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Grain Market View – Daily Update

Good morning Farmer Family …

US farm markets saw all ag commodities moving sharply lower again, on Wednesday.

Corn prices tumbled 5.30%.

Soybeans lost 2.94%.

The rest of the soy complex also faced noticeable cuts, as soymeal were down 1.35%, while soyoil trended 1.54% lower.

Wheat prices also saw severe cuts once again, with Chicago SRW falling 4.27%, Kansas City HRW losing 4.42%, and MGEX HRS dropping 3.54%.

Some much-needed rains came, and more wet weather is expected to help out thirsty spring crops across the Corn Belt later this week into early July. 

Meantime, winter crops harvest progress in the Northern Hemisphere continued, replenishing global supplies.

Larger-than-expected Canadian acreage estimate pressured more the wheat market, as Canadian farmers seeded 26.9 million acres to wheat for 2023, the most in 22 years.

The figure was above an average of industry expectations for 26.5 million. 

Canadian growers also planted more canola than the industry was forecasting.

EIA data confirmed ethanol producers averaged 1.052m barrel output per day through the week that ended 6/23. 

That matched last week’s output level as stocks increased by 175k barrels to 22.979 million. 

Also, USDA announced a large private sale of 170,706 MT of corn to Mexico. 

However, of that, 149.4k is for 23/24 delivery with only 21.3k for old crop.

Meantime, traders are also squaring positions ahead of key U.S. acreage and quarterly stocks reports due on Friday from the U.S. Department of Agriculture.

In this context, corn basis bids were steady to mixed across the central U.S. after trending as much as 10 cents higher at an Iowa processor and as much as 15 cents lower at a Nebraska elevator.

Soybean basis bids were mostly steady across the central U.S., but did slide 2 cents lower at an Ohio elevator and 2 cents lower at an Iowa river terminal.

Commodity were net sellers on 20,000 lots of corn, 18,000 lots of soy and 13,000 lots of wheat.

On this morning, corn prices rebounded, after two sessions of sharp losses.

Notably, the most-active corn contract on the Chicago Board of Trade (CBOT) was up 1% at $5.42 a bushel, as of 04:15 GMT.

Soybeans gained 0.6% to $12.72 a bushel, also recovering from a two-session slump, while wheat added 0.2% at $6.71 a bushel after a four-session sell-off.

Both corn, soybeans and wheat, however, remained on track for weekly losses even as prices are expected to continue fluctuating.

From Canada, Canadian farmers seeded the most wheat in 22 years, slightly more than expected, and also planted more canola than the industry was forecasting, a government report showed on Wednesday.

Notably, Statistics Canada estimated plantings of all wheat – including winter wheat sown last year for harvesting this summer – at 26.9 million acres, above average industry expectation of 26.5 million.

Wheat sowings are up nearly 7% from a year ago and are the most since 2001. 

It is the fourth-largest wheat area on record when winter wheat is included, which StatsCan has tracked since 1997.

Spring wheat makes up 19.47m acres with 6.034 million for durum and the balance winter wheat. 

StatsCan expected 3.824m acres for corn production in 2023. 

That is up from 3.62 million last year and was above the range of estimates. 

Farmers also planted 22.1 million acres of canola, higher than StatsCan’s April estimate of 21.6 million and 3% more than last year. 

The average trade estimate was 21.8 million acres.

StatsCan’s surprisingly high canola estimate weighed on prices.

ICE Canada November canola futures indeed dipped $13.20 CAD/MT on the Stats Can news, though held above the $700 mark.

StatsCan reported 2023’s soybean area at 5.631m acres. 

That was up from 5.27m last year, and was at the top end of estimates. 

Farmers, meantime, reduced plantings of oats, lentils and peas.

From South America, AgRural reported Brazil’s 2nd crop harvest in the Center-South region at 9.3% finished. 

That is up from 4.7% last week but trails the 20% pace from last year. 

Abiove raised their estimate for 22/23 Brazilian production by 1 MMT to 156 MMT, with local marketing year exports projected at 97 MMT. 

Meantime, Brazil’s Anec estimates corn shipments at 1.157 MMT for June. 

Anec estimates the June meal exports at 2.32 MMT, with 14.2 MMT of whole bean shipments.  

In Europe, all three markets extended their losses, with wheat hitting to its lowest in nearly three weeks.

More rain forecasts in the U.S. Midwest and export competition from cheaper Russian wheat supplies, weighed on the market.

There is no disruption into Russian trade.

Russian shipments for July were often slightly higher but still at $234-$235 for 12.5% protein wheat. 

And this is a level west Europe cannot compete with.

Also, ample supplies come as northern hemisphere harvests get going.

Recent rain also has tempered worries about yield losses in Europe.

Winter barley yields seem to be very mixed in France, depending on the rainfall received in recent months in the different regions, and on soil quality. 

This year’s soybean harvest in the European Union will be about 2.8 mln tonnes, up 16% from last year, and will be the largest in the last six years. 

It is reported by Oils & Fats International with reference to the forecast of the Union for the Promotion of Oilseeds and Protein Plants (UFOP).

Italy is expected to remain the largest producer in the EU in 2023 with the projected harvest of 1 mln tonnes (+15.6% compared to last year).

France, the second largest supplier in the EU, is expected to grow by 17% to 438 thousand tons.

Romania’s harvest, which is currently forecast at 394 thousand tons, will increase even more – by 63% compared to 2022.

Production in Croatia and Hungary is forecast to reach 251 thsd tonnes and 171 thsd tonnes, respectively, an increase of 30% and 35%.

In contrast, producers in Germany are expected to harvest about 24.8% less than last year – 91 thousand tons.

Similarly, the harvest in Austria, which is projected at 212 thousand tons, is expected to be 14% less than last year.

The projected increase in the total supply of soybeans in the EU will be due to higher yields, as the soybean area in the EU – 994 thsd ha – will be 98 thsd ha less than last year.

On the demand side, the Eid holiday period in Muslim countries has started with demand expected to remain thin among major importers.

In France, somevessels of feed barley were expected to load in early July for China.

However, the demand was insufficient to halt a slide in barley physical premiums and new export activity in wheat remained light.

Thus, September wheat on Paris-based Euronext settled down 2.2% at 231.25 euros ($252.27) a metric ton.

It earlier hit its lowest since June 9 at 231.00 euros as it continued a pullback from Monday’s two-month top of 254.50 euros.

Meanwhile, standard 12% protein wheat for September delivery in Hamburg was offered for sale at a premium of about 2 euros under the Euronext December contract.

On the other hand, financial investors last week switched to a net long position in Euronext’s wheat futures and options for the first time this year, data showed on Wednesday.

From Russia, Russia’s grain sowing campaign has almost been completed, with the sown areas in line with plans, Agriculture Minister Dmitry Patrushev said on Wednesday.

“According to preliminary data, 55.6 million hectares have been sown. 

This is higher than last year and in line with plans,” he said.

Including surviving winter crops, the area of sown grains and pulses was estimated at 28.1 million hectares as of June 1, 2.5% more than at the same date of 2022, Rosstat said.

However, Russian state statistics service Rosstat also said that 4.3%, or 249,000 hectares, of the sown area of winter grains and pulses had died as of June 1, as drought hit many Russian regions.

Meantime, the harvesting campaign is already underway in six regions of southern Russia and the North Caucasus.

The ministry predicted a grain harvest of 123 million tonnes in 2023, including 78 million tonnes of wheat.

On the geopolitical side, the probability of Russia’s withdrawal from the Black Sea grain deal in July remains high, although talks continue, Russia’s RIA news agency cited an anonymous source as saying on Wednesday.

Moscow has repeatedly complained that it was not getting what it wanted from the deal which has allowed grain to be shipped out of Ukrainian ports and expires on July 18.

From South East Asia, Malaysian palm oil prices ended at a more than one-week high on Wednesday, rebounding from the previous session’s losses.

Notably, the benchmark palm oil contract for the September delivery on the Bursa Malaysia Derivatives Exchange closed up 81 ringgit, or 2.20%, to 3,756 ringgit ($804.45) per metric ton, its highest since June 19.

Earlier in the day, the benchmark contract rose as high as 3.45% to 3,802 ringgit.

Meantime, Indonesia has set its crude palm oil (CPO) reference price at $747.23 per metric ton for the period of July 1-15, up from $723.45 currently, a trade ministry decree on Wednesday showed.

As a result, exports of Malaysian palm oil products for June 1-25 fell 4.5% from a month earlier, independent inspection company AmSpec Agri Malaysia said. 

Cargo surveyor Intertek Testing Services said exports declined 8.7% during the same period.

Malaysia’s financial markets are closed today for a national holiday. 

Trading will resume on Friday, June 30.

From Australia, weekly rainfall totals have been impressive across southeast WA, SA and Vic with most areas receiving 15-50mm with some areas now too wet. 

Most cropping regions in NSW have seen 10-25mm although it has been patchy with the northwest missing out again and Qld was relatively dry. 

The forecast for next week has 15-50mm for northern NSW and Qld.

Rural Bank has pegged the 2023-24 Australian wheat crop at 28Mt, with Queensland at 1.2Mt, NSW at 8Mt (subject to further reduction if more hectares remain fallow in northern NSW). 

Victoria’s crop is forecast at just under 4Mt, SA at 4.7Mt and WA at 10Mt.

However, widespread rain across southern Australia coupled with weaker offshore markets has seen prices for feed wheat and barley fall in the past week.

Prices in the south have fallen by up to $30 per tonne on barley, and $25/t on wheat but falls have been more modest in the north, where many crops are in need of a drink to preserve yield potential.

The new financial year starts on Saturday, and growers are already giving brokers and traders offers in order to clear some current-crop stocks.

Consumers are seen as mostly well covered in the near term, and the market appears to have more downside than upside for July.

Meantime, local markets remained very quiet yesterday, with dribs and drabs of old crop being traded but nothing to bowl the stumps over. 

It is just a very slow market with a lot of sitting, waiting, wondering what direction it will take. 

On the international trade scene, leading South Korean animal feed maker Nonghyup Feed Inc. (NOFI) has bought an estimated 68,000 metric tons of animal feed corn in an international tender for up to 138,000 tonnes on Thursday.

It was expected to be sourced from either South America or South Africa.

It was bought at the estimated outright price of $249.99 a metric ton c&f plus a $1.50 a tonne surcharge for additional port unloading for Nov. 10 arrival in South Korea.

Seller was believed to be trading house Olam.

In outside markets …

Energy markets saw oil prices climbing more then 2.5%.

Brent futures indeed rose $1.77, or 2.5%, to settle at $74.03 a barrel. 

U.S. West Texas Intermediate (WTI) crude rose $1.86, or 2.8%, to settle at $69.56, narrowing Brent’s premium over WTI to its lowest since June 9.

The U.S. Energy Information Administration (EIA) said crude inventories dropped by 9.6 million barrels in the week ended June 23, far exceeding the 1.8-million barrel draw analysts forecast and also much bigger than the 2.8 million barrel draw a year earlier. 

It also exceeded the average draw in the five years from 2018-2022.

However, investors remained cautious that interest rate hikes could slow economic growth and reduce oil demand.

On this morning, oil prices fell, paring some of the previous day’s gains, as investors took profits on concerns of further interest rate hikes dampening economic growth and global fuel demand.

Weak economic data in China also weighed on sentiment.

Thus, Brent crude futures declined 26 cents, or 0.4%, to $73.77 a barrel by 06:47 GMT. 

U.S. West Texas Intermediate (WTI) crude futures slipped 22 cents, or 0.3%, to $69.34 a barrel.

In ocean freight markets, the Baltic Exchange’s main sea freight index fell for a third straight day on Wednesday, pressured by losses in the larger capesize and panamax vessel segments.

The overall index, indeed, fell 45 points, or 3.8%, to 1,138 — its lowest level in a week.

Notably, the capesize index lost 115 points, or 6.0%, at 1,822.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, decreased $955 to $15,113.

The panamax index was down 31 points, or 2.9%, at 1,058, declining for the seventh straight session.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, slid $271 to $9,526.

Among smaller vessels, the supramax index rose 6 points to 752.

In equity markets, US stocks indexes were undercut as central bank chiefs Wednesday kept up their hawkish language at a policy panel at the ECB’s policy retreat in Sintra, Portugal.  

Thus, on Wall Street, the benchmark S&P 500 edged down less than 0.1% to 4,376.86.

The Dow Jones Industrial Average slipped 0.2% to 33,852.66. 

The Nasdaq composite rose 0.3% to 13,591.75.

The 10-year T-note yield Wednesday fell -5.2 bp.  

On this morning, Asian stock markets were mixed.

Shanghai, Hong Kong and Seoul retreated while Tokyo and Sydney advanced. 

The Shanghai Composite Index lost 0.1% to 3,185.56 while the Nikkei 225 in Tokyo gained 0.4% to 33,340.66. 

The Hang Seng in Hong Kong sank 0.9% to 18,995.31.

The Kospi in Seoul gave up 0.1% to 2,560.67 while Sydney’s S&P-ASX 200 advanced less than 0.1% to 7,203.30. 

New Zealand advanced while Bangkok declined.

In currency trading, the dollar index rose by +0.41% on Fed Chair Powell’s comments.  

Meanwhile, the EUR/USD fell -0.41% on weaker Eurozone economic reports. 

Notably, Wednesday’s Eurozone economic reports showed the July German GfK consumer confidence index fell by -1.0 point to -25.4, weaker than market expectations for an increase to -23.0.  

The June French consumer confidence index rose +2 points to 85, slightly stronger than expectations for a +1 point increase to 84.  

Italy’s June May EU-harmonized CPI eased to +6.7% y/y from May’s +8.0% y/y and was slightly weaker than expectations of +6.8% y/y.

Meanwhile, the USD/JPY rose +0.24%.

On this morning, the dollar edged up to 144.35 yen from Wednesday’s 144.32 yen. 

The euro fell to $1.0896 from $1.0922.

That’s all, thank you.

We wish you a nice day.

Author: Sandro F. Puglisi

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