Good morning, Farmer Family …
US farm markets were mostly weaker on Thursday.
Corn and soybean prices trended 0.15% and 0.19% lower respectively.
The rest of the soy complex was mixed, with soyoil faded more than 1.8% lower, while soymeal moved 0.37% higher.
Wheat prices were also mixed, as Kansas City HRW contracts managed keeping 0.11% gains, and MGEX spring wheat about 0.2%, meanwhile, Chicago SRW contracts suffered a double-digit setback, posting 1.77% losses, at the bell.
Corn and soybean drifted lower, as traders squared positions ahead of U.S. plantings and stocks reports due this afternoon.
Corn fell, despite the USDA reported another private export sale of 178k MT of old crop corn sold to China under the daily system.
Analysts, indeed, expect the USDA to project total U.S. 2023 corn plantings at 90.9 million acres, up from 88.6 million a year ago but down slightly from the 91 million acres that the USDA forecast at its February Outlook Forum.
For soybeans, analysts on average expect the USDA to estimate total U.S. 2023 soybean plantings at 88.2 million acres, up from 87.5 million a year ago and above the USDA’s February Outlook Forum forecast of 87.5 million.
Chicago wheat prices fell, meantime, on profit-taking after one-month highs a day earlier, and reminding the strong competition for global export business.
Traders monitored developments in Russia, where global grain trader Viterra will discontinue its origination and export program out of Russia after July 1.
However, there are plans to create an independent Russian grain exporter.
Russia’s agriculture ministry also said Viterra’s decision will not affect the amount of Russia’s grain exports.
Cargill also said it would take a further step back from the Russian grain market, although its shipping unit will continue to carry grain from the country’s ports.
In both Europe, Ukraine and Russia there were very little winter-kill, thus winter grains should be emerging in pretty good shape.
Meantime, Russian wheat continued to be offering at a very competitive prices on the international trade scene.
In Thursday’s Weekly Export Sales report, the USDA showed 1.036 MMT of corn booking for the week that ended 3/23.
That was within the range of estimates and included 641k MT of previously announced sales to China.
That brought the total commitment to 35.966 MMT.
However, old crop sales faded 67% lower week-over-week and were 34% below the prior four-week average.
Cumulative totals for the 2022/23 marketing year remain well below the prior year’s pace.
New crop sales were reported at only 21.8k MT, for a 1.974 MT total forward sale as of 3/23.
Corn export shipments also trended lower, spilling 37% below the prior four-week average.
As for soybean, USDA’s FAS reported 348,177 MT of soybeans were sold during the week that ended 3/23.
That was a large increase for the week but was still less than half of the same week last year.
That set the season’s total commitments at 49.761 MMT.
Cumulative sales for the 2022/23 marketing year is trending slightly above last year’s pace so far.
Forward sales for next year were at 1.75 MMT as of 3/23.
That is only 20% of the figure a year ago.
However, soybean export shipments jumped 48% above the prior four-week average.
The report showed soymeal sales were 378k MT for the week.
That was a MY high led by sales to Philippines.
Meal commitments were at 8.764 MMT as of 3/23.
The weekly soy oil sales were 1,964 MT for the week which was a sharp drop from last week’s 10k MT sale.
Accumulated bean oil commitments were at 76k MT as of 3/23.
As for wheat, the USDA reported 151,749 MT of old crop wheat sales for the week that ended 3/23.
That was up 20% from the week and was 60% higher than the same week last year, but were still 40% below the prior four-week average.
New crop’s export sales were 37,400 MT.
Accumulated commitments were at 18 MMT, slightly below last year’s pace.
Wheat export shipments eased 6% below the prior four-week average.
In this context, corn basis bids were steady to soft after dropping 2 to 6 cents across three Midwestern locations.
Soybean basis bids were mostly steady across the central U.S. but did move 5 cents higher at an Indiana processor while easing 2 cents lower at an Ohio elevato.
Commodity funds were net sellers of CBOT wheat, soyoil, soybean and corn futures contracts, and net buyers of soymeal futures.
All eyes will be on USDA Stocks Report and USDA Prospective Plantings Report both of which will be published tonight.
Meantime, on this morning, Chicago soybean and corn prices slid.
Both markets are poised for a quarterly drop.
Wheat also eased, set to end the first quarter of 2023 on a weaker note.
Notably, the most-active soybean contract on the Chicago Board of Trade (CBOT) was down 0.2% at $14.71-3/4 a bushel, as of 03:44 GMT.
Corn gave up 0.1% to $6.48-3/4 a bushel and wheat slid 0.8% to $6.86-1/2 a bushel.
For the quarter, soybeans are down more than 3.4%, corn has lost 4.4% and wheat is down more than13%.
In energy markets, oil prices rose more than 1% on Thursday.
Brent crude futures indeed rose 99 cents, or 1.3%, to $79.27 a barrel.
West Texas Intermediate crude rose $1.40, or 1.9%, to $74.37.
Some producers have shut in or reduced output at several oilfields in the semi-autonomous Kurdistan region.
Also supporting prices was a Wednesday report from the U.S. Energy Information Administration that U.S. crude oil stockpiles fell unexpectedly in the week to March 24 to a two-year low.
Crude inventories indeed dropped by 7.5 million barrels, compared with expectations for a rise of 100,000 barrels.
Also, China’s refined fuel consumption this year is likely to grow 3% from 2019 pre-COVID levels, state energy giant PetroChina said on Thursday.
These factors offset bearish sentiment after a lower than expected cut to Russian crude oil production in the first three weeks of March.
On this morning, oil prices dipped, with benchmarks heading for their weakest monthly performances since November.
Brent futures, which have risen nearly 5% this week, were down 63 cents, or 0.8%, at $78.64 a barrel at 08:24 GMT.
U.S. West Texas Intermediate (WTI) crude fell 44 cents, or 0.5%, to $73.93, having gained about 7% so far this week.
The contracts were set for 6% and 4% monthly drops, respectively.
Markets are now waiting for U.S. spending and inflation data due this morning and the resulting impact on the value of the U.S. dollar.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index dipped on Thursday as declines in the supramax vessel rates outweighed gains in capesize and panamax segments.
The overall index, indeed, was down 4 points, or about 0.3%, at 1,403.
Notably, the capesize index rose 14 points, or about 0.8%, to 1,676.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, increased $113 to $13,901.
The panamax index scaled its highest in over a week, gaining 27 points, or about 1.7%.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, increased $236 to $14,622.
The supramax index shed 48 points, or about 3.7%, to 1,237, its biggest daily percentage fall since Jan. 13.
In equity markets, US stock indexes posted moderate gains, on strength in chipmakers which boosted technology stocks and the overall market.
Traders hope that U.S. inflation data due today, will show upward pressure on prices easing.
That might prompt the Fed to postpone plans for a possible rate hike at its May meeting.
A softer inflation reading would be a “signal to continue with the risk-on theme”, and that helped to buoy the Big Tech stocks that dominate the S&P 500 and other indexes.
Amazon rose 1.7%.
Apple and Microsoft also rose.
U.S. stock indexes also had carryover support from a rally in European bank stocks after ECB Executive Board member Schnabel said that Eurozone banks had not seen a loss of deposits despite the recent financial stability concerns.
Thursday’s U.S. economic news was bearish for stocks as it showed weekly jobless claims rose more than expected, and Q4 GDP was revised downward.
Notably, U.S. weekly initial unemployment claims rose +7,000 to 198,000, showing a slightly weaker labor market than expectations of 196,000.
U.S. Q4 GDP was revised slightly lower to 2.6% (q/q annualized) from +2.7% as Q4 personal consumption was revised down to +1.0% from +1.4%.
Also, the Q4 core PCE deflator was revised upward by +0.1 point to 4.4% from 4.3%.
Global bond yields on Thursday were mixed.
The 10-year T-note yield gave up early gains and fell -1.9 bp to 3.545% after stocks fell back from their best levels.
However, stronger-than-expected German Mar Consumer prices pushed European government bond yields higher.
The 10-year German bund yield climbed to a 2-week high of 2.399%, and the 10-year UK gilt yield rose to a 1-week high of 3.534%.
In this context, on Wall Street, the benchmark S&P 500 index rose 0.6% on Thursday to 4,050.83 for its fifth gain in six days.
The Dow Jones Industrial Average rose 0.4% to 32,859.03. The Nasdaq composite gained 0.7%, to 12,013.47.
On this morning, Asian stocks followed Wall Street higher.
The Shanghai Composite Index rose 0.3% to 3,270.70 and the Hang Seng in Hong Kong gained 0.7% to 20,458.17.
The Nikkei 225 in Tokyo advanced 0.9% to 28,033.53 after government data showed factory output rebounded and retail sales rose in February.
The Kospi in Seoul added 0.9% to 2,475.06 and Sydney’s S&P-ASX 200 was 0.8% higher at 7,177.80.
India’s Sensex opened up 1% at 58,567.37.
New Zealand and Jakarta declined while Singapore and Bangkok advanced.
In currency trading, the dollar index fell by -0.47%, on unexpected downward revision of U.S. Q4 GDP, and stronger-than-expected German inflation.
In addition, the rally in U.S. stocks reduced the liquidity demand for the dollar.
Notably, Wednesday’s U.S. economic data was bearish for the dollar.
Weekly initial unemployment claims rose +7,000 to 198,000, showing a slightly weaker labor market than expectations of 196,000.
Also, Q4 GDP was revised downward to 2.6% (q/q annualized) from +2.7% as Q4 personal consumption was revised down to +1.0% from +1.4%.
The EUR/USD rose by +0.54%, after economic news showed German Mar CPI rose more than expected, pushing the 10-year German 10-year bund yield up to a 2-week high and strengthening the euro’s interest rate differentials.
Notably, Germany Mar CPI (EU harmonized) eased to +7.8% y/y from +9.3% y/y in Feb but was still above expectations of +7.5% y/y.
Spain Mar CPI (EU harmonized) eased to +3.1% y/y from +6.0% y/y in Feb, the slowest pace of increase in 20 months.
Eurozone Mar economic confidence unexpectedly fell -0.3 to 99.3, weaker than expectations of an increase to 100.0.
Also, reduced European banking concerns supported EUR/USD, as Eurozone banks had not seen a loss of deposits despite the recent financial stability concerns.
The USD/JPY fell by -0.26%, as Japan’s fiscal year-end and quarter-end on Friday have sparked some repatriation of yen back to Japan.
Also, lower US T-note yields were supportive of the yen.
On this morning, the dollar gained to 132.93 yen from Thursday’s 132.47 yen.
The euro was little-changed at $1.0903.
Going back to analyzing the other agricultural markets…
From South America, Refinitiv Commodities Research reported that in Brazil, due to slight harvest delays despite drier weather, the 2022-23 soybean production forecast was revised down by 0.3Mt, to 152.4Mt (151.4Mt Conab Mar).
Forecast of warm and dry weather over the next ten days is expected to be beneficial for harvesting.
Total maize production forecast cut by 0.3Mt, to 124.5Mt (124.7Mt Conab Mar) due to ongoing delays to second (safrinha) crop plantings, paired with hot and dry weather across key cropping areas in the centre-west and the southeast.
Near-term weather outlooks point towards hot and dry conditions, potentially hindering early second crop development.
In other news, according to Brazil’s Finance Ministry’s International Affairs Secretary, Brazil and China have agreed to start trading based on the Chinese renminbi (RMB) instead of the US dollar, with the scheme aimed at reducing transaction costs.
In Argentina, the Buenos Aires Grain Exchange held production forecasts steady this week, with soybean production at 25Mt and corn production at 36Mt.
Argentina’s main farming region will see welcome rainfall over the next week, the Buenos Aires Grains Exchange (BAGE) forecasted.
The expected rains would add to the 0.8-6 inches (20-150 millimeters) that have already doused a large area of prime farmland over the past couple weeks, Rosario stock exchange BCR data showed, giving both farmers and the grains-dependent economy much needed relief.
On Tuesday, BCR proclaimed that Argentina’s worst drought in at least six decades was over.
Within the next seven days “abundant rainfall” of 0.4-3 inches (10-75 millimeters) is expected over the northwest and center-east agricultural areas.
The expected rains are seen in particular boosting Argentina’s 2023/2024 wheat crop, with plantings set to begin in late May.
The precipitation will not, however, help the season’s soy and corn crops, since both are mostly fixed at this point in the cycle.
In Europe, grain and oilseeds sharply declined.
Corn and wheat lost ground ahead of tonight’s long-awaited USDA report on quarterly US inventories and corn and soybean planting intentions.
Turkey ended up buying only 395,000 t of wheat in its 695,000t tender.
Viterra followed Cargill’s example in announcing its withdrawal from Russia.
However, there was the announcement to create an independent exporter at the same time.
On Wednesday, Polish Prime Minister Mateusz Morawiecki had said he wanted the EU to use all tools at its disposal to limit the amount of Ukrainian grain entering the EU market.
On Thursday, the European Agriculture Commissioner Janusz Wojciechowski said, he would support curbs on trading with Ukraine if Poland proposed such a move.
However, he spoke after the European Commission said it had approved a 56-million-euro ($61.1 million) aid package for farmers in countries bordering Ukraine.
Poland will receive 30 million euros as part of the package.
With Wojciechowski adding that, “we are already preparing the next aid package and that will be for a bigger sum”.
Meantime, the European Commission expects total 2023-24 grain production in the EU to increase by 8.4pc y/y to 287.9Mt, assuming normal weather.
Exports may increase by a similar level.
Soft-wheat production was seen at 130.9Mt (a 3.9% increase year-over-year), barley at 54.2Mt, corn at 65Mt (a year-over-year increase of nearly 25%).
The European Commission left its soft wheat export estimate unchanged at 32 Mt for this MY, with 2022 production posted at 126 Mt.
2022 corn production is also left unchanged at 52.1 Mt and imports at 23 Mt.
Meanwhile, EU corn imports in the upcoming marketing year are expected to decline 22%.
Yesterday we saw a very sharp decline also in feed barley prices, in a context of geopolitical relaxation between Australia and China, leading to Australia once again being seen as an aggressive player in this destination.
Meantime, rapeseed prices fell in the wake of other vegetable oils, following the rally observed in the first part of the week.
Additionally, the European Commission also expects 2023/2024 oilseed crops to increase by 7% from the previous year to a record 33.6 million tonnes, mainly because of a larger area sown.
Notably, rapeseed production will rise 1% year on year and be 15% above the five-year average at 19.8 million tonnes, it predicted.
In its short-term outlook, the EU executive said that attractive prices during the sowing period and mild conditions during winter had boosted the rapeseed area to rise to an expected five-year high of 6 million hectares.
However, 2022/2023 EU rapeseed imports were revised up, to 6.2 Mt.
A temporary exemption from the obligation to allocate a part of arable land to fallow land and a possible switch from maize in drought-affected regions could lead to a rise in the sunflower area next season to 4.8 million hectares, up 10% on the five-year average.
Sunflower production, assuming average yields, notably in the drought-affected regions last year, is expected to reach a record 10.9 million tonnes, up 18% year on year.
The area sown with soybeans, which is a smaller oilseed crop in the EU, was seen rising by 6.4% above the five-year average to 1 million hectares.
EU vegetable oil and oilseed meal production is also expected to hit new highs at 17.2 million tonnes for oils and 30.9 million tonnes for meal, the Commission set without giving details.
As a result, EU net imports of these products are forecast to be lower than in 2022/23, it said.
From North Africa, Tunisia’s grain harvest will be “disastrous”, with the drought-hit crop declining to 200,000-250,000 tonnes this from 750,000 tonnes last year, a commercial source said on Thursday.
The expected decline in the grain crop would deepen Tunisia’s financial difficulties as it tries to clinch an international rescue package.
Tunisian authorities have started cutting off drinking water at night in areas of the capital and other cities in what appears to be a bid to reduce consumption in the face of severe drought.
Tunisian dams registered volumes down by a total of 1 billion cubic metres owing to the lack of rain from September 2022 to mid-March this year, said agriculture ministry official Hamadi Habib.
From Ukraine, Ukraine’s Ag Ministry reported 5.1 MTM of grain exports for March.
That is up from the 1.4 MMT during the same month last year when the war had just begun.
The MYTD volume reached 37.4 MMT, which is 16.7% lower than last year, and included 12.761 mln tonnes of wheat (1.423 mln tonnes in March), 2.267 mln tonnes of barley (217 thsd tonnes), 22.035 mln tonnes of corn (3.431 mln tonnes), and 17.4 thsd tonnes of rye (1.8 thsd tonnes).
Also, as of March 29, the total export of Ukrainian flour amounted to 152.3 thsd tonnes (20.3 thsd tonnes in March), including wheat flour – 109.9 thsd tonnes (14.9 thsd tonnes).
Meantime, as of March 30, all regions of Ukraine have started spring planting campaign, the press service of the Ministry of Agrarian Policy of Ukraine reported.
“In general, on the specified date, all categories of farms planted 500 thsd ha with grains and pulses, of which 107,7 thsd ha with spring wheat, 3007,4 thsd ha with spring barley, 57,7 thsd ha with peas and 26.4 thsd ha with oats,” the message states.
From Russia, the government statistics agency in Russian, Rosstat, estimated on-farm wheat stocks at 17.4Mt as of 1 March, 82pc higher than the 5-year average.
Russia has the opportunity to supply 62 million tons of grain to international markets this agricultural season (July 1, 2022 – June 30, 2023).
At the moment, the country has already exported 46 million tons.
The Russian government proposed to make an additional purchase to the state intervention fund for 7 million tons of wheat.
Prior to that, 3 million tons of grain were purchased.
But such a procedure cannot be carried out in such a short time. In addition, the lack of accredited warehouses for storing grain in Russia may become a problem.
Meantime, spring sowing was carried out on an area of about a million hectares, the pace is almost twice as high as last year, said Dmitry Patrushev during the operational headquarters, according to the Ministry of Agriculture of the Russian Federation.
Active sowing is carried out by the southern regions and the North Caucasus.
The agrarians of the central part of Russia have begun to enter the fields, and the Volga region will soon join them.
In general, spring field work has already begun in 33 regions.
Winter crops are fed on an area of 8.4 million hectares.
From Australia, local eastern Australian current crop markets remained steady.
New crop APW1 Port Kembla was bid around A$410/t.
ASX Eastern Australia wheat January 24 traded at $400/t.
Current crop canola values continued to strengthen too, across the board.
The Bureau of Meteorology short-term outlook 4-17 April has the excellent autumn break continuing with very high chance of above average rainfall across SA, Vic, NSW and Qld. The chance of below average rainfall increased in WA.
Its Climate Driver Update released this week has the El Niño–Southern Oscillation (ENSO) currently neutral (neither La Niña nor El Niño).
The ENSO Outlook is at El Niño WATCH.
An El Niño WATCH is not a guarantee that El Niño will occur, rather it is an indication that some of the typical precursors of an event are currently observed.
An El Niño WATCH means that there is around a 50pc chance that El Niño will develop.
This is about twice the normal likelihood of El Niño forming in any year.
All but one of the seven international climate models surveyed by the Bureau anticipate central Pacific sea-surface temperatures will remain ENSO-neutral through the southern hemisphere autumn; one model exceeds El Niño thresholds from May.
Meantime, Australian and Chinese officials will meet next week to discuss how to normalise trade.
Australia had lodged the complaint in the World Trade Organisation in December 2020, after China imposed anti-dumping and anti-subsidy duties totalling 80.5% on its barley exports in May.
A final WTO report on the barley dispute is due to be delivered to China and Australia on Friday, according to the WTO website, which also shows an interim report would have been delivered to the two nations weeks earlier.
However, diplomatic tensions have eased since a Labor government was elected in May 2022.
Aussie trade Minister Tim Ayres met his Chinese counterpart Wang Shouwen in China on Wednesday at the Boao Forum for Asia.
Trade Minister Don Farrell held a video meeting with his Chinese counterpart Wang Wentao in February, which was followed by a video meeting of trade officials.
Ministers agreed to enhanced dialogue at all levels, including between government officials, to pave the way for the resumption of trade.
Thus, officials are confident to continue to lay the groundwork for the resumption of trade beetwen the two countries.
On the international trade scene, Jordan issued a new international tender to purchase 120k MT of milling wheat from optional origins that closes on April 4.
The grain is for shipment in September and October.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
