Good morning, Farmer Family …
US farm markets were mixed on Wednesday.
Corn prices bounced back by 1.58%.
Soybean prices continued to slide lower, falling by 0.72%, with soymeal moving modestly higher, up 0.12%, while soyoil tumbled by 1.87% lower.
Wheat prices were mixed as Chicago SRW dropped 0.35%, Kansas City HRW slid 012%, while MGEX spring wheat lifted 0.21%.
Corn prices rose on signs of strength in the cash market, due to a slow farmer selling in recent months.
Also, ethanol production for the week ending May 5 eased slightly, with a daily average of 965,000 barrels, per the latest data from the U.S. Energy Information Administration, out earlier today.
However, it was also the third consecutive week that volume failed to reach the 1-million-barrel-per-day benchmark.
Ethanol stocks, meantime, faded to a 22-week low.
Notably, ethanol stockpiles were 23.291 million barrels, down by 72k to a new low for the year.
Soybean, in contrast, ended lower as the market faced pressure from weakness in the crude oil market, as well as a fast pace of planting in the U.S. Midwest.
The wheat market was mixed but mostly lower, with good weather for crop development in the eastern U.S. Midwest pressuring the benchmark Chicago Board of Trade soft red winter wheat contracts.
Meanwhile, adverse growing conditions in the southern U.S. Plainslimited the declines in K.C. hard red winter wheat.
Also, wet soils in the northern U.S. plains that slowed farmers in their seeding progress supported MGEX spring wheat prices.
In this context, corn basis bids were steady to mixed across the central U.S. after moving as much as 10 cents higher at an Iowa river terminal and as much as 15 cents lower at an Iowa processor.
Soybean basis bids held steady across the central U.S..
Commodity funds were net sellers of CBOT soybean, wheat and soyoil futures contracts.
The funds were net buyers of CBOT corn and soymeal futures.
On this morning, Chicago soybean prices lost more ground, with prices hitting a one-week low.
Wheat slid for a fourth session in a row.
Notably, the most-active soybean contract on the Chicago Board of Trade (CBOT) fell 0.4% to $13.98-3/4 a bushel, as of 02:30 GMT, after hitting its lowest since May 3 at $13.97 a bushel.
Wheat dropped 0.4% to $6.39 a bushel and corn lost 0.5% to $5.91-1/4 a bushel.
From South America, ANEC Brazil has revised up its May soybean export forecast by 3.3Mt to 15.4M versus 10.7Mt in May 2022 and soymeal exports were lifted by 200,000t to 2.4Mt against 1.1Mt in May 2022.
Argentina’s Rosario Grains exchange cut its forecast for the 2022/2023 soybean harvest by 6.5% to 21.5 million tonnes.
In Europe, scientists at the Copernicus Climate Change Service see a probability of more than 60 percent that temperatures across Spain, France and Italy will be well above average from June to August.
Much of Europe is in store for sweltering summer temperatures well above historical norms, posing risks for crops and energy demand.
In this context, Strategie Grains has raised its forecast for 2023/24 soft wheat production in the European Union on favourable conditions in most of the bloc but reduced its outlook for barley and maize crops, partly due to drought in Spain.
Notably, the consultancy said it now expects EU soft wheat output of 130.0 million tonnes in the 2023/24 season, up from 128.9 million forecast in April and nearly 4% above 2022/23 production.
Their forecast for the next EU barley harvest now are at 49.9 million tonnes, down from 51.6 million last month, and below 2022/23 production of 51.2 million.
The consultancy also reduced its maize 2023/24 production outlook to 62.1 million tonnes from 62.7 million seen in March, though that would be 19% above last year’s drought-hit level.
Meantime, soft wheat exports from the European Union in the 2022/23 season that started last July reached 26.49 million tonnes by May 7, up 11% compared with 23.87 million a year earlier, data published by the European Commission showed on Wednesday.
According to the Commission, 2022-23 all-wheat exports at 27.7Mt is up 9pc from 2021-22.
Barley exports at 8.1Mt are down 13pc from the previous year.
Soybean imports at 10.7Mt are down 12pc, canola at 6.7Mt is up 46pc, and sunflowerseed at 2.1Mt is nearly four times the amount imported in the previous year.
From the Black Sea basin, talks over the export deal take centre stage.
Turkish Foreign Minister Mevlut Cavusoglu said on Wednesday he thought the Ukraine Black Sea grain deal could be extended for at least two more months, as officials from the parties involved held the first day of talks on an extension in Istanbul.
Cavusoglu was speaking to reporters on his return from a trip to Moscow.
Meantime, export prices for Russian wheat weakened amid continued high export volumes, uncertainty surrounding the Black Sea grain deal and in anticipation of a new crop.
Notably, prices for Russian wheat with 12.5% protein content, delivered free on board (FOB) from the Black Sea in June, were $254 a tonne, down $11 from last week, the IKAR agriculture consultancy said.
Sovecon estimates total Russian wheat exports in April at 4.3 million tonnes, compared with a record for this month of 4.9 million tonnes.
Russia exported 2.4 million tonnes in April 2022, the average for the month being 2.7 million tonnes.
The first estimate of wheat exports in May is 3.6-4.1 million tonnes versus 1.2 million tonnes a year ago and 1.5 million tonnes on average.
Spring wheat is seeded at a record pace for recent years amid generally favorable weather conditions and warm weather at the start of the campaign, Sovecon noted.
As of May 4, farmers seeded 10.5 million hectares of grains compared to 6.1 million hectares in 2022, including 3.5 million hectares of spring wheat (1.3 million hectares in 2022) and 4.0 million hectares of spring barley (2.5 million hectares).
Refinitiv Commodities Research has kept its 2023-24 Russian wheat-production forecast unchanged, at 84.2 million tonnes (Mt), down from 104.2Mt in 2022-23.
Latest satellite imagery confirms good early crop growth across winter wheat-growing areas.
Overall weather prospects are deemed favourable, with weather forecasts suggesting near-normal precipitation for the next week, with surpluses expected in parts of North Caucasia, Volga and Siberia.
From the Middle Kingdom, China will stabilise and diversify its soybean imports, an official with the state’s grain reserve bureau said on Thursday, as the country continues to promote higher domestic production of the crop.
For imports, China will “develop new soybean source markets while stabilising traditional soybean markets”.
To help reduce its heavy reliance on soybean imports, the country issued a three-year action plan in April to reduce soymeal use in animal feed.
China is also expecting a good wheat crop this year.
From South East Asia, India’s Meteorological Department reports that as at May 9, cumulative rainfall since March 1 is estimated to be 29pc above the long-term average, with excessive or normal rainfall at 75pc of monitoring stations.
From Australia, local markets eased a fraction on both old-crop and new-crop bids over the trading day, but offers continued to come to the table and found a way to meet the market.
ASW wheat in South Australia was again active on the Clear Grain Exchange platform, trading at A$362/t Port, while canola in the Albany zone traded at $720/t FIS, and is continuing to trade at large premiums of more than $100/t over east coast values.
Growers continue to power ahead with seeding, and some areas of Victoria and New South Wales are now more than halfway through their programs.
The 8-day forecast looks relatively dry, with less than 10mm on the cards.
Parts of the Queensland’s Darling Downs are showing 10-15mm for the next eight days.
On the international trade scene, Algeria’s state grains agency OAIC has reportedly purchased 570,000t of milling wheat in its latest tender at US$276-$276.50/t C&F from Russia, Romania and France.
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 125,974 tonnes of food-quality wheat from the United States, Canada and Australia in a regular tender that closed on Thursday.
South Korea’s Major Feedmill Group (MFG) has issued an international tender to purchase up to 140,000 tonnes of animal feed corn to be sourced from optional origins.
The deadline for submission of price offers in the tender is also Thursday, May 11.
The corn is sought for arrival in South Korea in two consignments of up to 70,000 tonnes around Oct. 4 and Oct. 12, they said. But offers were also being sought for alternative arrival periods around Sept. 5 and Nov. 10.
In energy markets, oil prices fell by more than a dollar a barrel, ending a three-day rally, as economic data suggested that the U.S. Federal Reserve might hike interest rates further.
Notably, Brent crude dropped $1.03, or 1.3%, to settle at $76.41 a barrel while U.S. West Texas Intermediate crude (WTI) fell $1.15, or 1.6%, to $72.56 a barrel.
U.S. consumer prices rose in April, potentially raising the likelihood that the Fed will maintain higher interest rates.
U.S. crude oil inventories rose by about 3 million barrels last week due to another release from national reserves and a drop in exports, the Energy Information Administration said.
The government report confirmed industry data released late Tuesday that had reported an unexpected build, which weighed on prices for most of Wednesday’s session.
The surprising U.S. crude inventory build, along with lower crude imports and April’s softer export growth in China exacerbated worries about global oil demand.
The decline in crude prices was, however, limited by a surge in U.S. gasoline demand ahead of the summer driving season.
U.S. gasoline inventories, indeed, fell by 3.2 million barrels last week, much bigger than the 1.2 million-barrel draw forecast by analysts. Distillate stocks also declined, EIA data showed.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, rose on Wednesday, supported by increasing demand in the capesize and supramax vessel segments.
The overall index, indeed, gained 42 points, or 2.6%, at 1,640.
Notably, the capesize index was up 121 points, or 4.8%, at 2,630 — its highest since late December.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes carrying commodities such as iron ore and coal, increased $121 to $2,630.
The panamax index slipped 13 points to 1,481 — its lowest in over 10 weeks.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, lost $117 at $13,333.
Among smaller vessels, the supramax index was up 17 points at 1,114.
In equity markets, US stock indexes settled mixed, with the S&P 500 posting a 1-week high and the Nasdaq 100 climbing to an 8-1/2 month high.
The broader market rallied after the U.S. April CPI report showed that inflation moderated, which knocked bond yields lower, with the 10-year T-note yield falling -7.4 bp to 3.445%, and sparked a rally in mega-cap technology stocks.
Notably, the U.S. Apr CPI eased to a 2-year low of 4.9% y/y from 5.0% y/y in Mar, better than expectations of unchanged at 5.0% y/y.
Apr CPI ex-food and energy eased to 5.5% y/y from 5.6% y/y in Mar, right on expectations.
Meantime, the U.S. Apr monthly budget statement showed a surplus of $176.2 billion, lower than expectations of $235.0 billion.
U.S. debt ceiling talks Tuesday yielded little results.
In this context, the Dow Jones Industrial Average fell 30.48 points, or 0.09%, to 33,531.33; the S&P 500 gained 18.47 points, or 0.45%, at 4,137.64; and the Nasdaq Composite added 126.89 points, or 1.04%, at 12,306.44.
In currency trading, the dollar index fell by -0.13%, as the weaker-than-expected U.S. Apr CPI report knocked T-note yields lower and fueled speculation the Fed may be done with its rate-hike campaign.
Also, strength in EUR/USD weighed on the dollar as the euro rose on hawkish ECB comments.
Notably, the EUR/USD rose by +0.16%.
The USD/JPY fell by -0.67%, with the yen also had support on safe-haven demand from the impasse in the U.S. debt ceiling.
However, Wednesday’s economic news was bearish for the yen after the Japan Mar leading index CI fell -0.7 to 97.5, weaker than expectations of 97.9.
On this morning, the U.S. dollar was little changed at 134.72 Japanese yen, up slightly from 134.28 yen.
The euro cost $1.0928, down from $1.0984.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
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