Good morning Farmer Family …

US farm markets ended mixed but mostly lower on Friday, as a broad sell-off affected stock, energy and other commodity prices.

Corn prices, indeed, trended 0.33% higher during the end week session, but soybeans eased by 0.15%.

The soymeal market rallied to new contract highs, up 0.96%, meanwhile soybean oil faded by triple digits, down 3.08% for the session.

Wheat losses were variable, with Chicago SRW gave back 0.56%, Kansas City HRW settled down 0.88%, and Minneapolis spring wheat went home with 0.35% losses. 

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

Argentina’s drought was still in focus.

Thus, the corn market has been weighing potential drought losses in the South American country, against more favourable prospects in Brazil.

As for soybean, the Buenos Aires grains exchange warned on Thursday that, despite recent rainfall, the historic drought over the country’s core agricultural region could still negatively impact the current soybean harvest.

Supporting prices, private exporters on Friday reported to the USDA having sold 132,000 metric tons of soybeans for delivery to unknown destinations during the 2023/2024 marketing year.

However, some analysts see limited upside to soy prices given expectations that Brazil will harvest a record soybean crop, despite initial rain delays to harvesting.

Some analysts also noted rising U.S. tensions with China, the biggest global importer of the oilseed, as a potential bearish factor for soybean futures after a Chinese spy balloon was tracked flying across the United States.

As for wheat, the short-term availability of Black Sea supplies, highlighted by Egypt’s purchase on Thursday of 535,000 tonnes of wheat expected to be sourced from Russia, surely curbed prices.

However, wheat and soybean prices ultimately eased on Friday as dollar jumped, after much stronger than anticipated U.S. jobs figures, which potentially give the Federal Reserve more leeway to keep hiking interest rates.

As we know, a stronger dollar makes U.S. commodities more expensive for holders of other currencies.

For the week, corn prices was down 0.8%.

Soybeans gained 1.59%. 

Soy meal 4.86% since prior Friday. 

Soy oil, in contrast, lost another 2.57 %.

The wheat complex was firm again past week. 

Chicago was the leader up 0.9% week on week.

Kansas City gained 0.43% on prior week.

Minneapolis spring wheat was substantially unchanged from prior week.  

The U.S. Commodity Futures Trading Commission said on Thursday that as a result of the ransomware attack on ION Trading UK, the CFTC’s weekly Commitments of Traders report will be delayed until all trades can be reported. 

CFTC reports provide a snapshot of investor positioning on various assets, including grains oilseeds and crude oil.

Meantime, traders were increasingly setting their sights on the next World Agricultural Supply and Demand Estimates (WASDE) report from USDA, which the agency will release on Wednesday.

In this context, basis bids for soybeans shipped by barge to the U.S. Gulf Coast were mostly steady to weak on Friday on seasonally slowing demand, while CIF corn basis bids were largely unchanged.

Barge freight rates were narrowly mixed as improved near-term river shipping conditions anchored spot values while some deferred rates were underpinned by expected tight supplies of empty vessels.

Barge lines were able to increase vessel drafts at St. Louis and further upriver as water levels there rose late past week. 

Reduced barge drafts in recent days had limited the amount of grain that shippers can load.

Soybean export demand is slowing seasonally as newly harvested Brazilian beans are beginning to flood the market.

Wheat basis values at the Gulf were mostly flat on dull demand as rival exporters continue to offer shipments at lower prices.

Bids for CIF soybean barges loaded in February were a penny lower at 102 cents over Chicago Board of Trade March futures.

FOB basis offers for February soybean shipments fell 5 cents to around 120 cents over March futures.

CIF corn barges loaded in February were bid unchanged at 85 cents over CBOT March corn futures.

FOB offers for February corn shipments held at around 90 cents over CBOT March futures.

On this morning, Chicago soybean prices inched lower.

Wheat edged higher, while corn was largely unchanged.

Notably, the most-active soybean contract on the Chicago Board of Trade was down 0.1% at $15.31 a bushel, as of 04:43 GMT. 

Wheat gained 0.6% to $7.61-1/4 a bushel, while corn was largely unchanged at $6.77-1/4 a bushel.

In energy markets, oil prices fell to over three-week lows on Friday.

Notably, Brent crude futures fell $2.23, or 2.7%, to $79.94 a barrel, after rising to a session high of $84.20. 

It hit a session low of $79.72, its lowest since Jan. 11.

U.S. West Texas Intermediate crude (WTI) ended down $2.49, or 3.3%, at $73.39, after trading between $78.00 and $73.13, its lowest since Jan. 5.

Brent registered a 7.8% decline past week while WTI dropped 7.9%.

The U.S. central bank on Wednesday scaled back to a milder rate increase than those over the past year, but policymakers also projected that “ongoing increases” in borrowing costs would be needed.

Meantime, on Friday data showed U.S. job growth accelerated sharply in January amid a persistently resilient labour market.

European Union countries agreed to set price caps on Russian refined oil products.

EU diplomats said the price caps are $100 per barrel on products that trade at a premium to crude, principally diesel, and $45 per barrel for products that trade at a discount, such as fuel oil and naphtha.

However, the Kremlin said the EU embargo on Russia’s refined oil products would lead to further imbalance in global energy markets.

Meanwhile, although analysts noted a sharp jump in traffic in China’s 15 largest cities after the Lunar New Year holiday, Chinese traders had been “relatively absent.”

Also, in U.S. supply, energy firms past week cut the number of oil and natural gas rigs by the most since June 2020, energy services firm Baker Hughes Co (BKR.O) said. 

U.S. oil rigs indeed fell 10 to 599 last week, their lowest since September, while gas rigs dropped by two to 158.

On this morning, oil prices inched up.

Brent crude futures, indeed, rose 32 cents, or 0.4%, to $80.26 a barrel at 07:00 GMT, while U.S. West Texas Intermediate (WTI) crude futures climbed 22 cents, or 0.3% higher, to $73.61.

On Sunday International Energy Agency (IEA) Executive Director Fatih Birol highlighted that China’s recovery remains a key driver for oil prices.

The IEA expects half of global oil demand growth this year will come from China, where Birol said jet fuel demand was surging.

He said depending on how strong that recovery is, the OPEC+ may have to reassess their decision to cut output by 2 million barrels per day through 2023.

Saudi Arabia’s energy minister also warned over the weekend that sanctions and underinvestment in the energy sector could result in a shortage of energy supplies.

In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, fell for the fifth straight week on Friday, pressured by weaker rates across vessel segments.

The overall index, indeed, fell 19 points, or about 3%, to 621, its lowest since mid-June 2020.

The main index was down 8.1% for the week.

Notably, the capesize index lost 16 points, or about 3.6%, to over five-month low at 429.

The index was down 20% for the week, also marking its fifth straight weekly fall.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, decreased $127 to $3,561.

The panamax index lost 48 points, or about 4.9%, at 940, its lowest since June 15, 2020. 

The index was down 10.8% for the week.

Average daily earnings for panamaxes which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $438 to $8,456.

Among smaller vessels, the supramax index fell 2 points to 682.

In equity markets, US stock indexes settled lower on Friday.

Weakness in technology stocks weighed on the overall market Friday after Apple, Alphabet, and Amazon.com reported disappointing quarterly earnings results. 

However, Apple erased early losses, moved higher, and pulled the indexes up from their worst levels.

Meanwhile, Friday’s stronger-than-expected U.S economic reports on Jan payrolls and Jan ISM services sent bond yields soaring and weighed on stocks on concern the Fed will need to keep raising interest rates. 

Notably, U.S. Jan nonfarm payrolls surged +517,000, much stronger than expectations of +188,000 and the largest increase in 6 months.  

Also, the Jan unemployment rate unexpectedly fell -0.1 to a 53-year low of 3.4%, showing a stronger labor market than expectations for an increase to 3.6%.

U.S. Jan average hourly earnings eased to +4.4% y/y from 4.8% y/y in Dec, the slowest pace of increase in 17 months but stronger than expectations of +4.3% y/y.

The U.S. Jan ISM services index rose +6.0 to 55.2, stronger than expectations of 50.5.

As a result, U.S. Treasury yields climbed after the payrolls report, with those on the benchmark 10-year note up 13 basis points to 3.528%, from 3.398% late on Thursday, poised for their biggest one-day jump since Oct. 19.

Global bond yields also surged on Friday undercutting stock prices, with the 10-year German bund yield rose +11.3 bp to 2.193%.

In this context, the Dow Jones Industrial Average fell 127.93 points, or 0.38%, to 33,926.01; the S&P 500 lost 43.28 points, or 1.04%, to 4,136.48; and the Nasdaq Composite dropped 193.86 points, or 1.59%, to 12,006.96.

Even with Friday’s declines, both the S&P 500 and Nasdaq notched weekly gains, with the Nasdaq securing a fifth straight week of gains, its longest since October-November 2021.

On this morning, Asian stock markets sank.

The Shanghai Composite Index fell 0.8% to 3,237.36 while the Nikkei 225 in Tokyo advanced 0.6% to 27,671.02. 

The Hang Seng in Hong Kong sank 2% to 21,230.81.

The Kospi in Seoul declined 1.1% to 2,452.55 and Sydney’s S&P-ASX 200 retreated 0.3% to 7,539.00.

India’s Sensex opened down 0.6% at 60,472.35. Southeast Asian markets declined. 

New Zealand markets were closed for a holiday.

In currency trading, the greenback strengthened in the wake of the data, climbing off a nine-month on Thursday to hit 103.01, its highest since Jan. 12, as the dollar index rose 1.149% and the euro was down 1.02% to $1.0799.

The Japanese yen weakened 1.90% to 131.07 per dollar, while Sterling was last trading at $1.2053, down 1.39% on the day.

On this morning, the dollar rose to 131.70 yen, while the euro fell to $1.0796.

Going back to analyzing the other agricultural markets …

In Canada the Grain Statistics weekly report, had producers’ deliveries of common wheat at 432,4k mt for week 26 of this shipping season.

That was down from 503,1k mt posted prior week. 

So far, wheat deliveries (excluding durum) represent 42% of estimated supplies.

That is above the five-year average of 36.8%, a higher percentage than calculated for any year in the past five years.

Deliveries of durum wheat, were at 141,5k mt, down from 192,4k mt showed in prior week.

Meantime, Canada exported 395,7k mt of common wheat in week 26.

That was down from 443,9k mt of a week earlier.

Durum wheat exports, were also weaker moving down from 220,0k mt to 192,6k mt. 

Total Commercial Stocks of common wheat stood at 2.863,7k mt.

That was up from 2.805,7k mt posted in week 25.

However, it should to note, despite the higher deliveries reported, primary elevator stocks are reported up only 1.5% from the same week in 2021-22 and 2.1% below the five-year average. 

Durum total commercial stocks, were also higher from 667,7k mt a week earlier, at 685,4k mt. 

Cumulative exports for common wheat were at 9.923,9k mt.

That is compared 5.825,9k mt a year ago.

Durum cumulative exports reached 2.696,0k mt vs 1.300,2 a year ago.

Meantime, traders estimate StatsCan on Feb 7, will report wheat stocks at 22.3 MMT as of Dec 31. 

The lowest estimate is for 21.2 MMT, and the highest estimate is for 23.2 MMT, compared to last year’s 16.798 wheat stock. 

From South America, StoneX revised their Brazilian soy production estimate as yields in Mato Grosso offset weaker production in the South. 

Their new forecast is for a 154.2 MMT crop, compared to 153.8 MMT in their prior projection. 

Brazilian farmers have harvested 9.86% of the country’s soybean area so far in the season, with work progressing slowly due to rains in key producing regions, Patria Agronegocios consultancy said on Friday.

Safras, another agribusiness consultancy, estimated 7.8% of the planted area has been harvested so far.

Brazilian farmers increased soybean area by 4.7% to 43.4 million hectares (107.3 million acres) in the current cycle, according to government agency Conab.

Meantime, advance sales of Brazil’s 2022/2023 soybean crop rose slightly from last month but still trail last year’s and historical levels by a wide margin, according to data from Safras & Mercado on Friday.

Safras indeed said forward sales of Brazil’s soy crop, which farmers are still harvesting, reached 30.5% of the estimated production so far in the season and involved 46.72 million tonnes.

In January soybean exports from Brazil has been 851,878 MT, down from 2.452 MMT in Jan of ’22.

Brazil’s slow pace of the soybean harvest and farmers’ hopes to get better prices for their beans slowed sales.

Also, farmers tend to hold on to their grain in the face of market instability.

On the other hand, the Brazilian government has ended a tax exemption on imports of fuel ethanol, with immediate effect, according to the country’s Agriculture Ministry. 

Ethanol imports will now incur a tax of 16pc to enter Brazil until the end of the year. 

That levy will rise to 18pc in 2024.

In Argentina, drought has been still in focus this week.

The Buenos Aires grains exchange warned on Thursday that, despite recent rainfall, the historic drought over the country’s core agricultural region could still negatively impact the current soybean harvest.

Weather forecasts show high temperatures and limited rain in Argentina in the week ahead.

The Exchange reported 46% of their soy crop was in poor or very poor condition.

That has improved from 54% last week. 

BAGE also confirmed that 96.5% of the expected corn area was planted through 2/02. 

That includes both Argentina’s early and late season crops. 

Meantime, Agricultural exports from Argentina, increased 8.5% in 2022 from a year earlier to $49.58 billion, the South American nation said on Thursday.

Soybean exports rose 2.5% to $22.28 billion, while corn exports climbed 2.7% to $9.54 billion, the country’s agriculture ministry said.

Meat and dairy exports grew 20.7% to $5.51 billion, wheat shipments were up 35.4% at $4.72 billion, while combined sunflower, barley and sorghum exports grew 41.4% to $3.56 billion.

However, according to the Rosario Board of Trade, Argentina’s January soybean meal exports were the lowest since at least 2002. 

Exports are estimated at 1.06Mt, compared to the five-year average of 1.87Mt. 

The expiry at the end of December of a special FX rate for Argentina’s soy industry has subdued trading.

In Europe, Euronext has lacked clear direction past week after rebounding from an 11-month low in late January.

March milling wheat indeed settled up 0.5% at 284.50 euros ($308.17) a tonne on Friday.

Colder weather forecast in Europe this week was seen as favourable for crops, with chilly temperatures potentially strengthening plants after mild spells this winter while not projected to bring severe frosts.

Meantime will note a certain slowdown in the export activity of European sources.

Egypt’s tender on Thursday further dampened export sentiment in western Europe, as Russian exporters are still able to push out over half a million tonnes for quick shipment starting at the end of this month.

In this context, wheat export premiums have eased in France.

Standard 12% protein wheat for February delivery in Hamburg was offered for sale at a premium of about 11 euros over the Euronext March contract, but with little purchase interest.

From Ukraine, farms had harvested 53.2 million tonnes of grain in bunker weight from 97% of the expected area as of Feb. 2, the agriculture ministry said on Friday.

According to the Ukrainian Minister of Agriculture, the Ukrainian farm would have harvested 20.2 million tonnes of wheat and 5.8 million tonnes of barley this year, compared to 2021 at 32.2 and 9.4 million tonnes respectively.

From Russia, IKAR reduced their outlook from 87 MMT to 84 MMT for the 2023 wheat crop citing a cold and dry winter. 

Weather has been generally favorable.

However, analysts are monitoring the impact of dryness across the southern region and frosts in the central Black Soil and Volga regions.

Meantime, the Russian agriculture ministry revised the export tax for wheat, corn and barley.

Particularly, as of Feb 8, the export duty on wheat will increase to 4,496.6 from 4,365.3 rubles per ton a week earlier.

Ditto for corn, rised from 1,186.2 rubles of a week earlier, to 1,505.7 rubles per ton.

As for barley, the duty will be substantially stady, increasing to 3,175.2 rubles from 3,174.3 rubles per ton a week earlier.

This new duty rates will be in effect through Feb 14, inclusive.

The duties were calculated based on indicative prices: $307.2 per ton for wheat ($308.8 a week earlier), $264 for barley ($267.7), $229.8 for corn ($226.4).

Russia may export 30-35 million tonnes of grain in the first half of 2023, the Interfax news agency reported on Monday, citing the deputy agricultural minister.

From South East Asia, Indian wheat prices have dropped 13% since the release of wheat stocks to bulk users to 28,290 rupees or $347.11/MT, though domestic prices are still higher than the minimum support price of 21,250 rupees or $303.88/MT. 

Due to the elevated open market price, government purchases of wheat for the country’s subsidized feeding program dropped 53% to 18.8 MMT.

Meantime, per latest data from farm ministry, India’s wheat plantings remained steady despite a rally in price of the staple to a record as farmers in a key producing central state shifted to rapeseed to take advantage of even higher prices for the oilseed.

Notably, area under wheat rose to 34.32 million hectares (84.8 million acres) for the 2022/23 crop year, up 0.4% from last year’s 34.18 million hectares, data released by the Ministry of Agriculture & Farmers’ Welfare showed.

Area under rapeseed, the main winter sown oilseed crop, jumped 7.4% from a year ago to a record 9.8 million hectares, the data showed.

The total area of winter-sown crops jumped to a record 72.07 million hectares, higher than last year’s 69.8 million hectares, as rice sowing jumped by 32% to 4.63 million hectares.

A lower-than-expected planting area in the world’s second biggest wheat producer may cap an expected rise in production.

From Australia, local markets finished up a touch on Friday. 

WA ASW1 values were firmer by $5/t, SA wheat saw some buying activity and Port Adelaide zone values were firmer. 

Barley bids and offers were relatively unchanged. 

The northern feed grains market remains tight, however reports of some downgraded sorghum reaching the market is helping some feed buyers. 

Canola values gained a couple of bucks. 

CBH has loaded a 64,003t canola vessel at Albany late January for destination Europe. 

This was the largest vessel that CBH has loaded at Albany, both in cargo tonnage and vessel dimensions.

Clear Grain Exchange reported its largest trading week by volume last week at 246,495 tonnes and the highest number of buyers since Feb 2022.

On the international trade scene, South Korea’s Major Feedmill Group (MFG) purchased about 65,000 tonnes of animal feed wheat in a private deal on Friday without issuing an international tender.

One consignment expected to be sourced optionally from the United States U.S. Pacific Northwest coast, Australia, Romania or Bulgaria was purchased at an estimated $334.50 a tonne c&f plus a $1.50 a tonne surcharge for additional port unloading.

It was believed to have been bought from trading house Cargill with wheat arrival in South Korea around Aug. 25.

Egyptian state grains buyer the General Authority for Supply Commodities (GASC) said in a statement on Saturday it had bought 60,000 tonnes of yellow corn.

The shipments will arrive during the second half of February and early March, the statement said.

Traders said GASC bought 60,000 tonnes of Ukrainian corn through direct offers, adding that the two 30,000 tonne cargos were sold at an FOB price of $308 per tonne each, with a shipping cost of $15 per tonne.

Algeria’s state grains agency OAIC has issued two international tenders to buy soft milling wheat to be sourced from optional origins.

The tenders both sought a nominal 50,000 tonnes but Algeria often buys considerably more in its tenders than the nominal volume sought.

The first tender sought wheat for loading in all usual ports. 

The wheat is sought for shipment in two periods from the main supply regions including Europe: April 1-15 and April 16-30.

If sourced from South America or Australia, shipment is one month earlier.

The second tender sought wheat to the two ports of Mostaganem and Tenes only between March 1-15, March 16-31, April 1-15 and April 16-30. 

A relatively smaller purchase in the two-port tender is generally expected.

The deadline for submission of price offers in both tenders is Tuesday, Feb. 7, with offers having to remain valid until Wednesday, Feb. 8.

The Taiwan Flour Millers’ Association has issued an international tender to purchase 48,100t grade 1 milling wheat to be sourced from the US. 

The deadline for submission of price offers in the tender is 9 Feb.  


World food prices fell in January for a 10th consecutive month, and are now down some 18% from a record high hit last March following Russia’s invasion of Ukraine, the United Nations food agency said on Friday.

Notably, the FAO price index, which tracks the most globally traded food commodities, averaged 131.2 points last month against 132.2 for December. 

It was the lowest reading since September 2021.

The December figure was revised down from an original estimate of 132.4.

Falls in the prices of vegetable oils, dairy and sugar helped pull down the index, while cereals and meat remained largely stable, the FAO said.

Indeed, vegetable oil prices fell 2.9% in January, the dairy index dipped 1.4% and sugar declined 1.1%. 

Meat slipped a mere 0.1%.

The FAO cereal price index, in contrast, rose, though just 0.1% month-on-month in January.

That gives a 4.8% increase on the year. 

International wheat prices declined 2.5% as production in Australia and Russia outpaced expectations. 

However, rice jumped 6.2%, driven in part by strong local demand in some Asian exporting countries.

In separate cereal supply and demand estimates on Friday, the FAO raised its forecast for global cereal production in 2022 to 2.765 billion tonnes from a previous estimate of 2.756 billion tonnes.

FAO said it expected a record global output of wheat in 2022 thanks to revised crop forecasts from Australia and Russia.

FAO also reported most of the winter wheat crop for the 2023 harvest has been sown across the Northern Hemisphere and high prices likely boosted plantings in several key growing regions. 

In North America, US winter plantings likely rose to 8-year high and Canada’s wheat area is expected to rise 2pc year on year. 

EU plantings will likely hold near the 2022 level, India’s acreage may be a record, while Russian plantings could fall slightly due to ample domestic supply and low local prices. 

Ukraine winter plantings likely fell 40pc year on year due to “severe financial constraints, infrastructure damage and obstructed access to fields in part of the country.” 

However, the FAO warned that high fertilizer costs may impact yields.

Also, the forecast for world rice production, meantime, was revised down on the back of lower-than-expected output in China, and is now predicted to decline 2.6% from its all-time high in 2021.

World cereal utilisation in 2022/23 was forecast to dip 0.7% from the previous year to 2.779 billion tonnes. 

As a result, the estimate for world cereal stocks was pegged at 844 million tonnes, pushing down the world stock-to-use ratio for 2022/23 to 29.5% from 30.8% in 2021/22. 

Watching this week’s market

Monday is first notice day for Feb live cattle futures. 

We start the week with the Export Inspections report released in the afternoon. 

On Tuesday, Census will release US trade data for December. 

Skip ahead to Wednesday and EIA will begin the day with the release of weekly ethanol production and stocks data. 

Later that morning, USDA will publish their monthly WASDE report with updates to the US and World balance sheets, as well NASS Cotton Ginnings and Crop Production reports. 

Thursday afternoon will see the release of weekly Export Sales data.

That’s all, thank you.

We wish you a nice day and a good start to the week.

Author: Sandro F. Puglisi

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