Good morning, Farmer Family …

US farm markets saw some bargain buyers handing out double-digit gains for both corn and soybeans on Monday. 

Corn prices, indeed, climbed 2.98% higher, posting its biggest rally in nine months.

Soybean rose by +2.60% logging its biggest daily gain since Sept. 12,

Soymeal was up 0.76%, while soyoil jumped by 3.17% higher.

Wheat prices also trended higher, but gains were much more modest.

Chicago SRW indeed added +0.21%, Kansas City HRW picked up by +0.18%, and MGEX HRS gained +0.68%.

Grain prices had reached oversold territory during last week’s liquidation phase.

Corn and soybean prices both had posted four session losing streaks, last week, meanwhile, Chicago wheat prices, had dropped below $6 a bushel for the first time in more than two years.

Thus, a bounce was not a surprise.

Meantime, USDA’s weekly Export Inspections data showed 1.323 MMT of corn was shipped during the week that ended 5/18. 

That was up 150k MT from last week but was 430k MT from the same week last year. 

USDA marked Japan as the top destination with 38% of the total. 

However, the season’s total exports hit only 27.375 MMT, trailing last year’s pace by 13.5 MMT (33%). 

As for soybean, data had 155,051 MT of soybean exports for the week that ended 5/18. 

That was down from 187k MT last week and from 582k MT during the same week last year. 

USDA added 39k MT to past reports for a season total of 48.199 MMT. 

The full year total at the same point last season was 49.146 MMT.

Separately, USDA announced yesterday a private export sale of 225k MT of soymeal to Philippines for 22/23 delivery.

As for wheat, export shipments were at 407,682 MT. 

That was 144k MT above last week and was 132k MT more yr/yr. 

Mexico was the week’s top destination with 88k MT, followed by China and the Philippines each with over 60k MT. 

USDA marked 40% of the total as white wheat and 30% as HRS. 

The season’s total wheat export was reported as 19.143 MMT as of 5/18, trailing last year’s pace by 510k MT. 

However, reports on the wire suggested U.S. was importing wheat into Tampa FL from Poland, with three known cargos sold to date. 

Another consignment of about 30,000 tonnes of European Union origin wheat, indeed, is expected to be shipped to the United States in June or July. 

This followed two shipments earlier this year.

In this context, corn basis bids were steady to mixed, with one anomalous change of note at an Iowa processor, where they jumped 50 cents higher.

Soybean basis bids held steady across the central U.S..

Commodity funds were net buyers of Chicago Board of Trade soybean, corn, soyoil, soymeal and wheat futures contracts.

After the sessions close, the U.S. Department of Agriculture’s weekly crop progress report showed the U.S. corn crop was 81% planted as of Sunday, just below an average of analyst expectations but ahead of the five-year average of 75%. 

NASS marked emergence at 52%, compared to 30% last week and 45% on average. 

The USDA said it expects to release its first condition ratings for the 2023 corn crop in next week’s progress report.

For soybeans, planting was 66% complete, in line with trade expectations and ahead of the five-year average of 52%. 

National emergence reached 36%, compared to 20% last week and 24% on average. 

The USDA has projected record-large U.S. corn and soybean production this year.

As for wheat, planting progress for spring wheat rose to 64%, up from 40% a week earlier and ahead of the average analyst estimate, but still behind the five-year average of 73%.

Meantime, the USDA rated 31% of the U.S. winter wheat crop in good to excellent condition, up 2 percentage points from a week earlier and above an average of analysts’ expectations.

However, in Kansas,only 10% of the crop was rated good to excellent, unchanged from the prior week, and 69% of the state’s wheat was rated poor to very poor, up from 68% the week prior. 

On the weather side, most of the eastern Corn Belt will remain completely dry between Tuesday and Friday, while the Plains could catch some additional rainfall during this time, per the latest 72-hour cumulative precipitation map from NOAA. 

The agency’s new 8-to-14-day outlook predicts more seasonally wet weather for the Plains between May 29 and June 4, and most of the central U.S. could face seasonally warm weather next week.

On this morning, U.S. soybean and corn prices edged lower amid profit-taking after both contracts saw their biggest single-day rallies in months during the previous trading session.

Similarly, wheat edged lower on a better-than-expected weekly U.S. winter wheat crop report that soothed global supply concerns.

Notably, the most-active soybean contract on the Chicago Board of Trade was down 0.5% at $13.34-3/4 a bushel, as of 05:53 GMT. 

Wheat lost 0.8% to $6.01-1/2 a bushel and corn gave up 0.7% to $5.67-1/4 a bushel. 

In Europe, wheat ended Monday’s session slightly weaker after setting a new 22-month low as expectations of ample supplies in the Black Sea region continued to weigh on the market.

Notably, September wheat settled 0.7% down at 221.00 euros ($243.28) a tonne.

It earlier fell to 218.50 euros, the weakest front-month price since July 2021 and below a previous 22-month low struck on Thursday, but found buying interest around the technical floor of 220 euros.

Overall, the west EU is seeing little export demand apart from North and West Africa and Spain, which is hit by drought.

Thus, traders welcomed signs of more sales of European Union wheat to the United States.

Notabily, buyers in the United States have recently purchased about 210,000 tonnes of European Union origin wheat expected to be sourced from Poland and Germany.

The purchases were said to involve a total of around five shipments from Poland and two from Germany all of about 30,000 tonnes.

Shipment was mainly between May and August.

U.S. purchases so far largely involve milling wheat of about 12.5% and 13% protein.

Buying interest for EU wheat continues this week, with U.S. purchase interest for a consignment of about 30,000 tonnes for June and 30,000 tonnes for August shipment.

While volumes so far are modest, traders said high U.S. milling wheat prices and recent weakness in freight rates made further EU wheat sales to the U.S. market possible.

Meantime, the EU’s crop monitoring service on Monday raised its forecasts of this year’s EU soft wheat yield, citing a good crop outlook overall except in the drought-affected Iberian peninsula.

According to the European crop monitoring agency MARS, indeed, soft wheat yields in the EU this year are estimated at 6.01 t/ha, up 4% from last month’s estimate of 5.96 t/ha. 

For barley, future yields are expected to be 4.89 t/ha compared to 4.92 estimated last month, down 3% from last year. 

For rapeseed, future yields are expected to be 3.34 t/ha compared to 3.31 t/ha estimated last month, and up 8% compared to the 5-year average.

From Russia, export prices of Russian wheat fell again last week.

Notably, according to the IKAR, the prices of Russian wheat with 12.5% protein content, delivered free on board (FOB) from the Black Sea in June, was $242 a tonne, down $6 from the previous week.

As for other products, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 11,125 rbls/t 0 rbls/t (Sovecon).

Price for sunflower seeds was at 21,900 rbls/t -250 rbls/t (Sovecon).

Price for domestic sunflower oil was at 69,850 rbls/t -1,650 rbls/t (Sovecon).

Price for domestic soybeans was at 30,600 rbls/t +100 rbls/t (Sovecon).

Export price for sunflower oil was at $780/t -$35/t (IKAR).

Price for white sugar, Russia’s south was at $744.63/t -$50.17 (IKAR).

“The market just stood still waiting for a decision on the export duty”, said Dmitry Rylko, head of IКAR.

Last week the ministry confirmed its intention to raise the threshold price for the calculation of export duty from June 1 to 17,000 roubles from 15,000, which should result in the duty itself decreasing.

Weather conditions in Russia continue to be generally favourable for the new harvest. 

As of May 18, 19.0 million hectares of crops were sown, compared to 17.6 million hectares by that date in 2022, of which 7.4 million hectares were under spring wheat (6.6 million hectares in the same period of 2022). 

Thus, the planting campaign pace is getting close to average.

In this context, Sovecon on Friday raised its 2023 Russian wheat crop forecast to 88 million tonnes, up from 86.8 million tonnes previously.

Meantime, Russia exported 1.21 million tonnes of grain last week compared to 0.76 million tonnes a week earlier, including 1.07 million tonnes of wheat compared to 0.68 million tonnes a week earlier, Sovecon wrote in its weekly note, citing port data.

Sovecon estimates total Russian wheat exports in May at 3.8 million tonnes.

That would be a monthly decline of 11.6%, if realized, though that is also compared, to 1.2 million tonnes in May 2022 and 1.5 million tonnes on average.

From South East Asia, India’s wheat procurement in 2023 could fall by a fifth from the initial estimate as government purchases have slowed in the last few days after local prices jumped, government officials and traders said.

On the international trade scene, Taiwan issued an international tender to purchase 66k mt of animal feed corn to be sourced from the United States, South America or South Africa that closes on Wednesday. 

Taiwan also issued an international tender to purchase 57k mt of grade 1 milling wheat from the United States, which closes on May 26. 

The grain is for shipment in July.

South Korea issued a tender to purchase 136k mt of milling wheat, which can be sourced from the United States, Canada or Australia. 

Offers can be submitted through Tuesday. 

The grain is for shipment starting in August.

In energy markets, oil prices rose about 0.5%.

Notably, Brent futures for July delivery rose 41 cents, or 0.5%, to settle at $75.99 a barrel.

U.S. West Texas Intermediate (WTI) crude for June delivery rose 44 cents, or 0.6%, to settle at $71.99 per barrel, while the more active July contract , which is now the new front-month, rose 0.5% to settle at $72.05.

U.S. gasoline futures rose, with the U.S. Memorial Day holiday marking the start of the peak summer driving season.

The International Energy Agency (IEA) warned of a looming oil shortage in the second half of the year, as forecasts an increase for oil demand.

Meanwhile supplies from Canada and OPEC+ declined in recent weeks.

Also, oil production in Iraq’s Kurdistan region continued to drop.

Oil prices, however, were held in check by a stronger dollar, and as the market waited for news on the U.S. debt ceiling talks.

On Saturday, the Group of Seven (G7) nations pledged at its annual leaders’ meeting to enhance efforts to counter Russia’s evasion of the price caps on its oil and fuel exports.

However, the G7 meeting upset China, with State-backed Chinese newspaper Global Times called the G7 an “anti-China workshop.”

In ocean freight markets, the Baltic Exchange’s main sea freight index fell on Monday to its lowest level since early-March due to weaker demand for the capesize and panamax segments.

The overall index, indeed, fell for an eighth straight session, declining 19 points, or 1.4%, to 1,365 points – its lowest since March 8.

Notably, the capesize index touched a near one-month low, dipping 40 points, or 1.9%, to 2,065 points.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, decreased $333 to $17,126.

The panamax index shed 2 points, or 0.2%, to 1,220 points, falling to 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 $19 to $10,982.

Among smaller vessels, the supramax index dropped 14 points or about 1.3% to 1,063 points.

In equity markets, US stock indexes settled mixed.

The broader market was under pressure as U.S. debt-ceiling talks drag on.  

Also, higher bond yields weighed on stocks due to hawkish Fed comments.  

However, market uncertainty has prompted investors to park funds in mega-cap technology stocks as a safe haven.

Notably, the 10-year T-note yield climbed to a 2-1/4 month high of 3.726% and rose +4.4 bp to 3.717%.  

The two-year yield, which moves more on expectations for the Fed, rose to 4.32% from 4.28%.

In this context, the S&P 500 advanced to 4,192.63. 

The Dow Jones Industrial Average fell 0.4%, to 33,286.58 and the Nasdaq composite rose 0.5% to 12,720.78.

On this morning, in Asia the Shanghai Composite Index lost 1.5% to 3,246.23 and the Nikkei 225 in Tokyo shed 0.4% to 30,957.77. 

The Hang Seng in Hong Kong retreated 1.3% to 19,428.08.

The Kospi in Seoul advanced 0.4% to 2,567.55 and Sydney’s S&P-ASX 200 was less than 0.1% lower at 7×259.90.

India’s Sensex gained 0.3% to 62,153.31. 

New Zealand and Bangkok declined while Singapore and Jakarta advanced.

In currency trading, the dollar declined to 138.34 yen from Monday’s 138.56 yen. 

The euro retreated to $1.070 from $1.0819.

That’s all, thank you.

We wish you a nice day.

 Author: Sandro F. Puglisi

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