Good morning Farmer Family …
US farm markets rose on Tuesday.
The wheat market posted solid gains, with Chicago SRW contracts up 1.72%, Kansas City HRW rallied 2.15% higher, and MPLS spring wheat 2.1% higher.
Corn prices closed with 1.18% gains.
Soybean posted only some fractional gains about 0.2%, while meal was up 0.4%, and bean oil 0.57% higher.
Equity markets turned up, stemming a five-session rout after key U.S. data bolstered bets of a smaller interest rate hike by the Federal Reserve at its next meeting.
Meantime, wheat and corn prices continued to recover from multi-month lows, as the dip in grain prices appeared to have spurred export business.
Algeria, Tunisia and Jordan bought wheat this week.
The U.S. Department of Agriculture on Tuesday confirmed a private sales of 612,000 tonnes of U.S. corn to China.
That would be the largest sale at least on a weekly basis to China since April 2022.
Uncertainty about talks to extend the Ukrainian grain export corridor lent an additional support both for wheat and corn.
Negotiations, indeed, continue, the United Nations and Turkey said on Tuesday.
However, Kyiv rejected a Russian push for a reduced 60-day renewal.
Spillover strength from wheat lent to corn some additional support as well.
Soybean prices, meantime, posted smaller advances as pressure from the ongoing harvest of a large Brazilian crop hung over the market.
In this context, corn basis bids were steady to slightly firm across the central U.S. on Tuesday after trending 1 to 2 cents higher at three Midwestern locations.
Soybean basis bids held steady across the central U.S..
Commodity funds were net buyers of CBOT corn, wheat, soyoil and soymeal futures contracts, and were net even in soybean futures.
On this morning, Chicago wheat prices rose more than 1% to a one-week high.
Corn and soybeans rose for a second straight session.
Notably, the most active wheat contract on the Chicago Board of Trade added 1.2% to $7.04-1/4 a bushel, as of 01:07 GMT, the highest since March 6.
Corn added 1.2% to $6.28-1/4 a bushel and soybeans gained 0.4% at 14.99-3/4 a bushel.
In energy markets, oil prices dropped over 4% to a three-month low on Tuesday.
Brent futures, indeed, fell $3.32, or 4.1%, to settle at $77.45 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $3.47, or 4.6%, to settle at $71.33.
They were the lowest closes for both benchmarks since Dec. 9 and their biggest one-day percentage declines since early January.
In addition, both contracts fell into technically oversold territory for the first time in weeks.
Shockwaves from Silicon Valley Bank’s collapse triggered big moves in bank shares.
U.S. consumer prices increased solidly in February.
Data showed the U.S. Consumer Price Index (CPI) rose 0.4% in February from 0.5% in January.
Tuesday’s crude price decline also came ahead of U.S. data expected to show energy firms added about 1.2 million barrels of oil to crude stockpiles during the week ended March 10.
Limiting crude’s price decline – at least earlier in the day – was a monthly report from the OPEC, projecting higher oil demand in China in 2023.
OPEC, however, left unchanged its forecast for world oil demand to increase by 2.32 million barrels per day, or 2.3%, in 2023.
On this morning, oil prices rebounded more than 1%.
Brent crude futures, indeed, climbed $1.04, or 1.3%, to $78.49 a barrel by 07:10 GMT.
U.S. West Texas Intermediate crude futures (WTI) gained 98 cents, or 1.4%, to $72.31 a barrel.
Chinese refineries processed 3.3% more crude in the first two months of 2023 compared with the same period a year earlier, data showed on Wednesday, spurred by fuel export policy and independent refiners processing.
On the supply side, Saudi Arabia’s energy minister on Tuesday said the OPEC+ will stick to production cuts agreed in October until the end of the year.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, rose to a near 12-week high on Tuesday, helped by higher rates for all vessel segments, especially capesizes.
The overall index, indeed, was up 122 points, or about 8.3%, to 1,587 – its highest since Dec. 22.
Notably, the capesize index gained 289 points, or about 15.9%, to a more than 11-week high of 2,110.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, increased $2,401 to $17,500.
The panamax index rose 63 points, or about 3.8%, to an over four-month high of 1,743.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased $564 to $15,685.
Among smaller vessels, the supramax index was up 28 points at 1,263.
In equity markets, US stock indexes posted moderate gains.
Bank stocks moved higher on optimism that actions taken by government agencies to support the banking system will prevent broader contagion.
U.S. Feb CPI rose +0.4% m/m and +6.0% y/y, right on expectations, with the +6.0% y/y gain the smallest year-on-year increase in 17 months.
Feb CPI ex-food and energy eased to +5.5% y/y from +5.6% y/y in Jan, right on expectations and the slowest pace of increase in 14 months.
However, stock indexes fell back from their best levels on geopolitical concerns after a Russian fighter jet collided with a U.S. drone over the Black Sea.
Tuesday’s stock rebound has sapped the safe-haven demand for government debt and pushed bond yields higher.
As a result, the yield on the 10-year Treasury jumped to 3.66% from 3.55%.
The yield on a two-year Treasury, or the difference between the market price and the payout at maturity, climbed back to 4.21% from 4.02% late Monday, another huge move.
Also, the 10-year German bund yield rose +16.0 bp at 2.420%, and the 10-year UK gilt yield climbed +11.8 bp to 3.488%.
Signs of economic softness, combined with the regional banking scare, have increased the odds that the Federal Reserve will implement a modest, 25 basis-point hike to its key interest rate at the conclusion of its two-day policy meeting on March 22.
In this context, the Dow Jones Industrial Average rose 336.26 points, or 1.06%, to 32,155.4, the S&P 500 gained 64.8 points, or 1.68%, to 3,920.56 and the Nasdaq Composite added 239.31 points, or 2.14%, to 11,428.15.
On this morning, the Shanghai Composite Index rose 0.7% to 3,267.15 after Chinese economic activity improved in January and February but less than expected after anti-virus controls ended.
Retail sales rose 3.5% over a year earlier, rebounding from December’s 1.% contraction.
Factory output rose 2.4%, up from 1.3%.
The Nikkei 225 in Tokyo advanced 0.1% to 27,258.01 after major Japanese companies announced they had agreed with unions to the biggest wage increases in almost two decades.
Low wages are seen as a major drag on economic growth in Japan, but fewer than one in five Japanese workers belong to unions.
The Hang Seng in Hong Kong jumped 1.3% to 19,490.35 and the Kospi in Seoul surged 1.5% to 2,384.38.
India’s Sensex opened up 0.2% at 58,297.50.
New Zealand and Southeast Asian markets advanced.
In currency trading, on this morning, the dollar declined to 134.09 yen from Tuesday’s 134.19 yen.
The euro rose to $1.0754 from $1.0741.
Going back to analyzing the other agricultural markets …
From South America, Brazil’s Conab reports that as at 11 Mar, 2022-23 first (full-season) maize harvest is 26% complete (23% previous week, 34% previous year).
Second (safrinha) maize crop plantings at 73% complete (64%, 87%).
Fieldwork is nearing completion in Mato Grosso, with crops in generally good condition, while heavy rainfall limited sowings progress in Parana.
In Mato Grosso do Sul, high soil moisture following earlier precipitation hampered fieldwork in places, with reported instances of pest infestation.
Soybean harvest at 53% complete (44%, 63%), with most progress noted in Mato Grosso.
Despite recent rainfall, crop losses were reported in Rio Grande do Sul due to prolonged drought.
While precipitation delayed fieldwork in Parana, favourable conditions aided progress in Mato Grosso do Sul and Minas Gerais
A Reuters poll of 12 analysts shows an expectation that Brazil’s 2022/23 corn production will reach 126.62 MMT.
That would be a year-over-year increase of nearly 12%, if realized.
These estimates took into consideration a 4.4% increase in planted acres and the likelihood of improved per-acre yields this season.
Brazilian consultancy Pátria Agronegócios was the latest group to serve up an estimate for the country’s 2022/23 soybean production, offering a projection of 149 MMT.
Most current estimates are trending somewhere between 147 MMT and 152 MMT.
Cordonnier left his Brazilian crop estimates at 151mmt for soybeans and 121mmt for corn.
Meantime, Brazil’s corn exports fell sharply in February.
Last month, total corn shipments from Brazil dropped by more than 60% compared to January, to around 2.275 million tonnes.
According to revised Brazilian trade data, the country’s corn sales to China were only 70,000 tonnes last month, down from 983,700 tonnes in January and more than 1 million tonnes in December.
China had became Brazil’s biggest corn buyer in December and in January.
But last month, Brazil’s more traditional corn importers became relevant again, with Japan demanding 542,000 tonnes in addition to South Korea, which imported 276,200 tonnes.
Exporters are focusing on shipping Brazil’s new soy crop to clients overseas.
February is not traditionally a month for corn exports from Brazil, that will only increase shipments from July onwards.
However, China bought “a lot” of corn from the United States in February, which helps explain the fall in Brazil’s sales.
As for Argentine, South American crop consultant Dr. Michael Cordonnier cut another 3mmt each from his Argentine soybean and corn crop estimates.
He now forecasts the soybean crop at 28mmt and the corn crop at 37mmt.
His minimum forecasts were lowered to 25mmt for soybeans and 22mmt for corn.
In Europe, grain markets continued to rebounde, while rapeseed lost more ground.
Euronext wheat edged higher in afternoon trade as a Russian push for a shorter extension of a Black Sea grain agreement with Ukraine created uncertainty before a deadline later this week.
Volatility in financial markets, as investors grappled with the collapse of three U.S. banks, contributed to see-saw trading in grains.
Thus, May milling wheat on Paris-based Euronext, was up 0.3% at 267.75 euros ($287.19) a tonne.
However, if the Ukrainian shipping agreement is extended, we will see all countries sailing in the Black Sea peacefully without attacks.
Meantime, a large part of the Algerian wheat purchase on Monday is likely to be sourced from the Black Sea, including the EU exporters there.
So competition to the north EU is not letting up nor is likely to.
Per latest data from the European Commission, soft wheat exports from the European Union in the 2022/23 season that started in July had reached 21.54 million tonnes by March 12, up 8.6% from 19.84 million by the same week in 2021/22.
However, EU weekly wheat exports fall to only 208,475 mt.
The EU’s top five soft wheat export destinations were, Morocco, Algeria, Nigeria, Egypt, and Saudi Arabia.
A breakdown of the EU data showed France remained by far the biggest EU soft wheat exporter this season, with 8.59 million tonnes shipped, followed by Romania with 2.63 million, Germany with 2.50 million, Lithuania with 1.93 million and Latvia with 1.85 million.
As for barley, EU barley exports so far in 2022/23 totalled 4.28 million tonnes, down 29% from 6.03 million a year ago.
As for corn, EU maize imports were at 18.99 million tonnes, 60% above a year-earlier 11.84 million.
The EU’s five top maize import supplier countries so far in 2022/23 were Ukraine, Brazil, Canada, Serbia, and Russia.
Spain remained the EU’s leading importer so far in 2022/23 with 6.62 million tonnes, ahead of the Netherlands at 2.22 million, Portugal with 1.51 million, Hungary with 1.41 million and Poland with 1.28 million, the data showed.
As for soybean EU imports during the 2022/23 marketing year are trending moderately below last year’s pace after reaching 7.71 MMT.
EU soymeal imports are also down year-over-year, with 10.88 million metric tons during the same period.
Rapeseed imports currently stand at 5.76 million tonnes, against 3.67 million last year to date.
However, EU weekly rapeseed imports fell 67% to 156k mt, and soybean by 47%.
The Commission said it was still experiencing problems compiling grain trade figures from Germany and Italy.
Export data submitted by Germany from November may be inaccurate following the country’s switch to a new declaration system, while for Italy import data was available only up to Dec. 19, it said in a note.
In this context, standard 12% protein wheat for March delivery in Hamburg was offered for sale at about 1 euro under the Euronext May contract, with buyers seeking about 3 euros under.
From the Black Sea basin, the Black Sea Grain Deal is set to be renewed for another 120 days this weekend unless a party objects.
Russia is trying to negotiate a 60-day extension, while Ukraine is set on keeping the 120 day period.
The next 4 months are a more critical time for Ukraine’s corn shipments, as wheat exports typically drop off in the first 6 months of the calendar year.
The official statement from the UN released yesterday states “Within the context of the Black Sea Grain Initiative, the agreement foresees a renewal of 120 days but, in the present circumstances, the Secretary-General and his team are focused, in close contact with all the parties, on doing everything possible to ensure continuity of the Initiative. Regarding the parallel Memorandum of Understanding focused on the export of Russian food and fertiliser, Rebeca Grynspan, the head of UNCTAD, and her team, as well as the Secretary-General himself have spared no efforts to facilitate that trade. Meaningful progress has been made but it is true that some obstacles remain, notably with regard to payment systems. Our efforts to overcome those obstacles will continue unabated”.
Meantime, according to APK-Inform Agency, last week the prices for Ukrainian grain were mainly declining under the pressure from total uncertainty regarding the extension of the “grain agreement”, which held back trading activity in the direction of deep-sea ports.
At the same time, the number of grain offers in the direction of the Danube port declined slightly owing to the previous reduction of bid prices.
Thus, the companies, which needed to urgently attract large batches of grain (mostly wheat) for planned ships, were forced to raise the prices.
Notably, bid prices for milling and feed wheat in the Danube ports mainly varied between 200-215 and 195-205 USD/t CPT-port, and for corn – 195-205 USD/t CPT-port.
The demand for barley remained quite limited, and prices ranged from 190 to 195 USD/t.
The slow pace of grain supply from farmers led to a gradual reduction of barley stocks of importers and some recovery of their demand.
From Russia, Rosstat reports that Russia’s 2022-23 grain production is estimated at 157.7mmt (+30% on previous year), including wheat at 104.2mmt (+37%), barley at 23.4mmt (+30%), maize at 15.9mmt (+5%).
Oilseed production at 29.1mmt (+17%), including sunflowerseed at 16.4mmt(+5%), soybeans at 6.0mmt (+26%) and rapeseed at 4.5mmt (+62%).
Meantime, according to SovEcon, Russia is expected to export 4.2mmt of wheat in March.
This figure is double last year’s exports for the same month.
Russia is increasing its exports, which dropped in February due to bad weather.
From Australia, the Bureau of Meteorology has announced that the 2022-23 La Niña has ended and declared that Australia is on El Niño watch.
The tropical Pacific Ocean is now in a neutral phase, but there are signs of an El Niño forming later in the year.
An El Niño watch means there is a 50 percent chance of an El Niño forming in 2023.
Meantime, local markets remained largely unchanged along the east coast through wheat and barley.
Western Australian values were a touch softer while canola was off yesterday across the boards.
On the international trade scene, Algeria’s OAIC (state grains agency) reportedly purchased around 540,000 tonnes of milling wheat at $308.00-$312.00 c&f, for Arp/May shipment.
Algeria issued an international tender to purchase 35,5k mt of animal feed corn to be sourced from Argentina.
The deadline for offers is on Wednesday, and the grain is for shipment during the first half of April.
ODC Tunisia purchased 234 000 tons in its international tender of soft wheat from optional origins.
The lowest price (€292/t C&F) was offered by the trading house FarmSense, while the higest price was offered by Casillo at €305.69/t C&F.
The grain is comprised of eight consignments that are for shipment between late March and late May.
Jordan’s state grain buyer has issued an international tender to buy up to 120,000 tonnes of milling wheat, which can be sourced from optional origins.
The deadline for submission of price offers in the tender is March 21.
Shipment in the tender is sought in a series of possible combinations in 50,000 to 60,000 tonne consignments.
Possible shipment combinations are for Sept. 1-15, Sept. 16-30, Oct. 1-15 and Oct. 16-31.
A new tender had been anticipated after Jordan bought 60,000 tonnes of wheat in its previous tender for up to 120,000 tonnes on Tuesday, in which CHS sold 60k wheat at $309.75 CFR Aqaba for shipment 1-15 August 2023.
Jordan also has a separate tender for up to 120,000 tonnes of animal feed barley which closes later on Wednesday.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
