Good morning, Farmer Family …
US farm markets spilled back into the red again, on Wednesday.
Corn and soybean prices faced modest cuts, down 0.15% and 0.43% respectively.
The rest of the soy complex fared even worse, with soymeal down 1.49%, while soyoil lost 0.93%.
Wheat losses were more severe, with Chicago SRW down 1.37%, Kansas City HRW down 1.26%, and Minneapolis spring wheat down 1.8%.
First of all, the fading of a crude oil rally and investor concerns about the economic outlook capped grain prices, as participants adjusted positions in the run-up to the Easter holiday weekend.
After the Easter holidays, indeed, the U.S. Department of Agriculture is scheduled to release its April crop supply/demand report on Tuesday, April 11.
The report will include figures for Argentine and Brazilian 2022-23 production of corn and soybeans.
Meantime, corn prices eased after a day of ups and downs, on improved weather outlooks for planting season in the United States.
Until Sunday, indeed, loads of rain is expected across the Mid-South and Southeast, while most of the Midwest and Plains will remain relatively dry during this time.
Meantime, the NOAA’s 8-to-14-day outlook predicts a return to seasonally wet weather for the western half of the country between April 12 and April 18, with much warmer-than-normal conditions likely for the entire Corn Belt.
The U.S. Department of Agriculture confirmed a private sale of 125,000 tonnes of U.S. corn to unknown destinations for delivery in the 2022/23 marketing year.
However, the weekly EIA data showed ethanol production for the week ending March 31 was unchanged from the prior week’s tally of 1.003 million barrels per day.
That also matched the same week last year, but was slightly below the prior five-week average of 1.005 million barrels per day.
Ethanol stocks backed off by 400k barrels or 2%, but were still 25.1m on 3/31.
Meantime, monthly Census data confirmed 128.9 mbu of corn exports for the month of February.
That was up 3.3% from the Jan shipment but was still half of the monthly record set last year.
Month to month corn exports lagged last year by an average of 44% bringing the full MYTD lag to 414 mbu.
USDA had a 621 mbu decline from last year baked into the March WASDE.
Relative to that 1.850 bbu full year estimate, the season’s confirmed exports were 679.96 million bushels through Feb.
For ethanol, the census data showed 104.031m gallons were shipped in February.
That was down from 117.8m gallons in Jan and from 143.1m last year.
As for soybean, South American crops remained a focus, with a bumper Brazilian soybean harvest expected to offset a drought-hit Argentine crop.
Also, Argentina’s government announced a new plan setting a special exchange rate of 300 pesos per dollar to encourage soybean exports amid severe financial difficulties and foreign exchange shortages.
The current ratio is ~210.8099 pesos to $1.
The program, known locally as the “soy dollar,” will run from April 8 to May 31.
USDA confirmed a private export sale of 276k MT of old crop soybeans to unknown destinations for delivery in the 2022/23 marketing year.
However, Census data showed 197.5 mbu of soybeans were exported during the month of February.
That was a 39% drop from January’s shipment, though was 42% above Feb ’22.
The accumulated soybean export program reached 1.609 bbu through Feb, which is just shy of 80% of USDA’s forecast.
Shipments are also 5.1% ahead of last year’s pace.
For the products, census had 925,174 MT of soymeal exported and 11,774 MT of soybean oil shipped.
For meal that was a 34% drop from Jan, though bean oil shipments were up 68%.
As for wheat, the prospect of a drier, warmer spell boosting spring field work in the northern farm belt that was hit by snow this week took attention away from poor conditions for drought-affected winter wheat in the southern Plains.
Meantime, monthly census data showed 68.77 mbu of wheat exports for Feb.
That was a 5% boost from January’s export and was 1% higher than Feb ’22.
However, the full season’s total remains 2.7% behind last year’s pace with 591.5 mbu shipped.
Meantime, grain traveling the US railways saw another 20,628 carloads on the move last week.
That brings 2023’s cumulative totals to 282,739 carloads, which is 6.9% below last year’s pace so far.
In this context, corn basis bids were largely steady across the central U.S., but did tilt 5 cents higher at a Nebraska processor.
Soybean basis bids were steady across most Midwestern locations, but did trend 5 cents higher at an Ohio river terminal while fading 3 cents lower at an Iowa river terminal.
Commodity funds were net sellers of CBOT corn, soybeans, wheat, soymeal and soyoil futures contracts.
On this morning, corn lost more ground.
Wheat and soybeans were also slightly weaker.
Notably, the most-active corn contract on the Chicago Board of Trade (CBOT) was down 0.6% at $6.49 a bushel, as of 03:47 GMT, extending losses for a fourth session.
Wheat lost 0.5% to $6.78-1/2 a bushel, while soybeans shed 0.3% to $15.06-3/4 a bushel.
In energy markets, oil prices settled largely unchanged.
Notably, Brent crude futures settled up 5 cents, or 0.1%, at $84.99 a barrel, while West Texas Intermediate crude ended 10 cents, or 0.1%, lower at $80.61 a barrel.
U.S. crude inventories fell 3.7 million barrels last week, about 1.5 million barrels more than forecast, government data showed.
Gasoline and distillate stocks also fell more than expected, drawing down by 4.1 million barrels and 3.6 million barrels, respectively.
However, weak U.S. economic data raised concern over economic growth.
U.S. job openings in February dropped to the lowest level in nearly two years, suggesting that the labor market was cooling.
This could be the first sign of weakness in the U.S. labor market and that is huge.
Also, the U.S. services sector slowed more than expected in March, data showed on Wedsneday.
Record Russian diesel flows to the Middle East in March and the sluggish performance of middle distillates contracts have “acted as a brake on any attempt to push crude oil prices meaningfully higher” analysts said.
As a result, on this morning, crude oil prices dipped, although they are still on track for weekly gains.
Notably, Brent crude fell 34 cents, or 0.4%, to $84.65 a barrel by 08:03 GMT.
West Texas Intermediate U.S. crude dipped by 29 cents, or 0.4%, to $80.32.
The U.S. dollar index strengthened on Thursday, rebounding from a recent two-month-low.
A stronger dollar makes crude becomes more expensive for holders of other currencies and tends to reflect greater risk aversion among investors.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities rose for third-straight session on Wednesday, aided by higher rates for bigger vessel segments, largely panamax.
The overall index, indeed, gained 52 points, or about 3.5%, to its highest level in over two weeks at 1,525.
Notably, the capesize index rose 90 points, or about 4.8%, to 1,957, its highest since March 16.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes carrying commodities such as iron ore and coal, increased $750 to $16,233.
The panamax index to its highest since Oct. 17, adding 89 points, or 5.2%, at 1,813.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased $797 to $16,314.
Among smaller vessels, the supramax index lost 6 points to 1,170.
In equity markets, US stock indexes settled mixed.
The broader market moved moderately lower after weaker-than-expected U.S. economic news on Mar ADP employment ad Mar ISM services activity fueled concerns about an economic slowdown.
Notably, the U.S. Mar ADP employment change rose +145,000, weaker than expectations of +210,000.
The U.S. Mar ISM services index fell -3.9 to 51.2, weaker than expectations of 54.4.
The U.S. Feb trade deficit expanded to -$70.5 billion, wider than expectations of -$68.8 billion and the most in 4 months, which has negative implications for Q1 GDP.
Global bond yields retreated on weaker-than-expected economic reports on Mar ADP employment and Mar ISM services.
The 10-year T-note yield posted a 6-3/4 month low of 3.263% and finished the day down -4.9 bp at 3.290%.
Also, the 10-year German bund yield fell to a 1-week low of 2.164% and closed down -6.7 bp at 2.182%.
The 10-year UK gilt yield fell -0.6 bp to 3.428%.
Meantime, weakness in chipmakers led technology stocks lower after Japan joined the U.S. and Netherlands in restricting exports of chipmaking gear to China.
However, a more than +4% jump in Johnson & Johnson kept the Dow Jones Industrials in positive territory.
Johnson & Johnson rose 4.5% after it proposed to pay nearly $9 billion to cover allegations that its baby powder containing talc caused cancer.
As a result, the S&P 500 dipped 0.2% to 4,090.38 and the Dow Jones Industrial Average rose 0.2% to 33,482.72.
But the Nasdaq composite dropped 1.1% to 11,996.86.
On this morning, Asian shares were mostly lower.
Japan’s benchmark Nikkei 225 shed 1.2% to finish at 27,472.63.
Australia’s S&P/ASX 200 slipped 0.3% to 7,219.00.
South Korea’s Kospi fell 1.4% to 2,459.23.
Hong Kong’s Hang Seng gained 0.3% to 20,331.20.
The Shanghai Composite declined 0.3% to 3,312.63.
In currency trading, the U.S. dollar inched down to 131.23 Japanese yen from 131.30 yen.
The euro cost $1.0901, down from $1.0908.
Going back to analysing the other agricultural markets …
From Canada, Statistics Canada released February merchandise trade data on April 5.
Notably, Canadian exports and imports of merchandise fell in February, with total exports down 2.4% and imports down 1.3%.
Canada’s merchandise trade surplus fell for a second month from $1.2 billion to $422 million in February.
Statistics Canada commentary points to a sharp drop in total exports to countries outside of the United States.
Meanwhile the miscellaneous changes in activity during the month include a drop in reported wheat shipped to Iraq, while pointed an increase in agricultural products shipped to China.
From South America, soybean exports from Brazil, the world’s largest shipper of the oilseeds, surged in March both month-over-month and year-over-year, according to government data.
Exports of soybeans jumped to 13.3 million metric tons last month, a record for March, the Brazilian government said.
That’s a 155% increase from a month earlier and an almost-9% increase from March 2022.
Brazilian farmers are expected to produce 153 million metric tons of soybeans in the current marketing year, according to data from the U.S. Ag Department.
If realized, that would be the highest on record and an 18% increase from the previous year, the agency said.
Shipments from the South American country are projected by the USDA at 92.7 million metric tons, up from 79.1 million last year.
Brazilian soybean exports tend to peak in May then decline throughout the rest of the year, USDA data show.
Corn exports from Brazil, meanwhile, plunged 41% in March to 1.34 million metric tons amid the glut of soybeans that needed to be shipped, the country’s government said.
However, that was noticiabily higher from just 14k MT last year.
Corn production is forecast by the USDA at 125 million metric tons, up from 116 million tons a year earlier, the USDA said.
Exports are seen at 50 million metric tons, up narrowly from 48.5 million tons.
In Argentina, grains inspectors union ended a week-long strike after securing a deal to more than double salaries in line with the country’s surging inflation rate, it said on Wednesday.
Meantime, Rosario Grain Exchange expects Argentina to be surpassed by Brazil as the world’s largest soymeal exporter in 2022-23, reflecting Argentina’s heavily reduced crop due to drought and a significant fall in processing.
Exports from Argentina could total just 20Mt compared to Brazil’s 21-23Mt.
In Europe, corn and wheat fell further on Wednesday while rapeseed dropped 5%.
May milling wheat on Paris-based Euronext settled 0.5% down at 254.00 euros ($276.78) a tonne, after earlier touching its lowest since March 24.
September wheat ended 1.4% lower at 254.75 euros,
Notably, an additional pressure on new-crop prices came from reports that the European Union will continue zero tariffs for Ukrainian grain in the upcoming 2023/24 season.
In this context, Poland’s agriculture minister resigned on Wednesday, citing a European Commission decision to extend duty free imports for Ukrainian grain until June 2024.
However, trading remained choppy as traders prepared for the Easter holiday weekend.
In oilseeds, May rapeseed on Euronext ended 5.3% lower at 453.00 euros a tonne, accelerating a pullback from Monday’s three-week high.
Rapeseed, widely used in biofuel, rallied at the start of the week in step with crude oil.
But as crude prices faltered, attention turned back to ample supplies of rapeseed in Europe as well as the expiry of the May contract at the end of this month.
Meantime, financial investors reduced their net short position in Euronext’s wheat and rapeseed contracts last week, data published by Euronext showed.
On the other hand, Weekly EU data showed the bloc’s soft wheat exports so far this season had reached 23.15 million tonnes by April 2, up nearly 8% on year.
Morocco, Algeria, Nigeria, Egypt and Saudi Arabia were the top five customers.
EU barley exports, in contrast, so far in 2022/23 totalled 4.52 million tonnes, against 6.33 million a year ago, around 29% lower.
Mean while EU maize imports were at 21.20 million tonnes, against a year-earlier 12.31 million.
That was an increase of 72% year-over-year.
Ukraine, Brazil, Canada, Serbia and Russia were the top five suppliers.
European Union soybean imports reached 9.08 MMT through April 2, which is moderately below last year’s pace so far.
EU soymeal imports are down slightly year-over-year after reaching 11.99 million metric tons over the same period.
Rapeseed imports stood at 6.23 MMT, compared with 3.94 MMT last year.
However, the Commission said that it was still experiencing problems compiling grain trade figures from Germany and Italy.
Export data submitted by Germany from November may be inaccurate following the country’s switch to a new declaration system, while for Italy import data only went up to March 21, it said in a note.
The weekly publication was a day later than its usual Tuesday timing.
The Commission said it will also release the data on Wednesday next week.
From North Africa, USDA’s Foreign Agriculture Service Cairo post forecasts Egypt’s 2023-24 wheat imports to increase by 3 percent to 10.8 million tonnes, up from 10.5Mt in the previous year, due to population growth.
Meantime, Egypt is on the market for wheat today, with offers due also for today April 6th, for delivery May 10-31.
This tender will make it possible to clarify the level of the selling price of Russian wheat in a context of a floor price that has not yet been made official in Russia.
From Levant, Turkish Foreign Minister Mevlut Cavusoglu said Ankara is working with the United Nations to solve issues regarding grain and fertiliser exports via the Black Sea.
He will discuss developments in the Ukraine war with his Russian counterpart Sergei Lavrov during his visit to Turkey this week.
Cavusoglu also said he was concerned about preparations for further attacks.
From Ukraine, Ukraine’s grain exports for the 2022/23 season were at 38.5 million tonnes as of April 5, the agriculture ministry data showed on Wednesday.
The volume so far in the July-to-June season included about 13.2 million tonnes of wheat, 22.7 million tonnes of corn and 2.29 million tonnes of barley.
The ministry said grain exports in April had reached 476,000 tonnes as of April 5.
From Russia, as of April 5, 2023, customs duties for wheat and meslin decreased to 5179.4 rubles/t (-230.2 / -4.26%), for barley also decreased to 799.4 rubles/t (-2445.9 / -75.37%), for corn in contrast rose to 2943.6 rubles/t (+58.6 / +2.03%).
Meantime, the Ministry of Agriculture of Russia does not plan to cancel the export duty on sunflower seeds, Oksana Lut, the First Deputy Minister of Agriculture of the Russian Federation told journalists about this on April 6.
“As soon as we zero out the tariff, the prices for sunflower seeds will drop because the oilseed supplies on the market will increase,” she said.
As O. Lut explained, if we take the price for Ukrainian sunflower seeds as a guide, it is currently 370 USD/t (FOB basis).
If we assume that the price will decrease to 350 USD/t, at the current exchange rate of the ruble, the cost of sunflower seeds will be 26`000 RUR/t.
At the same time, you will have to minus 3`000-4`000 RUR for delivery to the ship.
“In this case, we will open our market, we ourselves will collapse the global prices for sunflower seeds.
At the same time, the prices for sunflower oil will also decrease, and they are already low now,” she emphasized.
In addition, the first deputy minister added, it is not advisable to cancel the duty, as the country still does not have enough oilseeds for the existing processing facilities and those under construction.
Current ones can process 26-28 mln tonnes of oilseeds, another 3 mln tonnes are under construction.
And in a record season, Russia harvested about 29 mln tonnes of oilseeds.
From South East Asia, India’s Meteorological Department reports that as at April 4, cumulative rainfall since March 1 is estimated to be 41pc above the long-term average, with excessive or normal rainfall at 88pc of monitoring stations.
From Australia, prices for feed wheat and barley have softened in the past week as prospects for a big and early winter-crop plant across Australia improve.
It has seen some in the trade, consumers included, unwinding the occasional position as exporters curb buying in the face of consolidating prospects for Northern Hemisphere grain.
Minimising the price falls this week has been a back-off in grower selling as planting of canola and other dual-purpose crops ramps up.
Meantime, yesterday was another day to slow burn.
Local markets continue to just tick along with enough liquidity coming to the market to keep everyone happy for now.
Victorian and South Australian markets on wheat and barley continued to slip, while Western Australia remained largely unchanged.
It’s a real mixed bag, but buyers are not jumping at it and coverage levels for the next month or so feel comfortable as we lead into a busy time for growers with seeding for the 2023-24 season under way.
The Easter weekend is looking wet for parts of southern WA with 5-25mm on the cards.
SA and western Vic look set to receive less than 10mm, while eastern Vic is looking at 10-50mm.
Most winter-cropping regions of NSW are in for 5-25mm and southeast Qld is looking at 10-50mm.
These totals will be a nice top-up to the rainfall already received and the break so far is certainly better than many were expecting.
On the international trade scene, Jordan purchased 60,000 t of barley for early September at 265.5 $/t C&F.
GASC set an international tender for wheat for shipment from May 10-20 and/or May 21-31, with an offers deadline on April 6.
Payment will be made at sight using funding from ITFC.
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 78,732 tonnes of food-quality wheat from the United States, Canada and Australia in a regular tender that closed on Thursday.
Details of the tender were:
U.S. – Dark Northern Spring (protein minimum 14.0 pct), 12,360t;
U.S. – Hard Red Winter(Semi hard), 15,470t;
Canada – Western Red Spring (protein minimum 13.5 pct), 29,142t
Australia – Standard White (West Australia), 21,760t.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
