Good afternoon Farmer Family …
US farm markets sold off, on Thursday.
A broad commodity selloff that left stocks and energy markets lower, has dragged down also agricultural commodities.
Wheat prices suffered the most blow, with Chicago down 3.16%, Kansas City HRW falling 2.87%, and MGEX spring wheat, 2.5% lower.
Corn also faced double-digit drops, down 2.24%.
Soybeans were relatively spared, but still trended 0.46% lower.
The rest of the soy complex was mixed, as soyoil tumbled more than 3.4% lower, while soymeal managed modest gains of 0.25% at the bell.
Weekly Export Sales data showed 1.412 MMT of US corn was sold during the week that ended 3/2.
That was a 5-wk high and above the range of estimates.
The report showed 1.052 MMT of corn was exported, bringing the old crop shipment to 16.081 MMT.
The Buenos Aires grains exchange cut its estimate for 2022/23 Argentina corn production to 37.5 million tonnes, down from the 41 million tonnes previously expected.
Rosario Grains Exchange also reduced their estimate for Argentina corn output from 42.5 MMT to 35 MMT.
However, corn prices yesterday hit their lowest price since August, on expectations that the El Nino climate phenomenon could boost U.S. crops and concerns about rising interest rates.
La Nina has ended, the National Weather Service’s Climate Prediction Center said on Thursday, and El Niño could possibly form during summer 2023 and persist through the fall.
That could boost precipitation, brightening the outlook for U.S. crops.
Corn was also hit by traders closing long positions after the Federal Reserve said this week it would continue to increase interest rates.
Additionally, Brazil’s food supply and statistics agency Conab raised its corn crop estimate, lessening worries about Argentina’s drought-hit harvest.
Notably, CONAB raised their outlook for Brazilian corn production back up by 933k MT to 124.677 MMT, mostly to the 1st crop, as the 2nd crop estimate shrank from 96.3 to 95.6 MMT in their recent update.
Soybeans also closed lower.
The USDA reported a private export sale for 184k MT of old crop soybeans.
Brazil’s CONAB reduced their soybean production outlook by 1.4 MMT to 151.42 MMT in their monthly update.
Argentina soybean production for the 2022/2023 harvesting season is estimated at 29 million tonnes, down from the 33.5 million tonnes previously estimated, the Buenos Aires grains exchange said.
Rosario Grains Exchange also reduced their forecast for Argentina’s soy output again, from 34.5 MMT down to 27 million metric tonnes.
However, the weekly FAS report had 23,234 MT of soybean net cancelations for the week that ended 3/2.
New crop bookings were reported as 172,300 MT for the week.
That left new crop bookings at 1.48 MMT compared to last year’s 3.099 MMT forward sales as of 3/2.
For the products, USDA reported 319k MT of soymeal sold for 22/23 delivery and 110k for 23/24.
Soybean oil bookings were 7,312 MT for the week, a 3-wk high.
However, accumulated soy oil shipments were just 32,046 MT as of 3/2 – a 92% lag from last year’s pace.
Wheat hit a new 18-month low, also because poor demand for U.S. exports.
Weekly wheat export bookings, indeed, were 266,685 MT for the week that ended 3/2.
That was down 7% from the week prior and was 13% lower than the same week last season.
USDA had 377k MT shipped for a full year total of 14.288 MMT as of 3/2.
The U.S. wheat market has also been under pressure from Russian export competition and expectations that the Ukraine grain corridor will be extended beyond this month, increasing available global supplies.
But the Kremlin said on Thursday that “a lot of questions” remain over the Black Sea grain deal.
In this context, corn basis bids were largely steady across the central U.S., but did slide a penny lower at an Illinois river terminal.
Soybean basis bids were steady to weak, after eroding 2 to 15 cents lower across five Midwestern locations.
Commodity funds were net sellers of CBOT corn, wheat, soyoil and soybean futures contracts.
Funds were net buyers of CBOT soymeal futures.
On this morning, Chicago wheat lost more ground with the market poised for its fourth week of decline.
Corn and soybeans were also on track for a weekly drop, although losses were limited.
Notably, the most active wheat contract on the Chicago Board of Trade slid 0.2% to $6.64-1/2 a bushel, as of 02:50 GMT, corn was unchanged at $6.11-1/2 a bushel and soybeans lost 0.2% to $15.08-1/2 a bushel.
The wheat market is down for a fourth week, having lost more than 15% during the period; soybeans have given up less than 1% this week and corn is down more than 4%.
In energy markets, oil prices slid about 1% to a two-week low on Thursday.
Brent futures indeed fell $1.07, or 1.3%, to settle at $81.59 a barrel, their lowest close since Feb. 22.
U.S. West Texas Intermediate (WTI) crude fell 94 cents, or 1.2%, to settle at $75.72, their lowest close since Feb. 27.
That put both benchmarks down for a third day in a row with WTI down about 6% and Brent down about 5% during that time.
The number of Americans filing new claims for unemployment benefits increased by the most in five months last week.
Thus, crude futures and Wall Street stocks were both trading higher Thursday morning on thoughts the U.S. unemployment data could push the Fed to slow the pace of future interest rate hikes.
Also supporting oil prices earlier on Thursday, TotalEnergies was unable to make deliveries from its French refineries on Thursday because of continued strike action a day after data showed an unexpected decline in U.S. crude inventories last week.
However, the U.S. bond auction Thursday afternoon “spooked the market” and “was the catalyst for the risk off sentiment” for the oil and stock market declines.
Investors, indeed, worried that a jobs report on Friday could spur aggressive interest rate hikes by the Federal Reserve.
On the supply side, the United States was reported to have privately urged some commodity traders to shed concerns about shipping price-capped Russian oil in a bid to shore up supply.
In this context, oil fell for a fourth session on Friday, heading for its biggest weekly loss in five weeks.
Brent dipped 63 cents, or 0.8%, to $80.96 a barrel by 11:40 GMT. U.S. West Texas Intermediate crude (WTI) was down 69 cents, or 0.9%, at $75.03.
In ocean freight markets, the Baltic Exchange’s main sea freight index rose to an 11-week high on Thursday as rates across larger vessel segments extended gains, led by capesize vessel segment.
The overall index, indeed, was up 52 points, or about 4%, at 1,379.
Notably, the capesize index was on its 14th day of gains, rising 112 points, or 7.2%, to 1,662, also an 11-week high.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $932 at $13,783.
The panamax index was up 32 points, or 2%, at 1,624. It has gained in 12 out of 13 previous sessions.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, gained $292 at $14,617.
Among smaller vessels, the supramax index rose 19 points to 1,180.
In equity markets, on Wall Street, the S&P 500 fell 1.9% to 3,918.32, further eroding gains from earlier in the year.
The Dow Jones Industrial Average lost 1.7% to 32,254.86.
The Nasdaq composite sank 2.1% to 11,338.35.
SVB Financial Group lost 60% of its value after announcing plans to raise up to $1.75 billion to strengthen its financial position amid concerns about higher interest rates and the economy.
Bank of America, Citigroup and other big banks fell sharply.
General Motors fell 4.9%.
JPMorgan Chase fell 5.4%.
Yields on the two-year Treasury, which tends to track expectations for future Fed action, eased to 4.87% from about 5.05% just before the unemployment report’s release, but it had been hovering at its highest level in 16 years.
Traders expect the Fed to raise its benchmark lending rate by an unusually large margin of 0.5 percentage points at its March 22 meeting.
That is up from an expectation of 0.25 points.
Economists expect profits to fall through the first half of 2023.
On this morning, Asian stock markets followed Wall Street lower.
Shanghai, Tokyo, Hong Kong and Sydney declined. Oil prices edged lower.
Notably, the Shanghai Composite Index fell 0.9% to 3,246.16 and the Nikkei 225 in Tokyo tumbled 1.2% to 28,291.89.
The Hang Seng in Hong Kong slid 2.4% to 19,460.27.
The Kospi in Seoul gave up 1.3% to 2,388.58 and Sydney’s S&P-ASX 200 lost 1.8% to 7,181.00.
New Zealand and Southeast Asian markets declined.
In currency trading, the dollar gained to 136.57 yen from Thursday’s 136.17 yen.
The euro rose to $1.0592 from $1.0578.
Going back to analyzing the other agricultural markets …
From South America, according to Brazil’s grain exporters’ association (ANEC), Mar soybean exports are forecast at 14.7Mt (12.2Mt same month of previous year) and soymeal at 1.9Mt (1.4Mt).
Conab estimates that Brazilian corn exports could reach 48 MMT in the current marketing year.
The Rosario Grains Exchange has slashed production forecasts citing the impact of historic drought.
Soybean production forecast cut by 7.5Mt, to 27.0Mt (USDA 33Mt), down 45pc on initial production prospects, and potentially the worst production in 15 seasons.
Maize output cut by 7.5Mt, to 35Mt (USDA 40Mt), down 35pc on initial expectations, with the recent reduction largely incorporating reduced yields in later-sown fields.
“Argentina is suffering from a climate scenario without precedent in modern agriculture,” the exchange said, with the country facing the driest season in 60 years and the highest temperatures since the early 1900s.
In Europe, grain market fell again on Thursday.
The condition of soft wheat in the week to March 6 was unchanged from the previous week with 95% of crops rated to be in good or excellent condition, farm office FranceAgriMer said on Friday, confirming little damage from dry weather in the previous month.
The score was above the 92% registered a year earlier, it said in a cereal crop report.
Conditions for durum were also stable with 91% of the crop rated good or excellent.
For winter barley, however, the rating fell slightly to 93% good or excellent, from 94% last week.
French farmers had nearly finished sowing spring barley, with 98% of the expected area drilled by March 6, compared with 92% a week earlier and an average 62% over the previous five years, FranceAgriMer’s data showed.
Meantime, exporters are still monitoring the price differential between Russian and European origins.
The recent downward movement in Europe is making European origins more attractive.
Thus, the Saudi Arabian tender for the purchase of 480,000 t of soft wheat for delivery this summer will be closely monitored by market players.
As for rapeseed, prices recorded a further decline for a fourth consecutive session.
On Euronext, the May 2023 contract indeed is back below 500 €/t for the first time since September 2021, weakening the 2023 harvest prices in its wake.
Vegetable oil market has suffered a further decline, with rapeseed oil fell back below $1,000/t in Rotterdam and this has not yet led to a significant return of buyers.
Meantime, the port activity in France will continue to be disrupted as the strikes will carry on for 3 more days next week.
From the Black Sea basin, the Ukrainian grain harvest may fall 37pc to 34Mt in 2023 because of a smaller area and lower yield, Ukraine’s national academy of agricultural science said on Thursday.
The scientists also said a possibly larger area under oilseeds could cause a 13pc rise in Ukraine’s oilseed harvest, which they said could reach 19.3Mt.
Meantime, Ukraine and Romania have agreed to check the depth of canals off the Danube river which Kyiv uses to export agricultural goods to try to increase the flow of traffic, Ukraine’s restoration ministry said on Thursday.
Romania said last month it was concerned by signs that Ukraine was dredging the Bystre canal that slices through a shared, ecologically sensitive coastal region, and asked if it could check the site.
Ukraine has denied violating any agreements by deepening the canal and has said it is ready to show Romania, a member of the European Union and the NATO military alliance, the work it has carried out.
Kyiv said representatives of Ukraine, Romania and the European Commission, the EU executive, had held talks on coordinating efforts to improve and develop export capacities through the Ukrainian and Romanian channels of the Danube.
Ukraine said last month the draught of ships passing through the Bystre Canal had deepened to 6.5 metres from 3.9 metres.
From Russia, Russian and the UN officials will hold talks in Geneva on Monday on renewing the Black Sea Grain Initiative but Russian Foreign Minister Sergei Lavrov said yesterday that extending the deal was becoming “complicated,” as he claimed the agreement on Russian exports was not being respected.
“If the package is half fulfilled, then the issue of extension becomes quite complicated,” Lavrov said during a press conference in Moscow.
“Our Western colleagues, the United States and the European Union, pathetically declare that no sanctions apply to food and fertilisers, but this position is dishonest,” Lavrov said.
“In fact the sanctions prohibit Russian ships carrying grain and fertilisers from entering the corresponding ports, sanctions prohibit foreign ships from entering Russian ports to pick up this cargo,” he said.
On the supply side, around 5-6% of Russia’s winter crops suffered damage over the cold season, Russia’s Hydrometeorological Centre said on Friday.
Damaged crops will account for around 1 million hectares of the sown area.
However, speaking at an agricultural conference, senior researcher Lidia Tarasova said she expected a “good or satisfactory condition of crops in most areas” of Russia.
Crop damage was most likely in the North Caucasus, the Volga region and Siberia, she added.
Experts at the conference also said Russia could face a hotter-than-usual summer this year, although Russia’s agricultural industry would not face a repeat of 2010 when crops were devastated in a record-breaking heat wave.
The agency said it would present its next forecast on the condition of Russia’s winter crops in April.
Meantime, Russia’s agriculture ministry has set out its grain export taxes for March 15-21.
Notably, as of Mar 15, the export duty on wheat will decrease to 5,344.0 from 5,371.6 rubles per ton a week earlier.
Ditto for corn, moved down from 2,740.0 rubles of a week earlier, to 2,615.3 rubles per ton.
Also for barley the duty will be weaker for this period, decreasing to 3,016.6 rubles from 3,548.8 rubles per ton a week earlier.
This new duty rates will be in effect through Mar 21, inclusive.
The duties were calculated based on indicative prices: $300.1 per ton for wheat ($303.2 a week earlier), $241.1 for barley ($252.5), $233.5 for corn ($237.1).
From the Middle Kingdom, China will hold an auction on March 15 to sell up to 140,000t of its state imported wheat reserves.
The country has offered a series of similarly sized auctions in recent months to boost local supplies and push down high prices.
From South East Asia, Refinitiv Commodities Research cut its 2023-24 Indian wheat production forecast by 1.0Mt, to 107.6Mt, but production was anticipated to remain above the long-term average owing to increased plantings.
Hotter than normal temperature and dryness were expected to persist in Northern India for the near-term, adversely impacting yields in Punjab, Haryana, Uttar Pradesh, Madhya Pradesh and Rajasthan.
Cooler temperatures are forecast for later this month, which could minimise the risk from further heat damage.
From Australia, the rainfall forecast over the next four days is still looking like 25-100mm for most of southern Qld except for the southwest and 15-50mm for northeast NSW.
Rain would be very welcome after below to very much below average rainfall received over summer.
Meantime, local markets continued to track sideways.
Small quantities traded of the ASX eastern wheat May23 contract at $400/t and track Vic APW1 was trading around $393-395/t level.
Barley bids were also largely unchanged on the boards and canola was a touch softer.
On the international trade scene, South Korea’s Feed Leaders Committee (FLC) has issued a tender to purchase 52,000 to 69,000 tonnes of corn sourced from optional worldwide origins.
The deadline for submission of price offers in the tender is also Friday, March 10, and arrival in South Korea is sought around July 30.
Shipment is sought between June 26-July 15 if sourced from the U.S. Pacific Northwest coast, between June 6-June 25 if sourced from the U.S. Gulf or Europe, between June 1-June 20 if from South America, or between June 11-June 30 if from South Africa.
Jordan’s state grain buyer reportedly bought about 50,000t feed barley from optional origins, at $279.50/t c&f, Jun shipment.
Algeria’s OAIC reportedly bought about 200,000t durum from optional origin for April shipment, with traders estimating prices at $440-$449/t c&f.
Saudi Arabia’s General Food Security Authority seeks (10 Mar) 480,000t milling wheat from optional origins, Jul/Aug shipment.
That’s all, thank you.
We wish you a nice weekend.
Author: Sandro F. Puglisi
