Good morning, Farmer Family …
US farm markets, were mostly lower on Tuesday.
Corn prices were slashed by 1.9%.
Soybean tumbled by 2.62%, soymeal dropped 0.93%, while soyoil were cut by 4.51%.
Wheat prices were mixed, with Chicago SRW down 2.01%, Kansas City HRW easing 0.33%, while MGEX HRS managed gains of 0.63%.
USDA’s weekly Export Inspections report on Monday showed 1.174 MMT of corn was shipped during the week that ended 5/11.
That was up 20% from last week and 11% from the same week last year.
However, the season’s total shipment reached only 26.051 MMT.
That is down 50% from last year, and 57% of the new WASDE forecast.
As for soybean, the report showed 147,897 MT of soybeans were shipped during the week that ended 5/11.
That was down from 400k last week and from 800k MT during the same week last year.
USDA had the full season’s total at 48.005 MMT.
That is 88% of the WASDE forecast.
As for wheat, data showed 242,269 MT of wheat was exported during the week that ended 5/11.
That was 18k MT higher wk/wk but was down 107k MT from the same week last year.
The full season’s shipment reached 18.7 MMT, which is 89% of USDA’s forecast.
On the other hand, NOPA members processed 173.23 million bushels of soybeans during April.
Although it was a record crush for the April month, that was a 6.8% decrease month/month and was below the average trade estimate of 174.17 mbu.
Also, soy oil stocks were reported at 1.957b lbs, compared to 1.851b in March and 1.828 billion expected.
Meantime, recent rains in the Midwest and Plains that will set crops for high yield potential, along with record-breaking production in Brazil, pressured corn prices.
Per UDSA’s latest crop progress report out Monday, corn plantings have made big strides recently, rising from 49% a week ago to 65% as of May 14.
Soybean, also faced seasonal pressures of a fast-planted crop in the U.S., with plantings reaching 49% through May 14, and advancing 14% points for the week, coupled with a record-breaking harvest in Brazil.
Also for wheat, NASS data showed a fast pace in spring wheat planting progress, which advanced from 24% to 40% during the week that ended 5/14.
However, that was still 17% points behind the 5-yr average.
NASS also showed spring wheat emergence was 13%, compared to 23% on average.
For winter wheat, 49% was headed as of 5/14, compared to 48% on average.
Conditions were unchanged at 29% good/ex.
Meantime, the crop tour currently being carried out in Kansas in the USA confirms the lowest expected wheat yields since 2003 at 29.8 bushels per acre, with a range which varied from 16 to 48 bpa, showing both drought and hail damage and some freeze damage.
Crop scouts are bracing to see even more drought damage in southwestern Kansas on Wednesday.
The final results will be out later this week.
Separately, state wheat associations pegged Nebraska’s crop at 30 million bushels, up from about 26.2 million last year, and Colorado’s crop at 54 million bushels, up from about 35.8 million last year.
Additionally, for wheat, the market is keeping a close watch on negotiations to extend the Black Sea grain export deal, which is expiring on May 18.
The deal will most likely be renewed.
However, even with a veto from Russia, Ukrainian supplies would reach global markets by other ways, although at higher cost, some market sources say.
In this context, corn basis bids were steady to mixed across the central U.S., after trending as much as 2 cents higher at an Iowa processor and as much as 11 cents lower at an Illinois river terminal.
Soybean basis bids held steady across the central U.S..
Commodity funds were net sellers of CBOT soybean, corn, soyoil, wheat and soymeal futures contracts.
In energy markets, oil prices dipped, after rising more than 1% on Monday.
Notably, Brent crude futures settled 32 cents lower to $74.91 a barrel.
U.S. West Texas Intermediate crude edged down 25 cents to $70.86.
Weighing on prices on Tuesday was Chinese data showing industrial output and retail sales growth undershot forecasts in April, suggesting the world’s second-largest economy lost momentum at the start of the second quarter.
However, an 18.9% year-on-year rise in China’s oil refinery throughput in April to the second-highest level on record helped to keep a floor under crude prices.
Also, with refiners building stockpiles ahead of the summer travel season in the northern hemisphere, crude imports by China in May are moving towards 11 million barrels per day, versus 10.67 million bpd in April, Refinitiv Oil Research said.
Meantime, U.S. data showed that retail sales increased less than expected in April, pointing to consumers feeling the pinch from rising prices and interest rates.
However, the IEA raised its forecast for global oil demand this year by 200,000 bpd to a record 102 million bpd.
It said China’s recovery after the lifting of COVID-19 curbs had surpassed expectations, with demand reaching a record 16 million bpd in March.
In another bullish development, the U.S. Department of Energy on Monday said it would buy 3 million barrels of crude oil for delivery in August in a move to begin refilling the Strategic Petroleum Reserve.
However, U.S. crude oil inventories rose by about 3.6 million barrels last week, according to market sources citing American Petroleum Institute figures on Tuesday.
In ocean freight markets, the Baltic Exchange’s main sea freight index fell to its lowest in nearly four weeks on Tuesday, pressured by lower rates across vessel segments.
The overall index, indeed, was down 46 points, or 3.0%, at 1,476 points – its lowest since April 20.
Notably, the capesize index lost 90 points, or 3.8%, to a two-week low of 2,295 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, fell $744 to $19,033.
The panamax index was down 52 points, or 3.8%, at an 11-week low of 1,314 points, logging its 15th consecutive daily fall.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, slide $463 to $11,828.
Among smaller vessels, the supramax index fell seven points to 1,091 points.
In equity markets, US stock indexes settled mixed, but mostly lower, under pressure as little progress was seen in the meeting Tuesday afternoon among President Biden and bipartisan Congressional leaders, on US debit celing.
Mostly stronger-than-expected U.S. economic news Tuesday and hawkish Fed comments boosted bond yields, but were a negative factor for stocks.
Notably, U.S. Apr retail sales rose +0.4% m/m, weaker than expectations of +0.8% m/m.
However, Apr retail sales ex-autos rose +0.4% m/m, right on expectations.
U.S. Apr manufacturing production rose +1.0% m/m, stronger than expectations of +0.1% m/m.
The U.S. May NAHB housing market index unexpectedly rose +5 to a 10-month high of 50, stronger than expectations of no change at 45.
In this context, the 10-year T-note yield jumped to a 2-week high of 3.572% and finished up +3.9 bp at 3.541%.
The two-year Treasury yield, which moves more on expectations for action by the Federal Reserve, rose to 4.07% from 4.01%.
However, strength in chip stocks supported gains in the technology sector and kept the Nasdaq 100 in positive territory.
As a result, on Wall Street, the S&P 500 fell 26.38 points, or 0.6%, to 4,109.90.
The Dow Jones Industrial Average dropped 336.46, or 1%, to 33,012.14, and the Nasdaq composite slipped 22.16, or 0.2%, to 12,343.05.
In currency trading, the dollar index rose by +0.13%, with the dollar finding support from stronger-than-expected U.S. manufacturing production and NAHB housing reports, which pushed T-note yields higher.
Weakness in the Chinese yuan was supportive for the dollar after weaker-than-expected Chinese economic news knocked the yuan down to a 2-month low Tuesday against the dollar.
The euro posted modest losses after the German May ZEW survey expectations of economic growth index fell more than expected to a 5-month low.
However, losses in EUR/USD were limited by hawkish comments from ECB Governing Council member Holzmann who said the ECB needs to raise its deposit rate above 4% to tackle inflation.
The yen posted a new 1-1/2 week low against the dollar.
Tuesday’s rally in the Nikkei Stock Index to a 1-1/2 year high curbed the safe-haven demand for the yen.
However, losses in the yen were limited by safe-haven support for the yen from lingering concerns about U.S. regional banks and the debt ceiling dispute.
In this context, the EUR/USD fell by -0.05%, the USD/JPY (^USDJPY) rose by +0.13%.
On this morning, the U.S. dollar edged up to 136.52 Japanese yen from 136.36 yen.
The euro cost $1.0873, up from $1.0868.
Going back to analyzing other agricultural markets …
From South America, Dr Michael Cordonnier has raised his Brazilian soybean crop estimate another 1Mt to 155Mt, noting yields in Rio Grande do Sul ended up a little better than expected.
Dr Cordonnier also raised his Brazilian corn crop estimate 1Mt to 125Mt, noting the safrinha crop is one week closer to the end of the growing season without a major frost or freeze.
Developing dryness in some central and southern areas is keeping his Brazilian corn estimate conservative compared to others.
Meantime, Brazil’s Anec is expecting an uptick in the country’s corn exports in May after increasing its estimate from 320k MT a week ago up to 571,500 t.
Brazil’s Anec slightly raised its projection for the country’s soybean exports in May, which it now estimates will reach 15.76 MMT.
Brazil expects the country to export an additional 2.6 million metric tons of soymeal this month.
In Argentina, Dr Cordonnier left his (2022/23) crop estimates for Argentina at 23Mt for soybeans and 35Mt for corn.
Meantime, the Buenos Aires grains exchange on Tuesday forecast Argentina’s 2023/24 wheat harvest at 18 million tonnes, up 45% from the 12.4 million tonnes harvested last season (2022/23) as the country faced a historic drought.
Wheat planting is forecast to increase 3pc to 6.3M hectares.
No change is seen from last season’s barley area, but better weather would boost production 32pc from last year to 5Mt.
In Europe, grain and oilseed fell, as the harvests in the northern hemisphere is approaching, and buyers waiting for the usual harvest pressure to hedge.
European Commission data showed EU’s cumulative soft-wheat exports were at 27.2Mt as of May 14, compared with 24.3Mt the previous year.
Leading destinations include Morocco on 4.24Mt, Algeria on 3.84Mt and Nigeria on 2.32Mt.
EU barley exports, in contrast, fell to 5.8Mt, compared with 6.73Mt the previous year.
Corn imports were at 23.6Mt, compared to 14.3Mt over the same period in 2021-22.
Soybean imports were down 12% so far after reaching 11 MMT through May 14. The United States, Brazil, Ukraine, Canada and Uruguay are the top five suppliers.
EU soymeal imports were trending 4% lower year-over-year, with 13.67 million metric tons.
Finally, rapeseed imports were at high levels, currently at 6.92 million tonnes against 4.80 last year.
Meantime, according to the Ministry of Agriculture, grain maize areas in France will be down sharply this year, estimated at 1.25 million hectares, down 7.6% compared to last year, a consequence in particular of irrigation restrictions.
Farm office FranceAgriMer on Wednesday lowered its forecast of French soft wheat exports outside the European Union in the 2022/23 season to 10.30 million tonnes from 10.40 million projected in April.
In a monthly supply and demand outlook for major cereal crops, the office also trimmed its forecast of 2022/23 French soft wheat exports within the 27-member bloc to 6.39 million tonnes from 6.43 million previously.
It increased its projection of French soft wheat stocks at the end of the season on June 30 to 2.72 million tonnes from 2.61 million projected last month.
From Ukraine, according to the Ukrainian Grain Association, corn production will fall 23 percent to 21 million tonnes (Mt) and exports in 2023-24 will plunge 30pc to 19Mt.
For wheat, UGA forecasts production of 17Mt, down 16pc from last year, while exports for 2023-24 are expected to fall 10pc to 14Mt.
Sunflower seed production is expected to jump 20pc to 13Mt.
However, the Ukrainian agriculture ministry said on Wednesday, Ukraine is likely to sow a record of 285,000 hectares to spring wheat in 2023.
Farmers have already sown 247,000 hectares of the commodity, it said in a statement.
From Russia, export prices for Russian wheat continued to decline last week.
Notably, prices for Russian wheat with 12.5% protein content, delivered free on board (FOB) from the Black Sea in June, were $248 a tonne, down $6 from last week, the IKAR agriculture consultancy said.
As for the other products, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 11,125 rbls/t, -50 rbls/t (Sovecon).
Price for sunflower seeds was at 22,150 rbls/t, -225 rbls/t (Sovecon).
Price for domestic sunflower oil was at 71,500 rbls/t (Sovecon).
Price for domestic soybeans was at 30,500 rbls/t (Sovecon).
Export price for sunflower oil was at $815/t, -$5/t (IKAR).
Price for white sugar, Russia’s south, was at $794.68/t +$18.7 (IKAR).
Weather conditions in Russia continue to be generally favourable for the new harvest, although recent cold and wet weather has started to slow work in the fields in parts of the Centre and the South.
However, as of May 11, 14.4 million hectares of crops were sown, compared to 11.8 million hectares by that date in 2022, of which 5 million hectares were under spring wheat (3.5 million hectares in the same period of 2022).
Meantime, “demand is sluggish, as everyone has bought indecent quantities this year, plus there are lots of places where a good harvest is expected,” said Dmitry Rylko, head of IКAR.
Stormy weather reduced exports to the lowest weekly volumes since early February, last week.
Russia, indeed, exported 0.76 million tonnes of grain last week compared to 1.14 million tonnes a week earlier, including 0.68 million tonnes of wheat compared to 1.06 million tonnes a week earlier, according to Sovecon.
On this wake, total Russian wheat exports in May will reach 3.8 million tonnes, Sovecon said.
That is compared to 1.2 million tonnes in May 2022 and 1.5 million tonnes on average.
From Australia, local cash markets were a few dollars stronger on wheat across the boards, with ASW1 in Western Australia up A$3-$4/t and trading actively over the day.
Barley remained relatively flat throughout the day, and canola bids were a touch firmer among thin trade.
Growers are now searching for that next rain event from WA around to parts of eastern Australia, while some areas are very wet in western Victoria.
There are more reports that mice are giving early emerging crops a hard time in central and southern New South Wales, and slugs remain a big problem in western Vic, with slug bait in high demand.
There is currently 3.5Mt of wheat on the shipping stem for May, 583,000t of barley, 422,000t of canola and 245,000t of sorghum.
Port wait times increased slightly across most major ports.
The highest average wait time to load is 12 days, with 14 vessels anchored and 13 loading at Australian ports.
On the international trade scene, the Korea Feed Association (KFA) in South Korea purchased about 68,000 tonnes of animal feed corn expected to be sourced from either South America or South Africa in a private deal on Tuesday without issuing an international tender.
It was purchased by the KFA’s Busan section from trading house Viterra at an estimated $258.75 a tonne c&f plus a $1.25 a tonne surcharge for additional port unloading for arrival in South Korea around Oct. 20.
Shipment from South America was between Aug. 20-Sept. 10 and from South Africa between Sept. 1-Sept. 20.
If sourced from South Africa, only 55,000 tonnes needs to be supplied.
Japan’s MAFF is seeking 113,555t of food-quality wheat from the United States, Canada and Australia in a regular tender that will close on Thursday.
An importer group in the Philippines has issued a tender to purchase around 40,000 tonnes of animal feed wheat.
The deadline for submission of price offers is also believed to be Wednesday, May 17.
Shipment is sought in the full month of July.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
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