Good morning, Farmer Family …
US farm markets were mixed but mostly lower on Monday.
Corn prices eased by 0.09%.
Soybean prices improved by 0.58%, with soymeal lifting 0.28%, and soyoil picking up 0.27%.
Wheat prices suffered double digit losses, with both Chicago SRW and Kansas City HRW falling by 2.45%, while MGEX HRS dropped 1.59%.
Wheat prices tumbled to fresh lows, with Chicago soft red winter wheat touching the lowest level since July 2021 during the session.
Hard red winter wheat, fell to the lowest in 15-1/2 months.
Ample world supplies, a sluggish U.S. export demand and beneficial rains in key production areas of the Plains and Midwest weighed the market.
Meanwhile, sinking wheat prices also anchored grain markets in general.
Thus, corn prices eased, with forecasts for favorable Midwest planting weather and lagging U.S. export sales added more pressure.
The corn and soybean markets are also facing headwinds as large Brazilian crops are eating into demand for U.S. supplies.
However, soybeans edged higher in a technical and short-covering bounce from Friday’s six-month lows.
Going inside USDA’s weekly Export Inspections report, data showed 1.518 MMT of corn was exported during the week that ended 4/27.
That was up 580k MT from last week but was below shipments from the same week last year by 180k MT.
The season’s total shipment reached 23.9 MMT as of 4/27, which remains 34.7% behind last year’s pace.
As for soybean, the report showed 401,976 MT were shipped during the week that ended 4/27.
That was a 38k MT increase from last week, but was below the 606k MT export during the same week last year.
The full season’s shipment reached 47.452 MMT, now ahead of last year by just 199k.
As for wheat, data had 358,273 MT of wheat shipped during the week that ended 4/27.
That was a 5.5k contract decline from last week’s volume and compares to 392k MT shipped during the same week last year.
HRW exports counted for 157k MT of the total, with HRS making up 106k MT.
Cumulative totals for the 2022/23 marketing year are slightly below last year’s pace so far, with 18.249 MMT.
After the sessions close, the weekly Crop Progress report showed 26% of the 23/24 corn crop was planted as of 4/30.
That was a 12% point advancement and now matches the 5-yr average pace.
By state, Iowa corn planting reached 29%, behind their 34% average pace.
Illinois on the other hand is 11% points ahead of average at 40% planted, and Missouri was 80% finished compared to 41% on average.
National emergence was shown at 6%, compared to the 55 average pace.
As for soybean, NASS reported the 23/24 soy crop was 19% planted as of 4/30.
That was a 10% point advancement through the week and is 8ppts ahead of the 5-yr average.
At the state level, IL was 39% planted compared to 15% on average, and MO was shown at 34% planted compared to 5% on average.
As for wheat, NASS reported 12% of the spring wheat crop planted as of 4/30.
That was 10% points behind the average pace.
Minnesota has not yet begun, while the state would be typically 16% finished at this time.
As for winter wheat, 25% was headed compared to 23% on average.
National conditions saw 28% of U.S. winter wheat in good to excellent condition, up 2 percentage points from last week.
Yesterday, NASS also reported 437.967 mbu of corn was used in March for ethanol production.
That was a 9.8% increase from February, with more days of use.
However, the March corn grind was 3.4% below March ’22.
That set the season’s total ethanol pull at 2.986 bbu, or 57% of the WASDE forecast.
The remaining 5 months need to average ~453 mbu of corn use to hit the April target, the MY high to date 449 mbu in October.
As for soybean, NASS confirmed 197.95 mbu of soybeans were crushed in March.
That was just 228k bushels below the all time record from Dec ’21, as the second most for any month.
Crush demand needs to average 184.6 mbu/month (which would be a new record for each remaining month) to hit the USDA forecast.
Soybean oil stocks were 2.387 billion lbs, which was slightly below the trade average guess ahead of the release.
Quarterly Flour Milling data from NASS showed 225.36 mbu of wheat was ground for flour during Q1 of 2023.
That was 4.91 mbu (2.1%) below Q1 2022’s use.
In this context, corn basis bids were mostly steady to firm, after rising 3 to 5 cents higher across four Midwestern locations.
An Indiana ethanol plant bucked the overall trend after fading 5 cents lower.
Soybean basis bids were mostly steady across the central U.S., but did trend 8 cents higher at an Illinois river terminal.
Commodity funds were net sellers of CBOT wheat and corn futures contracts on Monday and net buyers of soybeans, soymeal and soyoil, traders said.
On this morning, Chicago wheat rose on bargain-buying after the market dropped to its lowest in almost two years.
Corn and soybeans also inched higher, but the upside potential in both markets is likely to be limited amid favourable U.S. planting weather and stiff competition in the export market.
In energy markets, oil prices dropped by a dollar a barrel.
Notably, Brent crude fell $1.02, or 1.3%, to settle at $78.45 a barrel, while U.S. West Texas Intermediate (WTI) crude slid $1.12, or 1.5%, to settle at $75.66.
China’s manufacturing activity unexpectedly fell in April, official data showed on Sunday, the first contraction since December in the manufacturing purchasing managers’ index.
The U.S. Federal Reserve, which meets on May 2-3, is expected to increase interest rates by another 25 basis points.
Thus, the U.S. dollar rose against a basket of currencies, making oil more expensive for other currency holders.
Banking fears also have weighed on oil in recent weeks, with U.S. regulators seized First Republic Bank over the weekend ahead of a deal in which JPMorgan bought most of its assets.
Oil prices drew some support from U.S. manufacturing activity pulling off a three-year low in April, as new orders improved slightly and employment rebounded.
In ocean freight markets, the Baltic Exchange in London was closed yesterday.
Meantime, the main sea freight index slipped on Friday, although posted its third straight monthly gain, supported by increasing demand for the capesize vessel segment.
The overall index, indeed, fell 5 points to 1,576.
The index was, however, up 13.5% for the month, as well as registered a weekly rise.
Notably, the capesize index rose 25 points, or about 1.1%, to 2,301, its highest level since late December.
The index gained 38.2% for the month.
It was up over 17% for the week – its biggest weekly rise in three.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes carrying commodities such as iron ore and coal, increased $206 to $19,080.
The panamax index fell 26 points, or 1.6%, to 1,586 — its lowest since March 28. It is down 3% in April.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $232 to $14,274.
Among smaller vessels, the supramax index lost 20 points, or 1.7%, at 1,165.
In equity markets, US stocks initially moved higher on optimism from the U.S. economy, after Monday’s U.S. construction spending and ISM manufacturing reports were better than expected.
Notably, the U.S. Apr ISM manufacturing index rose +0.8 to 46.1, stronger than expectations of 46.8.
U.S. Mar construction spending rose +0.3% m/m, stronger than expectations of +0.1% m/m and the largest increase in 4 months.
However, US stock indexes gave up early gains and settled slightly lower on the large +15.4 bp rise in the 10-year T-note yield which closed at 3.578%.
The yield on the two-year Treasury, which moves more on expectations for Fed action, rose to 4.13% from 4.02%.
The market is pricing in a 95% chance the Fed raises the federal funds target range by 25 bp on Wednesday.
Also, weakness in regional bank stocks Monday weighed on the overall market as sentiment toward the sector remains sour after First Republic Bank became the third U.S. bank this year to fail.
However, JPMorgan Chase will pay the Federal Deposit Insurance Corp (FDIC) $10.6 billion to acquire First Republic Bank.
JPMorgan Chase will take over First Republic’s assets, including about $173 billion of loans, $30 billion of securities, and $92 billion in deposits.
In addition, JPMorgan Chase and the FDIC agreed to share the burden of losses and any recoveries on First Republic’s single-family and commercial loans.
Also, in a negative factor for Chinese and global economic growth, Monday’s Chinese manufacturing and non-manufacturing reports were weaker than expected.
The China Apr manufacturing PMI fell -2.7 to 49.2, weaker than expectations of 51.4 and the weakest level in 4 months.
Also, the Apr non-manufacturing PMI fell -1.8 to 56.4, weaker than expectations of 57.0.
Thus, on Wall Street, the S&P 500 was virtually unchanged, dipping 1.61, or less than 0.1%, to 4,167.87.
The Dow Jones Industrial Average slipped 46.46, or 0.1%, to 34,051.70, and the Nasdaq composite fell 13.99, or 0.1%, to 12,212.60.
On this morning, Asian shares were mixed, with some markets closed.
Australia’s S&P/ASX 200 dipped 1.1% to 7,254.40, after the Reserve Bank of Australia raised interest rates by a quarter-percentage point, an unexpected move that signaled further tightening might be ahead.
South Korea’s Kospi gained 0.6% to 2,515.24.
Hong Kong’s Hang Seng gained 0.5% to 19,986.86.
Japan’s Nikkei 225 edged up 0.1% in afternoon trading to 29,162.85.
Trading in Tokyo will be closed for Golden Week holidays the rest of the week.
Trading was closed in Shanghai for Labor Day.
In currency trading, the DXY rose by +0.51% posting a 1-week high, on higher T-note yields, weakness in the yen, and stronger-than-expected U.S. construction spending and ISM manufacturing reports.
On this morning, the U.S. dollar inched up to 137.70 Japanese yen from 137.47 yen.
The euro stood at $1.0991, up slightly from $1.0978.
Going back to analyze the other grain markets …
From Canada, common wheat exports in week 38 were large at 499.1k mt.
This makes for a season total of 14.7 million mt which is 76 per cent more than last year.
Canada needs to export an average of ~340k mt of wheat per week for the remainder of the marketing year to meet the AAFC’s 19.6 million mt export number.
Durum exports in week 38 were 185.1k mt for a season total of 4.0 million mt.
The AAFC did not raise their 2022/2023 export projection for durum in their recent update, which we think was a miss.
To meet the AAFC’s 4.8 million mt export number, Canada only needs to ship 800k mt of durum in the remaining 14 weeks of the marketing year.
Almost 500k mt of this has already been delivered into the Canadian elevator system.
Meantime, we have heard of some seeding progress in Alberta, and some fieldwork will likely begin in localized areas of Manitoba and Saskatchewan this week.
It seems like seeding will only begin in earnest in the second week of May.
From South America, “the market is counting on strong safrinha crop”.
In this context, Brazil will create a working group to study raising the mandatory blend of ethanol content in gasoline to 30pc from the current 27pc.
However, the government would first have to raise the ceiling of the permitted ethanol content in gasoline, which currently ranges from 18pc to 27.5pc.
As we saw last week, the sharp decline in Brazilian corn basis has paused any US corn shipment for now, as Chinese buyers are anticipating further fall in prices with record crop projection and storage woes in the country.”
Brazilian national food agency Conab has estimated the second season’s corn harvest at 95.3 million mt.
Crop harvest projection in the key producing region like Mato Grosso stands at 46.4 million mt, according to local government agency IMEA.
With the Brazilian corn harvest estimated at 124.897 million mt and the bumper soybean crop projected at 154 million mt by the USDA, a lack of storage and shipment delays stemming from logistical challenges have led to a sharp drop in premiums.
Thus, “expectation of record crop has raised concerns of further stress on domestic logistics and storage chain, which is already struggling to absorb country’s near record high soybean crop”.
“Farmers and cooperatives are buying silo bags while others are expecting to store their corn outdoors, which is further pressuring the prices.”
According to trade sources, Brazil is likely to export more corn in MY 2022-23 than the US since 2013, as it expects a record-high harvest in the second crop season.
Platts assessed Brazil corn FOB Santos for loading in August at $223.81/mt April 26 down 30.68% on the year and 14.31% on the month, the lowest since March 29, 2021.
Argentine exports of grain, oilseeds and their derivatives totaled $2.4 billion in April, Argentina’s CIARA-CEC grains exporters and crushers chamber said on Monday.
Settlements for the fourth month of the year showed a drop of 23% compared to the same month a year earlier.
The South American nation implemented a third round of the so-called soybean dollar in early April to encourage liquidations of the oilseed and increase central bank reserves through a differentiated exchange rate.
However, “the inflow of foreign currency for the month of April is a reflection of a market strongly affected by the extreme drought that has drastically reduced the production,” said a CIARA-CEC report.
Most of the sector’s foreign exchange earnings occur well in advance of export, an anticipation that is around 30 days in the case of grain exports and reaches up to 90 days in the case of oil and protein meal exports, the statement said.
In Europe, markets were closed due to Labour Day.
Wheat prices posted a 9% drop for April after edging down to a new 19-month low on Friday.
Notably, September wheat on Euronext settled 0.1% lower at 236.50 euros ($260.72) a tonne, after slipping earlier on Friday to 234.25 euros, the weakest since September 2021.
Over April, the contract was down 9.1%.
April has recorded a decline of -23.75 €/t for wheat, -24.25 €/t for corn and -32.25 €/t for rapeseed.
August rapeseed on Euronext settled 0.4% lower at 438.25 euros a tonne after hitting a one-month low.
This marks a shift in prices below production costs for farmers for the new marketing year.
All eyes are turned towards the new season.
In France, the condition of soft wheat was the best in at least a decade, data from farm office FranceAgriMer showed.
Drought in Spain remained a concern for grain markets but forecasts projecting showers the week after next offered some hope.
Consultancy Strategie Grains raised its forecast for 2023 European Union rapeseed production this year to 20 million tonnes from 19.5 million a month earlier, citing favourable crop conditions in much of Europe.
Among the bearish pressure elements observed on Friday on the European market, also the agreement in principle announced by the European Commission allowing the transit of Ukrainian grain through the 5 neighbouring EU member countries.
EU countries agreed on Friday to extend by a year the suspension of duties and quotas on imports from Ukraine, in parallel to plans to temporarily restrict imports to eastern members bordering Ukraine.
In addition, with almost two weeks to go before the 18 May ultimatum, attempts to negotiate the Grain Deal under the umbrella of the UN and Turkey continue, while Russian officials continue to be critical.
But there are some chances for the Ukraine grain deal holding beyond a May 18 deadline.
On the other hand, in Germany, traders again cited signs of renewed export demand.
Ship export loadings of German wheat were active, with one ship currently loading over 40,000 tonnes for Morocco while another vessel will take on another 40,000 tonnes for Morocco this week.
This week, also another ship is set to load about 60,000 tonnes for Kenya and one will load a combined 60,000 German/Baltic consignment for Togo in Africa.
Meantime, Egypt, which benefited from last week’s downturn, is back to buying for the lean season with a tender covering the periods 10-30 June and 1-20 July.
This will be another opportunity to gauge the strong competition between Russian, Western and Eastern European origins, all under the burden of large carryover stocks.
From North Africa, Egypt is reportedly “strongly considering” approving the currencies of trade partners such as Russia, China, and India as an alternative to dealing in US dollars.
Cereal production in Morocco is expected to rise by 62% in 2023 compared to the previous year, the country’s Ministry of Agriculture said in a statement on Friday.
For the 2022/2023 agriculture campaign, cereal production is expected to reach approximately 55.1 million quintals, up from 34 34 million quintals in the previous agriculture campaign, the statement says.
The statement details that soft wheat production is forecasted to make up 29.8 million quintals of the overall volume of cereal production this year, while durum wheat is set to reach 11.8 million quintals, and barley 13.5 million quintals.
From Ukraine, Ukraine’s Ag Ministry reported April grain exports were 3.62Mt, with cumulative 2022-23 grain exports at 41.6Mt, down from 45.9Mt over the same period last year.
Wheat ytd export was 14.4Mt, corn 24.4Mt and barley 2.5Mt.
From Russia, “there is still no progress in resolving financial and logistical problems in the shipment of Russian grain and fertilizers,” Andrey Ledenev, a minister-counsellor at the Russian Embassy in the United States, said in a post published on the embassy’s Telegram messaging app.
“The import of agricultural equipment to Russia is difficult.”
Ledenev also reiterated Moscow’s long lasting accusations that deadlock is a direct result of the “sanction strategy” of the United States and its western allies against Moscow, which include restrictions on payments, logistics and insurance industries.
From Kazakhstan, for 8 months of 2022/23 MY (September-March), Kazakhstan exported 4.68 mln tonnes of wheat, which is 11.4% higher year-on-year (4.2 mln tonnes), APK-Inform reports with reference to official statistics.
The top three buyers of Kazakh wheat includes Uzbekistan (2.34 mln tonnes), Tajikistan (676.3 thsd tonnes), and Afghanistan (653.6 thsd tonnes).
At the same time, there is a slowdown in wheat exports pace from Kazakhstan in February-March.
In March 2023, Kazakhstan exported 612.2 thsd tonne of wheat to the foreign markets (760 thsd tonnes y-o-y), and in February – 639.4 thsd tonnes (66 thsd tonnes y-o-y).
Interestingly, in the current season, Iran significantly reduced purchases of Kazakh grain – in 8 months of 2022/23 MY, wheat exports in this direction amounted to only 127.54 thsd tonnes compared to 420.49 thsd tonnes y-o-y.
It should be noted that due to logistical problems on the railway, Kazakh exporters are unable to export about 700 thsd tonnes of grain from the country every month, which is equivalent to loss of export earnings of over 82 bln tenge.
From Australia, ASX wheat was unchanged to start the week as local values followed offshore sentiment.
Sowing is progressing well for the most part but there are some delays through central west and northern regions that are still waiting on rain.
The 8-day forecast is looking dry for Qld and northern NSW with less than 5mm on the cards for most of southern NSW except for the southeast.
Vic is looking at a wet week with 10-50mm expected, although the northwest corner is looking at less than 10mm.
SA is looking at variable totals of between 5-25mm and WA is in for the same with Central and Midlands looking at the higher end of this range.
Parts of central and northern NSW and QLD are now quite dry, having missed out on most autumn rainfall to date and, although it is not yet panic stations, they need some decent falls in the next couple of weeks to join up the moisture profile to get their winter cropping programs underway.
On the international trade scene, Egypt’s General Authority For Supply Commodities (GASC) announced on Monday that it has set an international tender for wheat with a deadline on May 2.
Offers are to be submitted on a free on board basis with shipment dates scheduled June 10-30 and/or July 1-20.
Payment will be managed at the sight of the International Trade Finance Corporation, GASC said.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
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