Good morning, Farmer Family …
US farm markets closed mostly lower, on Wednesday.
Corn prices fell 0.78%.
Soybeans followed suit down 0.79%.
Soymeal was the weak link, closing with 1.96% losses, while soybean oil closed up by 0.96% at the bell.
The wheat market closed with losses across all three classes, with
Chicago SRW ending 0.94% weaker, Kansas City HRW fell 0.76%, and Minneapolis HRS eased 0.06%.
Corn and soybean prices fell, backing down from multi-week highs, as traders weighed fears of flagging demand for grains and other commodities against worries about dry Midwest weather.
Wet weather will be moving across the Central and Southern Plains between today and Sunday, with some areas ready to receive another 1” or more to close out the week, according to the NOAA.
Areas farther east will remain relatively dry, in contrast.
However, the agency’s new 8-to-14-day outlook shows that more seasonally wet weather may be in store for the Northern Plains and upper Midwest between June 21 and June 27, with warmer-than-normal conditions likely for the Corn Belt, later this month.
Meantime, the EIA reported ethanol producers averaged 1.018 million barrels per day through the week that ended 6/9.
That was down by 18k bpd from the week prior, though ethanol stocks tightened 3% or by 722k barrel last week to 22.226 million.
International activity remained lacklustre, with little demand.
Grain traveling the USA railways added another 16,523 carloads last week.
That brings cumulative totals for 2023 to 454,832 carloads.
However, that is a year-over-year decrease of 8.4% so far.
On this wake, analyst estimates for the weekly Export Sales report range from 100k MT of net cancelations to 550k MT of net new sales for old crop corn.
New crop bookings are expected to be below 350k MT for the week that ended 6/8.
As for soybean, analysts are looking for FAS to report between 250k MT and 550k MT of old crop soybean sales for the week that ended 6/8.
Recall the USDA already announced two large private sales, to Spain and to Unknown destinations.
New crop bean bookings are estimated between 100k MT and 350k MT.
Soymeal sales are estimated between 150k and 300k MT for 22/23 and below 100k MT for 23/24.
Analysts are looking for fewer than 15k MT of bean oil bookings in the weekly update.
As for wheat estimates range 200k MT to 450k MT for the week that ended 6/8.
On the other hand, the Fed yesterday kept interest rates unchanged weighing on the dollar.
However, they signaled in new economic projections that borrowing costs will likely rise by another half of a percentage point by the end of this year.
In addition, the surprise increase in oil and diesel stocks in the USA also weighed on agricultural commodity prices, somewhat overshadowing, at least temporarily, the risk of downward revisions of corn and soya yields if the current water deficit persisted.
As for wheat, prices sagged on profit-taking after a four-session advance, and seasonal pressure from the expanding U.S. winter wheat harvest.
Seeding of the U.S. spring wheat crop is basically done and crop development is near average after a bit of a late start to the season.
About 90% of the U.S. crop has emerged.
In North Dakota, also about 90% of the spring wheat has emerged.
Crop condition ratings dropped slightly from last week on a national basis.
Currently 60% of the spring wheat is rated in good to excellent condition, down from 64% last week.
However, in North Dakota, crop conditions remain mostly favorable with 67% of the crop rated in good to excellent condition, but it should be noted that conditions are quite variable across the state.
Durum planting has also finished in the state.
Crop development is ahead of last year’s extremely slow pace.
Just under 80% of the planted durum has emerged and the crop so far is in great condition.
Temperatures in the main durum producing region haven’t been as hot as other areas of the state and in general, moisture is decent.
Good crop stands are being reported.
The most recent USDA/NASS crop progress report indicates that 88% of the state’s durum is in good to excellent condition.
In Montana, 71% of the durum has emerged – 64% of their crop is rated in fair condition and 34% in good condition.
Traders, however, continued monitoring headlines from Ukraine and the Black Sea region, with the Cremlin saying, Russia’s “goodwill” cannot last indefinitely when it comes to renewing the Black Sea grain deal.
In this context, corn basis bids were steady to weak across the central U.S. after sliding 3 to 5 cents lower at four Midwestern locations.
Soybean basis bids were mostly steady to weak after fading 5 to 10 cents lower across five Midwestern locations.
An Iowa processor bucked the overall trend after trending 10 cents higher
Commodity funds were net sellers for 1,000 lots of corn and 4,000 lots of wheat.
They were neutral on soybean.
On this morning, corn and soybean prices edged higher, while wheat fell.
Notably, the most active corn on the Chicago Board of Trade (CBOT) rose 0.33% to $6.09-3/4 a bushel, as of 04:04 GMT.
The soybean contract was up 0.11% at $13.89-3/4 a bushel, while wheat lost 0.12% to $6.29-1/2 a bushel.
The recent upside in soyoil and palm oil prices has been giving some support to soybeans.
Argentina’s Rosario grains exchange again cut the estimate for its nearly-concluded soybean harvest, with the latest forecast 5% below its last one.
From Canada, Canadian provincial crop news highlights regional differences, from dryness to excessive moisture.
Notably, the Manitoba Agriculture, Food and Rural Development crop report, for the week ending 13 June, reported that rainfall was variable across the province, with isolated storms bringing significant rainfall to western areas.
Since 1 May, some western areas have received more than 120pc of normal precipitation, while rains in much of the Central and Interlake regions are less than 60pc of the 30-year average.
2023-24 seeding is largely complete, aside from some fields that may need re-planting following recent storms.
Fields in the southwest are being assessed for storm damage, with cereal crops looking reasonable, while canola, soybeans and sunflowerseed may have been significantly affected.
From Central America, dozens of flights at an international airport in the northern Mexican state of Sinaloa were suspended Wednesday.
Farmers in at least 20 states, indeed, kicked off demonstrations on Tuesday, blocking traffic on highways and toll booths and occupying government offices, as well as the airport in Sinaloa state capital Culiacan, which has domestic flights and an international route to Phoenix, Arizona.
Producers urge President Andres Manuel Lopez Obrador to guarantee prices for corn, wheat and sorghum, saying government intervention is vital to counter a steep drop in international prices.
Notabily, farmers sent him a public letter last week asking for the price of corn to be set at 7,000 pesos ($402.90) per ton, wheat at 8,000 pesos ($460.45) per ton and sorghum at 6,500 pesos ($374.12) per ton to help keep them afloat as production costs rise.
However, Sinaloa Governor Ruben Rocha asked farmers to instead protest commodities trader Cargill and Mexican corn product makers Minsa and Gruma, implying they were responsible for lower prices.
From South America, Brazil’s CONAB estimated their corn production at 125.7 MMT, compared to 125.5 MMT last month and 132 MMT from the USDA.
CONAB set the 2nd crop output at 96.3 MMT from 96.2 last month.
As for soybean CONAB estimated the soybean crop 900k MT higher at 155.7 MMT.
USDA went with 156 MMT in the June WASDE.
Meantime, Brazil ANEC have revised up their June soybean export estimate by 1.7Mt, to 14.8Mt, soymeal exports lifted by 0.2Mt, to 2.5Mt, while corn exports were revised down by 0.1Mt, to 1.6Mt.
In Argentina, the Rosario grains exchange cut its forecast for the country’s 2022/2023 soybean harvest to 20.5 million metric tons down from 21.5 million metric tons previously, it said on Wednesday.
In Europe, grain and oilseed prices fell sharply, due to the lack of competitiveness of European origins on the international scene.
Notably, wheat fell more than 2%, erasing gains recorded earlier in the week, pressured down by a fall on U.S. markets and an easing concerns about dry and hot weather in France.
Hot weather this month is expected to reduce the yield potential of French cereal crops but this summer’s harvest should still bring good yields, crop institute Arvalis said on Wednesday.
High temperatures could negatively impact the grain-filling process of cereals including wheat.
Soft wheat is on course for “good average” yields so far.
The winter barley harvest, which was just getting under way, was showing good yields and quality in very early results, he added.
According to the French Farm Ministry, 2023-24, winter barley production is seen at 9.1Mt (+7pc, +12pc).
However, this year’s harvest of durum wheat, is expected to be affected by drought in the southeast, one of the main production zones.
For maize there was early concern about crop prospects, especially with the threat of irrigation restrictions like last year due to low water reserves.
Indeed, French geological service BRGM said on Wednesday 66% of groundwater levels were below average in the country and that, although spring rainfall had been beneficial in some parts, further water restrictions were to be expected around Paris and in the southeast around the Rhone and Saone rivers.
On the demand side, unlike the Fed, which left interest rates unchanged yesterday, the ECB is expected to raise rates in the eurozone by 25 basis points today, taking its key rate to 3.5%.
As a direct consequence of this policy, the euro has strengthened against the dollar, reducing the competitiveness of the European origins on the international stage, particularly against Russia.
In this context, Farm office FranceAgriMer on Wednesday lowered by 100,000 tonnes its monthly forecast for French soft wheat exports outside the European Union in the 2022/23 season to 10.2 million tonnes, which would still be 16% above the previous season.
But also raised the projected carry over by 120,000 tonnes.
Just for remember, European Commission data showed that for the week ending 11 June, EU all-wheat exports are at 31.1Mt, 10pc higher than the previous year.
Maize imports were at 24.4Mt (+60pc) and barley exports at 9.2Mt (-6pc).
As a result, September milling wheat closed 2.4% lower to 233.00 euros ($253.04) a tonne.
It had hit a one-month high the previous day.
However, the contract was still 8% above the 22-month low of 215.25 euros a tonne hit on May 31.
Prices, however, were supported, partially after Agritel cut its forecast for Romania’s wheat harvest by 15% after a dry May strained crops in one of the European Union’s biggest grain producers.
Notably, Agritel published its wheat production estimate for Romania at 8.76 million tonnes, compared with 9.57 million tonnes anticipated by Coceral, and below earlier forecasts of around 10 million tonnes.
Rapeseed prices, meantime, fell sharply continuing to display a high degree of volatility.
According to the French Farm Ministry, 2023-24 rapeseed production is forecast at 4.6Mt (+3pc y/y, +18pc from 5-year avg).
From Ukraine, Refinitiv Commodities Research trimmed its 2023-24 Ukraine wheat production number slightly to 20.6Mt, reflecting the impact of flooding from the Kakhova dam breach.
Output excluding uncontrolled regions (Crimea, Donetsk, Zaporizhzhia, Luhansk and Kherson) is pegged at 16.8Mt.
2023-24 rapeseed output is forecast at 3.6Mt (3.0Mt excluding uncontrolled regions) and total maize production placed at 22.9Mt (22.6Mt).
Meantime, Ukraine’s grain exports for the 2022/23 season stood at 47.1 million tonnes as of June 14, compared to 47.8 million as of June 17 last year, ministry data showed on Wednesday.
From Russia, Russian President Vladimir Putin discussed supplies of fertilizers, wheat and fuel during a phone call with the interim president of Mali, the Kremlin said on Wednesday.
The call, which the Kremlin said was at Mali’s request, came after Putin said Russia was considering withdrawing from the U.N.-brokered Black Sea grain deal, which is partly aimed at relieving a food crisis in developing countries.
Putin said on Tuesday he would discuss the future of the grain deal with some African leaders expected to visit Russia soon, adding that Moscow was ready to supply grain for free to the world’s poorest countries.
From the Middle Kingdom, China will start auctioning 315,000 metric tons of imported soybeans from state reserves on June 20, an announcement by the National Grain Trade Center showed.
The soybeans were produced in 2020 and are distributed in warehouses in Guangxi, Fujian, Shandong, Henan and Jiangxi, according to the announcement.
From South East Asia, the Indian government instituted a limit on wheat inventory per entity to 10 MT for retailers, 3k MT for traders and wholesalers, and 75% of annual production for producers and processors.
In addition, the government is set to sell 1.5 MMT of government stocks to the open market.
In other news, India govt has lowered the import duties on Refined Soybean oil and Refined Sunflower oil from 17.5% to 12.5% to match it with RBD Palm Olein and RBD Palm oil import duties.
India’s palm oil imports in May fell about 14% from the previous month to 439,173 tonnes, a trade body said on Thursday.
Meanwhile, imports of soyoil rose around 22% to 318,887 tonnes and those of sunflower oil were up 18.5% at 295,206 tonnes, the Mumbai-based Solvent Extractors’ Association of India (SEA) said in a statement.
Vegetable oil imports inched up nearly 1% to 1.06 million tonnes, it added.
From Australia, the country is expecting a positive decision over the next two weeks from China to fully settle a dispute over barley tariffs, Trade Minister Don Farrell said on Thursday.
Meantime, prices for feed wheat and barley have firmed in the past week as dry conditions in much of north-west New South Wales prevail and the planting window for short-season wheat gets close to its nominal end date.
In contrast, showers and storms over Victoria, South Australia and southern NSW are keeping production prospects for establishing crops on track for at least average yields, provided spring is kind.
Traders report grower interest in selling is as subdued as export and domestic interest in buying.
The exception is sorghum, which is being harvested, delivered and sold at pace in Central Queensland.
Meantime, liquidity picked up yesterday, with local markets finding some common ground through wheat, barley and canola with bids and offers coming together and happy to trade.
Trades were a mixed bag of current crop, with malt barley in WA to more canola being let go in the east coast.
Current crop wheat market values were largely unchanged and continue to track sideways along with new crop.
Barley was also relatively unchanged, while canola current crop and new crop markets were bid up $10/t.
There is more rain on the 8-day forecast with southern regions looking to pick up the higher totals again.
Most of SA and Vic are looking at 10-25mm, while southern WA is looking at 5-15mm.
Most of NSW and southern Qld where rain is needed the most only have 1-5mm on the forecast.
On the international trade scene, Taiwan traders reportedly purchased 56,000 tonnes of milling wheat from the US including DNS (min. 14.5pc protein content) $368.30/t c&f, HRW (12.5pc) at $343.27/t c&f and soft white wheat (8.5pc-10.0pc) $304.96/t c&f.
In outside markets …
Energy markets saw oil prices falling 1.5%.
Notably, Brent crude futures settled $1.09, or 1.5%, lower at $73.20 a barrel, while U.S. West Texas Intermediate (WTI) crude closed $1.15, or 1.7%, lower at $68.27.
The U.S. Federal Reserve projected more interest rate hikes this year, worrying markets about demand.
U.S. crude oil stocks rose by about 8 million barrels in the week ended June 9, according to data from the Energy Information Administration.
Analysts had estimated a 500,000-barrel decline.
Gasoline and diesel stocks also rose more than expected.
The IEA increased its oil demand growth forecast for this year by 200,000 barrels per day (bpd) to 2.4 million bpd, lifting the projected total to 102.3 million bpd.
However, now the agency expects economic headwinds to reduce growth to 860,000 bpd next year and increasing use of electric vehicles to help to reduce that to 400,000 bpd in 2028 for overall demand of 105.7 million bpd.
The IEA’s 2023 oil demand growth figure is slightly above that of the Organization of the Petroleum Exporting Countries (OPEC).
On this morning, oil rebounded, as data showed China’s oil refinery throughput in May rose 15.4% from a year earlier, hitting its second highest total on record.
Brent crude futures indeed rose 39 cents, or 0.6%, to $73.59 a barrel by 06:30 GMT.
U.S. West Texas Intermediate (WTI) crude climbed 39 cents, or 0.6%, at $68.66 a barrel.
However, the sombre Chinese economic data weighed on oil prices, capping gains.
Adding to market jitters about weaker fuel demand, the European Central Bank is all but certain to raise borrowing costs to their highest level in 22 years on Thursday and leave the door open to more hikes.
The Bank of England is also not yet done with rate rises as it battles inflation, analysts said.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, edged higher on Wednesday, aided by an uptick in rates for smaller panamax and supramax vessels.
The overall index, indeed, was up 5 points, or 0.5%, at 1,079, its highest level in two weeks.
Notably, the capesize index broke its seven-session winning steak, losing 7 points, or 0.4%, to 1,580.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes carrying commodities such as iron ore and coal, fell $57 to $13,106.
The panamax index, gained 19 points, or 1.7%, to 1163.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, also rose $169 to $10,466.
Among smaller vessels, the supramax index was up 7 points at 729.
In equity markets, US stock indexes settled mixed, as Fed has hold rates steady, while hunting of hikes ahead.
The broader market rose as bond yields fell after the U.S. May PPI report showed price pressures at the producer level slowed more than expected.
U.S. May PPI final demand indeed eased to +1.1% y/y from +2.3% y/y in April, better than expectations of +1.5% y/y and the smallest increase in over two years.
Also, May PPI ex-food and energy eased to +2.8% y/y from +3.1% y/y in April, better than expectations of +2.9% y/y and the smallest increase in over two years.
Meantime, the FOMC voted 12-0 to maintain the fed funds target range at 5.00%-5.25% and said, “holding the target range steady at this meeting allows the committee to assess additional information and its implication for monetary policy.”
Thus, market odds for the Fed to raise the fed funds target range by +25 bp at the next FOMC meeting on July 25-26 was down at 64%.
However, the Fed’s new dot plot showed that FOMC members are forecasting that the federal funds rate will rise to 5.6% by year-end, up from the previous projection of 5.1%, signaling another 50 bp of rate hikes this year.
The FOMC also raised its 2023 U.S. real GDP central tendency range to 0.7%-1.2% from a March projection of 0.0%-0.8% and raised its 2023 core PCE range to 3.6%-4.5% from a March estimate of 3.5%-4.1%.
As a result, and in anticipation of future increases to rates, yields in the bond market rose following the Fed’s announcement.
The 10-year yield climbed as high as 3.83% from 3.77% just before the Fed’s announcement.
It later receded to 3.79%, compared with 3.82% late Tuesday.
The two-year Treasury yield, which moves more on expectations for the Fed, climbed to 4.68% from 4.67% late Tuesday and was as high as 4.78%.
In this context, stocks fell back from their best levels closing with mixed results.
Notably, the S&P 500 finished the day 0.1% higher to 4,372.59.
The Dow Jones Industrial Average dropped 0.7% to 33,979.33, while the Nasdaq composite rose 0.4% to 13,626.48.
On this morning, Asian shares were mostly higher.
Notably, Japan’s benchmark Nikkei 225 erased morning gains to finish little changed, down less than 0.1% at 33,485.49.
Australia’s S&P/ASX 200 added 0.2% to 7,175.30.
South Korea’s Kospi shed 0.4% to 2,608.54.
Hong Kong’s Hang Seng gained 2.2% to 19,828.92, while the Shanghai Composite edged up nearly 0.7% to 3,252.98.
In Japan, machinery orders for April, released Thursday, showed the first growth in three months.
Trade figures for May showed a deficit for 22 months in a row, as import costs rose with the rising energy and other prices.
In China, consumers, uneasy about possible job losses, have returned to shops and restaurants less quickly than expected.
China’s industrial output grew 3.5% in May, down from an expansion of 5.6% in April and slightly below a 3.6% increase expected by analysts , as manufacturers struggled with weak demand at home and offshore.
The country’s retail sales, a key gauge of consumer confidence, rose 12.7%, missing forecasts of 13.6% growth and slowing from April’s 18.4%.
Thus, the sombre Chinese data weighed on on the markets.
In currency trading, the dollar index tumbled to a 4-week low and finished down by -0.39%.
Wednesday’s U.S. May PPI report showed an easing of producer price pressures that knocked T-note yields lower and weighed on the dollar.
However, the dollar recovered from its worst levels after the FOMC raised its median fed funds forecast for this year to 5.6% from 5.1%, signaling another 50 bp of rate hikes this year.
Notably, the EUR/USD rose by +0.34% climbing to a 4-week high.
The euro also saw support from a strong Eurozone industrial production report, which rose +1.0% m/m, slightly stronger than expectations of +0.9% m/m.
In addition, the ECB is expected to raise interest rates b +25 bp on Thursday, although the German May wholesale price index fell -2.6% y/y, the largest decline in nearly three years.
As for the USD/JPY it fell by -0.24%, on expectations for the BOJ to maintain stimulus measures after this Friday’s policy meeting.
On this morning, the U.S. dollar cost 141.03 Japanese yen, up from 140.07 yen.
The euro cost $1.0814, down from $1.0833.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
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