Good morning Farmer Family …
US farm markets were mixed but mostly lower following USDA’s latest WASDE report.
Corn moved down 1.38%, while soybean after testing double-digit gains, only finished 0.15% higher.
The rest of the soy complex was mixed, as soymeal fell 0.43% lower, while soyoil improved by 0.72%.
Wheat prices were also mixed, but mostly in the red, as Chicago SRW fell 1.5%, KC HRW added 0.13%, while MGE spring wheat dropped by 1.67%.
Corn prices closed lower after the U.S. government estimated domestic corn supplies would be bigger than expected.
In its monthly WASDE report, USDA finally admitted that corn exports may not be able to match the agency’s prior projections.
Notably, USDA lowered the U.S. corn export forecast by 75 mbu to 1.850 bbu.
That went straight to carryout where the trade was looking for 1.308 bbu on average, while the USDA showed 1.342 bbu.
Census data confirmed 3.171 MMT of corn was exported in January.
That was a 14% drop from December and a 45% lower volume than Jan last year.
The season’s total export was up to 551 mbu, or 30% of USDA’s forecasted total.
The DDGS exports were 887k MT, Jan ethanol exports were 117.8m gallons, and 86,610 MT of milo was shipped.
Global WASDE data reduced corn production by 3.84 MMT, though Argentina was cut by 7 MMT to 40 flat. The average trade guess was to see 43.4 MMT for Argentina.
USDA also reduced their export forecast for Argentina by 7 MMT.
Global trade was reduced by 6.36 MMT to 174.7 MMT.
Carryout was lifted by 1.2 MMT to 296.5.
USDA set the new cash average price at $6.60, down by a dime.
Meantime, weekly EIA data had ethanol production averaging 1.01 million barrels per day through the week that ended 3/3.
That was a 7k bpd increase from the prior week.
That also marked the eighth consecutive week that production stayed above the 1-million-barrel-per-day benchmark.
However, ethanol stocks were 545k barrels higher to 25.32 million.
That meant a 2% increase wow.
As for soybean, beans rose driven up by the USDA slashing its Argentine soy production estimate to 33 million tonnes from earlier predictions of 41 million tonnes, a deeper cut than analysts were expecting, and boosted US export expectations.
The USDA projected the Argentine soybean harvest at 33.00 million tonnes.
The trade average guess was to see a 36.7 MMT Argentina output.
Meantime, they only trimmed Argentina’s exports by 800k MT, but global trade was a net 930k MT higher, from Brazil and U.S..
Notably, the USDA bumped up the U.S. export projection to 2.015 billion bushels, up 25 million bushels from February.
USDA’s monthly balance sheet had soy crush 10 mbu lighter to 2.2 bbu.
That put to a carryout net 15 mbu tighter to 210, compared to the 220 mbu estimate.
Argentina’s soymeal exports were also cut 1.3 MMT.
Global soybean stocks dropped 2 MMT compared to Feb, now figured at 100 flat.
However, it should to note that the USDA increased 2022-23 world canola production again this month by 1.23Mt to a record 86.31Mt mainly reflecting a 1Mt increase for Australia and a 200,000t increase for Ukraine.
That represents a 17pc increase in global production year on year.
In this context, USDA left the average cash bean price at $14.30/bu, and the bean oil cash price by 68 cents/lb.
The soymeal price was $25 higher to $450.
Meantime, Census data confirmed the official Jan soybean export was 8.559 MMT.
That was just 270k MT under 2020/21’s record for the month, and was 3% above December’s volume.
The season’s soybean export reached 1.412 bbu through Jan.
For the products, Census had 1.405 MMT of Jan meal exports and 6,989 MT of soy oil shipments.
As for wheat, wheat contracts mostly fell on Wednesday, with MGEX spring wheat hit its lowest in 20 months, Chicago wheat prices fell to their lowest point in 18 months, and K.C. hard red winter wheat hit a 13-month low, before closing above $8/bu benchmark.
Wheat markets are under pressure from Russian export and expectations that the grain corridor from Ukraine will be extended beyond this month.
Ukraine’s president and the United Nations Secretary-General called on Wednesday for the extension of a deal.
Top U.N. trade official Rebeca Grynspan will meet senior Russian officials in Geneva next week.
A Turkish diplomatic source said on Wednesday Ankara was “working very hard” to ensure the deal continues but that Russia’s demands have not yet been met.
In this context, U.S. wheat has been viewed as too pricey to compete with supplies from other exporting nations.
Monthly Census wheat export data confirmed US exports at 1.777 MMT for January.
That was a 3% increase from Jan last year, but the YTD 14.227 MMT trails last year’s 14.697 MMT pace.
And then off a lackluster WASDE report, made an additional pressure on wheat prices.
Notably, USDA’s WASDE report made no domestic changes to wheat’s balance sheet.
The projected season-average farm price remains $9.00 per bushel.
Globally, they raised production by 5.14 MMT with 1 for Australia (to 39 MMT), 1 to India (to 104), and 2.4 MMT to Kazakhstan (16.4).
Wheat stocks fell by 2 MMT to 267.2 MMT as USDA back adjusted carry-in and global domestic use was higher.
Ahead weekly export sales report, analysts were expecting USDA report on Thursday to show that export sales of corn were between 600k and 1.2m MT of old corn booked for the week that ended 3/2. New crop corn export sales are estimated below 200k MT.
As for soybean, traders estimate the FAS report to show soybeans were in a range between 200,000 and 950,000 tonnes.
Soymeal export sales were forecast between 100,000 and 375,000 tonnes and soyoil export sales between zero and 20,000 tonnes.
As for wheat, analysts expected to show that weekly export sales of wheat were in a range from 150,000 to 600,000 tonnes.
Meantime, grain traveling the US railways added another 20,522 carloads last week.
That brings cumulative totals for 2023 to 203,305 carloads.
However, that is a decline of 5.2% from last year’s pace so far.
In this context, corn basis bids were steady to mixed on Wednesday after trending as much as 3 cents lower at an Iowa processor and as much as 10 cents higher at an Indiana ethanol plant.
Soybean basis bids were steady to weak across the central U.S. after spilling 5 cents lower at an Illinois river terminal and easing a penny lower at an Ohio elevator.
On this morning, Chicago wheat prices slid for a second session in a row.
Soybeans and corn ticked higher.
Notably, the most-active wheat contract on the Chicago Board of Trade was down 0.3% at $6.85-1/2 a bushel, as of 03:45 GMT, after dropping earlier in the session to its lowest since September 2021 at $6.83-1/2 a bushel.
Soybeans rose 0.1% to $15.19-1/4 a bushel and corn added 0.2% at $6.26-1/2 a bushel.
In energy markets, oil prices fell on Wednesday, and both benchmarks declined between 4% and 5% over the last two days.
Notably, Brent crude futures were down 63 cents, or 0.8%, to $82.66 per barrel, while U.S. West Texas Intermediate (WTI) crude futures slipped 92 cents, or 1.2%, to $76.66 a barrel.
Oil prices were still seeing downward pressure due to the hawkish comments coming out of the Fed indicating higher interest rates for a longer period of time.
A stronger dollar also capped oil prices.
U.S. crude stocks however fell 1.7 million barrels last week, government data showed, compared with analyst estimates for a build of 395,000.
Industry data late Tuesday showed a decline in crude inventories for the first time after a 10-week build.
U.S. gasoline stocks also drew by 1.1 million barrels, according to official data.
However, that was less than the 1.8 million forecast, adding to demand concerns.
On this wake, distillate inventory grew by 138,000 barrels, compared with expectations for a 1 million-barrel draw.
Meanwhile, a group of bipartisan U.S. senators said they have reintroduced legislation to pressure OPEC to stop making output cuts.
U.S. Energy Secretary Jennifer Granholm also said that any further releases from the U.S. Strategic Petroleum Reserve would be due to disruptions.
On this morning, oil prices were in a holding pattern.
Brent crude futures indeed edged up by 1 cent to $82.67 per barrel by 06:45 GMT, while U.S. West Texas Intermediate (WTI) crude futures were flat at $76.66 a barrel.
Although China’s crude oil imports fell 1.3% in the first two months of 2023 from a year earlier, analysts pointed to accelerating imports in February as a sign that fuel demand was rebounding.
At a conference in Houston on Tuesday, the secretary general of the Organization of the Petroleum Exporting Countries said China’s oil demand would grow 500,000 to 600,000 barrels per day in 2023, and the organization was “quite optimistic, cautiously.”
In ocean freight markets, the Baltic Exchange’s main sea freight index, which tracks rates for ships ferrying dry bulk commodities, rose for the 14th straight session on Wednesday powered by gains in the capesize and panamax vessel segments.
The overall index, indeed, added 29 points, or about 2.2%, to 1,327 – its highest since Dec. 23.
Notably, the capesize index gained 79 points, or about 5.4%, to a more than eight-week high of 1,550.
Average daily earnings for capesizes (.BATCA), which typically transport 150,000-tonne cargoes such as iron ore and coal, increased $650 to $12,851.
The panamax index gained 12 points at 1,592, its highest since Dec. 21.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, was up $106 to $14,325.
The supramax index was unchanged at 1,161.
In equity markets, US stock indexes Wednesday settled mixed, recovering after Fed Chair Powell said that no decision had been made yet on the pace of Fed rate hikes.
However, after yesterday’s stronger-than-expected Feb ADP employment and Jan JOLTS job openings reports, the markets are pricing in a 75% chance the Fed will raise interest rates by 50 bp at the March 21-22 FOMC meeting.
Notably, the U.S. Feb ADP employment change rose +242,000, stronger than expectations of +200,000.
Also, the Jan JOLTS job openings fell -410,000 to 10.824 million, stronger than expectations of 10.546 million.
In this context, the yield on the 10-year Treasury, or the difference between its market price and the payout at maturity, ticked up to 3.98% from 3.97% late Tuesday.
The yield on the two-year Treasury rose to 5.05% from 5.02%.
T-note yields fell early Wednesday on Fed Chair Powell’s comments and after inflation expectations declined when the 10-year breakeven inflation rate fell to a 3-week low.
However, T-note yields erased their decline and moved slightly higher Wednesday afternoon also on weak demand for the Treasury’s $32 billion 10-year T-note auction.
A rally in chip stocks led technology stocks higher.
Positive corporate news Wednesday was supportive of the overall market.
As a result, on Wall Street, the S&P 500 rose 0.1% to 3,992.01.
The Dow Jones Industrial Average fell 58.06, or 0.2%, to 32,798.40, while the Nasdaq composite added 45.67, or 0.4%, to 11,576.00.
On this morning, Asian stock markets were mixed.
Shanghai and Seoul declined.
Tokyo and Hong Kong advanced.
Notably, the Shanghai Composite Index lost 0.2% to 3,277.13 after Chinese inflation decelerated in February to 1% over a year earlier from the previous month’s 2.5%.
The Hang Seng in Hong Kong advanced 0.3% to 20,110.28.
The Nikkei 225 in Tokyo gained 0.6% to 28,616.03 after the government cut its estimate of economic growth in the three months ending in December to 0.1% from a previous estimate of 0.6%.
The Kospi sank 0.4% to 2,422.31 and Sydney’s S&P-ASX 200 was up less than 0.1% at 7,311.10.
India’s Sensex opened down 0.2% at 60,197.90.
New Zealand and Singapore declined while Jakarta and Bangkok rose.
In currency trading, the dollar declined to 136.81 yen from Wednesday’s 137.24 yen.
The euro gained to $1.0554 from $1.0545.
Going back to analyzing the other agricultural markets …
From South America, Brazil’s Agriculture Minister Carlos Favaro said on Wednesday he will move forward a planned trip to China to later in March as Latin America’s largest economy aims to resume beef exports halted by a case of mad cow’s disease.
Favaro said he would visit China ahead of President Luiz Inacio Lula da Silva’s March 28 scheduled visit.
Shipments of beef to China were suspended following the confirmation of an atypical case of mad cow disease in the Brazilian state of Para in February.
The Brazilian government expects to resume beef exports to China in the next few days and is planning to request a revision of the protocol that triggered the ban, a government official said on Tuesday.
From Argentina, the government announced on Wednesday it would allow exporters to reschedule planned corn shipments for up to 180 days as the country’s agricultural sector has been hobbled by a historic drought, causing harvests to wither.
The measure, was published in Argentina’s Official Gazette.
The Rosario Grains Exchange cut its corn harvest estimate for the 2022/2023 season to 35 million tonnes, around two-thirds the estimate at the beginning of the season.
Exporters are currently allowed to ship up to 20 million tonnes of this season’s corn, but Argentina could roll back that number as the drought is expected to continue to tackle the toll.
So far, exporters have declared 10.8 million tonnes of corn sales from the 2022/2023 season.
The Rosario grains exchange also sharply cut its forecast for the country’s 2022/23 soybean harvest, dropping it to the lowest estimated this century and warning of future cuts.
The new estimates put the current cycle’s soy crop at 27 million tonnes, below the 34.5 million tonnes seen in last month’s forecast and under the 27.5 million tonnes harvested in the 2000/2001 season.
The ongoing drought is expected to cause further contraction in Argentina’s economy, analysts at Itau said Wednesday, revising their gross domestic product forecast for 2023 down to -3% from -1.5%.
Meanwhile, monthly inflation sped up to 6% month-over-month in January.
In Europe, the wheat market, could regaining its attractiveness compared to the Black Sea origins if the decline in price continue with this pace.
Yesterday’s session indeed was marked by a further decline in grain prices.
Morocco, a major cereal importer, has modified its wheat import subsidy scheme (read more below).
The change could increase competition in a Moroccan import market dominated by wheat from France and other relatively nearby suppliers in the European Union.
French traders said the change should not have a big immediate impact as ONICL had separately maintained a lower subsidy rate for Russian and Ukrainian wheat compared with imports of other origins like EU supplies.
But it could lead merchants to source more cargoes from EU countries on the Black Sea, like Romania, and make shipments from Ukraine and Russia more feasible in future, particularly if war disruption there eases.
The oilseeds market also did not benefit from the firmness of soybean prices, marking a further decline.
Rapeseed price indeed sank to the level of €520/t, in the wake of the drop in oils in Rotterdam.
Meantime, per latest data published by Euronext on Wednesday, non-commercial market participants raised their net short position in Euronext’s milling wheat futures and options in the week to March 3.
Notably, non-commercial participants, which include investment funds and financial institutions, lifted their net short position to 64,499 contracts from 43,423 a week earlier, the data showed.
Commercial participants lifted their net long position to 59,306 contracts from 37,692 a week earlier.
In Euronext’s rapeseed futures and options, non-commercial market participants raised their net short position to 35,451 contracts from 34,036 a week earlier.
Commercial participants increased their net long position in rapeseed to 33,125 contracts from 32,347 a week earlier.
In other news, Rhine river traffic came to a standstill in some places on Wednesday due to strikes against French government plans to raise the pension age, with sections of the river in France, Germany and Switzerland affected.
Around 1.28 million people in France had participated in a sixth day of protests on Tuesday against a draft law that would see the pension age delayed by two years to 64.
The whole international Rhine navigation has been practically interrupted on this section due to these strikes.
However, the Rhine Navigation Act states that individual countries must ensure that navigation is unhindered on their territory.
From North Africa, Morocco has modified its wheat import subsidy scheme to make it easier for companies to bring in cargoes from the Black Sea region, an official at state grain agency ONICL said on Wednesday.
The revision, also reported by traders, means that as of March importers are able to receive a monthly subsidy if cargoes are loaded by the end of the month, unlike previously when ships had to arrive in Morocco by the month’s end.
Encouraging shipments from the Black Sea region, which includes Russia and Ukraine, was “one of the reasons” for adjusting the import subsidy terms, the official said.
Traders have reported large sales of French and northern European wheat in the past week for March shipment to Morocco.
Thus, attention is turning to 2023 grain harvest.
The import subsidies will be offered till the end of May, suggesting Morocco will then close its import window to focus on its local crop.
However, Morocco usually does not confirm the end of its import campaign until harvest prospects become clearer around April.
From the Black Sea basin, the UN expects a Russian delegation in Geneva next week for discussions about the next steps in talks to renew the Black Sea Grain Initiative, a spokesperson for the UN secretary general said at a press briefing.
The Kremlin said on Thursday that there were still “a lot of questions” remaining over the Black Sea grain deal, and that there were currently no plans for a meeting with United Nations Secretary-General Antonio Guterres.
The Black Sea Grain Initiative, expires on March 18 but cannot be extended if Russia objects.
Moscow has already signalled it is unhappy with aspects of the deal.
From Russia, Refinitiv Commodities Research left its 2023-24 Russian wheat production forecast unchanged, at 84.2Mt, reflecting recent and forecast favourable weather.
With recent temperatures above-average across the country, the risk of winterkill was minimised and snow cover protected most crops.
Current weather forecasts point towards rainfall across the country, with above-average precipitation expected across most areas, with the highest accumulated amounts anticipated in Central, Volga and south Siberian Districts.
Above-average temperatures, paired with increased moisture, should benefit spring plantings.
According to Russia’s Ag. Ministry, at 7 Mar, cumulative 2022-23 (Jul/Jun) grain exports were estimated at 40Mt.
Meantime, SovEcon revised downward Russian 2022-23 wheat exports by 0.1Mt, to 44.1Mt (39.1Mt previous year), reflecting lower than expected Feb exports due to a prolonged period of stormy weather.
From Australia, prices for feedgrain in southern markets have eased a few dollars in the past week but firmed in the north, as sorghum harvesting and sales straight off the header dampen selling interest in white grains.
ABARES has this week released its forecasts for 2023-24 wheat and barley production, and the numbers are in line with expectations.
Amid forecast drier conditions, area planted to wheat is estimated by ABARES to decrease from 13 million hectares in 2022-23 which yielded 39.2Mt to 11.8-12.5Mha producing 28.2Mt.
Barley area is expected to drop, but to a lesser degree than wheat, to produce 9.9Mt million tonnes, down from 14.1Mt in the harvest just gone.
On exports, ABARES forecast wheat at a record 28Mt in 2022-23 and 22.5Mt in 2023-24, while barley is seen at 8.7Mt of current crop, or 2pc below the record set in 2016-17, and 5.8Mt of new crop.
The country exported 273,651 tonnes of containerised wheat and 3,057,527t in bulk in January, according to the latest export data from the Australian Bureau of Statistics.
Total January wheat shipments at 3,331,178t were up 25 percent from the 2,663,123t exported in December, and also the 2,660,888t exported in January 2022.
In the boxed market, Vietnam on 79,263t followed by China on 65,260t and Taiwan on 32,0403t were the biggest markets.
In bulk, China on 878,765t retained its position as the largest market by far, with Indonesia on 524,027t and South Korea on 352,576t in second and third place.
Appearing in the bulk export destinations for January is India.
Meantime, growers across southern Australia are starting to plant oat and dual-purpose canola and cereal crops in mostly dry conditions, while in northern Australia, flooding has stemmed the flow of cattle into feedlots to temper near-term demand from that sector.
In this context, wheat markets were generally firmer yesterday on the back of the AUD dip, but not to the extent some sellers had hoped.
Some improved selling liquidity was seen but the dry forecast was still holding some grain back.
On the international trade scene, Tunisia’s state grains agency is believed to have purchased about 100,000 tonnes durum wheat in an international tender on Wednesday seeking the same volume.
It was said to have been bought in four consignments of 25,000 tonnes.
Three consignments were believed to have been bought from trading house Casillo at $458.69, $456.89 and $455.89 all per tonne c&f, they said.
One more was said to have been bought from Viterra at $458.09 a tonne c&f.
Shipment was requested between April 1 and May 15 depending on origin supplied.
Algeria’s state grains agency OAIC is believed to have purchased durum wheat in an international tender which closed on Wednesday.
The precise volume bought was unclear.
Initial estimates were around 200,000 tonnes or slightly lower.
Traders initially estimated prices at around $440 to $442 a tonne C&F for consignments in large panamax-sized bulk carriers and around or slightly below $449 a tonne C&F for smaller handy-sized ships.
Shipment was sought in two periods between April 1-15 and April 16-30.
Algeria does not disclose the results of its tenders.
General Food Security Authority ex SAGO Saudi, has issued a tender to buy 480000 tonnes of milling wheat for arrival July, August 2023.
Closing date Friday 10 March.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
