Good morning, Farmer Family …
US farm markets were mixed but mostly weaker on Monday.
Corn prices fell by 0.42%.
Wheat prices were mixed, as Chicago SRW was up 0.18%, while KC HRW was 0.28% weaker, and MGE HRS closed down by 0.45%.
Soybean closed up 1.1%, and soyoil climbed 2.14%, meanwhile soymeal was 0.39% lower at the bell.
Corn fell, despite some bullish signals, including USDA’s announcement a 150k MT sale of new crop corn to Mexico via mandatory announcement.
Weekly Export Inspections data, indeed, had 1,098 MMT of corn exports for the week that ended 3/30, soaring by 60% for the week.
However, that was down by 29% from the same week last year, and total corn shipments for the season reached only 19,369 MMT as of 3/30.
That was still 37% behind last year’s’ pace.
Mexico was the top destination for the week with 35% of the total.
Meantime, the monthly Grain Crushing report showed total corn consumed for alcohol and other uses was 444 million bushels in February 2023.
Total corn consumption was down 10 percent from January 2023 and down 3 percent from February 2022.
February 2023 usage included 91.9 percent for alcohol and 8.1 percent for other purposes.
Corn consumed for beverage alcohol totaled 3.36 million bushels, down 45 percent from January 2023 and down 17 percent from February 2022.
Corn for fuel alcohol, at 400 million bushels, was down 9 percent from January 2023 and down 2 percent from February 2022.
The season’s running total use reached 2.549 bbu, which is 5.2% behind last year’s pace and 48.5% of the full year forecast.
Corn consumed in February 2023 for dry milling fuel production and wet milling fuel production was 91.5 percent and 8.5 percent, respectively.
Dry mill co-product production of distillers dried grains with solubles (DDGS) was 1.56 million tons during February 2023, down 9 percent from January 2023 and down 8 percent from February 2022.
Distillers wet grains (DWG) 65 percent or more moisture was 1.16 million tons in February 2023, down 8 percent from January 2023 and down 11 percent from February 2022.
Wet mill corn gluten feed production was 247,817 tons during February 2023, down 8 percent from January 2023 but up 4 percent from February 2022.
Wet corn gluten feed 40 to 60 percent moisture was 185,051 tons in February 2023, down 11 percent from January 2023 and down 3 percent from February 2022.
Soybean prices, in contrast, found the most upside despite a tepid round of grain export inspection data from USDA, capturing double-digit gains, mainly thanks to the spillover support from surging energy prices (read more below).
Soybean export inspections indeed were relatively disappointing last week, with only 499,054 t inspected.
That was 44% below the prior week’s tally, and it was also toward the lower end of trade estimates.
China was the No. 1 destination.
Cumulative totals for the 2022/23 marketing year are still 2.8% above last year’s pace so far, with 45,46 MMT.
However, monthly soy processing was marked at 176.882 mbu for February according to the NASS Fats and Oils report.
Analysts were looking for a 175.7 mbu figure.
Feb’s crush was down 7.45% from January’s total, but the crush/day was up 2.5%. That was also a record for the month of February.
Soybean oil stocks were shown at 2.362 b lbs, up only 0.2% mo/mo.
Meantime, private exporters reported to the USDA having sold 20,000 metric tons of soyoil for delivery to unknown destinations during the current marketing year.
Wheat markets were mixed ahead the first national Crop Progress report from NASS.
Also, USDA’s weekly Export Inspections report had 168,543 MT shipped for the week that ended 3/30.
That was 58% below last week’s export and was 47% lower than the same week last year.
The accumulated wheat export was 16.859 MMT as of 3/30, trailing last year’s 17.218 MMT pace.
In this context, corn basis bids were steady to mixed across the central U.S. after climbing as much as 20 cents higher at an Iowa processor while spilling as much as 10 cents lower at a Nebraska processor.
Soybean basis bids were steady to mixed, after firming 3 to 10 cents higher across four Midwestern processors while trending as much as 10 cents lower at an Illinois river terminal.
Commodity funds were net buyers of CBOT soybean (7,000 lots), corn (2,000 lots), soyoil, and wheat (2,500 lots) futures contracts and net sellers of soymeal futures contracts.
After the sessions close, the USDA in its first weekly crop progress report of the 2023 growing season rated 28% of U.S. winter wheat in good to excellent condition, the lowest for this time of year in records dating to 1989, as drought persists in key portions of the Plains wheat belt.
The figure fell below most analysts’ expectations, which expected the government to rate 31% of the crop as good to excellent, with estimates ranging from 25% to 36%.
The previous ratings low for the 13th week of the calendar year was 2022, when 30% of the winter wheat was rated good to excellent.
Approximately 48% of U.S. winter wheat was produced in an area experiencing drought as of March 28, the USDA said in a separate report last week, a reduction from 51% a week earlier and down from 69% as the year began.
Drought remains concentrated in southwest Kansas and the Texas and Oklahoma panhandles, all key winter wheat production areas, according to the latest weekly Drought Monitor report.
“Some areas of the state received more rainfall (in the week to April 2), while other areas experienced hot and dry weather accompanied by high winds.
The dry conditions have continued to cause small grains to suffer,” the USDA’s state report for Oklahoma said.
Winter wheat has headed in four of the top 18 growing states, so far.
In Arkansas, 3% of winter wheat has headed, up from 2% at this time last year, but behind the five-year average of 7%.
USDA rated the crop 1% very poor, 7% poor, 35% fair, 48% good, and 9% excellent.
California winter wheat surged ahead of the average pace of 4% to 30%.
That’s significantly ahead of 17% at this point in the 2022 growing season, as well.
The report rated winter wheat condition was 5% fair, 90% good, and 5% excellent.
North Carolina winter wheat is 2% headed, equal to the pace of the 2022 crop at this point in the growing season.
The five-year average is 1%.
The crop was rated 1% very poor, 2% poor, 18% fair, 65% good, and 14% excellent.
Winter wheat heading jumped 4% over the last seven days to 29% in Texas, which is ahead of last year’s pace and the five-year average of 20%.
USDA rated winter wheat 22% very poor, 25% poor, 35% fair, 14% good, and 4% excellent.
There was no excellent wheat in Idaho, Montana, or South Dakota.
Kansas reported 31% of the state’s winter wheat crop in very poor condition.
Meanwhile, farmers are starting to plant spring crops.
The USDA did not release figures on planting progress for spring wheat on Monday but said it expected to publish those starting with its next weekly report on April 10.
Analysts on average had estimated spring wheat planting as 2% complete, with estimates ranging from zero to 3%.
According to Monday’s Crop Progress Report, the USDA said farmers in Kansas, Kentucky, North Carolina, Tennessee, and Texas have started planting the 2023 corn crop.
Notably, Kansas corn is 1% planted, on pace with the five-year average and 1% behind last year’s 2% pace.
In Kentucky, 2% of the corn crop is in the ground, ahead of both the 2022 and five-year average planting pace.
North Carolina farmers are slightly behind last year and the five-year average with 1% of the corn crop planted, so far.
Tennessee farmers have also planted 1% of their corn crop, on pace with the five-year average and ahead of the 2022 growing season’s planting pace.
Over the past seven days, farmers in Texas planted 5% of the state’s corn.
Total planted corn acreage stands at 57% in The Lone Star State, says USDA.
That’s 3% ahead of the 54% five-year average.
Across all 18 of top corn growing states, 2% of the U.S. corn crop is in the ground, says USDA.
On this morning, Chicago wheat prices gained more ground, with lower-than-expected rating of the U.S. winter crop raising concerns over global supplies.
Corn eased as forecasts of dry weather in key parts of the U.S. Midwest boosted planting prospects, while soybeans were largely unchanged.
Notably, the most-active wheat contract on the Chicago Board of Trade gained 0.4% at $6.96-1/4 a bushel, as of 02:51 GMT.
Corn dipped 0.2% to $6.56-1/2 a bushel and soybeans added half a cent to $15.22-1/2 a bushel.
In energy markets, the big news during the weekend was the surprise announcement by OPEC that they would make a voluntary 1,16-million-barrel-per-day cut in oil production, raising fears of tightening supplies.
The latest pledges bring the total volume of cuts by OPEC+ to 3.66 million bpd including a 2 million barrel cut last October.
That is about 3.7% of global demand, according to some analysts.
OPEC had described the cuts as precautionary.
But analysts said a weakening economy and rising oil stockpiles likely supported the decision.
Since mid-December, U.S. crude oil inventories indeed have risen fairly steadily and hit their highest level in two years in the week ended March 17.
Also, Western sanctions on Russia also have led to a sizeable number of Russian crude cargoes looking for a home.
However, U.S. President Joe Biden’s administration told Saudi officials that it disagreed with it.
Meantime, oil benchmarks jumped 6% on Monday.
Notably, Brent crude settled higher by $5.04, or 6.3%, at $84.93 a barrel, after touching its highest since March 7 at $86.44.
West Texas Intermediate crude settled up by $4.75, or 6.3%, at $80.42 a barrel after rising to a two-month high during the session.
As a result, most analysts to raise their Brent oil price forecasts to around $100 per barrel by year-end.
However, the inflationary jolt to the world economy from rising oil prices will result in more rate hikes.
In this wake, someone warned of reduced demand if oil refiners flinch at paying higher prices for crude.
Lower refining output could push prices at the pump to near last year’s record levels.
Thus, long-term demand for energy could slump.
In a sign of an imminent recession, U.S. manufacturing activity slumped to the lowest level in nearly three years in March and could decline further on tighter credit and higher borrowing costs.
As a result, on this morning, oil prices rose again, but investors’ attention shifting to demand trends and the impact of higher prices on the global economy.
Thus, Brent crude futures were up 42 cents, or 0.5%, to $85.35 a barrel by 06:32 GMT.
U.S. West Texas Intermediate (WTI) crude futures were trading at $80.85 a barrel, up 43 cents, or 0.5%.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, rose on Monday buoyed by higher rates for capesize and panamax vessel segments.
The overall index, indeed, gained 23 points, or about 1.7%, to 1,412 – its biggest daily percentage rise since March 23.
Notably, the capesize index added 58 points, or about 3.5%, to 1,723.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes carrying commodities such as iron ore and coal, increased $484 to $14,290.
The panamax index gained 29 points, or about 1.8%, to its highest since March 20 at 1,664.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased $254 to $14,972.
Among smaller vessels, the supramax index lost 11 points to 1,187.
In equity markets, US stock indexes settled mixed.
Big gains for energy stocks helped offset losses for some big technology stocks on Wall Street.
Morgan Stanley warned that this year’s rally in technology stocks isn’t sustainable and that the sector will return to new lows.
Also, JPMorgan Chase said the technology sector would stop strongly outperforming due to earnings risks, unattractive valuations, and very high price relatives in the long-term context.
In this context, Amazon slipped 0.9%, and Tesla fell 6.1% after it said over the weekend deliveries in the first three months of the year fell short of analysts’ expectations, even though it still set a record.
But the broader market moved higher only after a gauge of U.S. manufacturing activity contracted by more than expected, which knocked bond yields lower and tempered inflation concerns caused by the surprise cut in oil production by OPEC+.
Notably, the U.S. Mar ISM manufacturing index fell -1.4 to 46.3, weaker than expectations of 47.5 and the steepest pace of contraction in 2-3/4 years.
Also, U.S. Feb construction spending unexpectedly fell -0.1% m/m, weaker than expectations of no change.
As a result, global bond yields gave up overnight gains and turned lower.
The US 10-year T-note yield fell -3.8 bp to 3.430%.
The 10-year German bund yield fell -3.7 bp to 2.255%.
The 10-year UK gilt yield fell -6.0 bp to 3.430%.
In this context, the S&P 500 rose 0.4% to 4,124.51.
The Dow Jones Industrial Average gained 1% to 33,601.15.
The Nasdaq composite lost 0.3% to 12,189.45.
On this morning, shares were mostly higher in Europe and Asia as investors watched for the latest moves by central banks, given signs that inflation is abating in many regions.
The OECD indeed reported inflation in leading economies fell to 8.8% in February from 9.2% in January.
Inflation rates remained above 20% in Hungary, Latvia and Turkey, but overall, inflation fell in 23 of the 38 OECD economies.
Thus, Germany’s DAX gained 0.6% to 15,684.77 and the CAC 40 in Paris was 0.5% higher, at 7,379.09.
Britain’s FTSE 100 edged 0.1% higher, to 7,681.11.
The S&P/ASX 200 in Sydney edged 0.2% higher to 7,236.00 after Australia’s central bank kept its key interest rate unchanged at 3.60%.
Elsewhere in Asia, Tokyo’s Nikkei 225 gained 0.4% to 28,287.42, while the Shanghai Composite index picked up 0.5% to 3,312.56.
Hong Kong’s Hang Seng lost 0.7% to 20,274.59.
Shares fell in Bangkok.
Markets were closed in India and Taiwan.
South Korea reported its consumer inflation rate fell to a lower-than-expected 4.2% in March from a year earlier from 4.8% the month before.
That has raised expectations that the central bank will keep its key interest rate at 3.5% when it meets next week.
Japan has kept its key interest rate at minus 0.1% and China has been easing credit to alleviate pressures on its vital property sector.
The Reserve Bank of New Zealand was due to make a decision on interest rates on Wednesday.
However, it should to note that easing energy prices has been a major factor for inflation abating.
In currency trading, the U.S. dollar rose to 132.92 Japanese yen from 132.44 yen late Monday.
The euro climbed to $1.0928 from $1.0905.
Going back to analysing the other agricultural markets …
From Canada, parts of the Canadian Prairies experienced the second-driest start to a year in 45 years, said David Streit, senior meteorologist at Commodity Weather Group.
Key spring wheat regions including Alberta, Saskatchewan and Manitoba have received less than 60pc of average precipitation since Sept. 1, according to Canada’s agriculture ministry.
From South America, the final week of March 2023, week ending April 1, was drier than normal for a large portion of Brazil’s growing regions.
Brazilian farmers have harvested 76% of the soybean area planted for 2022/23 through last Thursday, agribusiness consultancy AgRural said on Monday, up six percentage points from the previous week.
At the same time last year, 81% of the Brazilian soy fields had been reaped, said AgRural.
Meantime, dryness, combined with heat, will dry soils out quickly, especially in Mato Grosso do Sul, where this was the fourth hottest and third driest final week of March in 30-plus years, according to data from WeatherTrends360.
The drier weather was helpful in finishing up any remaining second corn crop (safrinha) planting in central Brazil, where planting was much behind schedule due to excessive rainfall.
The first week of April, week ending April 8, will bring wetter and cooler weather across portions of central Brazil, although not all of Brazil will see wetter weather.
The rainfall will be crucial to the success of the safrinha crop, a large majority of which was planted outside the ideal planting window.
Meantime, StoneX raised its Brazilian soybean crop estimate by 3 MMT to a record 157.7 MMT.
The firm expects Brazil to export 96 MMT of soybeans in 2022-23.
Brazil exported 13.271 MMT of soybeans last month, up 8.071 MMT (155%) from February as new-crop supplies became readily available for shipment.
March soybean exports topped year-ago by 1.08 MMT (8.9%).
StoneX increased its Brazilian corn crop forecast to 131.3 MMT, up 740,000 MT from last month.
The increase came amid a bigger first crop estimate, as the safrinha forecast was trimmed 260,000 MT from last month.
Safras and Mercado, in contrast, estimates the Brazilian 2nd corn crop at 92.2 MMT, from their 87.7 MMT prior estimate.
That sets their total corn output at 130.3 from 125.3 MMT.
Meantime, StoneX expects Brazil to export 48 MMT of corn in 2022-23.
Brazilian corn exports slowed to 1.335 MMT, down 942,000 MT (41.4%) from February as exporters shifted more focus to soybeans.
However, March corn exports still easily topped last year’s 14,278 MT tally.
In this context, Brazil posted the highest trade surplus ever recorded for March, with balance positive at $10.956 billion in the month.
Exports reached $33.060 billion, up 7.5% from March last year, boosted by a 53.8% jump in crude oil exports and 8.9% growth in soybean exports.
In Argentina, drier trends returned to the growing regions of the country.
This was the eighth driest final week of March in 30-plus years, according to WeatherTrends360.
Meantime, Argentina’s government will launch a new “soy dollar” preferential exchange rate for farm exports, a spokesperson from the economy ministry said, to boost agricultural shipments and increase the depleted foreign reserves in the central bank (BCRA).
The soy dollar rate was used twice last year to stimulate sales.
Analysts expect the new special exchange rate for the so-called “soy dollar” to be between 270 and 300 Argentina pesos per dollar.
The peso closed at 209.01 units per dollar on Friday.
The new rate could be applied immediately as an export incentive for soybeans, and maintained for the next 90 days to boost foreign trade in regional economies, a source from the ministry of agriculture said.
In Europe, we saw a very choppy session yesterday.
Grain prices initially rose sharply, but then gave up most of early gains, closing in the red.
Only rapeseed managed to stay positive on the back of crude oil prices’ rally.
Adding to global supply concerns, Louis Dreyfus Company will stop exporting Russian grain from July 1, the group said on Monday, joining other merchants in dropping activities in the world’s biggest wheat-exporting country.
The French agricultural trading giant in a letter, said “Louis Dreyfus Company (LDC) will cease grain exports from Russia, as grain export challenges continue to increase in the country, and is also assessing options for the transfer to new owners of its existing Russian business and grain assets.”
Last week, the trading firms Cargill and Viterra announced they would no longer handle Russian grain exports.
And that supported grain prices early in the morning.
Meantime, according to MARS, the European crop monitoring service, the forecast yield for winter wheat is 4.46 tonnes/ha, compared to the 5-year average of 4.3 tonnes/ha.
MARS expects Ukraine’s 2023 wheat production to trend 6% below the prior five-year average, though yields are expected to improve 6% this season, as total plantings are likely to be down 11% from the historical average.
Meantime, Strategie Grains have pegged 2023-24 EU sunflowerseed production at 11.3Mt (9.2Mt previous year), with soybeans seen at 3.2Mt (2.5Mt previous year) and rapeseed production at 19.5Mt (19.4Mt).
On the other hand, the Prime Ministers of Bulgaria, Hungary, Poland, Romania and Slovakia have reportedly sent a joint letter to the President of the European Commission, stating that if market distortions arising from incoming shipments of grains, oilseeds and other agricultural products from Ukraine cannot be eliminated, tariffs and tariff quotas should be introduced.
Additionally, measures proposed in the joint letter included a solution between the EU and the World Food Programme (WFP) as a means of limiting imports, while calls were reiterated for more financial assistance to local farmers, as well as improvements to transportation logistics and changes to laws, aimed at regulating the volume of inflows.
From Ukraine, according to Ukraine’s Ag. Ministry March grain exports totalled 5.3Mt, compared to 1.4Mt in March last year.
Cumulative 2022-23 grains exports are at 37.6Mt, compared to 44.9Mt exported over the same period of 2021-22, including wheat at 12.9Mt (18.4Mt), maize at 22.2Mt (20.4Mt) and barley at 2.3Mt (5.6Mt).
From the Middle East, recent available data indicates that Saudi Arabia imported approximately 2.7 million metric tons (MMT) of barley in the first six months of MY 2022/23 (July – December 2022), an increase of approximately 11% compared to the same period last year (2.46 MMT), according to the USDA attaché.
However, due to heavy rain that improved the livestock pasture, the demand for imported barley is forecast to significantly decline for the remainder of this marketing year to 4 MMT.
For the same reason, MY 2022/23 total corn consumption is estimated at approximately 3.6 MMT, down by approximately 5% from USDA’s official estimate of 3.8 MMT.
Meanwhile, the demand for wheat and rice are expected to increase due to expansions in the food service sector, and this trend is expected to continue for the next several years.
From Russia, export prices for Russian wheat halted a multi-week decline last week.
Notably, according to the IKAR, prices for Russian wheat with 12.5% protein content, delivered free on board (FOB) from Black Sea ports, were up $1 to $273 a tonne last week.
Russia exported 1.09 million tonnes of grain during the week to March 24, 970,000 tonnes of which was wheat, SovEcon said.
Although it was compared with 1.16 tonnes of grain and the same 970,000 tonnes of wheat the previous week, SovEcon raised its estimates of Russia’s wheat exports in March to 4.5 million tonnes from 4.3 million tonnes previusly forecasted.
Also, that is noticiably up from 2.1 million tonnes in March 2022 and is the highest level for March since 2018.
However, on the domestic front, prices of the other Russian products mostly fell.
Indeed, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 11,550 rbls/t -225 rbls/t (Sovecon).
Price for sunflower seeds was at 21,075 rbls/t -2,550 rbls/t (Sovecon).
Price for domestic sunflower oil was at 73,000 rbls/t -2,525 rbls/t (Sovecon).
Price for domestic soybeans was at 30,475 rbls/t -2,925 rbls/t, (Sovecon).
Export price for sunflower oil was at $825/t -$15 (IKAR).
Price for white sugar, Russia’s south was at $708.26/t +$3.24 (IKAR).
Russia’s agriculture minister reported that the rate of spring sowing is almost twice as high as last year: spring crops were sown an area of about 1 million hectares.
Meanwhile, major Western traders said they would stop handling Russian grain exports, following a report that Russia’s agriculture ministry had issued unofficial guidance to support export prices.
Notably, there were chatter about an unofficial recommendation to exporters not to sell wheat below $275-280/mt FOB.
From the Middle Kingdom, China sold 128k MT of its imported state wheat reserves at an auction held on March 29.
That was approximately 93% of the total available for sale.
China has offered a series of similarly sized wheat auctions in recent months in an attempt to boost local supplies and cool high prices.
From South East Asia, despite a slight reduction in planted area, 2023/2024 wheat production in Pakistan is forecast to reach 27.0 million tons, two percent higher than last year, according to the USDA attaché.
With consumption growth expected to outstrip the increase in production, 2023/24 wheat imports are forecast to reach 2.6 million tons.
Following the flood-damaged crop last year, rice production is forecast to rebound to 8.8 million tons.
This will boost the domestic surplus, and rice exports are projected at 4.5 million tons.
Continued good returns are expected to increase corn area and yields, and corn output is forecast to increase about 6 percent to?10.5 million tons in 2023/24.
In India, the USDA estimates the wheat crop at 108 Mt compared to 100 Mt last year.
The figure is subject to caution due to the logistical structure of the country.
Meantime, the government has been planning to relax norms to procure wheat from farmers amid untimely rainfall and hail which damaged the crop just before harvesting in key producing central and northern states.
Notably, the government-backed Food Corporation of India (FCI) plans to buy 34.15 million tonnes of new-season wheat from local farmers.
New season wheat has started arriving on the market, but the harvest has lost lustre in some districts.
The state-run agencies have procured 260,000 tonnes of wheat from farmers as on April 2, up from the last year’s 46,000 tonnes.
Crop with lower lustre was getting sold at a big discount to good quality crop in the market and the government buying would stop this distress sale.
From Australia, local markets on Monday were unchanged.
Pulse buying demand in Vic and SA remained strong.
Some growers were busy with paddock prep, while some powered ahead with sowing for the upcoming 2023-24 winter cropping program.
The break has certainly been a pleasant surprise for most with many going into a full moisture profile.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
