Good morning, Farmer Family …
US farm markets were mixed but mostly higher, on Monday.
Corn prices jumped 2.15% higher, on expectations for more dry weather in the U.S..
Traders, indeed, fretted about disappointing weekend rains, thus dry conditions forecasted for the coming days, could stressing crops in portions of the Midwest crop belt.
However, USDA’s weekly Export Inspections report showed 1.169 MMT of corn was shipped during the week that ended 6/8.
That was down 38k MT from last week and by 53k MT from the same week last year.
The full season’s pace was shown as 31.1 MMT through 6/8, which is still 31% behind last year’s pace.
As for wheat, prices followed corn suit, finding additional support from rising tensions in the Black Sea region.
United Nations Secretary-General Antonio Guterres indeed said he is concerned that Russia will on July 17 quit the Ukraine export deal.
Traders also monitored signs that Russia is imposing an unofficial minimum price for wheat exports that looks like the $240, as the impression has been that Russian authorities did not grant a waiver for a lower price sale to Egypt.
However, wheat gains were variable, as the supplier that sold 55,000 tonnes of Russian wheat to Egypt at $229 per tonne FOB, could look to source the grain from another country, an Egyptian minister said on Saturday.
Also, the weekly Export Inspections data showed 246,559 MT of wheat was shipped during the week that ended 6/8.
That was down from 304k MT last week and was below the 412k shipped during the same week last year.
The week’s shipment was mainly soft white wheat.
Thus, Chicago SRW and MGEX HRS gained +0.56% and +0.31% respectively, while Kansas City HRW inched 0.16% lower.
Soybean prices settled mixed, with nearby contracts falling on weak export demand and profit-taking, while back months clung to modest gains, due dry weather condition.
The weekly Export Inspections report indeed had just 140,179 MT of soybeans shipped during the week that ended 6/8.
That was down from 222k LW and was well below the 609k MT shipped during the same week last year.
The USDA added 27k MT to past reports for a season total of 48.837 MMT.
That was 1.7 MMT below last year’s pace.
Thus, the July contract closed 0.99% weaker, while the November contract, representing the 2023 soy harvest, settled up 4-3/4 cents at $12.09.
The rest of the soy complex was mixed, as soyoil faded 1.12% lower in the wake of crude oil lower, while soymeal found fractional gains of 0.05%.
In this context, corn basis bids were steady to soft after dropping 5 to 20 cents lower at four Midwestern locations.
Soybean basis bids were largely steady across the central U.S., after dropping 5 cents at an Indiana processor and rising 5 cents at an Iowa river terminal.
Commodity funds were net buyers of Chicago Board of Trade corn, wheat and soymeal futures contracts, and net sellers of CBOT soybean and soyoil futures.
After the sessions close, the USDA rated 61% of the U.S. corn crop in good to excellent condition, down 3 percentage points from a week ago and below the average of estimates.
Data also had 93% of the corn crop emerged as of 6/11, compared to 87% on average.
The USDA lowered its U.S. soybean crop rating by 3 percentage points to 59% good to excellent, below the average analyst estimate of 60%.
The soybean crop was as 96% planted through 6/11.
That remains 10% points ahead of average.
Emergence was at 86%, compared to 70% on average.
However, “during the weekend, hit-or-miss showers locally boosted topsoil moisture but left some areas still in need of rain,” the USDA’s Office of the Chief Economist said.
As for spring wheat, NASS’s weekly update showed planting reached 97%, and emergence reached 90%.
The USDA rated 60% of the U.S. spring wheat crop as good to excellent, down from 64% a week ago and below the average analyst estimate of 63%.
The harvest of the drought-hit U.S. winter wheat crop was 8% complete, up from 4% by June 4 but lagging the average analyst estimate of 10%.
Harvest in Texas was 42% finished, with OK at 28%, MO at 25% and KS at 1%.
The 5-yr average pace is to be 9% harvested nationally.
Winter wheat condition ratings improved to 38% good to excellent, above the average analyst estimate of 37%.
The national winter wheat crop was reported at 89% headed as of 6/11, 1% point ahead of average.
On this morning, corn prices edged lower, as traders locked in profits after a recent rally, following concerns over crop stress amid dry conditions in the U.S. midwest crop belt.
Wheat dipped to snap a three-session winning streak, while soybeans edged higher.
Notably, the most-active soybean contract on the Chicago Board of Trade was up 0.2% at $13.75-1/4 a bushel, as of 04:08 GMT.
Wheat lost 0.5% to $6.30-3/4 a bushel, while corn gave up 0.3% to $6.15-1/2 a bushel, after rising to a nearly two-month high in the previous session.
From Canada, the Canadian Drought Monitor, for the Prairie Region, as of May 31 estimates 79% of the Prairie Region ranged from abnormally dry (D0) to moderate to extreme drought (D1-D3), which includes 82% of the prairie agricultural land.
This was up from the 65% of the Prairie Region, and 79% of the agricultural land that was affected by drought at the end of April 30.
As well, the area viewed as Severe to Extreme Drought in Alberta increased from 4% to 9% during the past month.
The Alberta government views the affected area between Calgary and Lethbridge to have received very little precipitation from April 1 to June 6, the largest area facing difficult conditions with the amount of precipitation received to take place less than once in 50 years.
From South America, Brazilian farmers have harvested through last Thursday 2.2% of the area planted for their second corn crop in the center-south region, agribusiness consultancy AgRural said on Monday, up 0.8 percentage points from the previous week.
However that’s behind last year’s pace of 6.6% so far, though AgRural is expecting a record-breaking total corn production for 2022/23 with its latest projection of 127.41 MMT, of which the so-called “safrinha” is estimated to reach 97.9 million metric tons in 2022/23.
In Europe, grain prices rose, with wheat rising to around three-week highs, on dry weather concerns, while rapeseed prices continued rebounding, in the wake of other veg-oils.
In France, weekend storms brought some showers but traders are concerned that another hot, dry spell this week could strain wheat crops that had been in very good condition this year.
In Germany, dry weather continued to create concern about possible damage to wheat crops, especially in northern and eastern regions, which supply export ports.
Some rain is forecast in east Germany later this week but northern areas are expected to remain dry.
In this context, a reduced forecast from grain trade association Coceral for this year’s European Union cereal harvest helped keep the market focus on hit by dry weather in northern Europe.
Coceral indeed lowered its production forecast to 296.7 million tonnes in its latest projections for the 2023 European Union (EU) total grains crop, compared to its previous estimate of 303.5 million tonnes in March.
Notably, wheat production (excluding durum) is expected at 142.4 million tonnes, down from 144.5 million in the last forecast and from 142.5 million in 2022.
The EU-27+UK 2023 barley production is forecast at 56.6 million tonnes, down from the previous forecast of 59.6 million and from 59.3 million in 2022.
The corn crop is now seen at 61.3 million tonnes, down from the previous forecast of 62.3 million.
The main reason for the downward revision is the current dryness in the northern half of the continent.
However, despite the significant downward revision, this year’s crop is expected to be larger than last year’s drought-stricken harvest, which yielded 291.1 million tonnes.
As for rapessed, the EU-27+UK rapeseed crop is forecast at 21 million tonnes compared to 21.1 million in the previous forecast and 21 million in 2022.
Meantime, France’s farm ministry on Tuesday forecasted the country’s 2023 winter barley production at 9.07 million tonnes, up 7.3% compared with 8.45 million last year.
In its first production estimates for this year’s harvest, the ministry projected the winter rapeseed crop at 4.63 million tonnes, up 2.6% from 4.51 million in 2022.
From Ukraine, there are persistent tensions on the Ukrainian front.
More and more people are talking of the probability that the corridor will not be extended next month.
Queues are growing in the Black Sea to inspect ships leaving the Bosphorus Strait, despite the agreement on the corridor.
On the other hand, Ukraine argues that subsidies received by Polish farmers to compete with Black Sea origins are not in line with the rules of the World Trade Organisation.
The situation remains tense on this topic; neighbouring European producers are facing competition from Ukrainian origins.
Meantime, according to the Agriculture Ministry, grain exports for the 2022/23 season stood at 46.7 million tonnes as of June 12.
The volume so far in the current July-to-June season included almost 16.1 million tonnes of wheat, 27.7 million tonnes of corn and about 2.67 million tonnes of barley.
The ministry said grain exports during June were 1.4 million tonnes.
From the Middle Kingdom, large-scale harvest work of wheat in central China’s Henan Province has been basically completed, according to the province’s bureau of agriculture and rural affairs.
Henan experienced prolonged periods of rainy weather, which affected the wheat harvest.
Timely efforts have been made to carry out agricultural machinery harvesting on the rain-hit wheat fields and drying the soggy grain to minimize losses in grain production.
Meantime, Harvest is followed by planting.
As of Sunday, the total sown area of summer grain in Henan has reached 78.02 million mu (around 5.2 million hectare), accounting for 85.7 percent of the estimated total sown area.
A main grain producing area in China, Henan has a sown area of wheat stable at more than 85 million mu and its wheat output accounts for a quarter of the country’s total.
In India, the government has imposed a limit on the amount of wheat stocks traders can hold in an effort to bring down prices, food secretary Sanjeev Chopra told reporters on Monday.
India will also provide 1.5 million tonnes of wheat to bulk consumers such as flour millers, as part of efforts to bring down prices, which have risen 8% in a month, Chopra said.
On the international scene, Algerian state agency ONAB is believed to have bought an unknown volume of animal feed corn to be sourced from optional origins in an international tender for up to 140,000 tonnes which closed on Thursday.
It was believed to have been purchased at around $260 a tonne c&f and would be sourced from optional origins.
The shipment was sought in four 35,000 tonne consignments: one for immediate shipment by June 30 at the latest and the others for shipment between July 1-15, July 15-31 and Aug. 1-15.
Algerian state agency ONAB is believed to have made no purchase in a tender for up to 35,000 tonnes of soymeal which closed on June 8.
Shipment was sought between July 1-15.
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said that it will seek 60,000 tonnes of feed wheat and 20,000 tonnes of feed barley to be loaded by September 30 and arrive in Japan by November 30 via a simultaneous buy and sell (SBS) auction to be held on June 19.
In outside markets …
Energy markets saw oil prices falling by around $3 a barrel, after analysts highlighted rising global supplies and concerns about demand growth.
Notably, Brent crude futures fell $2.95, or 3.9%, to settle at $71.84 a barrel, their lowest since Dec. 2021.
West Texas Intermediate crude fell $3.05, or 4.4%, to settle at $67.12 a barrel.
Goldman Sachs cut its oil price forecasts early on Sunday, citing higher-than-expected supplies later this year and through 2024.
Also weighing on investors’ minds, Chinese demand has shown no signs of materializing.
Thus, there are definitely fears that OPEC and IEA today will cut their demand forecasts.
However, on this morning, oil prices traded up on bargain hunting, recovering some ground from the previous day’s plunge, but gains were limited as investors remained cautious ahead of key policy decisions by the U.S. Federal Reserve and other central banks.
Thus, Brent crude futures climbed 52 cents, or 0.7%, to $72.34 a barrel by 03:40 GMT.
U.S. West Texas Intermediate (WTI) crude was at $67.47 a barrel, up 35 cents, or 0.5%.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, edged higher on Monday buoyed by a pick up in demand for capesize vessels.
The overall index, indeed, rose 1 point, or 0.1%, to 1,056, its highest level since May 30.
Notably, the capesize index added 18 points, or 1.2%, to 1,532.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes carrying commodities such as iron ore and coal, increased $142 to $12,702.
The panamax index, however, fell 2 points, or 0.2% at 1,144.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, also fell $21 to $10,295.
Among smaller vessels, the supramax index lost 10 points at 726, touching an almost 4-month low.
In equity markets, US stock indexes moved moderately higher, on strength in technology sector.
Also, M&A activity was supportive for stocks after Nasdaq Inc agreed to Adenza from buyout firm Thoma Bravo for $10.5 billion, and Novartis AG agreed to buy Chinook Therapeutics Inc for as much as $3.5 billion.
The consensus is that today’s U.S. consumer price report will show May CPI eased to +4.1% y/y from +4.9% y/y in April.
Thus, market odds for the Fed to raise the fed funds target range by +25 bp at Wednesday’s FOMC meeting stand at 25%.
As a result, investors seen high-growth stocks as some of the biggest beneficiaries of lower rates, and they led the market Monday.
The 10-year T-note yield, however, rose +1.0 bp to 3.749%.
On Wall Street, the S&P 500 rose Monday to 4,338.93 and its highest close since April 2022.
The Dow Jones Industrial Average gained 0.6% to 34,066.33.
The Nasdaq composite rallied 1.5% to 13,461.92.
On this morning, Asian stock markets were mostly higher.
Shanghai declined while Tokyo and Hong Kong advanced.
Notably, the Shanghai Composite Index lost less than 0.1% to 3,226.89 after China’s central bank lowered its one-week lending rate for the first time since last summer.
That appeared to reflect official concern about the health of China’s economic recovery after growth in factory and consumer activity weakened.
The Nikkei 225 in Tokyo surged 1.9% to 33,053.90 and the Hang Seng in Hong Kong advanced 0.4% to 19,478.55.
The Kospi in Seoul added 0.6% to 2,644.78 and Sydney’s S&P-ASX 200 was 0.1% higher at 7,129.50.
New Zealand and Bangkok advanced while Singapore and Jakarta declined.
In currency trading, the dollar index recovered from a 2-1/2 week low and finished slightly higher by +0.08%, on strength in T-note US yields.
Also, a decline in the yuan to a 6-1/4 month low was positive for the dollar.
Notably, the EUR/USD climbed to a 2-1/2 week high and rose by +0.09%, as the European Central Bank is expected to hike interest rates by another quarter percentage point on Thursday.
The USD/JPY rose by +0.15%, with the yen giving up overnight gains and moving slightly lower, as Japanese economic reports were dovish for BOJ policy and negative for the yen after Japan’s May PPI rose less than expected and after May machine tool orders posted their largest decline in 2-3/4 years.
Notably, Japan May PPI eased to +5.1% y/y from +5.9% y/y in Apr, slower than expectations of +5.6% y/y.
Japan May machine tool orders fell -22.2% y/y, the steepest pace of decline in 2-3/4 years.
On this morning, the dollar declined to 139.40 yen from Monday’s 139.62 yen.
The euro advanced to $1.0778 from $1.0756.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
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