Good morning, Farmer Family …
US farm markets closed higher on Monday, as logistical hang-ups in Argentina and geopolitic’s concerns coming from eastern Europe.
Corn prices were up 1.54%.
Soybean prices edged up 1.1%.
The rest of the soy complex was also firm, with soymeal trended 1.31% higher, and soyoil going home with 1.7% gains.
Wheat prices also jumped, with Chicago SRW rising 2.05%, Kansas City HRW adding 1.25%, and MGEX HRS gaining 1.46%.
Wheat prices rose after Poland, Hungary and Slovakia banned grain and other food imports from Ukraine to protect their own agriculture sectors, casting further doubt on Ukrainian exports.
Polish farmers started to protest about Ukraine grain and ag products depressing their prices.
In this context, Poland and Hungary governments announced bans on some imports from Ukraine on Saturday.
Slovakia said on Monday it would do the same while other countries in central and eastern Europe were also considering action.
However, in response to individual country bans, the European Union’s executive has said such unilateral action was unacceptable.
Supporting prices, Ukraine said the Black Sea grain deal was in danger of a “shutdown” after Russia blocked inspections of participating ships in Turkish waters.
However, USDA’s weekly Export Inspections data showed only 239,907 MT of wheat shipments for the week that ended 4/13.
That was a 150k MT drop from last week and was a 206k MT lighter volume than the same week last year.
The report also included a 52k MT HRW shipment to Ethiopia via late reporting, which brought the full year’s total to 17.489 MMT.
That is still 595k MT behind last year’s export pace.
As for corn, the market was flat early in the session, as cooler weather and some snow in the Midwest threatened to delay U.S. planting.
Meantime, USDA reported 1.215 MMT of corn shipments for the week that ended 4/13.
That was up from 840k MT last week and was 32k MT above the same week last year.
Japan and Mexico were the week’s top destinations.
USDA added 34k MT to past reports which brought the season’s total to 21.424 MMT.
However, that is still 11.82 MMT behind last year’s pace.
As for soybeans, beans market rose mainly on slow Argentine exports activity.
Argentine soybean exports remain low after a poor crop, and grains inspectors launched a 24-hour strike that is halting shipments at key river ports in farm transport hub Rosario.
Also, NOPA members reported 185.81 mbu of soybeans were processed in March.
That was a new record for the month and was above the trade average guess going in.
NOPA members reported producing 4.432m tons of meal (47.7 lbs./bu) and 2.202b lbs of oil (11.85 lbs./bu) for March.
However, soybean oil stocks were shown at 1.851b lbs., up from 1.809 in Feb though below the trade average guess.
Meantime, Weekly Export Inspections data showed 526,376 MT of soybean exports for the week that ended 4/13.
That was down from 678k MT last week and from 1.008 MMT from the same week last year.
China was the week’s top destination with 53% of the total.
However, accumulated soybean exports were marked at 46.667 MMT, up by 628k MT from last year’s pace.
After the sessions close, the U.S. Department of Agriculture rated 27% of U.S. winter wheat in good to excellent condition, unchanged from a week ago but the lowest for this time of year in records dating to the late 1980s.
The wheat ratings, reflecting drought in key areas of the Plains wheat belt, however, matched the average trade expectation.
The winter wheat crop was 10% headed as of 4/16, which is up 2% points from the 5-yr average pace.
The weekly Crop Progress report also showed the national spring wheat crop was 3% planted as of 4/16.
That was a 2% point advancement through the week and now trails the 5-yr average pace by 4% points, and the average analyst estimate of 2%.
No measurable progress was made for MN nor ND through 4/16, on average MN is 2% planted and North Dakota is 3%.
Meanwhile corn planting moved ahead of the average pace during an unusually warm week.
The USDA indeed said planting was 8% complete by Sunday, behind the average analyst estimate of 10% but ahead of the five-year average of 5% as farmers took advantage of mild weather.
However, cold temperatures and late-week rains are likely to slow progress this week, meteorologists said.
The USDA’s first estimate of soybean progress for 2023 showed planting as 4% complete, ahead of the average analyst expectation of 2% and the five-year average of 1%.
In this context, corn basis bids were steady to soft across the central U.S., after easing a penny lower at an Illinois river terminal and dropping 5 cents at an Iowa processor.
Soybean basis bids held steady across most Midwestern locations, but did shift 3 cents lower at an Iowa river terminal.
Commodity funds were net buyers of CBOT grains and soy futures contracts.
In energy markets, oil prices turned lower on Monday as the U.S. dollar strengthened and as investors mulled over a possible May interest rate hike by the U.S. Federal Reserve, which could dampen economic recovery hopes.
Thus, Brent crude futures fell $1.55, or 1.8%, to settle at $84.76 a barrel, while U.S. West Texas Intermediate crude dropped $1.69, or 2.1%, at $80.83 a barrel.
The IEA warned in its monthly report that output cuts announced by OPEC+ producers risked exacerbating an oil supply deficit expected in the second half of this year and could hurt consumers and a global economic recovery.
The Group of Seven (G7) coalition will keep a $60 per barrel price cap on seaborne Russian oil, a coalition official said, despite rising global crude prices and calls by some countries for a lower price cap to restrict Moscow’s revenues.
In Iraq, the federal government and the Kurdistan Regional Government (KRG) have ironed out technical issues essential to resuming northern oil exports from the Turkish port of Ceyhan to international markets.
Turkey halted Iraq’s 450,000 barrels per day (bpd) of northern exports on March 25 after an arbitration ruling by the International Chamber of Commerce (ICC), which ordered Turkey to pay Baghdad damages of $1.5 billion for the KRG’s unauthorised exports between 2014 and 2018.
In Saudi Arabia, crude oil exports in February fell to 7.455 million bpd from 7.658 million bpd in January, official data showed on Monday.
U.S. shale crude oil production in the seven biggest shale basins is expected to rise in May by 49,000 bpd to 9.33 million bpd, the highest on record, data from the Energy Information Administration showed on Monday.
In ocean freight markets, the Baltic Exchange’s main sea freight index, which measures the cost of shipping goods worldwide, fell by 1.6% to 1,412 points on Monday, the lowest since April 3.
Notably, the capesize index, which typically transports 150,000-tonne cargoes carrying commodities such as iron ore and coal, declined by 2.7% to 1,801 points; and panamax index, which usually carries coal or grain cargoes of about 60,000 to 70,000 tonnes tumbled by 1.6% to 1,675 points.
Among smaller vessels, the supramax index went up by 2 points to 1,098 points.
Last week, the benchmark index was down 8%, its biggest weekly percentage fall since February 17.
In equity markets, US stock indexes posted moderate gains.
Stocks received a lift from hopes that Q1 earnings might be better than expected after last Friday’s big bank earnings were stronger than expected.
However, chip stocks retreated and limited gains in the Nasdaq 100 after a report said Taiwan Semiconductor Manufacturing, the world’s biggest contract manufacturer of chips, is planning to cut its capital expenditures.
Also, the decline in crude prices weighed on energy stocks.
Expectations for the Fed to keep raising interest rates pushed bond yields higher and weighed on the overall market.
Bond yields moved higher on the rise in inflation expectations to a 2-week high and on the strong Empire and NAHB reports.
Notably, the 10-year Treasury yield rose to 3.59% from 3.52% late Friday.
The two-year yield, which moves more on expectations for the Fed, climbed to 4.19% from 4.10%.
The market has priced in an 88% chance for a 25 bp rate hike at the May 2-3 FOMC meeting.
The U.S. Apr Empire manufacturing survey general business conditions index rose +35.4 to a 9-month high of 10.8, stronger than expectations of -18.0.
The U.S. Apr NAHB housing market index rose +1 to a 7-month high of 45, right on expectations.
In this context, the S&P 500 rose 13.68, or 0.3%, to 4,151.32.
The Dow Jones Industrial Average gained 100.71, or 0.3%, to 33,987.18, while the Nasdaq composite climbed 34.26, or 0.3%, to 12,157.72.
In currency trading, the dollar index rose by +0.54%.
Higher T-note yields gave the dollar a boost after the 10-year T-note yield rose to a 2-week high.
Also, Monday’s U.S. economic news showed signs of strength that was dollar supportive after the Apr Empire manufacturing survey general business conditions index rose to a 9-month high, and the Apr NAHB housing market index rose to a 7-month high.
Thus, the EUR/USD fell by -0.60%.
The USD/JPY rose by +0.46%.
On this morning, the U.S. dollar inched up to 134.49 Japanese yen from 134.42 yen.
The euro cost $1.0934, little changed from $1.0930.
Going back to analysing the other agricultural markets …
From South America, Brazilian farmers have harvested 86% of the soybean area planted for 2022/23 through last Thursday, agribusiness consultancy AgRural said on Monday, up four percentage points from the previous week.
At the same time last year, 87% of the Brazilian soy fields had been reaped, AgRural said in a statement, noting fielwork has been concentrated mainly in Rio Grande do Sul, Brazil’s southernmost state.
CONAB Brazil revised upward its 2022-203 soybean production forecast by 2.2Mt to 153.6Mt (125.5Mt previous year) reflecting higher yields.
Exports were increased by 1.4Mt, to 94.3Mt (78.7Mt previous year).
Total 2022-23 maize production forecast was increased by 0.2Mt, to 124.9Mt (113.1Mt previous year), export was left unchanged at 48Mt (46.6Mt previous year).
On the other hand, Brazilian farmers will harvest a record wheat crop of 11.3 million tonnes in the 2023/2024 season, compared with 11 million tonnes in the previous one, StoneX said on Monday.
In its first forecast for the new crop, StoneX said farmers will expand the planted area by 6.1% to 3.48 million hectare (8.599 million acres), citing “optimism” among wheat producers this year based on the expectation of costs remaining stable and demand strong, though wheat prices have declined.
Brazil still does not produce all of the wheat it needs, with domestic demand seen at 13.2 million tonnes this season, stable from last year, according to StoneX data.
To help meet internal demand, Brazilian wheat imports are seen rising by 9.4%, to 6.15 million tonnes, with Argentina remaining a large supplier, StoneX said.
Yields are likely to drop by 3.2% to 3,246 kilograms per hectare, StoneX predicted, noting the difficulty in keeping them above averages seen in the last harvest.
The southernmost state of Rio Grande do Sul will remain the Brazil’s biggest wheat state based on planted area, followed by neighboring Parana.
It will also be the main origin for Brazilian wheat exports in the new season, StoneX said, pegging export demand at 2.13 million tonnes in the 2023/24 cycle.
In Argentina, grains inspectors have launched a 24-hour strike that is halting shipments at key river ports in farm transport hub Rosario, the ports chamber CAPyM said on Monday.
The strike by the Urgara grains inspectors union is linked to conflicts over a port in the city of Buenos Aires and what it says are high taxes applied to workers’ salaries.
The strike “is affecting absolutely all the ports (in Rosario)”, and the measure was preventing ships being loaded.
Rosario Grain Exchange reported farmers in Argentina sold 441,747t soybeans during the first four days of the preferential exchange rate, the so-called soy dollar, compared to 3.1Mt over the same period in September 2022 and 1.1Mt in November 2022.
It attributed the slow uptake to the impact of severe drought on local production.
It lowered its 2022-23 soybean crush forecast by 0.5Mt, to 28.8Mt, potentially the lowest in two decades, and raised the soybean import forecast by 0.5Mt, to 10.0Mt.
Meantime, USDA’s Ag Attache expects the 23/24 Argentina soy crop will be 50.5 MMT on 16.9m HA.
That preliminary figure has the crop returning to normal conditions after this year’s drought, as yield comes back from 1.6 MT/HA (23.5 bpa) to 2.99 (44.4 bpa).
For old crop the Attache office expects the final output is 23.9 MMT, compared to USDA’s 27 MMT in the April WASDE.
In Europe, overall, the weather remains favourable in Europe.
However, the recent fall in prices is raising fears of a scissor effect in many farms, as costs remain high, mainly due to the cost of energy and equipment.
Meantime, both Poland and Hungary have blocked Ukrainian grain exports through their countries through June 30th following domestic protests.
Hungary’s Ag Ministry has said it could extend its ban beyond the current June 30 deadline if the EU does not take sufficient action to protect Hungarian farmers.
Poland’s ban on grains, in effect since Saturday evening, also applied to transit through the country.
Slovakia said on Monday it would do the same while other countries in central and eastern Europe were also considering action.
The massive arrival of ag products from Ukraine at prices well below the local farming production costs is hurting the sector.
The EU actively opposes the moves by the individual countries, creating tensions between the member countries.
Imports from Ukraine into these three countries for the 2022/2023 season are currently standing at 7.8 million tonnes, compared to 1.2 million tonnes in the previous year.
Trade estimates say Poland imported around 550,000 tonnes of Ukrainian wheat since the war started, with 100,000 re-exported, leaving about 450,000 tonnes used by the Polish industry.
From Ukraine, Kyiv aims to re-open food and grain transit via Poland as “a first step” to ending import bans at talks that began in Warsaw on Monday as countries halted grain from Ukraine to protect their local agriculture markets.
Additionally on Monday, Ukraine said the Black Sea grain deal was in danger of a “shutdown” after Russia blocked inspections of participating ships in Turkish waters.
Turkish Defence Minister Hulusi Akar will meet with Ukrainian Infrastructure Minister Oleksandr Kubrakov today for grain talks but the situation is not looking great.
From Russia, the Kremlin said on Monday prospects for a renewal of the Black Sea deal, whereby Russia allows Ukraine to ship agricultural exports from its Black Sea ports via Turkey, were “not so bright”.
However, export prices of Russian wheat fell slightly 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 in the first part of May, were $271 a tonne, down $2 from last week.
As for the other products, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 11,375 rbls/t, -100 rbls/t (Sovecon).
Price for sunflower seeds was at 21,925 rbls/t, +250 rbls/t (Sovecon).
Price for domestic sunflower oil was at 74,350 rbls/t, +350 rbls/t (Sovecon).
Price for domestic soybeans was at 30,475 rbls/t (Sovecon).
Export price for sunflower oil was at $850/t -$20 (IKAR).
Price for white sugar, Russia’s south was at $700.29/t -$0.09 (IKAR).
Overall weather conditions remained favourable for the new crops.
Meantime, according to SovEcon, “large traders’ outstanding wheat sales fell to 1.9 mmt (million tonnes) from 2.3 mmt a week ago.
This is the lowest volume since mid-January and it’s not matching well with optimism about Russian exports until the end of the season.
“If this trend continues, we may consider revising our export estimate for the current season lower”, SovEcon added.
Russia exported 1.16 million tonnes of grains during the week ended April 14, of which 950,000 tonnes were wheat.
That was compared with 1.1 million tonnes of grain and 930,000 tonnes of wheat the previous week.
SovEcon estimates wheat exports in April at 4.3 million tonnes, a month-over-month decline of 4.4%, if realized.
From the Middle Kingdom, China would spend ¥10b, US$1.5b, in farmer subsidies to support spring grain planting, the Ministry of Agriculture said.
Grain growers, including individuals, family farms and cooperatives, would be eligible.
From South East Asia, Malaysian, palm oil stocks are low and contribute to the firmness of oilseeds.
From Australia, wheat, canola and barley bids to growers largely were unchanged on Monday.
Planting continued to ramp up around the country after regions received some decent rainfall totals over the last week, particularly for southern NSW, Vic and SA.
Subsoil moisture levels are currently above to very much above average across northeast and southern NSW, Vic, SA and WA.
Parts of central and northern NSW and southern Qld are looking for more rainfall having missed out on the recent falls.
There is not much on the 8-day forecast.
The forecast period is looking relatively dry for nearly all winter cropping regions.
On the international trade scene, Egypt is buying vegetable oils.
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 66,377 tonnes of food-quality wheat from the United States and Australia in a regular tender that will close on Thursday.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
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