Good morning, Farmer Family …
US farm markets suffered another setback on Wednesday.
Corn prices dropped 0.77%.
Soybean fell 0.64%.
The rest of the soy complex was mixed, with soymeal stumbling 2.02% lower, while soyoil added 0.72%.
Wheat prices tumbled, with Chicago SRW dropping 1.8%, Kansas City HRW falling 3.02%, and MGE HRS sinking by 3.55%.
Corn and soybean prices fell, as traders monitored U.S. planting progress and cheap Brazilian export competition.
Based off of the weaker demand, traders will closely watch the weekly export sales report from USDA out on Thursday for fresh trade news.
Notably, analysts are looking for old crop corn export bookings to range 100k to 800k MT in the weekly Export Sales report.
New crop sales are estimated below 400k MT.
As for soybean, the trade is expecting between 75k and 500k MT of soybeans were booked.
New crop bean sales are estimated below 150k MT.
As for wheat, trader estimates ranged 75k MT to 400k MT for old crop wheat export sales.
New crop bookings are expected to be as much as 225k MT ahead of the FAS data.
Wheat, however, fell on news of ample short-term global supplies.
The improving U.S. weather with rain forecasted in much of the U.S. Plains this week and next, could help drought-affected hard red winter crops, though it may be too late to significantly improve yield prospects.
Also, according to a Statistics Canada survey released on Wednesday, Canadian farmers anticipate planting more acres of wheat, corn, and canola this year compared to 2022 levels.
And wheat fell, despite the risk that the agreement allowing exports from Ukraine may end next month.
Large Russian export supplies, indeed, have encouraged investors to look beyond, although Russia’s envoy to the United Nations in Geneva reiterated on Wednesday Moscow’s position that no real progress had been achieved in addressing Russian concerns.
On the other hand, per the latest data from the U.S. Energy Information Administration, ethanol production lurched lower in the week ending April 21, with a daily average of 967,000 barrels.
It was also just the fourth week in 2023 where production failed to reach the 1-million-barrel-per-day benchmark.
Ethanol stocks, however, trended 4% lower last week, as were down by 987k barrels to a 14-week low of 24.306 million barrels.
In this context, corn basis bids were steady to weak across the central U.S., after tracking 2 to 13 cents lower at three Midwestern locations.
Soybean basis bids spilled 10 cents lower at two Midwestern processors while holding steady elsewhere across the central U.S. .
Commodity funds were net sellers of CBOT corn, wheat, soybean and soymeal futures contracts.
Funds, in contrast, were net buyers of soyoil futures contracts.
On this morning, Chicago wheat prices fell for a seventh consecutive session, hitting a 21-month low.
Corn and soybeans lost more ground.
Notably, the most-active wheat contract on the Chicago Board of Trade lost 0.1% to $6.41-1/2 a bushel, as of 03:52 GMT, after dropping earlier in the session to its lowest since July 2021 at $6.40 a bushel.
Corn fell 0.1% at 6.00-1/4 a bushel and soybeans slid 0.1% to $14.14-1/2 a bushel.
In energy markets, oil prices dropped by almost 4%, extending the previous session’s sharp losses, even after a report showed U.S. crude inventories fell more than expected, as recession fears grew for the world’s biggest economy.
Notably, Brent crude settled at $77.69 a barrel, losing $3.08, or 3.8%. U.S. West Texas Intermediate crude settled at $74.30 a barrel, shedding $2.77, or 3.6%.
The EIA showed U.S. crude inventories fell last week by 5.1 million barrels to 460.9 million barrels.
Gasoline and distillate stocks also drew down, sinking by 2.4 million barrels to 221.1 million barrels and almost 600,000 barrels to 111.5 million barrels, respectively, the EIA said.
That helped to limit the falling in prices.
However, oil prices fell more than 2% on Tuesday as lingering economic concerns and expectations of further interest rate hikes that could curtail fuel demand growth countered signs of improving short-term consumption gains.
Thus, the complex on Wednesday was more focused on a recession that may be well under way.
U.S. consumer confidence dropped to a nine-month low in April as worries mounted.
New orders for key U.S.-manufactured capital goods also fell more than expected in March and shipments declined.
Investors also are concerned potential interest rate hikes by inflation-fighting central banks could slow economic growth and dent energy demand in the United States, Britain and the European Union.
On this wake, are forecast lower crude exports, despite an higher refinery activity.
In ocean freight markets, the Baltic Exchange’s main sea freight index edged up on Wednesday as higher rates for capesizes outweighed declines in smaller vessel segments.
The overall index, indeed, rose 26 points or about 1.7% to 1,536 – its highest in almost three weeks.
Notably, the capesize index gained 114 points, or 5.7%, to its highest since mid-March of 2,100.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes carrying commodities such as iron ore and coal, rose $948 to $17,419.
The panamax index fell 27 points, or 1.6%, to 1,640 – its lowest since March-end.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $240 to $14,761.
Among smaller vessels, the supramax index down 13 points at 1,203.
In equity markets, US stock indexes settled mixed, with the S&P 500 and Dow Jones Industrials falling to 3-1/2 week lows, after First Republic Bank sank more than -29% to a record low.
Wednesday’s strength in Microsoft and software stocks kept the Nasdaq in positive territory.
Meantime, U.S. Mar capital goods new orders nondefense ex-aircraft and parts, a proxy for capital spending, fell -0.4% m/m, weaker than expectations of -0.1% m/m.
U.S. Mar wholesale inventories rose +0.1% m/m, right on expectations.
However, Mar retail inventories rose +0.7% m/m, above expectations of +0.2% m/m.
In this context, the markets are showing a 77% chance of a 25 bp rate hike by the Federal Reserve at the May 2-3 FOMC meeting and have fully priced in a 25 bp rate hike by the ECB at its May 4 ECB meeting.
Meantime, global bond yields were mixed.
The 10-year T-note yield rose +2.8 bp to 3.428%.
The 10-year German bund yield rose +1.3 bp to 2.397%.
The 10-year UK gilt yield rose +3.4 bp to 3.729%.
As a result, on Wall Street, the S&P 500 dropped 0.4% to 4,055.99.
The Dow Jones Industrial Average fell 0.7%, to 33,301.87, while the Nasdaq composite led the market with a gain 0.5%, to 11,854.35.
On this morning, Asian shares mostly fell, echoing the drop on Wall Street.
Notably, Japan’s benchmark Nikkei 225 declined 0.2% in morning trading to 28,349.95.
Australia’s S&P/ASX 200 slipped 0.4% to 7,288.70.
South Korea’s Kospi rose nearly 0.1% to 2,486.90.
Hong Kong’s Hang Seng lost 0.1% to 19,730.31, while the Shanghai Composite added 0.3% to 3,274.59.
In currecy trading, the dollar index fell by -0.39% dropping to a 1-1/2 week low on concerns about U.S. banking turmoil and weaker-than-expected U.S. Mar capital goods new orders.
Notably, the EUR/USD rose by +0.58% and posted a 1-year high, garnering support also from positive comments from ECB Vice President Guindos, who said the Eurozone looks to avoid a recession.
In addition, an increase in German May GfK consumer confidence to a 13-month high was bullish for the euro.
The USD/JPY fell by -0.18%, with the yen extending Tuesday’s gains to a 1-1/2 week high against the dollar.
On this morning, the U.S. dollar inched down to 133.59 Japanese yen from 133.66 yen.
The euro cost $1.1047, up from $1.1042.
Going back to analysing the other agricultural markets …
From Canada, Canadian farmers intend to plant 27 million acres (10.9 million hectares) of wheat, the most in 22 years, a government report said.
Notably, StatsCan wheat intentions were shown as 26.98m acres for 2023.
That was a 1.58 million acre increase from last year and was the 3rd consecutive yearly gain.
Traders had anticipated a 1 million acres boost, though the larger number was within the range of estimates.
Spring wheat was confirmed at 19.39m acres – the largest since 2001.
Durum wheat acreage also increased to 6.1 million acres from 6.0 in 2022.
As for corn, StatsCan corn acreage came out as was estimated, with 3.724m acres planted for 23/24.
That’s a 100k acre increase from last year as a new record.
As for soybean, StatsCan reported soybean intentions as 5.511m acres for 2023.
That was 300k acreage increase, while the trade expected no change.
Canola area was about 200k acres below the trade average guess at 21.597 million.
That is still a 200k acre increase from 2022/23.
From South America, the USDA Ag Attaché set their preliminary output projection at 159 MMT for Brazil’s 23/24 soybean crop.
That would be a 6.5 MMT increase from this year’s record.
The attaché forecasted that Brazilian producers will expand soybean planted area to reach 45.2 million hectares (ha) in 2023/24 season, up from the estimated 43.5 mn ha planted in the 2022/23 season.
Soybean expansion is forecast on current market conditions and trends – including strong demand, high prices, and a favorable exchange rate.
All these conditions are expected to persist well into the 2023/24 season.
Soybean exports are forecast to hit records this season and next at 95 MMT and then 98.1 MMT.
Meantime, Anec expects Brazil’s soybean exports to reach 14.7 MMT for April, which is below their prior 15.15 MMT estimate.
Anec expects 1.9 MMT for soymeal shipments.
Anec expects Brazil’s corn exports to reach 166,552 MT for April, which is below their prior 186k MT estimate.
In Argentina, the USDA attaché estimated Argentine wheat production to rebound to 19.5 million metric tons (MMT) in marketing year (MY) 2023/24, resulting in wheat exports of 13.7 MMT (including wheat flour as its wheat equivalent).
However after the severe drought in MY 2022/23, more rains are needed to recharge soil moisture profiles before the June planting window.
Barley exports in MY 2023/24 are forecast up 13 percent at 2.6 MMT on higher production, though exporters are concerned that China may switch back purchases to Australia.
the attaché projected MY 2023/24 corn production up at 54.0 MMT on a return to normal weather.
Corn exports are forecast at 38 million tons.
In Europe, wheat prices ended little changed, consolidating above a 19-month low as traders assessed signs of renewed export demand and awaited clarity over the Black Sea grain agreement.
Notably, September wheat on Euronext settled unchanged on the day at 242.75 euros ($267.92) a tonne, holding above Tuesday’s low of 241.00 euros.
Meanwhile rapeseed prices almost erased the decline of the previous day, up around 15 €/T in a market that remains very volatile.
Weekly data showed financial investors extended their net short position in Euronext’s wheat futures and options last week.
Romania is expected to harvest 10.35 million tonnes of wheat this year in a sharp rebound from last year as farm belts recover from drought, consultancy Agritel said on Wednesday.
Meantime, the European Commission has finally accepted the ban on Ukrainian imports for the benefit of Romania, until June 5, in order to respond to their problem of seeing low-cost products locally, below the profitability thresholds of farmers.
Poland said it would keep its ban on Ukrainian grain imports until the end of 2023.
It expanded the list of restricted products to include sunflower oil.
Traders also noted interest in European Union wheat that has become competitive after the Euronext slide, despite strength in the euro.
In Germany, standard 12% protein wheat for May delivery in Hamburg was offered for sale around level the Euronext May contract, with buyers seeking one euro under.
The latest weekly data on imports&exports from the European Union, run up to last Saturday, rather than Sunday as normally, due to a technical issue, the Commission said on its website.
The data had been delayed from its usual Tuesday timing due to the technical problem.
On Wednesday the European Commission said soft wheat exports from the European Union in the 2022/23 season that started in July had reached 25.02 million tonnes by April 22, up 10% compared with 22.81 million a year earlier.
On the other hand, EU barley exports so far in 2022/23 totalled 5.09 million tonnes, down 23% against 6.65 million a year ago.
In imports, flows of maize into the EU had reached 22.65 million tonnes, 72% higher than a year ago, while wheat imports were at 7.39 million tonnes, 243% above the year-earlier level.
Total EU cereal imports were running 90% above the year-earlier volume at 33.85 million tonnes, but remained below total exports of 36.18 million, down 7% on year.
Weekly export and import figures for oilseed crops saw rapeseed imports reaching 6.47 million tonnes by April 22, up 50% from 4.31 million a year earlier.
EU soybean imports so far in 2022/23 had reached 10.06 million tonnes, down 13% compared with 11.50 million a year earlier, while soymeal imports over the same period totalled 12.71 million tonnes, 5% lower than 13.35 million a year ago.
Palm oil imports stood at 3.21 million tonnes, down 22% versus 4.12 million a year ago.
From South Africa, farmers are expected to harvest 2.7% more maize in the 2022/2023 season compared with the previous season, the government’s Crop Estimates Committee (CEC) said on Wednesday.
The CEC’s third summer crop forecast estimates the 2023 harvest at 15.89 million tonnes, up from the 15.47 million tonnes harvested last season.
The harvest is expected to consist of 8.36 million tonnes of white maize, used for human consumption, and 7.53 million tonnes of yellow maize, used mainly in animal feed.
From Ukraine, Ukraine’s grain exports for the 2022/23 season stood at 41.1 million tonnes as of April 26, Agriculture Ministry data showed on Wednesday.
The volume so far in the current July-to-June season included about 14.2 million tonnes of wheat, 24.2 million tonnes of corn and about 2.5 million tonnes of barley.
The ministry said grain exports during April were almost 3.2 million tonnes as of April 26.
The government has said Ukraine can harvest 44.3 million tonnes of grain or even up to 50 million tonnes in 2023 if weather favours.
From Russia, Russia’s envoy to the United Nations in Geneva said Moscow wanted the Russian Agricultural Bank (Rosselkhozbank) to return to the SWIFT banking system and it was against “case-by-case” decisions on the bank’s ability to conduct transactions.
Reconnecting the bank to SWIFT is one of Russia’s key demands in a negotiation over the future of the Black Sea grain deal.
Moscow has repeatedly said the deal will sink unless the West eases obstacles to Russian grain and fertiliser exports.
Russian Foreign Minister Sergei Lavrov had previously said that one bank “kindly consented to finance one operation”, without naming the lender.
Notably, JPMorgan Chase & Co received permission from the United States to process payments for Russian Agricultural Bank but that this could not replace the reconnection of the bank to the SWIFT payment system.
UN Secretary-General António Guterres is scheduled to travel to Washington today to meet with Secretary of State Antony Blinken and members of Congress, according to UN spokesperson Stéphane Dujarric.
Among the topics on the agenda are the war in Ukraine and the grain deal.
“We are at a very delicate time in the renewal of the Black Sea initiative,” Dujarric said.
He added that the UN was working to push forward a parallel part of the deal relating to Russia’s “ammonia pipeline” for selling fertilisers and grain but said that several obstacles remained.
From the Middle Kingdom, China’s Ministry of Ag and Rural Affairs intends to lift their domestic grain production to 88% of needs by 2032 – affecting rice, wheat, corn, and soybeans.
Currently China produces 82% of their grain needs domestically, relying on imports for the remainder.
From Australia, dwindling availability of barley in the northern region has piled $5 per tonne on to its value delivered Darling Downs this week to buck the steady to softer trend seen in other quoted markets.
With the Anzac Day public holiday on Tuesday making this week a short one, and growers across Australia planting at full tilt, offers for ex-farm grain are hard to find.
Trade activity has been mostly confined to grain warehoused at bulk storage sites in the northern and southern markets, and Queensland is facing another short week with Monday’s Labour Day public holiday.
Meantime, local markets were softer coming off Anzac Day, although spot-load-for-prompt homes still command a premium as the liquidity from grower sellers is somewhat limited during sowing.
Canola was bid down to near $600/t track east coast but was lacking any real definition as sellers moved underground.
New crop wheat and barley were also a fraction softer.
There are good sowing conditions for most regions.
Rain this weekend will help establish crops and particularly will benefit canola.
Cargill has announced a $73 million investment to upgrade and expand its Newcastle, Narrabri and Footscray oilseed-crushing facilities, with work expected to be completed by May 2024.
In a statement, Cargill said the investment will cater to rising demand for canola and cottonseed products and provide Australian growers with further access to global markets.
On the international trade scene, Tunisia’s state grains agency is believed to have purchased about 75,000 tonnes of soft wheat in an international tender on Wednesday.
Notably, is believed the wheat was bought in three 25,000 tonne consignments.
One consignment was said to have been sold by trading house Finagrit at an estimated $304.80 a tonne c&f and two consignments were bought from trading house Viterra at $309.89 and $311.19 a tonne c&f.
Finance for the purchase is being provided by the African Development Bank. Wheat can only be sourced from countries eligible to participate in the bank’s tenders, which basically excludes much of east Europe and the Black Sea region.
An offer for 50,000 tonnes of Russian-origin wheat was said to have been made in the tender at $310.00 a tonne c&f but was rejected.
Shipment was sought between June 5 and July 5, depending on origin selected for supply.
Two groups of South Korean flour mills bought around 77,000 tonnes of milling wheat to be sourced from the United States in international tenders on Wednesday.
The purchase included different wheat types, all bought on an FOB basis.
Some 45,000 tonnes was for shipment between July 1-July 31 and 32,000 tonnes for shipment between July 20-Aug. 20.
It was unclear if 50,000 tonnes of Australian-origin wheat also sought was purchased.
Notably, 45,000 tonne purchase was believed to have been made from trading house United Grain Corporation.
The purchase involved 21,295 tonnes of soft white wheat of between 9.5% to 11% protein content bought at an estimated $272.24 a tonne, 500 tonnes of soft white wheat of a maximum 9% protein bought at $280.46 a tonne, 8,640 tonnes of hard red winter wheat of 11.5% protein at $339.84 a tonne and 14,565 tonnes of northern spring wheat of 14% protein bought at $341.67 a tonne.
Trading house Bunge was the seller of the other consignment of 32,000 tonnes.
The second purchase involved 8,700 tonnes of soft white wheat of 9.5% to 11% protein content bought at $268.70 a tonne, 670 tonnes of soft white wheat of 8.5% protein bought at $268.70 a tonne, 10,520 tonnes of hard red winter wheat of 11.5% protein bought at $334.70 a tonne and 12,110 tonnes of northern spring/dark northern spring wheat bought at $338.70 tonne.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
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