Good morning, Farmer Family …
US farm markets continued to crumble on Thursday.
Corn prices dropped 2.26%.
Soybean faded 0.64% lower, with soyoil tumbling 2.5% lower, while soymeal firmed 0.45% higher.
Wheat prices faced severe cuts, with Chicago SRW dropping 1.99%, Kansas City HRW fell 1.86% and MGEX spring wheat lost 4.83%.
Corn declined, hitting a nine-month low, after the U.S. Department of Agriculture said private exporters cancelled sales of 233,000 tonnes of U.S. old-crop corn to China.
That was the second time this week tha a large export sale to China was cancelled, underscoring concerns how the large Brazilian crop was diverting demand from the United States.
Soybeans settled down , as advancing U.S. spring planting and competition from Brazil dragged prices lower.
As for wheat, Chicago wheat prices fell for a seventh straight session and touched a 21-month low on export competition.
The weekly FAS report showed 400,000 MT of old crop corn was sold during the week that ended 4/20.
That was a 28% increase from last week and was mid-range of the expectations, but down 49 percent from the prior 4-week
average.
Also, the week’s export shipment was shown as 1.076 MMT and brought the season’s total still to 23.67 MMT.
Adding the 14.78 MMT of unshipped sales has the total commitment at 38.452 MMT, which is only 82% of the forecast.
As for soybean, the report showed 311,300 MT of soybean bookings for the week that ended 4/20.
That was up from 100k MT last week and up 38 percent from the prior 4-week average, but was under the 481k MT sold during the same week last year.
Soybean exports were 453,700 MT for the week, taking the season’s total to 46.72 MMT.
That was down 22 percent from the previous week and 35 percent from the prior 4-week average, although it is even with last year’s export pace and is 85% of USDA’s forecast.
Accumulated old crop soybean commitments were at 92% of USDA’s forecast.
USDA’s FAS also reported 153,437 MT of soymeal sales and 134 MT of soy oil bookings.
For meal, USDA has the accumulated export at 7.013 MMT or 56% of the full year’s forecast.
The 36,835 MT of soy oil exports have the season’s total at 16% of the 230k MT forecast.
As for wheat, the report had 155,733 MT of old crop wheat sales for the week that ended 4/20.
That was down 40% for the week, and 7 percent from the prior
4-week average, but was mid-range compared to pre-report estimates.
USDA also reported 202,090 MT of new crop sales.
That set the forward book at 1.012 MTM, or 45% of last year’s volume.
Old crop commitments, are 88.6% of the April WASDE’s forecast.
Meantime, rain this week in the southern U.S. Plains has tempered concerns about drought especially regarding hard red winter wheat.
According to the NOAA, the Eastern Seaboard will gather large amounts of rainfall totaling 1.5” or more between Friday and Monday.
Most of the Midwest will also see some rains over the weekend, but few areas will see much more than 0.25”.
Further out, NOAA’s new 8-to-14-day outlook predicts a return to seasonally dry weather for a considerable portion of the Corn Belt between May 4 and May 10, with warmer-than-normal conditions developing across the plains during this time.
Meantime, global wheat supplies have also led the market to look beyond repeated warnings from Moscow that it will pull out of a Black Sea grain deal allowing shipments from Ukraine unless Russian demands are addressed.
Russia, indeed, has a large wheat crop they are selling into the world market regularly.
Ukraine is trying to sell their grain into the world market too.
The EU is trying to keep grain from coming into their countries, while raised sharply its official forecast of European Union soft wheat stocks this season on reduced export and increased import expectations.
In this context, corn basis bids were largely steady across the central U.S., but did trend 3 cents lower at an Iowa river terminal and a penny higher at an Illinois river terminal.
Soybean basis bids were mostly steady across the central U.S., but did tilt 10 cents higher at an Ohio elevator while easing a penny lower at an Illinois river terminal.
Commodity funds were net sellers in 18,000 lots of corn, 5,000 lots of soybean and 4,000 lots of wheat.
On this morning, Chicago wheat prices slid again and were set for their biggest monthly drop since last November.
Corn hit its lowest in nine months, and soybeans ticked lower too.
Notably, the most-active wheat contract on the Chicago Board of Trade was down 0.4% at $6.26-3/4 a bushel, as of 03:30 GMT, corn dropped 0.3% at $5.79-3/4 a bushel and soybeans added 0.5% to $14.10-1/2 a bushel.
Wheat has lost 9.3% in April, the market’s biggest monthly drop since November, corn hit its lowest since July at $5.78 a bushel and soybeans are down 6.3% this month, the biggest monthly decline since June.
In energy markets, oil prices steadied, paring losses from the previous session, after a top Russian official said global oil markets were balanced.
According to Russian Deputy Prime Minister Alexander Novak, indeed, OPEC+ does not see the need for further oil output cuts.
In this context, Brent crude futures settled up 68 cents at $78.37 a barrel, while West Texas Intermediate crude settled up 46 cents at $74.76 a barrel.
On Wednesday, the benchmarks dropped almost 4%.
Investors are watching economic data for any directional cues on energy demand.
U.S. economic growth slowed by more than expected in the first quarter, although jobless claims fell in the week ending April 22, data showed.
On Wednesday, U.S. data had showed capital goods spending fell more than expected.
Oil prices were also pressured on banking sector fears.
Also, analysts have seen weak refinery margins as a major drag on oil prices, with Russia increased exports of refined products.
Falling refinery profit margins could lead to cuts in runs and a further reduction in crude demand.
Markets will look for direction from the first quarterly print of euro zone gross domestic product growth, due on Friday.
The data could affect monetary policy decisions by the European Central Bank when it meets on May 4.
In ocean freight markets, the Baltic Exchange’s main sea freight index extended gains for a second-straight session on Thursday, supported by higher rates for capesize vessel segment.
The overall index, indeed, gained 45 points, or about 2.9%, to 1,581 – its highest since March 15.
Notably, the capesize index rose 176 points, or about 8.4%, to its highest level of 2,276 since late December.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes carrying commodities such as iron ore and coal, increased $1,455 to $18,874.
The panamax index fell 28 points, or about 1.7%, to 1,612 – its lowest in over four-weeks.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $255 to $14,506.
Among smaller vessels, the supramax index lost 18 points or about 1.5% to 1,185.
In equity markets, US stock indexes rallied sharply, on strength in technology stocks that boosted market sentiment and led the overall market higher after Meta Platforms soared more than +13%.
Also, Hasbro closed up more than +14%.
U.S. banking woes also eased slightly after First Republic Bank closed up more than +8%, recovering a bit after the -80% plunge in its stock price seen over the previous two sessions.
Stocks rallied even after news showed the U.S. economy in Q1 grew less than expected.
Notably, U.S. Q1 GDP rose +1.1% (q/q annualized), weaker than expectations of +1.9%.
Q1 personal consumption rose +3.7%, weaker than expectations of +4.0%.
The Q1 core PCE deflator rose +4.9% (q/q annualized), stronger than expectations of +4.7%.
U.S. weekly initial unemployment claims unexpectedly fell -16,000 to 230,000, showing a stronger labor market than expectations of an increase to 248,000.
Weekly continuing claims unexpectedly fell -3,000 to 1.858 million, showing a stronger labor market than expectations of an increase to 1.870 million.
U.S. Mar pending home sales unexpectedly fell -5.2% m/m, weaker than expectations of an +0.8% m/m increase and the biggest decline in 6 months.
In this context, bond yields jumped with the markets now showing a 90% 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.
Notably, global bond yields moved higher.
The 10-year T-note yield rose +7.7 bp to 3.526%.
The 10-year German bund yield rose +6.2 bp at 2.460%.
The 10-year UK gilt yield rose +6.5 bp to 3.794%.
As a result, the S&P 500 rose 2% to 4,135.35 and the Dow rose 1.6% to 33,826.16.
The Nasdaq composite led the market with a 2.4% gain, to 12,142.24.
On this morning, shares advanced in Asia, though gains were more modest as traders waited to see what the Bank of Japan would do in its first policy meeting since Kazuo Ueda took the helm.
Notably, Tokyo’s Nikkei 225 index added 1.1% to 28,764.98 and the Hang Seng in Hong Kong gained 0.6% to 19,951.51.
The Shanghai Composite index surged 0.7% to 3,307.68, while the S&P/ASX 200 in Sydney edged 0.2% higher to 7,308.40.
The Kospi in Seoul lost 0.1% to 2,491.50, and benchmarks in Southeast Asia also fell.
The Japanese central bank kept its ultra-lax policy unchanged, and the Japanese yen weakened sharply against the U.S. dollar.
The dollar rose to 134.92 yen from 133.96 yen earlier in the day.
In currency trading, the dollar index posted modest gains as higher T-note yields underpinned the dollar.
Notably, the EUR/USD fell by -0.14%, weighed down by strength in the dollar.
Also, Thursday’s economic news that showed Eurozone Apr economic confidence rose less than expected was bearish for the euro.
Eurozone Apr economic confidence rose +0.1 to 99.3, weaker than expectations of 99.9.
The USD/JPY rose by +0.21%, with the yen under pressure from higher T-note yields.
Also, an easing of the U.S. banking turmoil reduced the safe-haven demand for the yen.
Going back to analyze other ag markets …
From South America, Refinitiv Commodities Research revised its Brazilian corn crop forecast upward by 0.7Mt to 124.6Mt citing warm, dry weather favouring first (full season) and second (safrinha) crops.
It increased the soybean forecast by 0.6Mt to 153.2Mt again citing favourable weather.
Meantime, Chinese demand for Brazilian soybeans this year is lower than expected.
That explains why Brazil’s record harvest has not yielded monthly export records, the chief of commodity trader Cargill’s Brazil unit said in an interview.
Brazilian soybean premiums at ports fell to historic lows last week due in part to lower Chinese demand.
In Europe, all ag commodities prices fell again, with wheat dropping to a new 19-month low.
Vegetable oils also fell, impacting on rapeseed prices.
Notably, September wheat price settled 2.5% down at 236.75 euros ($260.69) a tonne.
It earlier touched a weakest second-month price since September 2021 at 236.25 euros.
In oilseeds, August rapeseed ended 2.7% lower at 440.00 euros a tonne.
The European Commission on Thursday raised sharply its official forecast of European Union soft wheat stocks this season on reduced export and increased import expectations.
Notably, the Commission has estimated future wheat production for the EU-27 at 130.2 Mt and exports to third countries at 32.0 Mt, with a carryover stock at the end of the 2023/2024 campaign at 22.3 Mt.
For the current marketing year, ending stocks are estimated upwards at 19.6 Mt vs.18.1 Mt seen last month.
Corn imports are estimated at 17 Mt and production at 64.4 Mt.
In oilseeds, while rose its outlook for rapeseed output to 20 million tonnes from 19.8 million for the upcoming 2023/24 season, the Commission forecasted 2022/23 EU rapeseed imports were increased to 6.5 million tonnes from 6.2 million last month.
The revisions highlight the prospect of large wheat supplies that has led to calls from some eastern EU countries to curb an influx of cheaper grain from Ukraine.
On this wake, the EU Commissioner for Agriculture reported EU Agriculture Ministers expected to approve a temporary import ban on wheat, maize, rapeseed, sunflowerseed and sunflowerseed oil from Ukraine into Hungary, Slovakia, Bulgaria, Romania and Poland, likely to take effect from 5 June until the end of the year.
Also, there is a feeling that both Russia and the EU have enough wheat to cover demand with the new harvests in the summer approaching, with the EU crop condition also looking overall pretty positive at this stage of the season.
In this context, on physical market, wheat quotations for the 2022 crop are becoming increasingly difficult to post.
At these levels, the European producers’ position will be tough for the 2023 harvest as most prices are below break-even point.
From Russia, the country is again calling for “full implementation” of a deal that allows for safe passage of shipping vessels in the Black Sea, which due for extension (or expiration) on May 18.
Russia wants to remove current obstacles slowing down its own grain and fertilizer exports.
Negotiations for a possible extension of the deal are ongoing.
Meantime, Russia on Thursday sent the first shipment from a new grain terminal at Port Vysotsky, near St Petersburg, the country’s Centre for Grain Quality Assessment said.
The centre’s statement said that 27,400 tonnes of durum wheat had been sent to Tunisia.
Russian grain exports to Tunisia have doubled this season to 300,000 tonnes.
The country significantly increased its purchases of wheat to 192,000 tonnes, it said, nine times more than the 2021/2022 season.
The construction of the Vysotsky grain terminal began in 2022.
It is schdeduled to reach full operational capacity of 4 million tonnes of grain cargoes a year in 2024.
Traders also reported sales offers for small shipments of Russian wheat in past days below Russia’s semi-official floor price of $275 a tonne FOB, with handysized shipments of Russian 12.5% protein wheat reportedly offered for May shipment at $270 FOB Black Sea.
From South East Asia, the Indian state has procured more wheat so far in the current marketing year than total purchases made in the previous year, two government officials said on Friday.
Notably, wheat procurement jumped to 19.5 million tonnes as of April 26th, above the more than 18.8 million tonnes procured last year.
In all, India plans to buy 34.15 million tonnes of new-season wheat from local farmers.
From Australia, canola found some strength in yesterday’s markets with most of the offshore gains passed on.
Wheat held its ground mostly in the face of a softer offshore market in that commodity.
Liquidity is still thin as growers are still focused on sowing.
After a record setting winter crop in marketing year (MY) 2022/23, Australia is expected to produce a more subdued, but still strong grain crop in MY 2023/24, according to the USDA attaché.
Favorable conditions around the time of winter grain planting across most production regions of Australia bodes well for the establishment and early growth of wheat and barley in MY 2023/24.
However, with predicted dry conditions in the coming months, production is expected to be down from the last three years of bumper winter crops.
Wheat and barley exports are forecast to decline from a record volume of wheat, and near record for barley, estimated this year.
Sorghum production and exports are forecast to decline in MY 2023/24 after making big gains in the previous two years, including record exports.
Notably, USDA Foreign Agriculture Service forecast Australia’s 2023-24 wheat production at 29Mt (-10Mt) and exports at 23Mt (-7Mt) and barley production at 10Mt (-4Mt) with exports at 5Mt (-3Mt).
On international trade scene, Iraq’s state grains buyer is believed to have purchased about 150,000 tonnes of wheat expected to be sourced from Australia in an international tender restricted to a limited number of participants which closed on Wednesday.
The wheat was bought at an estimated $387 a tonne CIF with trading house Australian Grain Export.
The tender had sought wheat sourced from either the United States, Australia and Canada.
Algeria’s state grains agency OAIC is believed to have bought milling wheat in an international tender on Thursday which sought limited shipment to two ports only.
Purchases reported were around $295 a tonne cost and freight (c&f) included.
Purchases were also reported at $296.50 a tonne c&f.
No estimates of tonnes bought were initially available.
The requirement in the tender to unload the wheat only in the ports of Mostaganem and/or Tenes in two port tenders from the OAIC generally signals that a relatively small purchase will be made.
The wheat was sought for shipment in several periods from the main supply regions including Europe: May 16-31, June 1-15, June 16-30, July 1-15 and July 16-31.
If sourced from South America or Australia, shipment is one month earlier.
South Korean flour millers reportedly purchased around 77,000t US milling wheats, including 31,165t SW (8.5pc-11.0pc protein) at an estimated $269-$280/t fob, 19,160t HRS (11.5pc) at $335-$340/t fob and 26,675t DNS (14pc) at $339-$342/t fob, 50,000t from Australia, for Aug shipment, including ASW in the high $280s/low $290s per tonne fob and hard wheat, bought in the low $320s per tonne fob.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
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