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Grain Market View – Daily Update

Good morning, Farmer Family …

US farm markets were mostly higher, on Monday.

Corn prices rebounded by 1.03%.

Soybeans rose 1.77%, with soymeal ending 0.95% higher, while soyoil settled up 2.71%. 

The wheat market was mixed, as Chicago SRW fell by 1.23%, MGEX HRS shaded 0.29%, while Kansas City HRW closed 0.87% higher.

Weather market isn’t over.

World Weather Inc reported substantial rain fell across parts of the Dakotas into northern Minnesota during the weekend, while lighter rain fell from southern South Dakota and northern Nebraska into northern Iowa and northern Illinois. 

A large portion of the Midwest missed the rains and dryness expanded to the southwest because of warm to hot temperatures. 

Conditions will be mostly dry until late this week when there will be another chance for rains across some areas of the Corn Belt.

Thus corn and soybeans traded higher, as dry Midwest weather and declining crop conditions kept a floor.

However, weekend rains in some northern crop areas lessened concerns.

As for wheat, markets ended mixed.

Weather and Russia news, were balanced by a sluggish U.S. export demand and rising supplies from the ongoing winter wheat harvest.

Concerns about political stability in Russia indeed had lifted wheat prices earlier to four-month highs.

Weekend showers across the Heartland turned out to be spotty, which likely accelerated declining spring crops conditions in key growing areas over the past week.

Meantime, USDA’s weekly Export Inspections report showed 542,727 MT of corn exported during the week that ended 6/22. 

That was down from 831k MT last week and was under the 1.247 MMT shipped during the same week last year. 

USDA marked the season’s total shipment at 32.48 MMT vs 47.43 MMT previous year.

As for soybean, the report had 141,158 MT of soybean shipments for the week that ended 6/22. 

That was down from 179k MT last week and from 477k MT during the same week last year. 

The season’s total export reached 49.165 MMT, compared to 51.436 MMT last year. 

As for wheat, the USDA reported 203,724 MT of wheat was shipped during the week that ended 6/22. 

That was a 31.5k MT drop wk/wk and was down by 149k MT from the same week last year. 

The season’s wheat export pace reached 757k MT, compared to 1.34 MMT last year. 

In this context, commodity funds were net buyers of CBOT corn, soybean, soymeal and soyoil futures contracts, and net sellers of wheat.

After the sessions close, the weekly crop progress report from USDA showed that good-to-excellent ratings for corn stood at 50% as of June 25, below the average estimates of 52%.

Just 51% of soybeans were in good-to-excellent condition, in line with analyst expectations. 

Those ratings, for both corn and soybeans were the lowest for this time of the year since 1988.

The report showed the national corn crop was 4% silking, with TX corn 67% along. 

The average pace would be to see 4% nationally.

Soybean emergence reached 96% nationally, compared to 89% on average. 

NASS showed 10% were blooming, which is 1 ppt ahead of average.

As for wheat, the report showed 31% of the spring wheat was headed as of 6/25. 

That was 21% points higher for the week, and is 6ppts ahead of the average. 

Spring wheat conditions fell 1% point to 50% good/ex.

Meantime, the winter wheat harvest was at 24% complete.

That was up by 9 ppts for the week, but trailing the 33% average. 

KS was marked at 21% harvested.

On this morning, soybean slid nearly 1%, while corn lost ground as expectations of much-needed rains in parts of the U.S. Midwest eased concerns over dry weather.

Wheat fell for a third consecutive session, as concerns about political stability in major exporter Russia eased.

Thus, the most-active corn contract on the Chicago Board of Trade (CBOT) lost 0.2% to $5.87-1/4 a bushel, as of 03:16 GMT.

Wheat fell 1.1% to $7.30-1/2 a bushel and soybeans gave up 0.9% to $13.11-1/4 a bushel.

From Canada, the Alberta Crop Report for the week ending 20 June, noted rainfall had improved soil moisture in many regions, particularly in the northeast. 

Some central and northwestern areas reported excessive moisture, including standing water in some fields. 

However, parts of the Peace Region, as well as southern and central regions, received limited precipitation. 

Spring wheat condition rated 51pc good/excellent (42pc week ago, 84pc year ago), barley 46pc (36pc, 78pc) and canola 49pc (40pc, 73pc).

Statcan will publish its acreage estimates for Canada tomorrow.

From South America, according to AgRural, 9.3% of the second Brazilian corn crop has been harvested. 

Yields are satisfactory for the time being, and AgRural estimates total production for the country at 127.4 Mt.

In Europe, we saw a mixed session, with wheat easing slightly at the bell due profit-taking, while corn piked up.

Rapeseed, meantime, rose in the wake of canola and other oils higher. 

Wheat prices turned lower after hitting a new two-month high, as attention shifted from weekend turmoil in Russia back towards continued export competition from large Russian wheat supplies.

Thus, September wheat was down 0.1% at 246.75 euros ($269.30) a metric ton.

The contract earlier rose to 254.50 euros, surpassing a previous two-month peak of 253.00 euros from last Thursday.

The European Union’s crop monitoring service MARS forecasted Russia’s total wheat production at 86.7 million metric tons, down 17% from last year’s record crop but 4% above the five-year average.

Of this 62.6 million tons were winter wheat (down 15% on 2022) and 24 million tons were spring wheat (-20%), it said in a report.

Sovecon last week lowered its wheat harvest projection to 86.8 million tons from 88 million tons seen earlier.

MARS also pegged Russia’s total barley output in 2023 at 20.4 million tons, down 11% on year, mainly due to a 14% fall in spring barley to 17.0 million tons. 

The winter barley crop was forecast 13% higher at 3.4 million tons.

For grain maize, MARS forecast Russia’s harvest at 15.2 million tons, up 1% on 2022 and 9% above the five-year average.

As we can understand, MARS underlined expectations for a bumper volume though below last year’s record.

Harvest prospects in France were still seen as favourable, with high temperatures at the weekend not expected to damage crops and showers forecast in the week ahead seen helping later-developing wheat crops.

Current international wheat export demand is currently very quiet with high prices unattractive to importers and the Eid holidays starting this week in many Middle Eastern and North African countries.

Meanwhile, FOB Russian wheat prices were at USD 234/t, according to Argus.

Also, transport concerns were eased as water levels on the Rhine in Germany were close to normal.

From North Africa, Morocco’s ONICL will offer subsidies for the import of up to 2.5 million tonnes of milling wheat between July 1 and September 30, the state grains agency said on its website.

Traders had expected the North African country to resume wheat imports after harvesting a below-average crop this year.

The authorities will provide subsidies for wheat origins including Russia, Ukraine, France, Germany, Argentina and the United States.

The scheme will pay importers the difference each month between the cost of foreign wheat and a benchmark import price of 270 dirhams per quintal ($271.60 per ton).

From Ukraine, Ag Ministry reported 48.4 MMT of grain shipments for the season through 6/26. 

With 4 days of data collection remaining, the unofficial 22/23 export included 28.8 MMT of corn compared to USDA’s 27 MMT forecast and 27 MMT last year (+23pc). 

Export included 16.6 MMT of wheat compared to USDA’s 16 MMT forecast and 18.8 MMT last year (-11pc).

As for barley, exports were at 2.7Mt (-53pc). 

From Russia, spring sowing is almost completed. 

As of June 22, farmers had sown 30.5 million hectares of grains compared to 29.1 million hectares in 2022, including 13.8 million hectares of wheat. 

Weather conditions are improving for spring wheat.

Meantime, the harvesting campaign has started in the south. 

As of June 22, farmers had harvested 300,000 tonnes of grains in bunker weight compared to 449.000 tonnes in 2022.

The wheat harvest was 21,000 tonnes so far. 

A year ago, wheat harvesting had not yet started.

On the demand side, Russia exported 1.0 million tonnes of grain last week compared to 680,000 tonnes a week earlier.

That included 970,000 tonnes of wheat compared to 560,000 tonnes a week earlier according to port data.

Meantime according to Sovecon the estimate for total Russian wheat exports in June is by 200,000 tonnes higher, to 3.2 million tonnes.

That is compared to 1.0 million tonnes in June 2022 and 1.4 million tonnes on average.

As a result, Russian wheat export prices rose for the second week in a row last week.

Notably, according to the IKAR, the price of Russia’s new wheat crop with 12.5% protein content, delivered free on board (FOB) from the Black Sea in July, was assessed at the end of last week at $231 a tonne compared to $228 a tonne the previous week.

Starting the week, the forwards for the new crop were already seen as higher – about $235 a tonne, the IKAR added.

As for the other products, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 11,900 rbls/t, +675 rbls/t (Sovecon).

Price for sunflower seeds was at 20,300 rbls/t, -300 rbls/t (Sovecon)

Pricee for domestic sunflower oil was at 64,350 rbls/t, +675 rbls/t (Sovecon).

Price for domestic soybeans was at 30,100 rbls/t, +475rbls/t (Sovecon).

Export price for sunflower oil was at $780/t +$20/t (IKAR).

Price for white sugar, Russia’s south was at $729.58/t, +$0.66 (IKAR).

From the Middle Kingdom, about 3 million hectares of farmland in China are suffering from drought, state media reported on Sunday, after record high temperatures hit a large part of the country’s north since last week.

About 200,000 people and 760,000 large livestock do not have access to sufficient water.

The affected areas are mainly the northwestern region of Inner Mongolia, as well as northern Hebei province and northeastern Liaoning.

Meanwhile, many areas in the south of the country received heavy rainfall over the weekend, including southern Guangdong province, eastern Zhejiang and Shanghai, causing flooding in 15 rivers.

From Australia, the theme of local markets on Monday was much the same as was the theme at the end of last week.

Buyers exhibited demand for protein wheat in Vic and SA while current and new crop barley and ASW1 in WA tracked sideways. 

The new crop ASX Jan 24 eastern wheat contract was firmer by a few bucks at the close of the day, trading at $407/t. 

Canola bids were down but saw some more interest for current crop GM canola in Victoria. 

The 8-day forecast continues to have moisture built into NSW and Qld. 

The widespread rainfall band that developed over northern WA is expected to reach southern parts of South Australia today, before pushing into NSW and southwest Qld tomorrow. 

It will continue to track slowly eastward.

In outside markets …

Energy markets saw oil prices rising slightly in a choppy trading session.

Brent crude futures indeed rose 33 cents, or 0.5%, to settle at $74.18 a barrel, while U.S. West Texas Intermediate (WTI) futures rose 21 cents, or 0.3%, to settle at $69.37 a barrel.

Investors balanced concerns about global demand growth against likely supply disruptions that could be exacerbated by political instability in Russia.

Also, in an early indicator of future U.S. supply, the number of oil and natural gas rigs operated by U.S. energy companies fell for an eighth week in a row for the first time since July 2020.

On this morning, oil prices edged higher.

Brent crude futures indeed had climbed 67 cents to $74.85 a barrel, as of 06:13 GMT, while U.S. West Texas Intermediate (WTI) futures rose 73 cents to $70.10 a barrel. 

Worries about political instability in Russia and possible supply disruptions, as well as U.S. demand hopes ahead of the summer driving season, supported prices.

The American Automobile Association estimates 43 million motorists will drive 50 miles or more from their homes this Independence Day weekend.

That is 4% more than 2019, analysts said.

Global gasoline demand grew by 365,000 bpd year on year, driven by strong U.S. gasoline data, with consumption at an eight-week high of 9.4 million bpd in the week of June 17, JP Morgan analysts said in a note.

Fragile market sentiment is likely to cap any price upside, however, they warned.

In ocean freight markets, the Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities, declined on Monday after four sessions of gains as rates slipped across vessel segments.

The overall index, indeed, fell 7 points to 1,233.

Notably, the capesize index shed 5 points to 2,075.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, decreased $43 to $17,209.

The panamax index fell 14 points, or about 1.2%, to 1,113 – its lowest level since June 6.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased $126 to $10,013.

The supramax index shed 2 points to 741.

In equity markets, U.S. stocks fell on geopolitical uncertainty and weak economic news in China and Germany.  

Markets were watching Russia after the aborted insurrection over the weekend by the Wagner Group.

Meantime, Chinese holiday tourism data released over the weekend showed that domestic travel spending during the recent dragon-boat festival was lower than pre-pandemic levels, fueling the narrative that China’s post-lockdown boom is running out of steam.  

Also, Chinese passenger car sales in June fell -6% y/y, according to China’s Passenger Car Association.  

Separately, Chinese home sales in June were weak, according to analysts cited by the 21st Century Business Herald.

On the other hand, the German June IFO Business Climate index fell -3.0 points to 88.5 from May’s revised 91.5, weaker than expectations for a decline to 90.7.  

The June IFO current assessment index fell -1.1 points to 93.7, a bit stronger than expectations for a decline to 93.5.  

The June IFO expectations index fell by -4.7 points to 83.6, weaker than expectations for a decline to 88.1.

In this context, major tech stocks ran into long liquidation pressure on Monday with Tesla, NVIDIA, Meta and Alphabet all showing declines of more than -2%.

Stocks saw some underlying support Monday from lower global bond yields.  

The 10-year T-note yield fell by -1.9 bp to 3.715%.

The markets are discounting the odds at 74% for a +25 bp rate hike at the next FOMC meeting on July 25-26, up from 72% last Friday.  

The markets are fully anticipating that +25 bp rate hike by November.

As a result, the S&P 500 declined 0.04% to 4,328.82. 

The Dow Jones Industrial Average lost less than 0.1% to 33,714.71.

The Nasdaq composite, dominated by tech stocks, fell 1.2% to 13,335.78.

On this morning, Asian stock markets were mixed.

Shanghai and Hong Kong advanced. 

Tokyo and Seoul declined. 

The Shanghai Composite Index gained 0.9% to 3,166.41 after China’s No. 2 leader, Premier Li Qiang, said economic growth accelerated in the latest quarter and can hit this year’s official target of “about 5%.” 

Li, speaking at a conference, gave no figure for the April-June period but said growth is faster than the previous quarter’s 4.5%.

The Nikkei 225 in Tokyo sank 0.8% to 32,451.18 while Hong Kong’s Hang Seng rose 1.6% to 19,086.95.

The Kospi in Seoul shed 0.2% to 2,577.68 while Sydney’s S&P-ASX 200 added 0.5% to 7,115.40.

India’s Sensex opened up 0.2% at 63,113.25. 

New Zealand declined while Southeast Asian markets advanced.

In currency trading, the dollar index fell by -0.20% on slightly lower T-note yields.  

The EUR/USD rose by +0.11% despite the weak German IFO report. 

Meanwhile, the USD/JPY fell -0.14%, with the yen seeing some support from verbal intervention after Japan’s top currency official Masato Kanda said the BOJ is watching the yen’s weakness with a sense of urgency and won’t rule out intervention.

The Chinese yuan on Monday fell -1% against the dollar to a 7-1/2 month low on weak Chinese economic news released over the weekend. 

On this morning, the dollar edged up to 143.48 yen from Monday’s 143.45 yen. 

The euro rose to $1.0925 from $1.0915.

That’s all, thank you.

We wish you a nice day.

Author: Sandro F. Puglisi

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