Good morning, Farmer Family …
US farm markets were mixed on Tuesday.
Corn prices traded as high for most of the session, but lost ground in the afternoon trade, settling 0.77% lower at the bell.
Soybeans were the big winner, up 1.93%.
The rest of the soy complex also closed higher with meal up 0.03%, and soyoil jumping by +2.69%.
Wheat prices were mixed, with Chicago SRW caught a bid mid-morning, after trading to their highest price since May 17th.
Thus, the market softened up into the afternoon trade, finishing the day just 0.39% higher.
Meanwhile Kansas City HRW fell by -0.60%, and MGEX HRS closed 0.55% weaker.
Corn prices were mostly higher on the Midwest weather jitters, but the nearby July contract fell on profit-taking and worries about demand for U.S. supplies.
Crop consultant Michael Cordonnier cut his US corn yield forecast by 1 bu. to 178 bu. per acre, noting moisture stress across 45 percent of US corn acres.
He now projects the US corn crop at 14.86 billion bushels.
Thus, deferred corn prices climbed on worries about crop stress, but front-month July corn bucked the higher trend, also falling in response to weak demand.
Corn demand, indeed, should stay pretty lousy in the caming weeks, as Brazil will start to offer corn on the market.
As for soybean, prices rose sharply hitting a one-month high, in a context of lower crop ratings posted on Monday by the USDA, and the persistence of a water deficit, which may hurting crop prospects.
Thus, Dr Cordonnier trimmed his soybean yield by 0.5 bu. to 51.5 bu. per acre.
Meantime, the spillover strength from crude oil which climbed more than 3% after China’s central bank lowered a short-term lending rate for the first time in 10 months, supported the market, as soybeans and corn sometimes follow trends in crude oil.
In addition, Chinese demand will be key for soybeans and corn, and the Chinese central bank’s decision is seen as supporting the economy, and therefore prices.
Meantime, the US Environmental Protection Agency is expected to announce its biofuel mandate targets on June 21.
EPA previously had agreed to finalise quotas by June 14.
The delay could allow EPA to incorporate more data on biofuel production into the final rule.
As for wheat, Chicago SRW rose, posting the day’s highs after Russian President Vladimir Putin said Moscow was considering withdrawing from the U.N.-brokered Black Sea grain export deal because the West had cheated Moscow by implementing none of the promises to get Russian agricultural goods to world markets.
That is raising uncertainty about global grain supplies.
In this context, commodity funds were net buyers of Chicago Board of Trade soybean, soyoil, wheat, corn and soymeal futures contracts.
On this morning, soybean prices edged lower, as traders locked in profits after the rally in the previous session.
Wheat snapped a four-session rally and corn futures also fell, extending losses to a second consecutive session.
Notably, the most-active soybean contract on the Chicago Board of Trade was down 0.2% at $13.96-3/4 a bushel, as of 04:07 GMT.
Wheat lost 0.2% to $6.35 a bushel, while corn gave up 0.8% to $6.07-3/4 a bushel.
For soybeans, a negative on the demand front is a 1.6 million metric ton decline in European Union soybean imports, analysts said.
The U.S. soybean processing pace likely slowed for a second straight month in May as some crushers idled facilities for seasonal maintenance, analysts said ahead of a monthly National Oilseed Processors Association (NOPA) report due on Thursday.
NOPA members were estimated to have crushed 175.880 million bushels last month.
The estimate implies a daily crush rate of 5.674 million bushels, down from 5.774 million bushels a day in April and the slowest daily rate since September, according to NOPA data.
The monthly crush, however, was still expected to be the largest May crush on record.
If the estimate is realized, indeed, it would be up 1.5% from the 173.232 million bushels processed by NOPA members in April and up 2.8% from the May 2022 crush of 171.077 million bushels, which is the current record for the fifth month of the year.
On the other hand, soyoil supplies held by NOPA members as of May 31 were forecast at 1.942 billion pounds.
Soyoil stocks at the end of April totaled 1.957 billion lbs, a 14-month high, while stocks at the end of May 2022 stood at 1.774 billion lbs.
From South America, Brazilian farmers will reap record soybean and corn crops this year, the government’s food supply and statistics agency Conab said on Tuesday, citing favorable conditions in key growing regions.
Notably, farmers are poised to harvest 155.7 million metric tons of soybeans in the 2022/2023 cycle, up 24% from last season.
Growers will also reap 125.7 million metric tons of corn nationally, 11.1% more than in 2022.
More than 99% of Brazil’s soybean fields have been harvested while growers have only begun reaping their second corn.
Conab said Brazilian farmers have harvested less than 1% of their second corn crop in top grower Mato Grosso state.
It added grain filling went well even with somewhat scarce rains in May, raising the potential for a full second-corn harvest there.
However, to now, higher Brazilian supply was partially offset by the arrivals of soybeans at the port of Rosario falling to the lowest levels since the turn-of-the-century.
In Europe, grain markets were hesitant, while rapeseed continued its rally in the wake of soyoil higher.
There are growing concerns about the sustainability of the Ukraine grain corridor.
Weather conditions in Europe remains very dry.
However, international activity have been lackluster also this week.
The European Commission showed soft wheat exports on June 11 for the EU at 29.97 million tonnes against 26.46 million last year to date.
Barley exports stood at 6.27 million tonnes against 6.88 last year.
Rapeseed imports were posted at 7.16 million tonnes against 5.19 million last year.
Soybean imports had reached 12.33 million metric tons by June 11, down 12% from 13.95 million a year earlier.
Russian 2023 harvest is looking promising again.
In France, the Ministry of Agriculture estimates the winter barley harvest at 9.07 million tonnes against 8.45 last year.
Rapeseed production is also estimated to be up on last year at 4.63 million tonnes against 4.51, mainly as a result of the increase in surface area, posted at 1.35 million hectares against 1.23 million last year.
The average yield of winter barley for France is thus estimated at 6.83 t/ha and that of rapeseed at 3.44 t/ha against respectively 6.54 and 3.68 t/ha last year.
Meantime, Farm office FranceAgriMer lowered on Wednesday its forecast for French soft wheat exports outside the European Union in the 2022/23 season to 10.2 million tonnes from 10.3 million projected in May.
The office also slightly cut its forecast for 2022/23 French soft wheat exports within the 27-member bloc to 6.38 million tonnes from 6.39 million previously.
As a result, it increased its projection of French soft wheat stocks at the end of the season on June 30 to 2.89 million tonnes from 2.72 million projected last month.
FranceAgriMer also increased projected 2022/23 barley stocks, now seen at 1.26 million tonnes, from 1.12 million earlier, following a cut in its export forecast outside the EU to 3.15 million, down from 3.20 million last month, while intra-EU exports were cut to 3.12 million from 3.15 million seen in May.
For maize it cut its ending stock forecast to 2.11 million tonnes from 2.15 million projected last month.
From North Africa, Egypt has allocated 127.7 billion Egyptian pounds ($4.14 billion) for its food subsidy programme in the financial year 2023-2024 which starts on July 1.
From Ukraine, the European Commission’s latest MARS report for Ukraine has pegged 2023-24 canola area at 1.8 million hectares (Mha) (1.0Mha previous year, 1.0Mha average). With productivity placed at 3.1t/ha (2.9t/ha, 2.6t/ha), production is forecast at 5.5Mt (2.9Mt, 2.7Mt).
Using remote sensing, it estimates the share of canola has significantly increased in controlled areas at the expense of wheat.
Area planted excluding Donetsk, Zaporizhzhia, Luhansk and Kherson seen at 1.6Mha (0.8Mha, 0.9Mha).
With a yield of 3.1t/ha (3.0t/ha, 2.7t/ha), output seen at 5.0Mt (2.5Mt previous year, 2.4Mt average).
Meantime, Ukraine’s grain exports for the 2022/23 season stood at 47.1 million tonnes as of June 14, Agriculture Ministry data showed on Wednesday.
The volume so far in the current July-to-June season included 16.2 million tonnes of wheat, 27.9 million tonnes of corn and about 2.7 million tonnes of barley.
The ministry said grain exports during June were 1.8 million tonnes.
From Russia, according to the Ministry of Agriculture of the Russian Federation, the 2023 harvesting campaign has started in Russia.
At the moment, farmers from Dagestan, the Stavropol Territory and the Chechen Republic have started work.
Harvesting also will soon start in other regions.
The total sown area in 2023 will exceed 85 million hectares. The Ministry of Agriculture predicts grain harvest this year in the amount of at least 123 million tons, of which 78 million tons will be wheat.
Meantime, Russia’s agricultural exports will grow by at least 10% this year, despite being barred from selling to “unfriendly countries”, Russia’s RIA state news agency reported early on Wednesday.
“The closure of trade relations with unfriendly countries did not stop agricultural exports, we increased supplies both in rouble and in physical terms,” RIA cited Deputy Prime Minister Viktoria Abramchenko as saying.
Abramchenko said that in 2022 agricultural exports exceeded $41.5 billion and were 12% higher than a year earlier.
When asked whether a growth of more than 10% is possible this year Abramchenko said “yes,” RIA reported.
From Australia, rainfall totals for the week were variable but we saw some good falls in many areas with southwest Qld picking up 5-50mm.
Parts of NSW picked up 5-100mm with the highest totals in the southwest.
In Vic the Goulburn and Ovens-Murray valleys saw up to 200mm with the Wimmera and Western Districts getting up to 100mm.
In SA the South East saw between 25-100mm with Eyre Peninsula picking up 5-50mm.
Southwest WA and the Lower Great Southern saw between 10-200mm.
Meantime, the country exported 3,008,382 tonnes of wheat and durum in April, down 20 percent from the 3,757,439t shipped in March, according to the latest data from the Australian Bureau of Statistics.
China was the biggest destination by far in the containerised wheat market with 62,113t, or 30pc of the total 209,861t shipped in April.
China accounted for 923,066t, or 33pc, of the 2,798,521t of bulk wheat and durum, also making it the major destination for wheat leaving the country in ships’ holds in April.
Malaysia on 28,233t and Taiwan on 26,994t were the second and third-biggest containerised wheat export destinations for April, while volume to Vietnam fell 67pc to 23,997t from 72,745t in March.
In bulk exports, Thailand on 310,750 and Indonesia on 281,322t were the second and third-biggest markets, and Turkiye and Vietnam have shown up as destinations for bulk durum cargoes.
Australia’s April 2023 wheat and durum exports are up 14pc on the 2,593,273t shipped in April last year.
In this context, local markets showed some life yesterday across the board in a mixed way.
Current crop wheat in SA was a touch firmer and saw some more grower liquidity exchange hands.
The ASX eastern wheat January contract settled the day down $2/t.
Barley markets were largely unchanged with $280/t FIS still trading in Kwinana port zone on current crop.
Canola markets again were a touch firmer on current crop and we are likely to see further strength in bids today, because Matif and Winnipeg markets had been stronger overnight.
On the international trade scene, the announced merger between Bunge and Viterra will create a $34 billion global trading giant.
The merger would boost the dominance of Brazil’s biggest grains exporter and wheat miller, gaining leverage over farmers in some regions.
Iranian state-owned animal feed importer SLAL has issued international tenders to purchase up to 120,000 metric tons of animal feed corn and 120,000 metric tons of soymeal
Japan is buying 60,000 t of fodder wheat and 20,000 t of fodder barley.
The Taiwan Flour Millers’ Association purchased an estimated 56,000 metric tons of milling wheat to be sourced from the United States in a tender on Wednesday.
The purchase involved various wheat types for shipment from the U.S. Pacific Northwest coast between July 31 and Aug. 14.
The purchase involved U.S. dark northern spring wheat of a minimum 14.5% protein content bought at an estimated $341.35 a metric ton FOB U.S. Pacific Northwest coast or $368.30 c&f including ocean shipping to Taiwan.
It also involved hard red winter wheat of a minimum 12.5% protein content bought at $316.32 a metric ton FOB/$343.27 a metric ton c&f and soft white wheat of a minimum 8.5% and maximum 10% protein bought at $278.01 a metric ton FOB/$304.96 a metric ton c&f.
The seller of dark northern spring grain was trading house CHS.
Trading house Columbia Grain International sold the hard red winter and soft white.
In outside markets …
Energy markets saw oil prices climbing over 3% on hopes for growing fuel demand after China’s central bank lowered a short-term lending rate for the first time in 10 months, boosting crude prices after steep losses the previous session.
Notably, Brent crude futures settled up $2.45, or 3.4%, to $74.29 a barrel.
U.S. West Texas Intermediate (WTI) crude gained $2.30, or 3.4%, at $69.42 a barrel.
On Monday, crude prices had fell by about 4%.
The Organization of Petroleum Exporting Countries (OPEC) kept its forecast for 2023 global oil demand growth steady for a fourth month on Tuesday, slightly increasing expectations of Chinese demand growth.
Another monthly report by the International Energy Agency (IEA) due on Wednesday will provide further trading cues.
However, U.S. crude oil rose by about 1 million barrels in the week ended June 9, according to market sources citing American Petroleum Institute figures on Tuesday, contrary to the analysts average estimate for a decline.
Government data on stockpiles is due on Wednesday.
On this morning, oil prices inched up slightly in Asian morning trade.
Brent crude futures were up 9 cents, or 0.1%, at $74.38 a barrel by 03:40 GMT.
U.S. West Texas Intermediate (WTI) crude was at $69.43 a barrel, up 1 cent.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, gained 1.7%, rising to two-week highs, helped by higher rates for capesize vessel segment.
The overall index, indeed, was up 18 point at 1,074.
Notably, the capesize index extended gains for the seventh straight session, adding 55 points, or 3.6%, to 1,587.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes carrying commodities such as iron ore and coal, increased $461 to $13,163.
The panamax index, was unchanged at 1,144 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased $2 to $10,297.
Among smaller vessels, the supramax index lost 4 points at 722.
In equity markets, US stocks rose moderately on outlook for a Fed pause rate hikes.
U.S. May CPI eased to +4.0% y/y from +4.9% y/y in Apr, better than expectations of +4.1% y/y and the smallest increase in over two years.
Also, May CPI ex-food and energy eased to +5.3% y/y from +5.5% y/y in Apr, the smallest increase in 1-1/2 years but higher than expectations of +5.2% y/y.
That led traders to firm up expectations of a rate pause by the Fed to 94%.
However, traders are also bracing for the possibility of a hawkish surprise, with a 60% probability priced in for a hike in July, according to CME FedWatch Tool.
As a result, perhaps reflecting some of those concerns, two-year Treasury yields hit 4.7070% overnight, the highest since March, before easing 4 basis points to 4.6519% in Asian hours.
The benchmark 10-year yields also climbed to the highest in 2-1/2 weeks at 3.8450%.
They were last down 3 basis points to 3.8056%.
U.S. stocks had also carryover support from a rebound in Chinese stocks as the country considered broad stimulus measures to revive the economy, including interest rate cuts.
On this wake, the PBOC unexpectedly lowered its seven-day reverse repurchase rate, which bolsters the outlook for a cut in one-year policy loans.
In this context, on Wall Street, the S&P 500 rose 30.08 points to 4,369.01, the Dow Jones Industrial Average gained 0.4% to 34,212.12 and the Nasdaq composite rallied 0.8% to 13,573.32.
On this morning, Asian stock markets were mixed.
The Shanghai Composite Index rose 0.2% to 3,241.57 and the Nikkei 225 in Tokyo advanced 1.5% to 33,495.29.
The Hang Seng in Hong Kong lost less than 0.1% to 19,511.86.
The Kospi in South Korea was off 0.7% at 2,619.68 and Sydney’s S&P-ASX 200 gained 0.3% to 7,159.90.
India’s Sensex opened down 0.1% at 63,071.69.
New Zealand declined while Singapore and Bangkok advanced.
In currency trading, the dollar index fell to a 3-week low and finished down by -0.29%, as Tuesday’s U.S. May CPI report showed an easing of price pressures that boosted expectations for the Fed to pause its rate hike campaign.
Also, the strength in stocks Tuesday curbed liquidity demand for the dollar.
Notably, the EUR/USD rose by +0.26% and posted a 3-week high.
An unexpected increase in the German May ZEW business confidence index also was bullish for the euro.
The German May ZEW expectations of economic growth index indeed unexpectedly rose +2.2 to -8.5, stronger than expectations of a decline to -13.5.
As for the USD/JPY, it rose by +0.47%.
A rally in the Nikkei Stock Index curbed safe-haven demand for the yen, though Tuesday’s Japanese economic news was positive for the yen after the Japan Q2 BSI large manufacturing business conditions index indeed rose to -0.4 from -10.5 in Q1.
On this morning, The dollar declined to 140.12 yen from Tuesday’s 140.29 yen. The euro was unchanged at $1.0790.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
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