Good morning, Farmer Family …
US farm markets landed into the red on Wednesday, after a broad selloff affected grains, cattle, energy and more.
Corn prices, indeed, faded 0.77% lower.
Soybean faced double-digit losses, down 0.84%.
The rest of the soy complex also shifted lower, with soymeal down 1.45%, and soyoil dropping 0.61%.
Wheat prices were slashed, as Chicago SRW lost 2.33%, Kansas City HRW fell 2.21%, and MGEX HRS eroded 2.09%.
The pressure coming from a generally benign spring planting forecast, the lack of fresh demand news, record-breaking production in Brazil, Ukrainian shipping trends, and outside markets all applied downward pressure.
Notably, wheat prices fell, as supply concerns eased with inspections of ships carrying Ukrainian grain resuming in the Black Sea region.
Poland, Hungry, and Slovakia banned Ukrainian imports earlier this week.
Bulgaria became the fourth European Union member state in the region to block Ukrainian grain imports, hoping to protect local farmers following an influx of cheaper supplies
However, yesterday Ukraine reached an agreement with Poland to allow for passage of grain through the country.
Russia will have a good grain harvest this year of about 123 million tonnes, including 78 million tonnes of wheat, its agriculture minister said on Wednesday, althogh the harvest will be about a fifth less than the record achieved last year.
Also, in the United States, weather forecasts pointed to rainfall next week in some drought-affected U.S. hard red winter wheat belts, while planting of soybeans and corn continued.
Easing concerns about Ukrainian grain exports, have also weighed on corn prices.
EIA reported a recovery in ethanol production as producers averaged 1.024 million barrels per day through the week that ended 4/17.
That was an 8-wk high and was a 65k bpd increase from last week.
However, ethanol stocks were reported at 25.293 million barrels which was up by 165k barrels through the week.
Corn as well as soybeans dipped also because ag markets faced additional pressure from weaker crude oil prices.
Meantime, a federation of unions representing Argentina’s port and maritime workers lifted a three-day-old strike that had affected the key Rosario grains shipping hub.
Ahead of the weekly Export Sales report, analysts are looking for the trade is looking for old crop corn bookings from 575k to 850k MT in today’s FAS report.
As for soybean, analysts are looking for old crop soybean sales to come in between 250k and 425k MT.
As for wheat, analysts estimate a range between 0 to 300,000 MT for old crop wheat.
In this context, corn basis bids tumbled 20 cents lower at an Iowa processor while easing 2 cents lower at two other Midwestern locations and holding steady elsewhere across the central U.S..
Soybean basis bids were steady to mixed after firming 4 cents at an Illinois river terminal while tracking 3 to 16 cents at two other Midwestern locations.
Commodity funds were net sellers of CBOT grain and soy futures contracts on Wednesday.
In energy markets, oil prices fell as muted U.S. economic data and expectations of interest rate hikes pushed up the U.S. dollar, prompting concerns over global oil demand.
Notably, oil prices slid about 2% to a two-week low on Wednesday despite U.S. crude stockpiles fell by a bigger-than-expected 4.6 million barrels last week.
Gasoline inventories, however, jumped unexpectedly on disappointing demand, according to the U.S. Energy Information Administration (EIA).
Investors were also discouraged by still high inflation in Europe and uneven economic data in China, the world’s biggest crude importer.
Adding more pressure on oil benchmarks, Asian refiners have continued to snap up Russian crude in April.
India and China have bought the vast majority of Russian oil so far in April.
Oil loadings from Russia’s western ports in April will rise to the highest since 2019, above 2.4 million barrels per day, despite Moscow’s pledge to cut output.
In this context, Brent futures for June delivery fell $1.65, or 2.0%, to settle at $83.12 a barrel.
West Texas Intermediate crude (WTI) for May delivery fell $1.70, or 2.1%, to settle at $79.16, while the June WTI contract, which becomes the U.S. front-month at the end of trading on Thursday, also lost 2.1% to settle at $79.24.
Those were the lowest closes for both benchmarks since March 31, erasing most of the price gains since the surprise oil output cut announced on April 2 by the OPEC+ group.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, snapped a three-session losing streak on Wednesday, aided by gains in the panamax and supramax vessel segments.
The overall index, indeed, gained 4 points, or 0.3%, to 1,372.
Notably, the panamax index was up 13 points, or 0.8%, at 1,657.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased $114 to $14,910.
The capesize index fell 35 points, or 2.1%, to 1,643, its lowest since March 9.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes carrying commodities such as iron ore and coal, decreased $292 to $13,624.
Among smaller vessels, the supramax index rose 38 points to 1,151.
In equity markets, US stock indexes closed slightly lower, recovering most of their early losses on a rally in regional bank stocks, which moved higher after Western Alliance Bancorp jumped more than +24% when it reported bank deposits increased Q2 to date, easing liquidity concerns.
Global bond yields however continued to be higher.
The yield on the 10-year Treasury rose to 3.59% from 3.58% late Tuesday.
The two-year Treasury yield, which more closely tracks expectations for the Fed, rose to 4.25% from 4.20%.
Also, the 10-year German bund yield climbed to a 1-1/4 month high of 2.540% and finished up +3.8 bp at 2.515%.
The 10-year UK gilt yield rose to a 6-week high of 3.870% and is up +10.9 bp at 3.856%.
In this context, the S&P 500 inched down by less than 0.1%, to 4,154.42.
The Dow Jones Industrial Average slipped 0.2% to 33,897.01, and the Nasdaq composite edged up less than 0.1%, to 12,157.23.
In currency trading, the dollar index rose by +0.22%, as higher T-note yields supported moderate gains in the dollar.
The dollar also found support from a decline in the yen to a 1-1/4 month low against the dollar.
Notably, the EUR/USD fell by -0.16%, although losses in EUR/USD were limited after ECB Chief Economist Lane said the ECB should raise interest rates again next month if the economic backdrop doesn’t shift significantly.
Also, Wednesday’s Eurozone economic news is bullish for EUR/USD after Eurozone Mar new car registrations rose +28.8% y/y to 1.088 million units, the most in 1-3/4 years.
The USD/JPY rose by +0.46%, with the yen tumbling to a 1-1/4 month low against the dollar.
The yen retreated on speculation the BOJ will maintain its ultra-easy monetary policy .
On this morning, the U.S. dollar rose to 134.78 Japanese yen from 134.72 yen.
The euro edged up to $1.0958 from $1.0956.
Going back to analysing the other agricultural markets …
From Canada, StatsCan shortly will release Canada’s initial planted area forecasts for 2023 canola.
Analysts expect it to be around 22.1million acres, around 3.3pc higher than last year.
A Canadian strike comprised of around 155,000 federal workers will affect a broad range of public services in the near future, including the inspection of wheat and canola at outbound ports.
Workers were negotiating for higher wages and work-from-home privileges but were unable to come to a deal that satisfied all parties.
From South America, Brazil’s AgRural expects 6b L (1.6b gallons) of corn based ethanol production for 2023, as the country shifts production plants from sugar.
Brazil’s ANEC forecasted the corn export at 186,552 MT for April.
That would be down from 200k MT last year.
Brazil’s ANEC estimated the April soybean export at 15.15 MMT from 14.4 MMT last year.
Meal shipments were forecasted at 2.04 MMT, which is slightly below last season.
In Europe, grain and oilseed prices fell as the halt to Ukrainian grain exports was averted.
Poland agreed on Tuesday to lift a ban on the transit of Ukrainian grain, and a similar move was announced on Wednesday by Romania, where most Ukrainian grain exported via the EU has transited since the start of the war.
The European Union is preparing 100 million euros ($109.32 million) in compensation for farmers in five countries bordering Ukraine and plans to introduce restrictions on imports of Ukrainian grains.
The European Commission said on Wednesday it would take emergency “preventive measures” for wheat, maize, sunflower seeds and rapeseed.
An EU official said this would only allow the grains to enter the five countries from Ukraine if they were set for export to other EU members or to the rest of the world.
This measure would last until the end of June.
Separately, the European Commission, which oversees trade policy for the 27-nation EU, plans an investigation into whether measures are required for other sensitive products.
Romanian Farm Minister Petre Daea said the EU asked Bulgaria, Hungary, Poland and Slovakia to withdraw their individual import bans and that the Commission could approve a general ban of Ukrainian grain and oilseeds to the five countries affected until June 5.
Romania is the only country of the five affected that has not enforced a ban.
The resumption on Wednesday of vessel inspections under the wartime corridor deal for maritime shipments from Ukraine also eased supply concerns, although the deal remains in doubt after warnings by Russia it could pull out next month.
Favourable crop conditions in the EU, with the exception of Spain, and Russia were also capping prices.
However, according to the association of farm cooperatives, Germany’s 2023 wheat crop of all types will fall 1.6 % on the year to 22.15 million tonnes, repeating its earlier forecast of smaller harvests this year.
The association also forecast Germany’s 2023 winter rapeseed crop will fall 0.6% from last summer’s crop to 4.25 million tonnes.
In this context, September milling wheat on the Paris-based Euronext exchange indeed settled 2% lower at 253.50 euros ($277.89) a tonne, moving away from Tuesday’s two-week top of 261.00 euros.
Meantime, financial investors expanded their net short position in Euronext wheat futures and options last week, data published by Euronext showed.
From Ukraine, Ag Ministry reported that the 2023 grain harvest could be 50 MMT under ideal conditions.
Their working forecast is for 44.3 MMT of all grain, which is down from their record 86 MMT output pre-war.
Even though weather conditions are generally favorable in Ukraine, Refinitiv Commodities Research estimates that the country’s 2023/24 corn production could trend another 15% lower, with production expected to reach 22,9 MMT this season.
From Russia, Russian grain suppliers may be able to waive a part of their export quotas so they can be redistributed to other companies, a draft regulation shows, as Moscow seeks to maximise exports and avoid domestic oversupply.
According to the draft, which was opened to input from the industry on Wednesday before being finalised, exporters who have already used up their quotas will be able to claim more from companies that do not use theirs.
They will not be allowed to top up their initial quota by more than 45%, however, the document says.
The agriculture minister said on Wednesday that Russia’s grain harvest was likely to be about 123 million tonnes in 2023, some 20% down on last year’s record.
From Kazakhstan, FAS Astana estimates wheat production at 16.4 million metric tons (MMT) in marketing year (MY) 2022/2023, which is the largest production volume since MY 2017/2018.
FAS Astana forecasts no significant change to wheat and barley planted area for MY 2023/2024.
Higher wheat stocks are expected due to grain export restrictions the government imposed in MY 2021/2022 and lower priced wheat imports from Russia that compete with domestic supplies for use in flour milling.
From the Middle Kingdom, China plans to auction off another 41K MT bushels of its state reserves of imported wheat on April 26.
The country has offered a series of similarly sized auctions in recent months as it attempts to boost local supplies and push down high prices.
From Australia, prices for northern feedgrain have firmed this week as grower selling grinds to a halt and limits supply, while southern values have traded mostly sideways.
Southern markets have seen more selling from within the trade to help offset the hiatus in out-turns from growers who have mostly kicked off their winter-planting campaigns.
Seeding is also under way in the north, where those that have missed out on storms need around 25mm of rain to get them going early in the planting window.
Preliminary 22/23 wheat output for Australia was estimated at 33 MMT from a private analyst firm IKON, which compares to ABARES’s 28.2 MMT estimate.
Meantime, Australia exported 3,050,336 tonnes of wheat in February, down 6 percent from the 3,251,260t shipped in January, according to the latest data from the Australian Bureau of Statistics.
The February 2023 figure is up 13pc from the 2,695,173t shipped in February 2022.
In containerised exports, Vietnam on 74,073t followed by China on 59,288t and Thailand on 24,983t were the biggest markets for wheat shipped in February of this year.
In bulk sales, China on 652,888t, Thailand on 301,776t and Vietnam on 295,452t were the biggest markets.
African nations, namely Algeria with 30,348t, Mozambique with 66,000t and South Africa with 44,000t were shipped their first new-crop cargoes from Australia in February.
In this context, local markets had a midweek mixed bag across the boards yesterday.
Delivered Melbourne wheat last half April/May eased, while eastern Australian track wheat was unchanged.
WA ASW1 wheat, at $355/t FIS, was also left unchanged.
Barley was bid again a touch firmer.
Canola went for another run with bids up $30/t in eastern Australia which tempted sellers and provided liquidity.
On the international trade scene, South Korea purchased around 60,000 metric tons of soymeal, likely sourced from South America, in an international tender that closed yesterday.
The grain is for arrival by mid-August.
Japan is on the market for 66,377 MT of wheat to be sourced from the U.S. and Australia.
The Philippines are tendering for 150k MT of wheat.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
To read more, register on
