Good morning, Farmer Family …
US farm markets faced moderate cuts on Tuesday.
Corn prices dropped by 0.61%, while soybean eased by 0.3%.
The rest of the soy complex was also in the red, with soymeal and soyoil each incurring losses of 1.46% and 1.66% respectively.
Wheat prices tried to lead the market out of the bearish sentiment, but ultimately faded into the red, with Chicago SRW ending the session with 0.29% losses, KC HRW was down by 0.31%, MGE HRS closed 0.25% in the red.
Markets were lower with a risk off day in outside markets, spilling over also in ag commodities.
However, grain prices had enjoyed some solid gains in recent sessions, reaching so levels to spur also some profit-taking, especially as Brazilian harvest is nears completion, while planting season is rapidly approaching in the United States.
Thus, corn eased as forecasts for dry weather in key parts of the U.S. Midwest boosted planting prospects.
Corn planting has started in some areas, per USDA’s new crop progress report.
More than half (54%) of Texas’s crop is already in the ground through April 2.
Three other states – Kansas (2%), Kentucky (1%) and North Carolina (3%) also showed measurable progress last week.
Nationwide, 2% of the 2023 corn crop has been planted, which matched analyst expectations.
USDA also noted that the U.S. used 399.8 million bushels of corn to produce ethanol in February.
That was modestly below year-ago totals of 406.1 million bushels.
The U.S. also produced 1.561 million tons of DDGS in February, which was also down from year-ago results of 1.693 million tons.
Meantime, Safras&Mercado estimated the Brazilian 2nd corn crop at 92.2 MMT, an increase from their 87.7 MMT prior estimate.
That sets the total corn output at 130.3 from 125.3 MMT.
Brokerage StoneX has their estimate at 100.54 MMT for the 2nd crop and 131.3 MMT for the total output.
Meanwhile, Brazilian export data showed 1.335 MMT of corn was shipped in March.
That was up from just 14k MT last year following the 1st crop’s drought.
Also about soybean, prices mainly declined on optimism that planting weather will improve In the USA after this week storms.
Meantime, AgRural reported the Brazilian soybean harvest at 76% complete – up 6% points from last week but still trailing the rapid 81% pace last year.
StoneX raised their soybean production outlook by 3 MMT for Brazil to 157.7 MMT, with 96 MMT of exports for 22/23.
Official Brazilian export data showed 13.27 MMT of soybeans were exported in March.
That was up from 12.19 MMT last year.
Also, Argentina’s latest ‘soy-dollar’ preferential exchange rate, the 3rd of its kind, is set to roll out on Wednesday, improving export activity.
Notably, this plan will lock in a 210 peso/dollar exchange rate for soybeans and soy products sold for export from Wednesday – May 31.
The current ratio is 210.8099 pesos to $ – compared to 60/1 before covid and 170/1 at the start of 2023.
The Argentine government needs the tax revenue from exports, but the severe declines in 2023 crop production could limit exports.
Thus, with this move the government aims increasing substantially soybean export activity, with some analysts expect to reach 10MMT in this new round, and to enter US$6 billion to the Central Bank.
Wheat prices followed other grain prices lower, but losses were relatively muted.
The U.S. Department of Agriculture (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 score for the time of year in records dating to 1989.
However, improving weather outlook tempered concerns about poor U.S. winter crop conditions, and eased worries about spring planting, across most of the northern Plains spring wheat belt.
In this context, corn basis bids were mostly steady across the central U.S., but did inch a penny higher at an Iowa river terminal while easing 1 to 2 cents lower at two other Midwestern locations.
Soybean basis bids were steady at most Midwestern locations, but did shift 10 cents higher at an Indiana processor.
Commodity funds were net sellers of Chicago Board of Trade soybeans, soymeal, corn, soyoil, and wheat futures contracts.
On this morning, Chicago wheat prices dipped in Asian trading, extending losses from the previous session, while soybeans regained some lost ground.
Notably, the most-active wheat contract on the Chicago Board of Trade was down 0.7% at $6.86-3/4 a bushel, as of 05:07 GMT.
CBOT corn was steady at $6.53-3/4 a bushel.
In energy markets, oil prices were little changed in choppy trading on Tuesday.
Notably, Brent crude futures settled 1 cent higher at $84.94 a barrel, while U.S. West Texas Intermediate (WTI) crude futures closed up 29 cents, or 0.4%, at $80.71 a barrel.
Investors weighed OPEC+ planned production cuts against weak U.S. and Chinese economic data that could suggest cooling oil demand.
Notably, U.S. job openings in February fell to the lowest level in nearly two years, meanwhile the U.S. manufacturing activity in March slumped.
Also, in China, manufacturing activity last month was weak.
The economic signals ran alongside fears of an inflationary hit to the world economy, as rising oil prices fuel higher interest rates.
Meanwhile, U.S. crude oil stockpiles drew by more than 4 million barrels last week, according to market sources citing American Petroleum Institute figures on Tuesday, while analysts had estimated a 2.3 million barrel drop in inventories.
As a result, on this morning, oil prices rose.
Notably, Brent crude futures gained 22 cents, or 0.26%, to $85.16 a barrel by 07:47 GMT.
West Texas Intermediate U.S. crude was up 12 cents, or 0.15%, to $80.83 a barrel.
The U.S. Energy Information Administration will release its data today at 14:30 GMT.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, extended gains on Tuesday supported by higher rates for larger vessel segments, especially capesizes.
The overall index, indeed, gained 61 points, or about 4.3%, to 1,473 – its biggest daily percentage rise in three weeks.
Notably, the capesize index rose 144 points, or about 8.4%, to 1,867.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes carrying commodities such as iron ore and coal, increased $1,193 to $15,483.
The panamax index gained 60 points, or about 3.6%, to its highest since March 17 at 1,724.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased $545 to $15,517.
Among smaller vessels, the supramax index lost 11 points to 1,176.
In equity markets, US stock indexes posted moderate losses, after a sell-off in bank stocks weighing on the overall market.
JPMorgan Chase CEO Dimon said the U.S. banking crisis is “not yet over” and will be felt for years.
Stocks were also under pressure on concerns the labor market.
U.S. Feb JOLTS job openings fell -632,000 to a 1-3/4 year low of 9.931 million, showing a weaker labor market than expectations of 10.500 million.
U.S. Feb factory orders fell -0.7% m/m, weaker than expectations of -0.5% m/m.
That pushed T-note yields lower and bolstered expectations that the Federal Reserve may be approaching the end of its interest rate hike campaign.
Thus, the 10-year T-note yield fell -6.7 bp to 3.344% and posted a 1-week low of 3.333%.
The two-year Treasury, which moves more on expectations for the Fed, dropped to 3.82% from 3.97%.
In Europe, the 10-year German bund yield fell -0.5 bp at 2.249%, while the 10-year UK gilt yield rose +0.5 bp to 3.434%.
In this context, on Wall Street, the S&P 500 dropped 0.6% to 4,100.60, breaking a four-day winning streak.
The Dow Jones Industrial Average fell 0.6%, to 33,402.38.
The Nasdaq composite sank 0.5% to 12,126.33.
On this morning, Asian shares were trading mixed.
Notably, Japan’s benchmark Nikkei 225 lost 1.7% in afternoon trading to 27,808.75.
Australia’s S&P/ASX 200 stood little changed, inching down less than 0.1% to 7,232.60.
South Korea’s Kospi added 0.5% to 2,493.83.
Trading was closed in Hong Kong and Shanghai for the Qingming Festival, a holiday.
New Zealand’s benchmark fell 0.3% after the central bank surprised economists by imposing an aggressive half-point rate rise to bring its policy interest rate to 5.25%.
It was the Reserve Bank of New Zealand’s 11th straight rate hike as it tries to cool inflation, which is running at 7.2%, far above the bank’s target level of around 2%.
In currency trading, the U.S. dollar slipped to 131.52 Japanese yen from 131.71 yen.
The euro cost $1.0954, up from $1.0951.
Going back to analysing the other agricultural markets …
From South America, recent rain has stabilised crops in Argentina, leading South American crop consultant Dr Michael Cordonnier to keep his Argentine crop estimates at 26Mt for soybeans and 36Mt for corn.
He also kept his Brazilian crop estimates at 151Mt for soybeans and 121Mt for corn.
StoneX has revised Brazilian soybean production up by 3Mt to 157.7Mt, reflecting higher area and yields.
2023 (Jan/Dec) exports seen at 96.0Mt (93Mt CONAB, 78.7Mt previous year), with closing stocks at 9Mt (5.5Mt, 3.2Mt).
Meanwhile, Argentina is set to lose its status as the world’s top exporter of processed soy meal due to the toll of historic drought on the country’s main cash crop, according to the Rosario stock exchange.
In Europe, both grain and oilseed prices declined, mainly penalized by a rise in the euro.
Wheat edged to a new one-week low.
May milling wheat, indeed, settled 0.4% down at 255.25 euros ($279.40) a tonne.
It earlier fell to 253.50 euros, its lowest since March 24 and below a previous one-week low touched on Monday.
New-crop September contracts ended 0.3% lower at 258.25 euros after also reaching their lowest in over a week.
Price movements remained choppy, trading in positive and negative territory during the session, as traders assessed spring weather for crops.
The low temperatures recorded overnight in France should not have a major impact on crop conditions. Moreover, the return to more normal temperatures should happen very quickly.
As for rapeseed the May contract pulled back from three-week peak, falling 2.4% to 478.25 euros a tonne.
Oilseeds once again showed the most volatility, as rapeseed, widely used in biofuel, was pressured as crude oil turned lower after Monday’s surge.
Rapeseed, which hit its lowest in over two years last month, remained capped by expectations for ample supplies in Europe.
On the other hand, the European Commission decided to extend duty free imports for Ukrainain grains until June 2024, while Polish and other five Eu States had called for the introduction of tariffs.
Logistical bottlenecks, indeed, meant large quantities of Ukrainian grains, which are cheaper than those produced in the European Union have ended up in Central European states, hitting prices and sales of local farmers.
In this context, Polish Agriculture Minister Henryk Kowalczyk resigned from his post on Wednesday amid rising anger among farmers over the impact of Ukrainian grain imports on prices.
From North Africa, Morocco’s private importers stepped up imports of soft wheat in March to the maximum volume allowed under the government’s new “first come, first served” import quota system.
Notably, Moroccan ports received 508,000t of soft wheat in March, local silo and port data showed.
This represents the maximum volume eligible for government rebates under a new 500,000 t/month quota system and is the first time that Morocco has imported wheat at the same rate as local consumption since October — local millers typically process around 450,000-500,000t of wheat a month.
France kept its place as the top supplier with 300,000t arriving in Morocco in March.
Morocco also imported 115,000t of German wheat in March, as well as 64,000t from Romania’s Constanta port.
Ultmately Morocco imported 30,000t from Polish ports.
Morocco’s private importers are understood to have booked the full 1.5mn t of wheat allowed under government quotas to arrive in March-May.
From Ukraine, according to Anna Tanska, the head of the local markets department, last week prices for Ukrainian feed corn on the FOB Black Sea basis declined.
The limited entry/exit of the vessels from/to ports of Great Odesa was one of the factors of pressure on prices.
However, “for the most part, the decrease in prices was also due to the need to increase its competitive attractiveness on the global market before the South American corn entered the market” the expert added.
In addition, A. Tanska noted that there is a spring planting campaign in Ukraine.
Ukraine plans to plant more than 13 mln ha in spring season, said Denys Shmyhal, the Prime Minister of Ukraine, during the government meeting on April 4.
Thus farmers need funds for its implementation and have significantly increased the product offers.
In this context, offer prices for feed corn with delivery in April from Great Odesa ports lost 15-20 USD/t and were 230-250 USD/t FOB, and in some cases – 220 USD/t FOB.
From Georgia, the government will lift the ban on the export of wheat from the country ahead of schedule, stated Otar Shamugia, the Minister of Agriculture of Georgia, at a briefing on April 4.
“The country has stocks of both flour and wheat, for at least two or three months, and in 3 months we are waiting for a new harvest,” the minister explained.
O. Shamugia noted, that this decision will help farmers to sell their wheat in the free trade area.
A ban on the export of wheat was introduced in Georgia on July 4, 2022, to ensure the food security of the republic.
Initially, this restriction was supposed to be in effect until July 1, 2023.
From Russia, according to SovEcon estimates, as of March 29, the average third-grade wheat price in Russia dropped to RUB11,550 ($147), the lowest price since November 27, 2019.
The decline is attributed to high wheat supply and weak demand from exporters.
According to Rosstat, wheat stocks held by commercial firms reached 17.4 MMT as of March 1, which is 82% higher than the five-year average.
The decrease in exporter demand is due to falling wheat export prices, with SovEcon estimating the average FOB price of Russian wheat on March 22 at $279/t, the lowest since August 2021.
SovEcon says, “Low domestic prices are likely to support active wheat shipments from Russia during next months.
However, we don’t expect the country to increase exports substantially from current levels because of infrastructure bottlenecks.”
From South East Asia, USDA’s FAS post in India has pegged 2023-24 wheat production at 108Mt, up from 100Mt in 2022-23.
Favourable weather conditions and sufficient soil moisture from the time of planting through the vegetative/reproductive stages buoyed record planting levels.
Yields are forecast at 3.39t/ha, up on last year’s 3.28t/ha.
Currently, the crop is at the advanced-maturity stage, progressing well without any visible impact of heat stress or pest and/or disease incidences in wheat growing states.
The report noted that as the Indian Government needs to replenish its depleted wheat stocks, a relaxation in its export ban on wheat and wheat products is unlikely, at least through the peak harvest/marketing period.
On this wake, India will relax parameters to procure wheat from areas where untimely rainfall and hail damaged crops just before harvest.
“We have allowed Madhya Pradesh state to procure wheat even with 10pc loss in luster.
If required we would take call for other states and other parameters such as moisture,” a senior government official said.
The wheat crop has also been damaged in Punjab and Haryana because of rainfall, and the government will likely make similar changes in the procurement rules for these states.
From Australia, canola followed offshore markets yesterday with a $15/t bounce, but is still giving up more basis.
The AUD took some heat out of the domestic market with a preemptive rally prior to the RBA meeting.
On the international trade scene, Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said on Wednesday that it will seek 60,000 tonnes of feed wheat and 20,000 tonnes of feed barley to be loaded by July 31 and arrive in Japan by Sept. 28, via a simultaneous buy and sell (SBS) auction that will be held on April 12.
Jordan made no purchases in its international tender to purchase 120,000 tonnes of wheat.
It’s beilieved seven trading houses participated in the tender: Viterra,
CHS, Cargill, Ameropa, GrainFlower, FarmSense, Agrochirnogi.
It seems Grain Flower offered Russian as per same terms of last week CIF.
Insurance for seller a/c +payment after arrival in Aqaba.
However, MIT bid a low price, although no prices leaked yet.
A new tender is expected for next Tuesday, 11/04.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
