Good morning, Farmer Family …
US farm markets continued to shift lower on Thursday.
Wheat prices tumbled even lower, with Chicago SRW dropping 2.2%, Kansas City HRW lost 3.22%, and MGEX HRS fell by -3.63%.
Corn prices slumped 1.11%.
Soybean prices followed other grains lower, down 0.28%.
Meanwhile, the rest of the soy complex was mixed, as soymeal prices tumbled 2.63% lower, while soyoil bounced by +1.9%.
Wheat prices fell further as the extension of the deal to allow Ukraine to export grains through Black Sea ports eased concerns over world supplies.
Three new ships were authorized on Thursday to take part in the deal, said the United Nations.
Kremlin spokesman Dmitry Peskov called the extension “a qualified result” for Russia and said different scenarios were being worked on regarding easing restrictions on Russia’s state agricultural bank.
However, given the short extension of the deal, the market will have to continue to deal with uncertainty over what happens next.
The challenge of moving grain through the region also was highlighted on Thursday by the suspension of rail traffic between, Simferopol, capital of the Crimean peninsula, and the city of Sevastopol, after a freight train carrying grain derailed.
Also, expectations of lower winter wheat production in the United States limited the decline in prices.
The final results from the Kansas Wheat Quality Tour, indeed, has the state average yield at 30 bushels per acre, the lowest since at least 2000.
That leaves their total state wide output at 178 mbu, compared to NASS’s May forecast of 191.
That is the lowest production estimate since 1970.
Last year the Tour estimated a 261 mbu production and the final was 267.
On average the tour has understated KS final production by 1.8%.
Their results implied additional abandonment with an implied 5.93m acre harvest for Kansas, compared to NASS’s 6.6 million.
Kansas winter wheat was planted on 8.1m acres.
However, Thursday weekly Export Sales report from USDA showed 42k MT of net cancelations for old crop wheat.
That left the full season commitments at 18.89 MMT compared to the 21.09 MMT via the WASDE report, while there are only 3 weeks for weekly reports.
New crop sales were 337k MT which left the new crop total at 1.962 MMT.
That is 71% behind last year’s forward sales which compares to USDA’s forecasted 7% yr/yr decline.
As for corn, prices slumped to a 19-month low, after yet another round of technical selling caused moderate losses.
The U.S. Environmental Protection Agency (EPA) reported that the U.S. generated around 1.16 billion ethanol blending credits in April, which was down from March’s tally of 1.22 billion.
EPA also indicated that 603 million biodiesel blending credits were generated last month, versus 619 million in April.
Also, USDA’s weekly Export Sales report showed net cancelations of 339k MT for old crop corn.
That was mainly via China, though Japan and Colombia were net buyers.
Cumulative sales for the 2022/23 marketing year are roughly 15.24 MMT below last year’s pace so far after reaching 27.61 MMT last week.
For new crop, USDA reported 74k MT of sales for a 2.7 MMT forward book.
That is 48% behind last year’s forward sales pace compared to an 18% WASDE expected increase.
As for soybean, the report showed 17k MT of old crop beans were sold for the week that ended 5/11.
That was at the low end of estimates and was down 73% from last week.
Accumulated commitments were 50.76 MMT, or 93% of the WASDE forecast.
New crop soybean sales were 663k MT, which were double the estimates and led by unknown and China.
That left the forward book at 2.55 MMT or 78% behind last year’s pace.
The WASDE forecast has new crop sales decreasing 2% yr/yr.
As for the products, weekly soybean meal export sales were 202k MT for 22/23 delivery and 89k MT of forward sales.
That was within the range of estimates.
Soybean oil sales were shown at 856 MT.
That left the total commitments at 118,617 MT.
USDA had old crop bean oil exports penciled in at 200k MT.
In this context, corn basis bids were largely steady across the central U.S. on Thursday but did trend 5 cents higher at an Illinois while dropping 3 to 5 cents at two other Midwestern locations.
Soybean basis bids were mostly steady across the central U.S. on Thursday but did tilt 5 cents higher at an Iowa river terminal.
Commodity funds were net sellers of CBOT soymeal, wheat, soybean and corn futures contracts, and net buyers of soyoil futures.
On this morning, Chicago corn lost more ground.
Wheat was also weaker, while soybean inched higher.
Notably, the most-active corn contract on the Chicago Board of Trade gave up 0.2% to $5.54-1/4 a bushel, as of 04:14 GMT, having dropped to its lowest since October 2021 at $5.47 a bushel on Thursday.
Wheat fell 0.3% to $6.10-1/4 a bushel, while soybeans were up 0.4% at $13.38-1/4 a bushel.
Corn and wheat were on track for a second weekly decline, while soybeans have lost 3.8%, set for their biggest weekly drop in almost eight months.
In energy markets, oil prices slid about 1% on Thursday after solid U.S. economic data spurred the dollar to reach a two-month high on growing expectations the U.S. Federal Reserve could raise interest rates again in June.
Thus, Brent futures fell $1.10, or 1.4%, to settle at $75.86 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 97 cents, or 1.3%, to settle at $71.86.
A stronger dollar can weigh on oil demand by making the fuel more expensive for holders of other currencies.
Also weighing on oil prices, blue-chip stocks in China, the world’s biggest oil importer, slipped after the country’s industrial output and retail sales growth undershot forecasts, suggesting the economic recovery is losing momentum.
Another factor that could reduce oil demand was a fire in Mexico at the Salina Cruz refinery owned by Mexican state oil company Pemex.
Workers were evacuated, no one was injured and the fire has been controlled, according to the local Red Cross.
On the supply side, Saudi Arabia’s crude oil exports rose about 1% to 7.52 million barrels per day (bpd) in March from the previous month, according to data from the Joint Organisations Data Initiative (JODI).
However, Saudi exports may have fallen in May as a voluntary production cut pledged by the kingdom and other OPEC+ members.
On this morning, oil prices rebounded, as investors turned cautiously optimistic over the fading risk of a U.S. debt default.
Notably, Brent futures rose 59 cents, or 0.8%, to $76.45 a barrel by 0420 GMT, while U.S. West Texas Intermediate crude climbed 48 cents, or 0.7%, to $72.34.
In ocean freight markets, the Baltic Exchange’s main sea freight index fell for a sixth straight session on Thursday to its lowest level in almost a month, pressured by lower rates across all vessel segments.
The overall index, indeed, fell 23 points, or 1.6%, to 1,402 points – its lowest since April 19.
Notably, the capesize index dipped 42 points, or 1.9%, to over three-week low at 2,142 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, decreased $344 to $17,767.
The panamax index was down 25 points, or 2.0%, at 1,235 points, its lowest since Feb. 23.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $231 to $11,112.
Among smaller vessels, the supramax index fell 5 points to 1,085 points.
In equity markets, US stock indexes extended this week’s rally, due growing optimism that the U.S. will raise its debt ceiling and avoid a default.
However, a negative factor for stocks was the jump in bond yields on hawkish Fed comments, and Thursday’s economic news that showed weekly jobless claims fell more than expected, and the May Philadelphia Fed business outlook survey rose more than expected.
Notably, U.S. weekly initial unemployment claims fell -22,000 to 242,000, showing a stronger labor market than expectations of 251,000.
Weekly continuing claims unexpectedly fell -8,000 to 1.799 million, showing a stronger labor market than expectations of an increase to 1.820 million.
The U.S. May Philadelphia Fed business outlook survey rose +20.9 to a 4-month high of -10.4, stronger than expectations of -20.0.
U.S. Apr existing home sales fell -3.4% m/m to 4.28 million, weaker than expectations of 4.30 million.
As a result, the markets have priced in a 33% chance the Fed will raise interest rates by +25 bp at the June 13-14 FOMC meeting.
Meantime, the 10-year T-note yield jumped to a 2-month high of 3.655% and finished up +8.4 bp at 3.648%.
The two-year yield, which moves more on expectations for the Fed, rose to 4.25% from 4.16%.
In this context, the S&P 500 gained 39.28 points to 4,198.05.
The Dow rose 115.14 to 33,535.91, and the Nasdaq climbed 188.27 to 12,688.84.
On this morning, Asian shares were mostly higher.
Japan’s benchmark Nikkei 225 rose 0.8% in early trading to 30,827.87.
Australia’s S&P/ASX 200 gained 0.5% to 7,270.20.
South Korea’s Kospi added 0.6% to 2,529.68.
Chinese shares, in contrast, fell on renewed worries set off by signs of slower sales.
Also weighing on Chinese shares were inflationary pressures and geopolitical risks.
Thus, Hong Kong’s Hang Seng slipped 1.4% to 19,449.72, while the Shanghai Composite lost 0.7% to 3,274.87.
In currency trading, the dollar index rose and posted a 1-3/4 month high, with the dollar moving higher on optimism that the U.S. will raise its debt ceiling.
Also, Thursday’s stronger-than-expected U.S. economic reports on weekly jobless claims and the May Philadelphia Fed business outlook survey are hawkish for Fed policy, supported the dollar.
In addition, the jump in the 10-year T-note yield Thursday to a 2-month high strengthened the dollar’s interest rate differentials.
Thus, the EUR/USD fell by -0.66% and posted a 7-week low.
The USD/JPY rose by +0.75%, with the yen extending its streak to six consecutive sessions of losses and dropping to a 5-1/2 month low against the dollar.
The jump in T-note yields undercut the yen.
Also, Thursday’s rally in the Nikkei Stock Index to a 20-month high has curbed the safe-haven demand for the yen.
In addition, Japanese trade news Thursday was weaker than expected and weighed on the yen.
On this morning, the U.S. dollar declined to 138.53 Japanese yen from 138.66 yen.
The euro cost $1.0764, down from $1.0777.
Going to analyze other ag markets …
From Canada, as of May 15, the Saskatchewan government estimates 38% of the province’s crops are seeded, up from 9% reported as of May 8 but well below the five-year average of 53%.
The pace relative to the five-year average has remained steady, with current progress estimated to be 15 percentage points behind average, while one week ago, progress was reported at 14 percentage points below average.
An estimated 29% of the crop was planted over the past week, which is close to the average of 30% seeded over this week during the past five-years.
Progress is most advanced on the west side of the province, with 43% of the Southwest Region complete, up 30 percentage points over the past week, while 54% of the West-Central region is complete, up 40 points over the past week and 55% of the Northwest Region, up 38 points from the past week.
This compares to the Southeast Region at 18% complete, up 15 points over the past week, the East-Central region at 21% complete, up 18 points and the Northeast Region at 35% complete, up 28 points over
When compared to the five-year average, the Southeast Region is 33 points behind, the Southwest Region is 20 points behind average and the East-Central Region is 12 points behind.
At the same time, the West-Central Region is 4 points ahead of average, the Northeast Region is 6 points ahead of average and the Northwest Region is 16 points ahead of average.
Progress for select crops is seen at 43% for spring wheat (54.6%), 38% for durum (65.6%), 19% for canola (44.8%) 54% for peas (77.8%), 50% of the lentils (76%) 38% of the barley (46.6%), 19% of the oats (33.6%) and 7% of the soybeans (38.2%), with the five-year average in brackets.
During the past week, the area of the province rated as having adequate topsoil moisture fell 3 points to 69% while the area rated as short topsoil moisture increased by 3 points to 24% or the province.
It can only be assumed that 5% of the province is facing surplus topsoil moisture and 2% is facing very-short topsoil moisture, unchanged from the previous week, although this was not stated in the report.
One year ago, this data shows 12% of the province rated to have surplus topsoil moisture, 56% adequate, 20% short and 12% very short.
Meantime, the Grain Statistics weekly report past week showed producers’ deliveries of common wheat at 125,6k mt for the week 41 of this shipping season.
That was down from 214,5k mt posted prior week.
Deliveries of durum wheat, were also weaker at 27,3k mt, compared with 53,2k mt showed in prior week.
Canada exported 372,5k mt of common wheat in week 41.
That was up from 334,3k mt of a week earlier.
Durum wheat exports, in contrast were lower, moving down from 89,6k mt to 57.5k mt.
Total Commercial Stocks of common wheat stood at 1.974,5k mt.
That was down from 2.171.4k mt posted in week 40.
Total durum commercial stocks, were also weaker, moving down from 377,8k mt a week earlier, to 353,4k mt.
Cumulative exports for common wheat were at 15.981,3k mt.
That is compared 9.038,3k mt a year ago.
Durum cumulative exports reached 4.381,1k mt vs 2.000,1 a year ago.
From South America, the Buenos Aires grains exchange on Thursday cut its estimate for the 2022/23 soybean harvest to 21 million tonnes, from a previous estimate of 22.5 million tonnes.
“There have been significant losses in the area farmers can harvest for second (late-season) soybeans,” the exchange said in its weekly report, adding that the country’s farmers have harvested 69.2% of the suitable area planted with the oilseed.
Meanwhile, the exchange maintained its estimate for 2022/23 corn production at 36 million tonnes, however still well below the 50 million tonnes collected in the previous season.
In Europe, Sep wheat extended losses falling another 1.4%, while Aug rapeseed rebounded after sliding on Wednesday to a 30-month low.
The extension of the pact allowing grain shipments from Ukraine through Black Sea ports helping to ease supply concerns.
Meanwhile, an Ascension Day holiday in much of Europe helped to subdue trade in physical markets.
However, limiting losses, the International Grains Council on Thursday lowered its forecast for EU wheat production in 2023/24 by one million tonnes to 136.8 million.
The cut was driven by a downward revision for Spain, which has been suffering from drought, to 5.6 million tonnes from 7.0 million.
World production is revised down by 4 million tonnes to 783 million.
The cut was driven by a downward revision for the United States to 45.2 million from 49.4 million.
As for corn, the IGC revised upwards its estimate of world maize production for the next campaign to 1.217 billion tonnes, against 1.208 estimated last month.
This is mainly the result of an increase in production in Brazil, now estimated at 130.2 million tonnes.
China production was also increased.
The global corn crop was now seen well above the prior season’s 1.153 billion but still slightly below the record set in 2021/22 of 1.223 billion.
The IGC forecast total grains production in 2023/24 at 2.294 billion tonnes, up from a previous projection of 2.291 million and now marginally above the 2.293 billion harvested in 2021/22.
Meantime, the condition of French soft wheat fell slightly in the week to May 15 but remained at its highest level in at least a decade, data from farm office FranceAgriMer showed on Friday.
An estimated 93% of soft wheat was in good or excellent condition compared with 94% the previous week.
However, the score was above the 73% registered a year earlier and the highest for the time of year in FranceAgriMer data going back to 2011.
The good/excellent rating for winter barley shed 2 percentage points in the latest week to 90% while the durum wheat score eased by one point to 87%.
The corresponding spring barley rating was unchanged from the previous week at 95%.
Grain maize sowing was nearing completion, with 88% of the expected area planted.
This year’s sowing, which has been hampered by recent wet and cool weather, was lagging the 97% achieved by the same stage last year and a five-year average of 93%, FranceAgriMer said.
French farmers are estimated to have made a sharp reduction to the maize area this year, partly in response to severe drought last year.
In Germany, winter wheat sown area for the 2023 harvest has been reduced by 1.4% to about 2.85 million hectares, Germany’s national statistics agency estimated on Friday.
German farmers have partly turned to winter rapeseed, with sowings for the 2023 crop expanded by 7.6% to some 1.16 million hectares, the agency said.
Sowing by German farmers of winter barley was raised by 5.2% to 1.27 million hectares, the agency said.
Plantings of grain maize were cut 6.1% to 429,000 hectares.
Sowing of silo maize rose 2.1% to 2.06 million hectares.
Plantings of rye and other minor winter grains were expanded by 4.0% to 611,400 hectares.
Sowing of spring grains was reduced, partly as Germany’s mild winter meant there was less need to replant other frost-damaged crops.
Plantings of spring barley were cut 11.2% to 329,300 hectares.
From Ukraine, Ukrainian 2023 spring grain sowing was 86% complete at 4.7 million hectares on May 18, agriculture ministry data showed on Friday.
The ministry has said the overall spring grain sowing area could shrink to 5.5 million hectares in 2023 from 5.9 million in 2022.
The total sown area at May 18 included 256,900 hectares of spring wheat, 759,600 hectares of barley, 132,700 hectares of peas, 143,100 hectares of oats and 3.3 million hectares of corn.
The ministry said farmers had also sown 207,400 hectares of sugar beet, almost 4 million hectares of sunflowers and 1.3 million hectares of soy beans.
From Russia, the head of the RusAgroTrans sees Russia’s 2023 wheat harvest at 84.1Mt, Interfax reported, citing comments made at Rusgrain conference in Sochi.
The forecast was revised up by 1.6Mt in May thanks to the improved situation in the south, Volga and Central regions.
They see total grain harvest in Russia at 129.8Mt.
Russian total grain exports from July 2022-April 2023 are at a record 50.7Mt, including 41Mt of wheat.
RusAgroTrans expects total grain exports in 2023-24 to be 59.3Mt, including wheat at 48Mt.
Meantime, Agriculture Minister Dmitry Patrushev reported on the progress of spring field work to President Vladimir Putin on Thursday.
By May 18, 33.2 out of 57 million hectares had been seeded and is proceeding at a faster pace than average.
Thus, the total sown area in 2023 will exceed 85 million hectares including winter wheat area.
Winter wheat condition saw 93% of winter crops came out of wintering in a normal state.
In this context, Russian grain exports will total around 50-55 million tonnes in the 2023-2024 season, the Ministry said.
Patrushev said that Russia’s 2023 wheat crop was seen at 78 million tonnes.
The total grain harvest would be at least 123 million tonnes, he said.
“This volume will allow us to fully ensure the balance in the market, meet domestic demand and continue to develop our export potential,” Patrushev said.
Putin said grain exports could total 55-60 million tonnes for the 2022-2023 year, though he added there was a lot of grain supply on the global market.
From the Middle East, Iraq’s strategic wheat reserves are sufficient for six months, its state news agency quoted Minister of Commerce Atheer Daoud Al-Ghurairy as saying on Thursday.
The minister expects to secure reserves for a full 12 months by the end of the procurement year, which runs from mid-April, the news agency said.
Iraq’s state grain buyer announced on Tuesday it had procured more than one million tonnes of local wheat sourced from farmers in 13 of Iraq’s provinces, according to state TV Al Iraqiya.
From Australia, local markets remain subdued as growers are in no rush to sell at the moment with feed wheat and barley values unchanged to slightly firmer in the past week.
With drier conditions starting to creep in, thoughts of growers are increasingly about the rest of the season and many are now waiting for that next rainfall event to finish sowing.
The rainfall received in southern QLD/northern NSW in the past week has made the difference of crops getting in the ground that otherwise may not have and we are likely to see the foot ease off the pedal as sowing progresses if we don’t see more rain in the next week or so.
According to BOM’s latest three month rainfall outlook released yesterday, below median rainfall is likely (60 to 80pc chance) for June-August for the majority of Australia, increasing to very likely (greater than 80pc chance) for some southern areas of the country including southwest WA, southeast parts of SA and NSW, and most of VIC.
Parts of inland WA, western Tasmania and eastern Queensland have roughly equal chances of above or below median rainfall.
They also noted that parts of southern Australia are at least twice as likely to receive unusually low rainfall (amongst the driest 20pc of records at this time of the year.
On the international trade scene, Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 113,555 tonnes of food-quality wheat from the United States, Canada and Australia in a regular tender that closed on Thursday.
The Korea Feed Association (KFA) in South Korea purchased about 65,000 tonnes of animal feed corn expected to be sourced from either South America or South Africa on Thursday.
It was purchased from trading house Cofco at an estimated $248.76 a tonne c&f for arrival in South Korea around Oct. 20.
If sourced from South Africa, only 55,000 tonnes needs to be supplied.
South Korea’s Major Feedmill Group (MFG) has purchased an estimated 66,000 tonnes of animal feed corn expected to be sourced from South America in an international tender on Thursday.
It was bought in one consignment at an estimated $247.69 a tonne c&f plus a $1.50 a tonne surcharge for additional port unloading.
It was for shipment from South America between Aug. 25 and Sept. 15 for arrival in South Korea around Oct. 25.
Seller was said to be trading house ADM.
Iranian state-owned animal feed importer SLAL has issued an international tender to purchase up to 120,000 tonnes of animal feed corn to be sourced from Brazil or Argentina.
The deadline for submission of price offers in the tender is believed to be May 22.
Shipment was sought between June 1 and July 15.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
To read more, register on
https://marketplace.bancadelgrano.it/
