Good morning Farmer Family …
Grain prices made moderate inroads on Friday.
Traders squared their positions ahead of the three-day Memorial Day weekend in the USA.
A variety of bullish factors are still in play, including poor U.S. and France winter wheat crop quality, a sluggish US spring planting pace both for corn and soybeans, geopolitical tensions due the ongoing war in Ukraine and more …
Thus, in Chicago, corn prices rose 1.6% higher at the end week session.
Soybeans found more modest gains of around 0.3%.
Soymeal prices ended the day with 0.96% gains.
Soy oil prices closed off their daily lows, but were still down by 1.18% on the day.
The wheat complex captured decent gains on the last trading day of the week.
Chicago wheat prices went home 1.25% higher.
Kansas City wheat prices ended the Friday session 0.55% up, though prices were up by over 20 cents earlier in the day.
Minneapolis wheat ended 0.97% higher on the day.
For the week, despite we have seen a 33 cent range during the week, corn prices were down around 0.2% from Friday to Friday.
Soybeans were the only bright spot in the row crops this week, with July up 1.58% and hitting new contract highs on Friday, while new crop November closed up with 1.47% gains for the week.
Product values were mixed, with meal somewhat supportive, up $2.40/ton or 0.56% and soy oil down 136 points or -1.68%.
Wheat prices saw some spreading on the week, with the winter wheat contracts weaker and spring wheat higher.
Reports of Russia opening an export corridor out of Ukraine in exchange for the lifting of some sanctions, indeed, shot things lower.
However, skepticism appeared quickly when it was realized that things weren’t that simple to put into action.
Thus, Minneapolis popped out to a 2.02% jump from last Friday on the wake of slow planting pace.
Meanwhile, Chicago SRW prices were down 0.97% and Kansas City wheat contracts down nearly 1.4%, as in northen emisphere the harvest started.
Going inside the numbers, CBOT corn prices, closed down $0.015 at $7.77/bu.
CBOT soybean prices finished the week $0.270 stronger at $17.32/bu.
Soymeal rose $2.4/smt for the week at $432.3 smt.
Soy oil fell $1.36 cents, to close at $79.57.
CBOT soft red winter (SRW) prices shedded by $0.113 to close at $11.58/bu.
KCBT hard red winter (HRW) prices fell $0.175 ending at $12.35/bu.
MGE hard red spring (HRS) prices soared by $0.258 to close at $13.05/bu.
Meantime, as of May 26, 2022, US corn 3YC (Gulf) was at $341/mt (down $7/mt from last week).
US soybean 2Y (Gulf) quoted at $688/mt (up $15/mt from last week).
As for wheat, US wheat No 2 Hard Red Winter (HRW) was valued at $523/mt (down $26/mt from last week).
US wheat No 2 Soft Red Winter (SRW) was at $455/mt (down $21/mt from last week).
USDA’s daily Ethanol Report showed the average cash price for corn oil slipped from between 80.88-82.14 c/lb regionally last week to 80.25-81.5 cents this week.
DDGS FOB prices were firm in the Gulf from $290-$305/ton, while PNW offers increased from $358 to $365.
Cash ethanol prices averaged $2.64-$2.82 regionally, compared last week when were between $2.65-$2.78/gal.
Meanwhile gasoline futures ended the week at $3.9039, that was up from $3.8465/gal posted last week.
USDA’s weekly Crush report showed processing value of soybeans was $19.99/bu on $17.83 cash beans.
Last week showed the estimated processing value of soybeans was $20.09/bu on $17.6 cash beans.
On the weather side, the Texas panhandle and central and northern Oklahoma received much-needed rain this week, with as much as six inches in some areas.
Across the High Plains, the rain was widespread with varying amounts.
Northeast Nebraska saw considerable improvement to severe drought conditions.
In the western portion of the United States, conditions were dry in wheat-growing areas.
However, considerable seasonal rain has shrunk areas rated with abnormal dryness and severe drought conditions across Washington, Oregon, Idaho, and Montana.
More wet weather will be rolling through the Northern Plains this weekend, with drier conditions more likely farther east, according to the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts seasonally cool weather returning to the Corn Belt between June 3 and June 9, with wetter-than-normal conditions sticking around the Northern Plains.
In this context, corn basis bids were largely steady but slightly mixed at a few Midwestern locations on Friday, moving as much as 3 cents higher at an Iowa ethanol plant and as much as 3 cents lower at an Ohio elevator.
Soybean basis bids were mostly steady to soft across the central U.S. after dropping 5 to 15 cents lower at five Midwestern locations.
An Indiana processor bucked the overall trend after firming 5 cents higher.
As for wheat, basis for all wheat classes was down in both the Gulf and Pacific Northwest (PNW) this week.
Well-timed rain in the central Plains helped ease basis for HRW.
Advancing planting progress and significant moisture in parts of eastern Montana and western North Dakota also eased HRS basis.
Meantime, the weekly Commitment of Traders report showed a 48,242 contract reduction in managed money’s net position for corn futures and options through the week that ended 5/24.
That wk/wk reduction, from 340k contracts to 291.4k, was mainly fueled by 30.9k corn spec longs being closed.
Their short position itself was the largest since December 2020.
Commercial hedgers also reduced exposure through the week, buying back 54.8k contracts for a 58k lighter net short of 635,456 contracts.
As for soybean, the report showed managed money soybean traders were 163,067 contracts net long as of 5/24.
That was a wk/wk increase of 15.7k contracts on net new buying.
Commercial soybean traders also added 10.4k new shorts for a 12,294 contract stronger net short of 245,822.
For soymeal, the weekly positions update from the CFTC showed specs were 13,231 contracts more net long wk/wk on short covering.
That left the group 49,154 contracts net long.
Soybean oil spec traders cut their net long by 17,243 contracts to an 18-wk low 68,994.
Their change from last Tuesday was mainly rotation as 10k longs were closed to 7.3k new spec shorts opened.
As for wheat, CoT data showed managed money firms were 22,254 contracts net long in SRW.
The 4,334 contract net long reduction from 5/17 to 5/24 was primarily long liquidation.
In KC wheat, the funds were 2,244 contracts less net long via new short sellers.
The group was still 44.5k contracts net long as of Tuesday’s settle.
CFTC reported spring wheat speculative traders as 15,231 contracts net long. That was down 2,944 wk/wk on long liquidation.
In energy markets, oil prices rose on Friday.
Both benchmark, closed out the week with gains.
The U.S. Memorial Day holiday weekend, rapresent the start of peak U.S. demand season.
Both gasoline and heating oil futures outpacing crude this year due a strong demand.
Meanwhile, Iranian forces seized two Greek oil tankers on Friday in the Persian Gulf.
On the other hand, European Union contined to negotiate over whether to impose an outright ban on Russian crude oil.
Hungary’s resistance to oil sanctions and reluctance of other countries have held up implementation of a sixth package of sanctions by the 27-member EU against Russia.
Global oil benchmark Brent crude could rise past $150 a barrel if there is a sharp contraction in Russian oil exports, Bank of America (BofA) Global Research said on Friday.
Meantime, Russian President Vladimir Putin told Austrian Chancellor Karl Nehammer that Moscow would meet its natural gas delivery commitments.
In this context, Brent crude rose $2.03, or 1.7%, to settle at $119.43. U.S. West Texas Intermediate (WTI) crude rose 98 cents, or 0.9%, to settle at $115.07 a barrel.
For the week, Brent rose 6% while WTI gained 1.5%.
Meanwhile, U.S. energy firms cut oil and natural gas rigs this week for the first time in 31 weeks, but the rig count rose for a record 22nd month in a row even.
The U.S. oil and gas rig count, an early indicator of future output, fell by one to 727 in the week to May 27.
However, despite this week’s rig decline, the total count was still up 270, or 59%, over this time compared last year.
In May, the total oil and gas rig count rose 29, the biggest monthly rise since Febrauary.
U.S. oil rigs fell two to 574 this week, their first decline in 10 weeks, while gas rigs rose one to 151 to their highest since September 2019.
For the month, the oil rig count rose for a record 21 months in a row, while the gas rig count was up for a ninth month in a row, the most since May 2017.
Even though the rig count has climbed every month since August 2020, weekly increases have mostly been in single digits and oil production is still below pre-pandemic record levels as many companies focus more on returning money to investors and paying down debt rather than boosting output.
U.S. crude production was on track to rise from 11.2 million barrels per day (bpd) in 2021 to 11.9 million bpd in 2022 and 12.9 million bpd in 2023, according to federal energy data.
That compares with a record 12.3 million bpd in 2019.
In freight markets, the Baltic Exchange Dry Index slipped 252 points, or 8.6% to 2,681 points on Friday, the lowest since May 5th, extending losses for the fourth straight session, amid lower rates across all its vessel segments.
The capesize index, which tracks iron ore and coal cargos of 150,000-tonnes, plunged 19% to 2,818 points; and the panamax index which tracks cargoes of about 60,000 to 70,000 tonnes of coal and grains, fell 2.9% to 3,048 points.
Among smaller vessels, the supramax index shed 27 points to 2,796 points.
The Baltic Exchange Dry Index plunged 19.8% this week, heading for its first weekly fall in seven.
Particularly, as for Capesize segment, this week, the tailwinds turned to headwinds for the Capesize market as a dip in values amongst bearish sentiment was evident for most regions.
The Pacific Ocean trade had the charterers in the driving seat as they often managed to achieve lower than last done fixing levels throughout the week as they encountered ample tonnage options.
This was reflected on the C5 West Australia to Qingdao route as it opened the week at $15.05 to close at $11.741, while the Transpacific C10 closed at $19,313.
With the driving force of the Pacific basin now waning, the Atlantic region has followed suit.
With low spot market cargo levels and tonnage building in the area, the return to lower levels looks likely.
The Transatlantic C8 dropped to $22,100 by Friday.
Ballaster tonnage for the South Africa and Brazil to Far East trade is heard to be building, coinciding with some sharp drops in the Tubarao to Qingdao C3 route, which now stands at $31.675.
Backhaul trade, which has been in hot form lately was quieter this week, while a more standard shorter variant of backhaul trade from South Africa to the Continent was heard fixing at much lower than published levels.
This set the bar down considerably lower on the C16 Backhaul route, almost halving the value by week’s end to $17,350.
As for Panamax, a week of negativity engulfed the Panamax market with all rates falling sharply.
Reduced fixing volumes and a build up of tonnage in most origins gave charterers the upper hand and reduced bids consequently became common theme.
The Atlantic lacked any real demand both in the North and the South this week.
Ballaster tonnage began to show signs of under pinning rates and several APS load port deals were now concluded and being traded.
Earlier in the week a 82,000-dwt delivery Gibraltar was able to achieve $29,500 for a transatlantic round via North Coast South America, but such levels were unrepeatable by the end week.
Asia began the week with some healthy NoPac demand and an 81,000-dwt delivery Japan achieved a rate of just over $30,000, albeit on a pet coke trip which normally commands a premium.
However, rates by the end of the week for standard Australia/NoPac trips were reduced to being traded at closer to $26,000 levels.
As for Ultramax/Supramax, a rather protracted week as widespread European holidays dimmed activity levels.
Sentiment eased in most areas as the week closed.
The Atlantic saw limited fresh enquiry from key areas such as the US Gulf whilst further south, East Coast South America remained finally balanced.
From Asia, the week started on an optimistic note.
However, there was limited fresh enquiry from the south which saw an easing in owners expectations.
Further north there was a more positive feel again, but as the week closed this was being eroded.
Period activity saw a 63,000-dwt open Jakarta fixing minimum to about six months trading at $36,500.
In the Atlantic, a little more activity was seen from the Continent.
A 56,000-dwt open Antwerp was heard fixed for trip East Mediterranean at $26,000.
Whilst in the Mediterranean a 58,000-dwt open Algeria fixed a trip to West Africa at $29,000.
From Asia, a 63,00-dwt open Surabaya was fixed for a trip redelivery China in the mid $30,000s.
As for Handysize, with holidays in large parts of Europe and many places round the world, activity was limited.
In the US Gulf a 36,000-dwt was fixed for a trip to the UK – Continent with an intended cargo of wood pellets at $32,000. A 39,0000-dwt was fixed from Norfolk for a trip to East Coast Mexico with an intended cargo of Coal at $34,000.
A 28,000-dwt was fixed for a trip from Istanbul via Bourgas to Tunisia with an intended cargo of grains at $21,250.
In Asia a 28,000-dwt was fixed from Matsure for end May delivery via Australia to the Continent at $31,500 and a 38,000-dwt was fixed from China to South Africa with an intended cargo of steels at $38,000.
In China period enquiry remained active and a 38,000-dwt had rumoured to have seen low $30,000s for short period but was holding out for higher levels.
On week 21, freight rates in the Azov and Black Sea region dropped again.
Thus, the rates for a 3K parcel of wheat from Azov to Marmara Sea ports is $36 pmt.
There are very few goods in the market right now due to several factors at once.
High export fees on grains and the strengthening of the ruble as well as a weak demand in the Turkish market do not allow the charterers to conclude contracts, Sea Lines shipbrokers explain.
At the same time, the export of Ukrainian grain via the Danube ports is actively underway.
The rates are very high there, because the unprecedented cargo traffic has created huge queues at the entrance to the Danube.
However there is no sharp decline in the Sea of Azov, since most shipowners are still fulfilling previously signed contracts, or are working cargoes from Ukraine.
According to Sea Lines, on week 21, freight rates for shipping wheat by 3,000 dwt bulkers from Azov make $34 to the Black Sea, $36 to Marmara, $51 to Mersin and $61 to Egypt.
Freight rates from Rostov AB (after bridge) are $1 above, from Rostov BB (before bridge) the same, from Yeisk and Taganrog $1 below, and from Temryuk $3 below those from the port of Azov.
In the Caspian, freight rates are on the previous week’s level.
On week 21, freight rates for shipping corn by 3,000 dwt bulkers to Iran make $22 from Aktau, $28 from Makhachkala, and $35 from Astrakhan.
In equity markets, global markets enjoyed a broad-based rally on Friday, while the yield on benchmark U.S. Treasuries fell after data showed that U.S. consumer spending rose in April and the uptick in inflation slowed, two signs the world’s largest economy could be on track to grow this quarter.
Particularly, the Commerce Department said that inflation rose 6.3% in April from a year earlier, the first slowdown since November 2020 and a sign that high prices may finally be moderating, at least for now.
U.S. Apr personal spending which accounts for more than two-thirds of U.S. economic activity, rose +0.9% m/m, stronger than expectations of +0.8% m/m and March personal spending was revised upward to +1.4% m/m from+1.1% m/m.
However, U.S. Apr personal income rose +0.4% m/m, weaker than expectations of +0.5% m/m.
U.S. Apr PCE core deflator rose +0.3% m/m and +4.9% y/y, right on expectations.
The +4.9% y/y gain was the weakest report in 4 months.
On the negative side, the final University of Michigan U.S. May consumer sentiment index was unexpectedly revised downward by -0.7 points to a 10-3/4 year low of 58.4 from the previously reported 59.1.
Strength in technology stocks Friday boosted the overall market, with Dell Technologies closing up +12% and Marvell Technology up +6% after both companies reported stronger-than-expected quarterly earnings.
Positive carry-over from a rally in China’s Shanghai Composite Friday was also supportive for U.S. stock indexes after two of China’s biggest internet companies, Alibaba Group Holding and Baidu, reported better-than-expected quarterly sales growth.
Asian shares also benefited from hopes of stabilizing Sino-U.S. ties and more Chinese government stimulus.
The United States, indeed, would not block China from expanding its economy, but wanted it to adhere to international rules, Secretary of State Antony Blinken said on Thursday in remarks that some investors interpreted as positive for bilateral ties.
Meantime, global equity funds are returning to the market to buy stocks, which is supporting prices.
According to a Bank of America note citing EPFR Global data, investors added about $20 billion to global stock funds in the week ended May 25, led by inflows into the U.S.
In this context, the MSCI world equity index, which tracks shares in 45 nations, was up 2.12% on Friday.
European shares hit a three-week high and rose 1.42%.
Britain’s FTSE also hit a three-week high, and was heading for its best weekly showing since mid-March.
Emerging market stocks rose 1.98%.
MSCI’s broadest index of Asia-Pacific shares outside Japan closed 2.17% higher, while Japan’s Nikkei rose 0.66%.
In this context, all three major U.S. stock indexes on Friday rallied for a third day, with the S&P 500, Nasdaq 100, and Dow Jones Industrials posting 3-week highs bringing a decisive end to their longest weekly losing streaks in decades.
Particularly, the Dow Jones Industrial Average rose 575.77 points, or 1.76%, to 33,212.96.
The S&P 500 gained 100.4 points, or 2.47%, to 4,158.24.
The Nasdaq Composite added 390.48 points, or 3.33%, to 12,131.13.
Smaller company stocks also gained ground.
The Russell 2000 rose 49.66 points, or 2.7%, to 1,887.90.
For the week, the Nasdaq composite bounced by 6.84%.
The S&P 500 jumped 6.58% higher, its best weekly gain since November 2020.
The Russell 2000 gained 6.46%.
The Dow Jones Industrial Average rose by 6.24%.
Meantime, the yield on benchmark 10-year Treasury notes was last 2.7432%.
It had hit a three-year high of 3.2030% earlier this month on fears that the Fed may have to raise rates rapidly to bring inflation under control.
Lower yields show the Fed’s monetary policy is succeeding in tightening credit and slowing down prices.
“The 10-year yield is suggesting we don’t have to have inflation break above 9-10%,” some analysts said.
And seems “we are getting close to a peak in inflation” they added.
Meantime, the two-year yield , which rises with traders’ expectations of higher fed fund rates, fell to 2.4839%.
In currency trading, the swing toward broadly positive market sentiment drove the dollar to one-month lows against an index of currencies.
The dollar index (Jun ’22) on Friday fell by -0.160 (-0.16%) at 101.698 to a 1-month low as the rally in stocks curbed liquidity demand for the dollar.
For the week the dollar index fell 1.43%.
The EUR/USD on Friday rose by +0.0011 (+0.1%) to 1.0735.
Gains in EUR/USD, however, were limited Friday on dovish comments from ECB Governing Council member de Cos who said “the process of increasing interest rates should be gradual.”
The USD/JPY on Friday fell by -0.01 (-0.01%) to 127.13, as the yen strengthened on a weaker dollar.
The yen also has carry-over support from Thursday when BOJ Governor Kuroda said the BOJ could manage an exit from its decades-long monetary policy and that U.S. rate rises would not necessarily keep the yen weak.
For the week, the euro rose by 0.0173 points or 1,64%, while the yen lost 0.73 poits or 0.57%.
In Canada, heavy rain in Manitoba, a Canadian province, has slowed spring grain planting, according to a May 24 crop report.
The provincial seeding report showed 10% completion, behind the 5-year average of 77%, and estimated that farmers were about 3 to 4 weeks behind normal seeding progress.
Alberta, a neighboring Canadian province, showed spring wheat planting was 59% complete, ahead of the 5-year average of 55%.
Meanwhile, Saskatchewan reported 52% of spring crops were planted as of 5/23, compared to 33% last week and the 78% average.
Meantime, as of May 24, 2022, Canadian wheat prices for FOB delivery West Coast were (Cdn$/mt):
– for the N1 class CWRS 13.5% – $644.7 per tonne, down C$55.82/t from prior week;
– for the N2 class CWRS 13.0% – $628.16/t, down C$66.55 wow;
– for the N3 CWRS – $642.33/t, down C$57.24 from prior week.
As of May 24, 2022, for the N1 CWAD 13% (durum wheat first class) deferred average street prices for delivery in May/Jun ’22 were at C$587.90 unchanged week on week.
However, export basis West Coast & Central SK fell from C$ 179.44 to 177.32 per tonne, as delivered FOB price Great Lakes was posted at C$ 765.22, down C$2.12 from prior week.
Meantime, per latest data from the European Commission, as of May 24, 2022, Durum wheat – CA St Lawrence (CWAD) was offerd at C$706.13/t, down $32.11/t from prior week.
As of May 27, 2022, for the N1 CWAD 13% (durum wheat first class), average street prices in REGIONAL ZONES were at C$587.73 per tonne, up C$3.82 from prior week.
(1USD=Cnd$1.2723 down from past week when was 1.2839).
In South America, as of May 26, 2022 – Argentina Wheat Grade 2 export price, (Up River) was at $475, down $6 from prior week.
Argentina corn feed was down $1/t for the week, closing at $318.
Brazilian corn feed (Paranagua) was valued at $329, up $5 from prior week.
Argentina feed barley, was unchanged to $382.
Argentina soybean was up $10 at $669.
Brazilian soybean gained $15 finishing the week at $689.
Meantime, Argentina’s fertilizer association, Fertilizar, said that fertilizer use is expected to drop 7% compared to last year due to higher fertilizer prices, tight availability and political uncertainty.
In Europe, French farm office FranceAgriMer reported that the country’s soft wheat quality ratings have degraded another four points lower, with 69% rated in good-to-excellent condition through May 23.
Durum conditions also moved down to 67% from 74% a week ago.
Quality ratings have eroded 20 points lower over the past three weeks.
Year-ago results saw 80% of the crop in good-to-excellent condition.
French barley conditions also dropped, as in the previous week.
The good to excellent rating for winter barley fell 5 percentage points to 66%, while the corresponding score for spring barley dropped 8 percentage points to 61%, FranceAgriMer’s report showed.
Also, French farm office FranceAgriMer reports that 99% of the country’s 2022 corn crop has been planted through May 23.
It also notes that 91% of the crop is rated in good-to-excellent condition, versus 93% in the prior week.
In spite that, grain trade association Coceral raised on Friday its forecast of this year’s soft wheat production in the European Union and Britain, to 143.0 million tonnes from 141.3 million estimated in March, notably due to beneficial rainfall in Spain.
The raised forecast compared with 2021 production of 143.9 million tonnes, Coceral said.
However, Coceral raised slightly its projection for the French soft wheat crop, to 34.8 million tonnes from 34.5 million in March, as it revised up the crop area while leaving unchanged its yield forecast.
That contrasts with reduced estimates from some analysts and traders who have pointed to stress on plants from very dry conditions.
Forecast for EU soft wheat production, not including Britain, was seen at 127.4 million tonnes compared with 126.9 million in March, Coceral’s data showed.
For barley, Coceral raised its harvest outlook for the EU plus Britain to 60.0 million tonnes from 59.2 million in March, now slightly above a 2021 crop of 59.4 million.
Projected corn production for the EU’s 27 countries and Britain was lowered to 66.0 million tonnes from 67.3 million in March, now below a 2021 crop of 67.2 million, Cocereal said.
For rapeseed, Europe’s main oilseed crop, forecast output in the EU and Britain this year was increased to 19.5 million tonnes from 19.3 million and well above a 2021 crop of 18.5 million.
Meantime, the Paris-based Euronext exchange saw September’s wheat prices to close the week at €414.75, a decrease of €6 from past week.
June corn price was down €8/t for the week, closing at 352.25 euros per ton.
Rapeseed for August deadline, slumped €42.25/t for the week, to close €828.25/t.
July-22 UK wheat feed futures closed at £314.75/t, down £19.95/t week on week.
Meantime, as of May 26, 2022, FOB prices in US dollar for French wheat with 11.5% protein and June delivery, were at $449/mt, down $9 from prior week.
German wheat Deposilo Hamburg, was at $434.77/t, up $7/t from prior week.
Baltic wheat, delivery first Vilnius, was at $418.67/t, up $10.98/t from prior week.
French durum wheat – basis La Pallice, was at $547.49/mt, up $8.83 from prior week.
Italian durum wheat Bologna (Delivered to first customer), was valued this week at $566.45 per tonne up $10.89 from past week.
Corn, delivered Bordeaux port was at $371.43 per tonne, down $8.8/t from past week.
Corn FOB Rhin Spot – July 2021 basis was down $14.34 to $355.33/t.
Feed barley FOB Rouen was at 402.56$/t, down $10.41 per tonne.
Malting barley FOB Creil Spot – July 2021 basis was at $509.91 per tonne, up $18.78/t from prior week.
Rapessed FOB Moselle – 2021 harvest was at 901.74$/ton, up $19.81 compared to prior week.
Standard sunseed FOB Bordeaux – 2021 harvest was up 27.86$ from prior week at $1073.5 per tonne.
(Eur/USD = 1.0735 vs last week 1.0562).
From North Africa, Egypt, will allow wheat shipments with up to a 14% moisture level, up from 13.5%.
The trade ministry said the move would help with “current supply conditions.”
The increased moisture basis will open Egyptian wheat tenders to more offers, according to a regional trader who noted that some EU-origin wheat has 14% moisture basis offered in their contracts.
Meantime, the government has raised its procurement local price by 22% from last year, to $311.23-$318.40 per tonne, though that is still well below international prices and some farmers say it is not enough given rising input and labour costs.
Despite the dissatisfaction, farmers say selling to the government is convenient, and guarantees payment for those who are in debt or in need of quick money.
As of Thursday, the government had procured 3 million tonnes from the local harvest, which runs till July.
According to two private sector traders, some private mills have been offering 7,000 Egyptian pounds ($377) per tonne for local wheat, around 1,100 Egyptian pounds ($59) more than what the government is offering but still well below the international price.
News reports of the government seizing hundreds of tonnes of illegally-traded wheat from private mills have dominated local headlines in recent weeks.
Farmers’ struggles with rising costs of inputs including fertilizer and labour also raise questions over a long-standing push to use scarce arable land and water to expand wheat production and increase self-sufficiency.
($1 = 18.5300 Egyptian pounds)
From the Middle East, Iran is set to bring in 5 MMT of wheat from Russia.
In Russia, Russian wheat export prices rose last week.
Particularly, prices for wheat with 12.5% protein content from Black Sea ports were at $395-405 free on board (FOB) at the end of last week, up $10 from a week earlier, the Sovecon agriculture consultancy said.
IKAR said that the price rose by $20 to $410 per tonne, but there were no deals signed.
Meantime, in the domestic market, prices fell due to the stronger rouble currency, muted demand from exporters and domestic consumers, as well as rising supply from farmers who liquidate their grain stocks ahead of the new crop.
The index of exporters’ purchase prices for wheat in the deep-sea ports of the Black Sea decreased by 3.8% over the week (from 16.1 thousand rubles to 15.5 thousand rubles per ton) against the background of declining demand on the eve of the end of the season and the strengthening of the ruble.
Indeed, prices for domestic 3rd class wheat, European part of Russia, excludes delivery were at 15,375 rbls/t ($258.40), down 500 rbls from prior week, according to Sovecon;
Prices for sunflower seeds were at 39,175 rbls/t, down 1,475 rbls from prior week (Sovecon);
Prices for domestic sunflower oil were at 106,025 rbls/t -5,675 rbls (Sovecon);
Prices for domestic soybeans were at 50,500 rbls/t unchanged (Sovecon);
Prices for export sunflower oil were at $1,950-2,050/t +$50 (Sovecon);
Price for export sunflower oil were at $1,890/t -$50 (IKAR);
Price for white sugar, Russia’s south was at $988.8/t +$28 (IKAR).
($1 = 66.7000 roubles).
Meantime, Russia has set out its grain export taxes for June 1-7, 2022.
It will increase for wheat to $121.2 per ton against $110.5 per ton this week, according to the materials of the Ministry of Agriculture.
The duty on barley exports remains at the same level of $76.5 per ton, while the duty on corn will decreased to $73.9 from $76.5 a week ago.
The wheat rate is calculated based on the indicative price of $373.2 per ton, for barley — $294.3 per ton, for corn $290.7 per ton.
That compared the prior week when indicative prices were at $357.9 per ton for wheat, $294.3 per ton for barley, $294.3 per ton for corn.
Meantime, Russia will not remove its ban on exports of sunflower seeds at the end of August, Interfax news agency reported on Friday, citing the first deputy agriculture minister Oksana Lut.
Russia banned exports of sunflower seeds from April 1 to Aug. 31 to protect domestic supply for sunflower oil producers.
The ban “will not be removed until there is enough raw material to fulfil our processing capacity,” Interfax quoted Lut as saying.
Also, in a meeting of the Eurasian Economic Commission (EEC) this week, Russia said that members should impose quotas and duties on wheat and flour exports to third countries.
The Russian agriculture minister said the move would prevent the reexport of Russian grain through Eurasian Economic Union (EAEU) members.
The EEC and EAEU are economic blocs consisting of former Soviet countries.
Meantime, Interfax estimates Russia’s 22/23 wheat export shipments will be 40 MMT out of an 86 MMT crop.
That would be up from the 84.7 MMT crop reaped in 21/22.
This export projection is larger than the USDA forecasts of 33 MMT for old crop and 36 MMT for NMY.
In Ukraine, according to APK-Inform, the indicative forward export prices of Ukrainian wheat increased again last week.
The indicative offer prices of new-crop 12.5%, 11.5% and feed wheat increased by 15-20 USD/t to 365-390, 360-385 and 325-345 USD/t FOB (July-August) last week.
Also the bid prices for corn increased slightly in the Ukrainian ports of the Danube (Reni and Izmail) last week.
Particularly, the bid prices of corn increased by 5-10 USD/t to 235-255 USD/t CPT-port.
The bid prices of corn for delivery to the port of Constanta remained steady at 285-305 USD/t or 275-290 EUR/t.
The prices for delivery to port of Giurgiulești totaled 240-255 USD/t.
Meantime, the Ukrainian Agribusiness Club estimates that the country’s total grain production will drop nearly 38% this season.
That includes corn production sliding 39% lower to 25.7 MMT and wheat production dropping 44% to 18 MMT.
In Australia, logistics issues in the northern market have held prices aloft this week while in southern markets, signs of softening in global pricing as well as improved road-freight ability have allowed wheat prices to drift lower.
The market for H2 wheat delivered Brisbane consumer breached $600 per tonne, making the Brisbane wheat market the dearest in the country, and putting it ahead of even Adelaide.
It reflects the squeeze on truck availability in southern Queensland, and ongoing rain delays affecting grain movements on farm and at ports, storage sites and mills.
In this context, indicative delivered prices in Australian dollars per tonne were:
Barley Downs: $500 down $2 from May 19;
SFW wheat Downs: $505, unchanged from May 19;
Sorghum Downs: $395, up $13 from May 19;
Barley Melbourne: $446, up $6 from May 19;
ASW wheat Melbourne: $493 down $9 from May 19.
SFW wheat Melbourne: $490 down $12 from May 19.
(AUD/USD=> US$0.7161 vs. US$0.7039 past week).
On international trade scene:
- Bangladesh scrapped an international tender to import 50,000 tonnes of wheat as it received only one offer to supply the grain that was too expensive, two officials from the state grains procurement agency said on Friday.
Trading house Agrocorp was the only participant and the price offered was $548.38 a tonne CIF liner out in the tender, issued by the Directorate General of Food, the procurement agency.
Liner out costs included ship unloading costs for the wheat seller.
- The lowest price offered in the tender being held by Pakistan to purchase 500,000 tonnes of wheat was believed to be $515.49 a tonne, cost and freight (c&f) included.
All offers were:
FalconBridge: 110 kmt at $515.49;
Bunge: 110 kmt at $526.00;
Cargill: 116 kmt at $532.40;
Agrocorp: 110 kmt at $534.38;
LDC: 100 kmt at $534.90;
Vittera: 120 kmt at $537.00.
The Trading Corporation of Pakistan (TCP) is still considering the offers and no purchase has been reported.
- Jordan has boutght from Ameropa 60k barley at $452 CFR Aqaba for shipment between 16/30 August 2022.
Other offers were Cargill at $463 and Bunge at $484.
There was another offer from Viterra but with no price.
The next barley tender is expect for 1st June 2022 and shipment in September &/or October.
- Jordan’s state grain buyer is believed to have made no purchase in an international tender to buy 120,000 tonnes of milling wheat which closed on Tuesday.
Only one trading house participated, CHS.
A new tender is expected to be issued in coming days closing on June 2.
- Turkey bought 175,000 t of corn.
- South Korea purchased 125.000t of wheat sourced from the United States, Canada and Australia in a tender that closed on Thursday.
Approximately one-third of the total was sourced from the U.S.
The grain is for shipment starting in July.
Watching next week market, the final few days of May will start with US markets closed on Monday in observance of Memorial Day.
The markets will open Monday night for the Tuesday session.
USDA reports will also be pushed back a day with Export Inspection on Tuesday morning and Crop Progress that afternoon.
Wednesday will have the monthly USDA domestic use reports for April via the Grain Crushing, Fats & Oils, and Cotton Systems reports.
Move to Thursday and EIA will release ethanol production and stocks data.
Weekly Export Sales data will also be a day late, with the report published on Friday morning.
June live cattle options also expire on Friday.
To all of you, we wish you a good day and a good weekend.
Author: Sandro F. Puglisi