Good morning, Farmer Family …
US farm markets were mixed but mostly weaker on Tuesday.
Corn took the largest hit, fading 1.97% lower.
Soybeans lost 1.36%, with soymeal falling 1.85% lower, and soyoil closing down 1.14%.
Wheat prices have been divergent, as Chicago SRW contracts was down 1.61%, while Kansas City HRW rallied 1.42% and MGEX spring wheat prices rose 0.47% higher by the close.
Corn and soybean prices dropped, under pressure from a fast pace of planting across key production areas of the U.S. Midwest and an outlook for good growing weather once seeding is finished.
Wet weather is likely later this week, with some parts of the Dakotas, Nebraska, Kansas, Missouri and Arkansas likely to gather another 1” or more between Wednesday and Saturday, according to the NOAA.
The agency’s new 8-to-14-day outlook predicts a return to seasonally dry conditions for the Corn Belt between May 16 and May 22, with colder-than-normal conditions likely for the Ohio River Valley and Great Lakes region next week.
Soft red winter wheat prices also weakened due to good field conditions in the eastern U.S. Midwest where much of that crop is grown.
However, hard red winter wheat contracts in Kansas City extended their gains due to dry soil limiting harvest potential there in the U.S. Plains, while MGEX spring wheat contracts posted gains, as the market was underpinned by planting delays in North Dakota.
Meantime, the USDA announced a private corn export sale cancelation in the afternoon.
Notably, China removed 272k MT of corn bookings, shrinking US old crop commitments.
Also, Chinese import data from April indicated 7.26 MMT of soybean imports during the month.
That was down 9.8% vs. the same month in 2022.
Some sources attribute the slowdown to a change in Chinese port procedures that is creating delays in unloading and movement from the ports.
Total imports YTD are still 6.8% larger than in 2022 at 30.29 MMT.
A Stats Canada report from Tuesday afternoon showed all wheat stocks as of March 31 at 13.3 MMT, 18.2% larger than last year.
The trade was expecting stockpiles of 14 MMT.
On the geopolitcal side, the United Nations said inspections resumed of outbound vessels on Tuesday under the deal allowing the safe Black Sea export of Ukraine grain.
In this context, corn basis bids firmed 3 to 10 cents higher at two interior river terminals and improved 5 cents at an Iowa ethanol plant while holding steady elsewhere across the central U.S..
Soybean basis bids trended 10 cents lower at an Illinois river terminal while holding steady elsewhere across the central U.S..
Commodity funds were net sellers of CBOT corn, soybeans, wheat, soymeal and soyoil futures contracts.
On this morning, Chicago soybean and corn prices eased, and wheat also edged lower.
Notably, the most-active soybean contract on the Chicago Board of Trade (CBOT) fell 0.44% to $14.08 a bushel, as of 08:54 GMT and corn lost 0.47% to o $5.82 a bushel.
Wheat faded 0.66% to $6.39-1/5 a bushel.
In energy markets, oil prices ticked up on Tuesday, reversing a more than 2% drop earlier in the session, as markets weighed U.S. government’s plans to refill the nation’s emergency oil reserve and anticipated higher seasonal demand.
Thus, Brent crude settled 43 cents, or 0.6% higher, at $77.44 a barrel, while U.S. West Texas Intermediate (WTI) crude closed up 55 cents, or 0.8%, at $73.71.
Both benchmarks had fallen about 2.5% earlier in the session after two days of gains.
Energy Secretary Jennifer Granholm has said the administration could start buying back crude oil for the Strategic Petroleum Reserve late this year after President Joe Biden last year directed the largest sale yet from the stockpile.
Supporting prices, a report from the Energy Information Administration (EIA) pointing to higher seasonal demand and lower-than-expected output.
Notably, the EIA forecasted U.S. crude production will rise 5.1% to 12.53 million barrels per (bpd) day this year, but lowered its output estimate for this year and next from previous forecasts.
As a result, it cut its estimate for Brent and WTI prices by more than 7% each to $78.65 and $73.62 a barrel, respectively.
Also, crude prices were supported as wildfires prompted oil producers in the Canadian province of Alberta to shut in at least 319,000 barrels of oil equivalent per day, more than 3.7% of Canada’s output.
Meantime, U.S. crude oil inventories rose by about 3.6 million barrels in the week ended May 5, according to market sources citing American Petroleum Institute figures on Tuesday, compared with analysts’ estimate for a drawdown of about 917,000 barrels.
Also, data showed China’s imports contracted in April, while exports rose at a slower pace, implying weak domestic demand.
On this morning, oil prices dipped, stalling a three-day rally, as the unexpected rise in U.S. oil inventories sparked demand concerns.
Notably, Brent crude dropped 52 cents, or 0.7%, to $76.92 a barrel at 04:55 GMT, while U.S. West Texas Intermediate (WTI) crude fell 49 cents, also 0.7%, to $73.22.
The market is also awaiting the monthly oil report from the OPEC due on Thursday for clues to whether the group and its allies will need to cut output again to prop up prices.
Media reported that Russia’s Energy Ministry said the nation’s oil output reduction almost reached targeted levels in April.
Saudi Arabia, which pledged to cut production by 500,000 bpd from May, has informed buyers in Asia that it will supply full crude oil volumes requested for June.
Some Chinese refiners may have asked for less supply, sources said, which would help the world’s top oil exporter meet its lower output target.
In Alberta wildfires eased on Tuesday thanks to cooler weather.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, rose on Tuesday, aided by higher rates for capesize and supramax vessel segments.
The overall index, indeed, gained 40 points, or 2.6%, to its highest in eight weeks at 1,598.
Notably, the capesize index was up 125 points, or 5.2%, at 2,509 — its highest since Dec. 22.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes carrying commodities such as iron ore and coal, increased $1,039 to $20,807.
The panamax index slipped 7 points to 1,494 — its lowest since Feb. 28.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, lost $62 to $13,450.
Among smaller vessels, the supramax index snapped its seven-session losing streak; added 1 point at 1,097.
In equity markets, US stock indexes closed moderately lower ahead of U.S. inflation news scheduled for this morning.
The debt ceiling stalemate also undercutted investor sentiment and weighed on stocks.
Also, global growth concerns were negative for stocks after Chinese Apr imports plunged -7.9% y/y, weaker than expectations of -0.1% y/y and a sign that China’s recovery is weaker than expected, which weighed on global growth prospects.
Global bond yields were mixed.
The 10-year T-note yield rose +2.1 bp to 3.528%, and the two-year Treasury yield, which moves more on expectations for the Fed, rose to 4.02% from 4.00%.
The 10-year German bund yield rose +3.1 bp to 2.350%, and the UK 10-year gilt yield finished the day at a 2-1/2 week high of 3.855%.
On the bearish side for stocks, PayPal Holdings closed down more than -10%.
Also, Waters closed down more than -6%.
In addition, International Flavors & Fragrances closed down more than -7%.
As a result, on Wall Street, the S&P 500 fell 18.95 points, or 0.5%, to 4,119.17.
The Dow Jones Industrial Average lost 56.88, or 0.2%, to 33,561.81, while the Nasdaq composite fell 77.37, or 0.6%, to 12,179.55.
On this morning, Asian shares declined in muted trading as investors awaiting the upcoming report on inflation in the United States.
Notably, Japan’s benchmark Nikkei 225 lost 0.4% in afternoon trading to 29,136.92.
Australia’s S&P/ASX 200 inched down 0.1% to 7,255.70.
South Korea’s Kospi slipped 0.9% to 2,488.42.
Hong Kong’s Hang Seng dipped 0.4% to 19,783.56, while the Shanghai Composite shed 1.4% to 3,309.98.
In currency trading, the dollar index rose by +0.24%, with the dollar posting moderate gains as concern about the ongoing U.S. debt ceiling turmoil boosted safe-haven demand for the dollar.
Also, hawkish comments from New York Fed President Williams and Fed Governor Jefferson lifted bond yields and were bullish for the dollar.
In addition, weakness in stocks sparked liquidity demand for the dollar.
Notably, the EUR/USD fell by -0.32% and posted a 2-week low.
The USD/JPY rose by +0.07%.
Tuesday’s economic news was bearish for the yen after Japan’s Mar household spending unexpectedly fell -1.9% y/y, weaker than expectations of +0.8% y/y and the biggest decline in a year.
Also, Mar labor cash earnings rose +0.8% y/y, weaker than expectations of +1.0% y/y.
On this morning, the U.S. dollar stood unchanged at 135.18 Japanese yen.
The euro cost $1.0975, inching up from $1.0967.
Going back to analyze other ag markets…
From Canada, Prime Minister of Canada, Justin Trudeau, promised to support Canadian agricultural producers if China were to retaliate economically to the expulsion of a Chinese diplomat.
Mr Trudeau said, while hoping economic retaliation would not happen, the government had always been there to assist businesses and producers, whether pork or canola.
Meantime, Statistics Canada released their Stocks of Principal Field Crops as at March 31, 2023, with stocks of wheat, canola, barley, oats and soybeans up from one year ago.
However, the agency cautioned that overall stocks of grain have increased year over year due to the significant increase in 2022 production when compared to the 2021 drought year.
Going inside numbers, all-wheat stocks in Canada were estimated up 18.2% from one year ago to 13.261 million metric tons (mmt), while is 18.8% below the five-year average.
The disappearance calculated for the Dec. 31-March 31 period is calculated at 9.121 mmt, which is a record for this three-month period or quarter.
Wheat stocks (excluding durum) are estimated at 11.455 mmt, up 22.9% from last year while 13.2% below the five-year average.
However, this is the second-lowest stocks reported in 15 years, or since 2008.
It also is interesting to note that commercial stocks of wheat fell by a modest 0.3% year over year, while farm stocks increased 35% to 8.234 mmt.
December-March disappearance of wheat is calculated at 7.230 mmt (Statistics Canada’s Dec 31 stocks — March 31 stocks), which is up 23.3% from the five-year average, which is a record disappearance for this quarter.
Note that the Dec. 31, 2022, stocks of wheat were revised 86,000 metric tons higher this month.
Durum stocks are estimated at 1,806 mmt, down 4.8% from one year ago and 42.4% below the five-year average for this date.
Farm stocks increased by 6.6% year over year while commercial stocks fell by 18.7% to 697,000 metric tons, the lowest reported in five years.
Disappearance of durum over the Dec-March quarter is calculated at 1.891 mmt, which is 41.5% higher than the five-year average.
Canola stocks as of March 31 were reported at 5.948 mmt, up 15.3% from one year ago while 32.1% below the five-year average for this date.
Commercial stocks are reported to fall by 26.2% to 1.283 mmt, the lowest reported for this date in 13 years.
At the same time, farm stocks swelled by 36% to 4.665 mmt, although this remains 35% below the five-year average for this date.
Dec. 31 canola stocks were revised 309,000 metric tons (mt) higher in this report, while the Dec-March disappearance is seen at 5.717 mmt, up 20.5% from the five-year average.
Barley stocks are estimated at 2.667 mmt, up 43.9% from last year and 7.8% below the five-year average.
Stocks of barley on farm and in commercial storage increased from the same date in 2022.
Statistics Canada tables show feed consumption of barley at 4.955 mmt so far this crop year, up 1.3 mmt from the same period last crop year due to increased supplies and feed demand while compares to the five-year average of 4.824 mmt.
Oat stocks are estimated at 2.634 mmt, up 114.5% from one year ago and 53.8% higher than the five-year average.
While Statistics Canada commentary indicates this is a record level of stocks for this date, their tables show March 2009 stocks at 2.720 mmt.
Commercial stocks have increased by a modest 65,000 mt year over year, while farm stocks are estimated to have swelled by 1.341 mmt or 145%.
Feed use is estimated at 1.169 mmt over the August-March period, which compares to the five-year average of 810,560 mt.
Lentil stocks were reported at 900,000 mt, down 13.6% from one year ago and 40% below the five-year average and the lowest March 31 stocks reported in seven years.
Dry pea stocks of 1.471 mmt are up 22.4% from one year ago and 19.4% below the five-year average.
Canada’s corn stocks fell 2.2% from March 31 to 9.075 mmt due to an increase in farm stocks.
This is up 6.8% from the five-year average for this date.
Industrial use is reported at 3.415 mmt from September through March, a record level of industrial demand, while feed use of corn has fallen sharply to 4.973 mmt from 7.243 mmt reported in the same period of 2022 due to lower imports of U.S. corn that was fed in western Canada.
Soybean stocks increased by 6.1% to 1.995 mmt as of March 31, while 22.8% below the five-year average for this date.
This inventory is seen close to evenly split between farm storage and commercial storage, with a significant 12.2% increase noted for farm stocks.
Dec. 31, 2022, stocks were revised 175,000 mt lower in this report, while the Dec-March disappearance of 1.484 mmt is up 13.7% from the five-year average.
Meantime, the first prairie crop report of the season was released in Alberta on May 5, with estimates as of the May 2 cut-off.
The government has estimated 2.5% of major crops (spring wheat, barley, oats, canola and dry peas) were planted as of May 2, which compares to the five-year average for this period of 11% and the 10-year average of 11.6%.
This is the slowest start since May 2018, or five years, when only 0.4% of the crop was estimated as seeded as of May 1.
Notably, progress ranges from the Southern Region, where the 6.6% of major crops planted is 25.3 percentage points behind the five-year average pace for the region, to the Northwest Region, where the 1.1% of major crops seeded as of May 2 is 0.3 percentage points ahead of the average pace for the region for this week.
From South America, soybean yields in central and northeastern Brazil have been above expectations and more than compensated for disappointing results in far southern areas.
As a result, crop consultant Michael Cordonnier raised his Brazilian soybean crop estimate 1Mt to 154Mt.
Dr Cordonnier also raised his Brazilian corn crop estimate 1Mt to 124Mt, despite some safrinha corn areas starting to turn drier.
Meantime, Brazil’s Anec estimated that the country’s corn exports will reach 320.040t in May, which is slightly below it’s prior forecast from a week ago.
Anec also estimated that the country’s soybean exports will reach 15,35 MMT in May, which is moderately above its prior projection last week.
They also increased estimates for Brazilian soymeal exports this month, with a new forecast of 2.37 million metric tons.
Meantime, the sharp drop in corn prices in Brazil should provide some relief for the poultry and pork industries this year, the president of meattrade group ABPA said on Tuesday.
In Campinas, Sao Paulo state, corn prices indeed are close to 60 reais per bag, down 28% this year and well below the highs of more than 100 reais per bag in 2022.
In Europe, very sharp decline in wheat prices, with corn following suit, while rapeseed found support in canola prices as stocks in Canada fell below expectations.
Optimism on Ukrainian exports returned.
Russia has resumed inspections of ships in the Black Sea basin, but Ukraine has proven this season its ability to export overland, despite the geopolitical context.
Polish farmers still has a lot of grain stuck in storage.
Also other eastern European countries have been hit by a perfect storm, after a jump in exports from Brazil and Russia helped to drive global grain prices lower while the EU opened its borders to tariff-free Ukrainian grain imports in a show of solidarity.
In Poland, millers and livestock producers imported a flood of grains from Ukraine.
After opening its borders to Ukrainian grain, Poland imported 2.08 million tonnes of maize and 579,315 tonnes of wheat last year, up from just 6,269 tonnes of maize and 3,033 tonnes of wheat in 2021.
The European Commission agreed to block sales of Ukrainian wheat, maize, rapeseed and sunflower seed within Hungary, Slovakia, Bulgaria, Poland and Romania from May 2 until June 5.
But the issue is unlikely to go away.
Also, if the grain corridor due to expire this month were to collapse, Ukrainian farmers would have little option but to send all their grain exports through eastern Europe.
Meantime, the price paid for Ukraine’s grain which was in line with European market levels, have fallen well below the prices sought by many farmers in eastern Europe.
Ukraine’s farmers, indeed, said they receive far less than the market price, as about 100 euros a tonne is deducted to cover transport to eastern Europe, far higher than the costs of shipping their grain out of Black Sea ports.
In Romania, farmers complain that local mills and processors were not interested in their wheat and maize, saying trucks of Ukrainian grain were lining up at their gates, despite the cost of logistics up 70% from before the war.
Since the conflict, began about 17 million tonnes of major agricultural products have left Ukraine by road, railways as well as barges on the Danube river, data issued by Ukraine’s farm ministry shows.
All the grain, representing about 38% of Ukraine’s exports, went into the eastern European Union as Ukraine’s borders with Russia and Belarus have been closed.
From Ukraine, according to the agriculture minister, Ukraine has alternative ways of transporting grain and would not see the non-renewal of the Black Sea grain deal as an “apocalyptic scenario”.
“Ukrainian farmers and Ukrainian traders have shown that they can do a lot, and a lot of (export) routes can be laid,” Agriculture Minister Mykola Solsky was quoted by his ministry as saying late on Monday.
“There are several scenarios that will be involved in the worst-case scenarios,” he said, giving no more details.
From Russia, in the reporting week, from 04/28/23 to 05/05/23, Russian indicative prices (FOB FM) were:
wheat – decreased to $279.20/t (-0.71%);
barley – increased to $222.00/t (+4.03%);
corn – increased to $217.40/t (+1.02%);
The Russian wheat index, CPT Novorossiysk, rose to 13,305 rubles/t (0.45%).
Prices for Russian wheat (protein 12.5%, FOB FM) for delivery JUN 23 fell to $275/t (-$0.5/t), corn fell to $235/t (-$0.5/t).
Domestic Russian purchase prices for grade 4 wheat, protein 12.5%, at port elevators of the Black and Azov Seas for the reporting period were:
Azov – 11900 (-100) rub/t;
Novorossiysk – 13300 (0) rub/t;
Rostov-on-Don – 11900 (0) rub./t;
Taganrog – 11700 (0) rub./t;
Taman – 12800 (0) rub/t.
Grain prices in several regions of the Russian Federation began to grow due to a reduction in supply, ProZerno analysts report.
However, stocks of grain and legumes, including wheat, in agricultural organizations remain record-breaking.
In a number of regions of Russia, the sowing campaign is shifting due to cold weather.
From May 4, 2023, customs duties for wheat and meslin will decrease to 5573.2 rubles/t (-105.7 / -1.86%), for barley they will decrease to 2195.4 rubles/t (-300.6 / -12.04%), for corn will decrease to 3,000.0 rubles per ton (-215.8 / -6.71%).
Meantime, a high-level meeting on the Black Sea Grain Initiative will take place in Istanbul on 10-11 May according to a statement attributed to Russia’s Deputy Foreign Minister.
Officials from Russia, Ukraine, Turkey and the United Nations are expected to attend.
The Kremlin said on Wednesday that Russia’s stance on the Black Sea grain deal – that its own interests must be taken into account in talks aimed at extending it beyond May 18 – was understood by all relevant parties.
From Australia, local markets remained subdued.
Eastern states wheat and barley mostly attracted little buying interest. South Australian Adelaide zone wheat at around $360/t port traded for APW1 and ASW1 grades.
Canola bids current crop eased yesterday.
New crop interest gained some traction, with some wheat parcels getting priced, however growers remained focused on getting the crop in the ground.
According to ABS data Australia exported just over 600kt of canola in March up slightly from the 592kt exported in February.
The top three destinations were the EU (336kt) the UAE (170kt) and Mexico (48kt).
Australia also exported 777,823 tonnes of barley and 255,066t of sorghum in March, according to the latest data from the Australian Bureau of Statistics.
Feed barley shipments for the month totaled 636,233t, down 30 percent from the 911,105t exported in February.
The three largest markets for March-shipped feed barley were Saudi Arabia on 285,171t, Vietnam on 82,358t and The Philippines on 60,036t.
March malting barley exports at 141,590t more than tripled from the February figure of 41,278t, with Vietnam on 32,615t followed by Mexico on 31,733t and Japan on 21,000t the largest markets.
Sorghum shipments surged to reflect new-crop availability, with the March total of 255,066t being almost five times the 53,117t exported in February.
China on 232,996t accounted for 91pc of March sorghum exports, with Japan on 14,360t and Taiwan on 4454t the second and third-biggest markets respectively for the month.
On the international trade scene, Taiwan’s MFIG purchasing group bought about 65,000 tonnes of animal feed corn to expected to be sourced from Brazil in an international tender on Wednesday.
It was believed to have been sold by trading house CHS.
Egypt’s state grains buyer, the General Authority for Supply Commodities, said on Tuesday it was seeking vegetable oils in an international purchasing tender for arrival June 25 – July 10.
GASC said traders should submit bids for payment at sight and 180-day letters of credit, and it would choose between them.
The deadline for offers is May 11.
Egypt’s state grains buyer, also said on Tuesday it set a tender for local vegetable oils, seeking at least 1,000 tonnes of soyoil and 500 tonnes of sunflower oil for delivery July 1-20.
The deadline for offers is May 11.
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 125,974 tonnes of food-quality wheat from the United States, Canada and Australia in a regular tender that will close on May 11.
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said on Wednesday that it will seek 60,000 tonnes of feed wheat and 20,000 tonnes of feed barley to be loaded by Aug. 31 and arrive in Japan by Oct. 26, via a simultaneous buy and sell (SBS) auction that will be held on May 17.
Algerian state agency ONAB is believed to have rejected all offers and made no purchase in an international tender for up to 140,000 tonnes of animal feed corn, and an international tender 70,000 tonnes of soymeal which closed last week.
Jordan’s state grains buyer issued an international tender to purchase up to 120,000 tonnes of animal feed barley.
The deadline for submission of price offers in the tender is May 10.
Algeria’s state grains agency OAIC has issued an international tender to buy soft milling wheat to be sourced from optional origins.
The tender sought a nominal 50,000 tonnes but Algeria often buys considerably more in its tenders than the nominal volume sought.
The deadline for submission of price offers in the tender is May 10, with offers having to remain valid until May 11.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
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