Good morning, Farmer Family …
US farm markets ended mixed on Wednesday, after a very choppy session.
Corn and soybeans continued to move higher, with each commodity capturing gains of 0.5% and 0.65%, respectively.
The rest of the soy complex was lightly mixed, as soymeal was flat, up 0.07%, while soyoil prices shifted 0.60% higher.
The wheat complex was also mixed, as Chicago SRW was up 0.71%, while Kansas City HRW, and Minneapolis HRS contracts spilled back into the red by -0.23% and -0.51%, respectively.
Wheat prices rallied after global grain trader Cargill Inc said it would take a further step back from the Russian market by no longer handling the top wheat supplier’s grain at its export terminal from July.
In addition, Bloomberg News reported that grain trader Viterra, part-owned by Switzerland-based mining and trading giant Glencore, was planning to stop grain trading in Russia.
Apparently leading grain multinationals seemed had been asked to leave Russia.
Late last year, Russian fertiliser producer Uralchem said it would be interested in buying the Russian assets of Cargill and Viterra if they decide to leave.
Meantime, Moscow asserted that although Cargill exports a significant amount of Russian wheat, the company’s decision shouldn’t adversely affect overall Russian grain shipments.
Also, “Russia is ready to work with all foreign companies whose activities contribute to the development of both the domestic food market of Russia and its export potential” according to a ministry spokesperson.
Interfax reported that Russia is set to construct 61 grain vessels with the lead ships to be ready for launch in 2-3 years.
Later, Cargill clarified it would only stop to elevate Russian grain for export, but intend to continue shipping grain from Russia.
Viterra will also reportedly be doing the same.
As a result, those gains largely fizzled by the close.
Soybeans settled up, bolstered by continued concerns over production in drought-hit Argentina.
The South American country may have to import up to 10 million tonnes of soy this season.
That is more than double than in previous years.
Soy will come mainly from Paraguay and Brazil, with Brazil poised to supply up to half.
Ahead of the USDA monthly fats and oils report, analysts expect, U.S. soybean processors likely crushed 5.272 million short tons, or 175.7 million bushels, of soybeans in February, the most ever for the second month of the year.
If the estimate is realized, the crush would be down from the 191.1 million bushels that USDA reported as processed in January but up from the February 2022 crush of 174.4 million bushels.
It would also be the largest February crush on record, topping the 175.3 million bushels processed in February 2020.
U.S. soyoil stocks as of Feb. 28 likely declined to 2.339 billion lbs.
If realized, the supply would be down from 2.356 billion lbs at the end of January and below stocks totaling 2.566 billion lbs at the end of February 2022.
The USDA is scheduled to release the report on Monday, April 3.
Corn rose, testing even larger gains after the USDA confirmed another large private export sale for 204,000 MT of old crop corn to China via mandatory announcement.
Ethanol production reached a daily average of 1.003 million barrels for the week ending March 24, per the latest data from the U.S. Energy Information Administration.
Ethanol stocks were 3%, or 661k barrels lighter to 25.527m barrels.
However, gains cooled somewhat by the close, as traders jockeyed their positions ahead of Friday’s annual USDA planting intentions report.
Going into the weekly Export Sales report, traders are looking for between 600k MT and 1.8 MMT of old corn crop sales for the week.
New crop business is expected to be below 300k MT.
As for soybean, analysts expect to see between 100k and 600k MT of old crop soybean sales.
New crop bookings are expected to be between 50k and 300k MT.
For the products, analysts expect soymeal sales will be between 75k and 200k MT for the week that ended 3/25.
Soy oil bookings are estimated to be under 20k MT going into the report.
As for wheat, analysts surveyed expect to see between 125k MT and 300k MT of old crop wheat sales.
New crop sales are expected to be less than 150k MT for the week that ended 3/25.
Grain traveling the USA railways saw another 19,889 carloads on the move last week.
That brings cumulative totals for 2023 to 262,111 carloads.
However, that is tracking 6.9% below last year’s pace so far.
Meantime, the US Army Corps reported several barges breaking loose from a tug boat on the Ohio river on Tuesday near the McAlpine Locks and Dams.
In this context, corn basis bids were steady to mixed across the central U.S. after firming a penny at an Ohio elevator while fading 2 to 5 cents lower at two other Midwestern locations.
Soybean basis bids firmed 8 cents at an Ohio elevator and jumped 12 cents higher at an Ohio river terminal while holding steady elsewhere across the central U.S..
Commodity funds were net buyers of CBOT corn, soybean, wheat and soyoil futures contracts on Wednesday, and net sellers of soymeal.
On this morning, Chicago wheat slid for the first time in five sessions, although losses were limited.
Soybeans ticked lower, while corn firmed.
Notably, the most-active wheat contract on the Chicago Board of Trade (CBOT) fell 0.1% to $7.04 a bushel, as of 04:26 GMT.
Soybeans lost half a cent to $14.76-3/4 a bushel and corn added quarter of a cent to $6.50-3/4 a bushel.
In energy markets, oil edged lower in a choppy trading session, with Brent crude closing 37 cents, or 0.5%, lower at $78.28 a barrel, while West Texas Intermediate crude fell 23 cents, or 0.3%, to $72.97.
Investors looked to pocket profits from two straight days of gains, as markets debated supply tightness.
U.S. crude oil stockpiles fell unexpectedly last week, the Energy Information Administration said, as refineries ramped up operations after maintenance season and U.S. imports fell to a two-year low.
Notably, crude inventories fell by 7.5 million barrels to 473.7 million barrels in the week to March 24, while analysts’ expectations were for a rise of 100,000 barrels.
EIA data also showed a draw in gasoline stocks by 2.9 million barrels to 226.7 million barrels, with analysts’ expectations for a 1.6 million-barrel drop, which implying strong demand heading into the summer season.
News of the surprise drop in inventories came on top of shuts or reducing output at several oilfields in the semi-autonomous Kurdistan region of northern Iraq.
But the Kurdistan-Iraq premium in oil prices could vanish sooner than expected, as the changes in Iraq’s domestic politics may lead to a durable political settlement very soon and pipeline flows could grow by some 200,000 barrels per day (bpd) analysts said.
Meantime, supply concern were eased by reports that Russian oil production fell by around 300,000 bpd in the first three weeks of March, less than the targeted cuts of 500,000 bpd.
Also, the dollar edged higher against most major peers, weighening on oil prices.
A stronger greenback hurts oil demand as crude becomes more expensive for buyers who hold foreign currencies.
On this morning, oil was nearly steady.
Brent crude futures, indeed, fell 5 cents, or 0.1%, to $78.23 a barrel at 06:30 GMT, while West Texas Intermediate crude rose 12 cents, or 0.2%, to $73.09 a barrel.
In ocean freight markets, the Baltic Exchange’s main sea freight index edged up on Wednesday on higher rates for capesize and panamax vessel segments.
The overall index, indeed, gained 5 points to 1,407.
Notably, the capesize index was up 16 points, or about 1%, to 1,662.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes for commodities such as iron ore and coal, increased $133 to $13,788.
The panamax index snapped a losing streak of nine sessions, adding 37 points, or about 2.4%, to 1,598.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased $335 to $14,386.
Among smaller vessels, the supramax index fell 30 points to 1,285.
In equity markets, US stock indexes Wednesday rallied moderately as waning banking concerns boosted risk appetite and fueled stock buying.
Strength in technology stocks also lifted market sentiment, with Micron Technology climbing more than +7%.
U.S. tech stocks had carryover support from a rally in Chinese technology companies after Alibaba Group Holding’s plan, announced on Tuesday, to split into six separate units sparked optimism that China’s regulatory crackdown on the sector might be over.
Traders are largely betting the Fed will have to cut rates as soon as this summer.
That’s helped Big Tech and other high-growth stocks in particular, which are seen as some of the biggest beneficiaries of lower rates.
However, Wednesday’s U.S. economic data was bullish for the dollar, as U.S. Feb pending home sales unexpectedly rose +0.8% m/m, stronger than expectations of a -3.0% m/m decline.
On this wake, Fed has hinted it sees one more hike before holding rates steady through this year.
In this context, on Wall Street, the S&P 500 rose 1.4% to 4,027.81, for its fourth gain in the last five days.
The Dow Jones Industrial Average climbed 1% to 32,717.60, while the Nasdaq composite jumped 1.8% to 11,926.24.
The month has being dominated by worries about banks and whether the industry is cracking under the pressure of much higher interest rates.
On this morning, Asian shares were mostly higher.
Japan’s benchmark Nikkei 225 shed 0.5% to 27,740.58.
Australia’s S&P/ASX 200 added 1.0% to 7,122.30.
South Korea’s Kospi rose 0.7% to 2,459.73.
Hong Kong’s Hang Seng gained 0.4% to 20,266.96, while the Shanghai Composite advanced 0.6% to 3,259.64 after China’s new No. 2 leader, Premier Li Qiang, said the recovery from a long slowdown picked up pace in March.
The economy showed “encouraging momentum of rebounding” in January and February, Li said at the Boao Forum for Asia, a gathering of businesspeople and politicians on the southern island of Hainan.
“The situation in March is even better,” he said.
In currency trading, this morning the U.S. dollar slipped to 132.50 Japanese yen from 132.75 yen.
The euro cost $1.0839, inching down from $1.0847.
The dollar index on Wednesday rose by +0.23%, as waning concerns of banking-sector contagion weakened the yen.
The dollar also found support after Wednesday’s economic news showed U.S. Feb pending home sales rose unexpectedly.
Gains in the dollar were limited as the rally in stocks curbed liquidity demand for the dollar.
Losses in EUR/USD were limited due to some hawkish ECB comments and a larger-than-expected increase in German Apr GfK consumer confidence.
ECB Chief Economist Lane said the ECB will need to increase interest rates further if recent tensions in the financial system stay “fairly limited.”
The German Apr GfK consumer confidence index rose +1.1 to a 9-month high of -29.5, stronger than expectations of -30.0.
Going back to analyzing the other agricultural markets …
From Canada, the top 5 homes of Canadian Durum exports as of end of February for this crop year were, 1- Italy with 987K; 2- Algeria with 538K; 3- Morocco with 480K; 4- USA with 370K; 5- Tunisia with 272K.
From South America, Brazil is harvesting a record crop and will export at least 3 million tonnes of soybean to Argentina, but if international soymeal prices pay off, that volume can reach 5 million tonnes, analysts said.
The U.S. Department of Agriculture indeed expects Argentina to remain the world’s biggest soymeal exporter despite the nation’s soy crop and crushing woes.
Grain companies in Mato Grosso do Sul are estimating a record export of 1.6 million tonnes of soybeans to Argentina via Porto Murtinho and across the dry border to Concepcion, Paraguay.
There are reports of shipments of Brazilian soybeans leaving for Argentina from Santarem, in the state of Para.
It is possible that there are shipments from other ports.
Bolivia, Paraguay and Uruguay will supply soy to Argentina.
However, if Brazilian soy premiums continued to fall, Brazilian suppliers will remain competitive against their counterparts to sell to Argentina.
Brazil may export up to 97 million tonnes to all destinations.
Meantime, Argentina’s grains inspectors union said it will launch a indefinite strike over wage demands starting after midnight on Thursday targeting grains storage facilities.
The URGARA union is an association of grain technicians who analyze grains held in storehouses and loaded on ships, so their strike could affect the country’s grain trade.
The union said in a statement that the strike would target grains storage facilities rather than ports.
In Europe, grain and oilseed prices on Euronext marked an increase across all the board.
Wheat and corn prices turned trading at their highest since mid-March.
Rapeseed also edged higher, with Canadian Canola Prices have rallied for 5 straight sessions from $715 to $765 in the May contract.
Prices pushed up, on news from Cargill and Viterra about the possibility to leave Russian facilities.
Refinitiv Commodities Research revised downward its 2023-24 EU common wheat production forecast by 1.7Mt, to 132.2Mt (126.7Mt previous year).
It also cut 2023-24 rapeseed production forecast by 0.2Mt, to 20.4Mt (19.5Mt previous year).
The cut reflected water shortages in southern and south-western regions of Europe.
However, winter crops entered spring in mostly fair to good conditions, although more precipitation would required to aid further crop development.
Near-term forecasts pointed to a cold front across Europe, but average temperatures were not expected to fall below freezing.
Meantime, weather forecasts for April indicate rainfall surpluses across Europe.
On the other hand, Poland will seek to export existing grain stocks to free up storage space by the next harvest, after Ukrainian grain import have depressed local grain prices and fulled internal facilities.
Meantime, in an appeal to the rural voter base, Polish prime minister said on Wednesday, Poland wants the European Union to take measures to limit the amount of Ukrainian grain entering those markets because the influx is suppressing prices for Polish farmers.
Poland wants the European Union to use all tools at its disposal to limit the amount of Ukrainian grain entering the EU market.
Poland would ask the European Commission to employ a protective clause regarding grain imports to Poland from Ukraine.
The current regulation which lifts all import restrictions provides for such a clause that can be introduced in a situation where there are market disturbances.
Poland is encouraging Slovakia, Romania, Hungary and Bulgaria to take a similar step.
Farmers have dismissed government aid proposed so far as inadequate.
“There must be at least 6 billion zlotys ($1.39 billion) to cover these losses.”
The figure was 10 times higher than the 600-million-zloty aid programme approved by the European Commission on Monday.
An additional compensation of 520 million zlotys is in the works, with half of it coming from EU crisis provisions and the other half from the national budget.
But that, will put the total aid for Polish farmers only at 1.12 billion zlotys.
($1 = 4.3212 zlotys).
Meantime, per latest data pubblished by Euronext, non-commercial market participants raised their net short position in Euronext’s milling wheat futures and options in the week to March 24.
Notably, non-commercial participants, which include investment funds and financial institutions, increased their net short position to 67,924 contracts from 63,046 a week earlier, the data showed.
Commercial participants similarly lifted their net long position to 59,357 contracts from 54,274 a week earlier.
In Euronext’s rapeseed futures and options, non-commercial market participants reduced their net short position to 35,575 contracts from 36,571 a week earlier.
Commercial participants also lowered their net long position in rapeseed to 32,337 contracts from 33,567 a week earlier.
From Africa, Sudan will need to import 3.5 million tonnes of wheat this year because of a 30% drop in the projected local harvest after farmers switched to planting different crops, the U.N. Food and Agriculture Organization (FAO) said on Wednesday.
Local government had failed to buy their wheat on promised terms last year, thus farmers have been reluctant or without the money to plant a new crop.
Projected wheat imports will therefore account for nearly all Sudan’s expected cereal import requirements of 3.6 million tonnes, it added.
In 2022, Sudan imported 2.7 million tonnes of wheat and flour at a cost of $1.06 billion, with Russia, Australia, and Romania being the top import origins, according to central bank data.
From Ukraine, country’s total grain exports in March should come in around 5.1 million metric tons, according to the country’s agriculture ministry.
That’s sharply above March 2022 totals of 1.4 million metric tons.
From Russia, Moscow-based Institute for Agricultural Market Studies IKAR pegged 2023-24 grain production at 131Mt down from 157.7Mt produced last year including wheat at 86Mt (104.2Mt previous year).
Meantime, Russia’s state-owned agricultural leasing company Rosagroleasing has placed orders for ocean-going grain carriers, and plans to launch them within two to three years, the firm’s head Pavel Kosov said on Wednesday.
At a meeting with Russian Prime Minister Mikhail Mishustin, Kosov said: “Now Rosagroleasing has ordered a project for the construction of 40 and 60 thousand tonne vessels …
And within the next two or three years, the lead ships will be launched”.
Russia announced plans to launch its own sea transport fleet for grain exports last year, after sanctions imposed over the conflict in Ukraine disrupted agricultural exports.
From Kazakhstan, the Minister of Trade and Integration said annual wheat export volume to China could be increased to at least 1Mt, with one train loaded with grains currently on its way to China’s bonded zone as part of a pilot project.
From the Middle Kingdom, China will hold an auction on April 6 to sell another 140,000t of its imported wheat reserves.
(The volume was previously incorrectly reported as 900,833t, which was actually for a rice auction.)
China has served up similarly sized auctions in recent months in an attempt to boost local supplies and cool high prices.
From South East Asia, Malaysian palm prices rose on Wednesday in anticipation of tightening production, although the rise was capped by a report highlighting the vegetable oil’s fading premium against rival oils.
A miller association estimated a 22.9% decline in output during March 1-25.
Exports from Malaysia during March 1-25 jumped between 11.4% and 19.8% from the same period in February, according to cargo surveyors’ data this week.
Thus, the benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange gained 22 ringgit, or 0.6%, to 3,709 ringgit ($839.90) a tonne.
Palm rose for a third straight session to its highest closing in one week.
Meantime, top producer Indonesia set its crude palm oil reference price for the April 1-15 period at $898.29 per tonne from $911.41 in mid-March.
From Australia, subdued interest from export buyers facing increased competition from Black Sea cargoes has seen values for feedgrain soften this week.
Demand from domestic consumers is limited in the prompt market, with traders saying most offers from growers are for the July market, which will put income in the new financial year.
In the north, barley continues to hold its premium over wheat as the preferred grain for feedlots, and the sorghum market has weakened on grower selling swamping Chinese demand in the near term.
Widespread rain across southern Australia and patchy falls in northern New South Wales and southern Queensland are shoring up prospects for some early winter-crop planting.
Seeding for 2023 is underway in WA.
Grazing crops and long season canola are being planted in eastern Australia.
With the good recent rainfall and abundant sub soil moisture, growers are taking advantage of the early start with the potential El Ninõ lurking in the background for later in the year.
Meantime, local wheat and canola markets remained buoyant yesterday.
In Western Australia trade liquidity was reported around the unchanged Kwinana ASW1 bid price $355/t FIS.
Barley remained steady.
Pulses also kept their market alive with lentil prices through Vic and SA pushing higher as the day progressed.
On the international trade scene, Jordan makes no purchase in tender for 120,000 tonnes feed barley.
Turkey’s state grain board TMO has purchased 395,000 tonnes of milling wheat out of a tender for 695,000 tonnes held on Tuesday.
A provisional purchase of 300,000 tonnes in the tender for shipment May 18-June 16 was cancelled.
Traders had initially reported that TMO had purchased the full amount it had tendered for, but tonnages in TMO’s tenders are provisional and can be reduced or cancelled completely in the following days.
The wheat was bought in a series of consignments to different Turkish ports as well as in warehouses in Turkey.
Purchases for the shipment period May 18-June 16 were:
Samsun 25,000 Ulusoy $292.80 C&F import;
Samsun 25,000 Tarimex $297.90 C&F ex-warehouse;
Trabzon 10,000 Erser $295.80 C&F ex-warehouse;
Purchases for the shipment period June 12-July 10 were:
Iskenderun 50,000 Nibulon $293.99 C&F import;
Mersin 50,000 Nibulon $293.99 C&F import;
Izmir 25,000 Ulusoy $293.70 C&F ex-warehouse;
Tekirdag 25,000 Erser $294.90 C&F import;
Tekirdag 25,000 Ulusoy $290.40 C&F import;
Bandirma 50,000 Ulusoy $286.30 C&F import;
Derince 50,000 Ulusoy $289.80 C&F import;
Samsun 25,000 Ulusoy $281.90 C&F import;
Samsun 25,000 Erser $286.40 C&F ex-warehouse;
Trabzon 10,000 Erser $284.00 C&F import.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
