soft wheat exports from the European Union in the 2022/23 season that started in July had reached 28.40 million tonnes by May 27, up 11% from 25.47 million a year earlier.

EU barley exports so far in 2022/23 totalled 5.93 million tonnes, down 13% from 6.84 million a year ago.

A breakdown of the EU data showed France remained by far the biggest EU soft wheat exporter this season, with 9.67 million tonnes shipped, followed by Romania with 4.05 million, Germany with 3.61 million, Lithuania with 2.60 million and Latvia with 2.22 million.

The EU’s top five soft wheat export destinations were Morocco, Algeria, Nigeria, Egypt and Saudi Arabia. 

On the imports side, EU maize imports were at 24.34 million tonnes, up 61% against a year-earlier 15.14 million.

Soft wheat imports were at 8.23 million tonnes, 243% above the year-earlier level, while barley imports had reached 1.91 million tonnes, up 119% on year.

Soybean imports were down 12% from last year’s pace so far after reaching 11.63 MMT through May 27.

EU soymeal imports were also down year-over-year, with 14.32 million metric tons over the same period.

Spain remained the leading EU maize importer with 8.03 million tonnes, ahead of the Netherlands at 2.80 million, Italy with 2.52 million, Portugal with 1.85 million and Hungary with 1.63 million, the data showed.

The Commission listed the five top maize import origins so far in 2022/23, Ukraine, Brazil, Canada, Serbia, and Russia.

It should to note, that due to a technical issue, the weekly data ran up to Saturday, rather than Sunday as normally, the Commission said.

From North Africa, the Egyptian government has procured three million tonnes of local wheat from farmers so far, the chairman of the state-run General Company for Silos and Storage said on Tuesday, while Egypt, has sufficient strategic wheat reserves until the end of November.

From Levant, Turkey expects the 2023/24 wheat crop would reach 20.5 MMT, a 3.8% increase yr/yr. 

From Ukraine, the country is seeking guarantees from Moscow and the U.N. that a deal on the safe export of Black Sea grain will work normally if Kyiv allows Russian ammonia to transit Ukrainian territory, a Ukrainian official said on Tuesday.

Spring planting in the Ukraine has reached 5.3m HA as of 5/26, a 10% lower area than this time last year. 

That includes 3.6m HA of corn, a 16% decrease yr/yr, and 261.9k HA of spring wheat. 

SovEcon expects the 2023/24 corn crop would be 23.1 MMT, down 300k on decreased area, while wheat crop will be 18.5 MMT, up 400k MT from their prior estimate. 

Due to fertilizer and logistics issues, a number of farmers switched to oilseeds from feed grains. 

Meantime, according to the State Statistics Service, as of May 31, in 2022/23 MY Ukraine exported 45.29 mln tonnes of grains and pulses, including 3.403 mln tonnes in May, reported the press service of the Ministry of Agrarian Policy of Ukraine.

It should be noted, last year’s Ukraine export amounted to 47.011 mln tonnes (1.142 mln tonnes in May).

In particular, in the current season, as of reporting date, Ukraine exported:

– wheat – 15.442 mln tonnes (18.57 mln tonnes in 2021/22 MY);

– barley – 2.647 mln tonnes (5.679 mln tonnes);

– rye – 17.9 thsd tonnes (161.9 thsd tonnes);

– corn – 26.868 mln tonnes (22.295 mln tonnes).

The total export of flour from Ukraine in 2022/23 MY, as of May 31, amounted to 141.5 thsd tonnes (71 thsd tonnes y-o-y), including 136 thsd tonnes of wheat flour (69.4 thsd tonnes). 

From Russia, in May, the country can export 4.9 mln tonnes of wheat, which is 3.8 times higher year-on-year.

In general, the export of Russian grain this month is estimated at 5.75 mln tonnes, which is 3.1 times higher y-o-y, according to the Russian Grain Union, Interfax reports.

As Olena Tyurina, director of the RGU analytical department, noted, such estimates were made on the basis of shipment data for the period from May 1 to May 28.

“During the reporting period, 5.3 mln tonnes of grain have already been exported, including 4.5 mln tonnes of wheat. Moreover, there is an increase in demand from both the main consumers and countries that did not purchase Russian wheat last season,” she said.

Thus, since the beginning of May, shipments to Turkey have increased by 4.5 times to 916 thsd tonnes, to Egypt – by 3.6 times to 637 thsd tonnes, to Libya – by 1.9 times to 287 thsd tonnes, to Israel – 3 times to 216 thsd tonnes, to Saudi Arabia – 3.6 times to 204 thsd tonnes, to Algeria – 6.5 times to 192 thsd tonnes.

In addition, 110 thsd tonnes of wheat were shipped to Tanzania and almost 100 thsd tonnes each to Brazil and Bangladesh.

Russian wheat was not shipped to these countries, as well as to Oman, Qatar, and Mexico in May of last year.

From the Middle Kingdom, China’s agriculture ministry is urging local authorities to speed up the harvesting and drying of damaged grain, after heavy rain flooded fields of ripe wheat in the country’s most important growing region.

Authorities should send emergency teams to drain water from fields, speed up access by harvesters and mobilise drying machinery to save as much of the crop as possible, said the ministry late on Tuesday.

Heavy rain across the southern half of central Henan province last week were raising concerns.

Henan produced 28% of China’s crop of 137 million tonnes in 2021, and though it is too early to say how much output would be affected, the harvest is definitely going to be impacted, as some areas have seen 400% precipitation anomalies over the past 10 days.

Some wheat in southern Henan has sprouted.

More than 90% of the wheat around the city of Nanyang has sprouted.

Meantime, buyers are purchasing the sprouted wheat at around 1,000 yuan ($144.67)to 1,200 yuan per tonne, half of the normal price.

The spot wheat price in Zhengzhou fell 1.5% to 2,700 yuan on Monday, weighed down by lower quality supply. 

Sprouted wheat is also being seen in northern Shandong province.

However, the agriculture ministry urged buyers to purchase sprouted wheat that can still be used for feed or industrial purposes, while making sure it does not go to food.

($1 = 6.9121 yuan).

From South East Asia, Malaysian palm oil prices ended lower for a second consecutive session to log its worst day in two weeks as rival edible oils fell, with oversupply worries denting investor sentiment on Tuesday.

Notably, the benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange slid 141 ringgit, or 3.98%, to 3,405 ringgit ($767.76) a tonne, its largest daily drop since May 16.

The benchmark contract fell as low as 4.31% earlier in the session.

May production is expected to rise about 20% from April, rebounding from the lows seen during the Raya holidays.

Indonesia aims to accelerate its palm oil replanting program to double the area it covered between 2017 and 2022 in an effort to maintain production levels, a government official said on Tuesday.

Meanwhile, India’s weather department said monsoon rains had advanced into more parts of southwest Bay of Bengal after stalling for the past 11 days.

On this morning, Malaysian palm oil prices plunged for a third session and hit a new low due to weaker rival oils and negative export data in May.

Notably, the benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell 5.82% to 3,205 ringgit ($722.66) per tonne at closing.

The contract booked a third monthly drop, to close down 3.98% from 3,338 ringgit per tonne at the end of April.

Today’s closing was also the lowest since November 2020.

From Australia, local markets remained sluggish yesterday, with the usual current crop markets continuing to tick over with ASW1 in WA trading around $360/t FIS.

There was interest on Clear Grain Exchange in SA for lower grade wheat and sorghum found a bid under it again late in the day through northern NSW and Queensland.

New crop markets were largely unchanged on the boards for the day. 

On the weather side, the 8-day forecast is continuing to build with WA now looking at 10-50mm for most cropping regions with southern WA tipped to get between 50-100mm.

SA, Vic and southern NSW are looking at 5-15mm while central and northern NSW have 15-25mm on the forecast, with some pockets 25-50mm.

Southern Qld is looking at 5-25mm.

The timing would be perfect if this rainfall eventuates.

On the international trade scene, Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), said on Tuesday it was seeking vegetable oils in an international purchasing tender for arrival July 11-25.

GASC said traders should submit bids for payment at sight. The deadline for offers is June 1.

GASC also set a tender for local vegetable oils, seeking at least 1,000 tonnes of soyoil and 500 tonnes of sunflower oil for delivery July 1-31. 

The deadline for offers is also June 1.

South Korea’s Major Feedmill Group (MFG) purchased about 55,000 tonnes of animal feed wheat on Wednesday which can be sourced from optional worldwide origins.

One consignment was purchased at an estimated $263.90 a tonne c&f. It was believed to have been bought from trading house Cofco.

It’s expected the wheat to be sourced from the Black Sea region with shipment in the full month of August.

But excluded as origins in the purchase were Russia, Ukrainian loading ports but not Ukrainian origin, China, Indian and Denmark.

In outside markets …

Energy markets saw oil prices falling more than 4% on Tuesday, on concerns about whether the U.S. Congress will pass the U.S. debt ceiling pact and as mixed messages from major producers clouded the supply outlook ahead of the OPEC+ meeting this weekend.

Notably, Brent crude futures settled down $3.53, or 4.6%, at $73.54 a barrel. U.S. West Texas Intermediate crude (WTI) was down $3.21, or 4.4%, from Friday’s close, to $69.46 a barrel. 

On this morning, oil prices fell by over 2%.

Brent crude futures for August delivery indeed were down $1.75, or 2.37%, to $71.96 a barrel at 11:51 GMT. 

U.S. West Texas Intermediate crude (WTI) fell $1.90, or 2.74%, to $67.56.

Brent’s July contract , which expires on Wednesday, and the U.S. benchmark were on track for monthly declines of more than 9% and 12%, respectively.

China’s manufacturing activity contracted faster than expected in May on weakening demand.

Further pressure came as the U.S. dollar rose to its highest in over two months, making commodities more expensive for buyers holding other currencies and weighing on oil demand.

The U.S. dollar index, saw support from cooling European inflation and progress on the U.S. debt ceiling standoff, which will advance to the House of Representatives for debate on Wednesday.

In ocean freight markets, the Baltic Exchange’s main sea freight index of shipping rates for dry bulk commodities fell for the 13th straight session on Tuesday, hitting a near three-month low as rates fell across all vessel segments.

The overall index, indeed, dropped 49 points, or 4.2%, to 1,129 points, its lowest since March 1.

Notably, the capesize index was down 89 points, or 5.3%, to 1,594.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes including iron ore and coal, fell $735 to $13,221.

The panamax index lost 29 points, or 2.6%, to over three-month trough at 1,090.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $261 to $9,811.

Among smaller vessels, the supramax index dropped 36 points or 3.8% to 910.

In equity markets, US stock indexes settled mixed, as the broader market found support after a tentative agreement was reached over the long holiday weekend to raise the U.S. debt ceiling.  

However, the euphoria over the agreement faded since the agreement will reduce spending and fiscal stimulus for the U.S. economy, and also boosted the chances of a Fed rate hike in June.

Tuesday’s U.S. economic news was mixed, as the U.S. Mar S&P CoreLogic composite-20 home price index fell -1.15% y/y, the biggest decline in nearly 11 years but a smaller decline than expectations of -1.60% y/y. 

The Conference Board’s U.S. May consumer confidence index fell -1.4 to 102.3, stronger than expectations of 99.0.

The U.S. May Dallas Fed manufacturing outlook level of general business activity unexpectedly fell -5.7 to a 3-year low of -29.1, weaker than expectations of an increase to -18.0.

Thus, the 10-year T-note yield fell -10.8 bp at 3.690%.

However, a decline in bond yields Tuesday gave technology stocks a boost.  

Weakness in energy stocks limited gains in the overall market.  

As a result, on Wall Street, the S&P 500 gained to 4,205.52, near its highest level in nine months.

The Dow Jones Industrial Average slipped 0.2% to 33,042.78. 

The Nasdaq composite rose 0.3% to 13,017.43.

However, uncertainty about U.S. government debt adds to market anxiety over signs global economic activity is slowing following interest rate hikes.

China’s economic recovery has been weaker than some businesspeople and investors hoped.

A monthly purchasing managers’ index issued by the national statistics agency and an industry group declined to 48.4 from April’s 49.2 on a 100-point scale on which numbers below 50 show activity declining. 

Manufacturers have been hurt by weak global demand and a slower-than-expected recovery in Chinese consumer spending.

As a result on this morning, in Asia the Shanghai Composite Index lost 0.6% to 3,204.56 and the Nikkei 225 in Tokyo fell 1.4% to 30,887.88. 

The Hang Seng in Hong Kong tumbled 1.9% to 18,234.27.

The Kospi in Seoul retreated 0.3% to 2,577.12 and the S&P-ASX 200 in Sydney fell 1.6% to 7,091.30.

India’s Sensex lost 0.7% to 62,514.88. 

New Zealand advanced while Southeast Asian markets declined.

In currency trading, the dollar index fell back from a 2-1/2 month high and posted a small -0.06% loss, as lower T-note yields weighed on the dollar.  

The dollar also moved lower after U.S. negotiators agreed to a tentative agreement to raise the debt ceiling, which puts a cap on federal spending that could slow economic growth.  

However, losses in the dollar were limited by hawkish Fed comments and the stronger-than-expected U.S. May consumer confidence report. 

Notably, the EUR/USD rose by +0.17%, with the euro recovering from a 2-1/4 month low. 

EUR/USD Tuesday initially fell to a 2-1/4 month low after Spain’s May CPI rose less than expected, which was dovish for ECB policy. 

Notably, Spain May CPI (EU harmonized) eased to +2.9% y/y from 3.8% y/y in Apr, slower than expectations of +3.3% y/y and the smallest increase in 1-3/4 years.

Also, Eurozone May economic confidence index fell more than expected to a 6-month low, with the index falling -2.5 to 96.5, weaker than expectations of 98.8.

Eurozone Apr M3 money supply rose +1.9% y/y, weaker than expectations of +2.0% y/y and the smallest increase in 8-3/4 years.

The USD/JPY fell by -0.49%, with the yen recovering from a 6-1/4 month low against the dollar after an unscheduled meeting Tuesday between Japan’s Ministry of Finance, the BOJ, and the Financial Services Agency sparked short covering in the yen.  

Also, Japan’s top currency official, Kanda, said the government would take action if needed if the yen continues to decline.  

The unscheduled meeting came after the yen softened beyond 140 per dollar.

Tuesday’s Japanese economic news was supportive for the yen after the Japan Apr jobless rate fell -0.2 to 2.6%, showing a stronger labor market than expectations of 2.7%.

On this morning, the dollar declined to 139.67 yen from Tuesday’s 139.87 yen. 

The euro retreated to $1.0695 from $1.0719.

That’s all, thank you.

We wish you a nice day.

 Author: Sandro F. Puglisi

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