Good morning, Farmer Family …
US farm markets were bearish on Tuesday.
Wheat prices saw variable losses, as Chicago SRW lost 2.5%, Kansas City HRW fell 1.14%, and MGEX spring wheat prices dropped 0.68%.
Soybean prices spilled 1.28% lower.
The rest of the soy complex also eroded lower, with soymeal eased around 0.45% lower, while soyoil tumbled more than 3% lower.
Corn prices posted 0.47% losses at the bell.
Wheat fell as strong competition into the international markets has kept the market in an overall bearish environment for the past several weeks.
Harvest progress in Brazil continued to apply downward pressure on soybeans.
Corn prices followed soybeans and wheat lower but managed to keep them somewhat in check after USDA announced another private export sale to China for 136 MT of old crop corn.
Corn and wheat prices, also remained sensitive to the fact that a critical Black Sea shipping deal, received at least a 60-day extension.
Also, worries that the Federal Reserve will announce another interest rate hike later this week made an additional pressure.
Meantime, the Commitment of Traders data for the week ending March 14 was released yesterday, and showed spec traders had added 48.8k shorts and closed 26.4k longs during the week.
That flipped the group net short for the first time since August of 2020.
CFTC showed commercial hedgers were adding longs during the week, which reduced their net short by 66k to 165,518 contracts as of 3/14.
As for soybean, the report showed soybean spec traders were 127,661 contracts net long in soybeans as of 3/14.
That was a weekly drop of 29.7k contracts via long liquidation.
The commercial soybean traders added new longs for the week, which reduced the group’s net short by 23k contracts to 196.7k.
Managed money was also confirmed selling the products.
For soymeal, long liquidation reduced their net long by 21k contracts to 134k.
For soy oil it was net new selling, and flipped the managed money group net short by 1,189 contracts.
As for wheat, the report showed SRW spec traders had reduced their net short by 5.4k contracts that week via net new buying.
The funds were still 95k contracts net short.
The KC wheat specs were extending their net short by 2.3k contracts through the week, to 12,732 as of 3/14.
Managed money firms were 4,447 contracts net short in spring wheat, which was a 1,418 contract stronger net short through the week.
In this context, corn basis bids were steady to mixed across the central U.S., after trending 2 cents higher at an Illinois river terminal while tilting 1 to 5 cents lower at three other Midwestern locations.
Soybean basis bids were largely unchanged across the central U.S., but did trend 10 cents higher at a Nebraska processor and 2 cents lower at an Illinois river terminal.
Commodity funds were net sellers of CBOT corn, soybean, wheat, soymeal and soyoil futures contracts.
On this morning, Chicago wheat prices hit a one-week low, weighed down by improved weather in the U.S. winter crop growing regions.
Soybeans also eased while corn was largely unchanged.
Notably, the most-active wheat contract on the Chicago Board of Trade lost 0.7% to $6.78-3/4 a bushel, as of 03:55 GMT.
The market dropped to its lowest since March 13 at $6.74 a bushel earlier in the session.
Soybeans fell 0.2% to $14.63-3/4 a bushel and corn was unmoved at $6.30 a bushel.
Plenty more rain is in store for parts of the central U.S. between Wednesday and Saturday, with the heaviest amounts likely in a band stretching from eastern Oklahoma to southern Ohio, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s new 8-to-14-day outlook predicts more seasonally wet weather in store for the Ohio River Valley between March 28 and April 3, with colder-than-normal conditions likely for the Northern Plains and upper Midwest.
However, grain markets are also monitoring harvest prospects in other key exporting and consuming countries.
Ukraine’s 2023 grain harvest is likely to fall to 44.3 million tonnes from 53.1 million in 2022 as less acreage is sown.
In India, unseasonal rains and hailstorms have damaged ripening, winter-planted crops including wheat in the country’s fertile northern, central and western plains.
In energy markets, oil prices rose more than 2%.
Brent crude, indeed, settled up $1.53, or 2.1%, at $75.32 a barrel, while U.S. West Texas Intermediate (WTI) closed up $1.69, or 2.5% to $69.33.
Measures to stabilise the banking sector, including a UBS takeover of Credit Suisse and pledges from major central banks to boost liquidity, have calmed fears about the financial system that roiled markets last week.
The latest price drop was speculative and not based on fundamentals.
Money managers cut their net long U.S. crude futures and options positions in the week to March 14, the U.S. Commodity Futures Trading Commission (CFTC) said.
However, U.S. crude oil inventories rose by about 3.3 million barrels last week, according to market sources citing American Petroleum Institute figures.
That compared with analyst estimates for a draw of 1.6 million barrels.
Figures from the U.S. Energy Information Agency are due on Wednesday.
Thus, on this morning oil slipped in Asian trade.
Brent futures, which have risen more than 3% this week, were down 55 cents, or 0.73%, at $74.77 a barrel at 07:55 GMT.
U.S. West Texas Intermediate (WTI) crude futures were down 59 cents, or 0.85%, at $69.08.
Further price weakness followed an unexpected rise in UK inflation in February, raising fears of further interest rate hikes a day before the Bank of England announces its latest interest rate decision.
The market will be seeking direction from the U.S. Fed’s Federal Open Market Committee (FOMC), which announces its decision on interest rates at 1800 GMT.
Following the meeting, Chair Jerome Powell is expected to unveil new economic projections and the central bank’s path for interest rate hikes.
Despite market expectations for a 25 basis points rate increase, some top central bank watchers say the Fed could well pause further rate hikes or delay releasing new economic projections due to ructions in the global banking sector.
A pause in rate hikes would help stoke economic activity and in turn boost fuel demand.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, fell on Tuesday, weighed by weakness in the capesize and panamax segments.
The overall index, indeed, lost 30 points, or about 2%, to 1,512 – its lowest since March 13.
Notably, the capesize index was down 64 points, or about 3.3%, to 1,881.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, decreased $533 to $15,601.
The panamax index fell 39 points, or about 2.3%, to 1,658 – its biggest one-day fall since Feb. 7.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $351 to $14,919.
Among smaller vessels, the supramax index rose 6 points, to 1,335.
In equity markets, US stock indexes Tuesday posted sharp gains, as banking tensions eased.
Bank stocks rallied following a Bloomberg report that U.S. officials are studying ways they might temporarily expand Federal Deposit Insurance coverage to all bank deposits.
Tuesday’s comments from Treasury Secretary Yellen supported bank stocks and boosted market sentiment.
Tuesday’s U.S. economic news supported stocks after Feb existing home sales jumped +14.5% m/m to a 5-month high of 4.58 million, stronger than expectations of 4.20 million.
Global bond yields moved higher Tuesday as banking turmoil eased and stocks rallied.
The 10-year T-note yield rose +10.5 bp to 3.590%, the 10-year German bund rose +16.7 bp to 2.292%, and the 10-year UK gilt yield rose +5.7 bp to 3.367%.
In this context, on Wall Street, the S&P 500 rose 1.3% to lock in its first back-to-back gain since Silicon Valley Bank’s rapid failure began two weeks ago.
It closed at 4,002.87.
The Dow Jones Industrial Average rose 1% to 32,560.60, while the Nasdaq composite jumped 1.6% to 11,860.11.
On this morning, Asian shares advanced.
Notably, Tokyo’s Nikkei 225 surged 1.9% to 27,466.61, catching up on gains after the market was closed on Tuesday for a holiday.
Hong Kong’s Hang Seng index advanced 1.9% to 19,631.80 and the Shanghai Composite index added 0.2% to 3,261.14.
Australia’s S&P/ASX 200 jumped 0.9% to 7,015.60.
The Kospi in South Korea climbed 1.2% to 2,417.14.
In currency trading, the dollar fell to 132.40 Japanese yen from 132.47 yen.
The euro edged up to $1.0772 from $1.0770.
Going back to analyzing the other agricultural markets …
From South America, Brazil’s CONAB reports that as at 18 Mar, 2022-23 first (full-season) maize harvesting is 35pc complete (26pc previous week, 42pc previous year).
Second (safrinha) maize crop plantings are 85pc complete (73pc previous week, 95pc previous year).
Fieldwork in Mato Grosso was close to completion amid favourable weather, with dry conditions in Parana also allowing for progress.
Soybean harvest was 63pc complete (53pc previous week, 71pc previous year), with reports of good quality in Mato Grosso.
There was reduced rainfall in Parana, which proved beneficial to fieldwork, but there are reports of crop damage due to humidity.
Meantime, Agroconsult increased its estimate soybean crop from 153 to a record of 155 million tonnes.
Average yields for Brazil soybean fields stood at 59.1 60-kilo bags per hectare, shy of an all-time record of 59.4 bags in the 2020/2021 cycle.
Meantime, Agroconsult lowered its second corn crop to 97.2 million tonnes, from 101.3 million tonnes in January, citing weather risks and a likely fall in areas planted in states like Paraná.
Brazil is expected to export 96 million tonnes of soybeans this year, a record, according to a forecast on Tuesday by agribusiness consultancy Agroconsult.
Brazil will also export above 50 million tonnes of corn this season, Agroconsult said.
Meantime, according to the Anec the country’s corn exports will reach 899,160t in March, which was modestly above the group’s prior projection from a week ago.
Anec also anticipates seeing an additional 726,653t of wheat exports this month.
Anec expects the country’s soybean exports will reach 15.39 MMT in March, which is slightly above the group’s prior projection from a week ago.
Anec also anticipates that Brazilian soymeal exports will reach 1.787 million metric tons this month.
In Europe, we saw a further decline in all commodity markets, mainly driven by funds which are withdrawing from the asset class.
Euronext wheat fell again to reach its lowest in nearly 18 months as improved supply prospects and a rally in equities and crude oil led investors to sell wheat.
Thus, May milling wheat on the Paris-based Euronext was down 2.2% at 253.5 euros.
It earlier dropped to 251.50 euros, the lowest front-month price since late September 2021.
Technical pressure increased after Euronext broke successive chart floors, while a sharp rise in the euro against the dollar, further dented export sentiment as cheaper Black Sea supplies were set to keep flowing.
Thus, in Germany, standard 12% protein wheat for March delivery in Hamburg was offered for sale at level the Euronext May contract, with buyers seeking about 2 euros under.
In France, selling by farmers ahead of spring deadlines to release grain stored by cooperatives added supply pressure on Euronext.
Euronext rapeseed extended losses, with May prices set a new two-year low for a front-month price at 440.00 euros, as a surplus in Europe hung over the market.
The extent of the fall surprised dealers, however.
Per the latest data from the European Commission, 2022/23 EU soft wheat exports had reached 22.13 million tonnes by March 19.
That was up almost 8% from 20.52 million by the same week in 2021/22.
EU barley exports so far in 2022/23 totalled 4.33 million tonnes, down nearly 30% versus 6.18 million a year ago, while EU maize imports were at 19.73 million tonnes, almost 66% above a year-earlier 11.90 million.
A breakdown of the EU data showed France remained by far the biggest EU soft wheat exporter this season, with 8.69 million tonnes shipped, followed by Romania with 2.77 million, Germany with 2.60 million, Lithuania with 1.97 million and Poland with 1.86 million.
The Commission listed also the EU’s top five soft wheat export destinations which included Morocco, Algeria, Nigeria, Egypt, Saudi Arabia.
In maize, Spain remained the leading EU importer so far in 2022/23 with 6.76 million tonnes, ahead of the Netherlands with 2.26 million, Portugal with 1.54 million, Italy with 1.52 million and Hungary with 1.46 million, the data showed.
The Commission listed also the five top maize import origins which included Ukraine, Brazil, Canada, Serbia, and Russia.
As for soybean, European Union soybean imports had reached 8.45 million tonnes by March 19.
That was down 14.6% from 9.89 million by the same week last season.
EU rapeseed imports so far in 2022/23 had reached 5.87 million tonnes, up 54% compared with 3.81 million tonnes a year earlier.
The bloc’s soymeal imports over the same period totalled 11.24 million tonnes, down 4.6% from 11.78 million the prior season, while palm oil imports stood at 2.65 million tonnes, 29% below a year-earlier 3.73 million.
The Commission also listed the five largest supplier countries which included for soybean, USA, Brazil, Ukraine, Canada, and Uruguay; for rapeseed, Ukraine, Australia, Canada, Uruguay, and Moldova; for soymeal, Brazil, Argentina, USA, Ukraine, and Paraguay; for palm oil, Indonesia, Malaysia, Guatemala, Papua New Guinea, and Honduras.
However, the Commission said that 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 only went up to Jan. 13, it said in a note.
From North Africa, Morocco has soft wheat stockpiles that may only last up to three months, finance minister Nadia Fettah Alaoui said on Tuesday.
In March last year, the country had soft wheat stockpiles covering five months with the agriculture minister promising to build additional stocks.
Meanwhile, durum stockpiles were enough to cover two months of Morocco’s needs, the minister said.
Morocco’s central bank forecasted on Tuesday the cereals output to stand below average at 5.5 million tonnes this year.
Last September, France’s wheat professionals group Intercereales expected Morocco’s imports of soft wheat to stand at between 4.5 million and 5 million tonnes in 2023.
Morocco subsidises soft wheat imports and controls the prices of sugar and cooking gas.
The country’s subsidies of the three goods soared to 40 billion dirhams in 2022 from 1.3 billion in 2021 due to higher prices in international market.
From Ukraine, according to Ukraine’s Ag Ministry 2023-24 total grains production seen at 44.3Mt down from 53.1Mt last year, including wheat production at 16.6Mt (20.5Mt previous year), corn production at 21.7Mt (25.6Mt) and barley at 4.8Mt.
In contrast to smaller grain harvests, 2023-24 oilseeds production is forecast to increase to 19.2Mt, up from the 18.2Mt produced last year, reflecting larger plantings, with sunflowerseed output pegged at 11.5Mt (11.1Mt), rapeseed at 3.8Mt (3.7Mt) and soybeans at 3.9Mt (3.4Mt).
Ukraine’s grain exports for the 2022/23 season totalled 36.3 million tonnes as of March 22, agriculture ministry data showed on Wednesday.
The ministry gave no comparative data for the same date in 2022.
It said Ukraine had exported 44.8 million tonnes of grain as of March 27, 2022.
The volume so far in the July-to-June season included about 12.4 million tonnes of wheat, 21.3 million tonnes of corn and 2.25 million tonnes of barley.
The ministry said grain exports in March had reached 3.99 million tonnes as of March 22.
Meantime, the extension of the Ukrainian shipping agreement has generated more cheap sales offers of Ukrainian wheat this week at well under $300 FOB a tonne.
Sales offers on Tuesday included a panamax shipment of Ukrainian 11.5% protein wheat of up to 30,000 tonnes for March/ first half April shipment at $285 FOB per tonne from a corridor port.
Traders said Ukrainian 11.5% protein wheat was offered in export markets in 30,000 tonne shipments for March/April as cheap as $304 c&f Egypt and Tunisia, or $305 c&f Algeria.
From Russia, while was in Moscow, President Xi Jinping has made a range of pledges to expand China’s economic partnership with Russia, outlining an economic order that could help both China and Russia insulate themselves from Western sanctions.
Russian President Putin and Xi signed 14 agreements of wide-ranging collaboration, including media enterprises and scientific research and promised to bring more Russian oil to China and more Chinese companies to Russia.
The firming of links between China and Russia is leading to a significant increase in Chinese imports from Russia by land.
Meantime, Russia may require foreign seed producers to create joint ventures with local scientific firms in order to continue working in the country, the Vedomosti newspaper said on Tuesday.
According to the report, foreign seed makers would be forbidden from operating in Russia unless they enter the joint ventures, where their stake may not exceed 49%.
The new rules could come into effect from Sept. 1, the paper said.
In other news, Russian grain production is forecasted 19% lower for 23/24, with 82.6 MMT of wheat output – per UkrAgroConsult.
From South East Asia, according to the USDA attaché, Indonesia palm oil production for 2023/24 is forecast at 46 million metric tons (MMT), an increase of 3% from the previous year.
Weather agencies are forecasting a developing El Nino weather pattern in the second half of 2023 that might bring on severe dryness.
Soybean imports are expected to rise to 2.65 MMT for 2023/24 on continued rising demand from the soybased food industry.
From Japan, USDA attaché in Tokyo projected a reduction in corn imports and feed consumption in MY (marketing year) 2022/23 due to large outbreaks of Highly Pathogenic Avian Influenza as well as increased competition from domestic feed rice, followed by a recovery of corn consumption in MY2023/24.
The attaché, forecasts strong demand for feed wheat and barley in MY2022/23 and MY2023/24 and for food wheat consumption to gradually recover despite price increases.
The attaché projects flat rice consumption in MY2022/23 due to strong demand for feed rice offsetting lower table rice demand but forecasts a decrease in MY2023/24 consumption as feed rice production declines.
The attaché forecasts MY2023/24 corn imports to increase to 15 million metric tons, up 1.4% from prior MY2022/23 estimates, based on projected increases in feed and FSI (Food, Seeds and Industrial) demand. The attaché projects MY2022/23 imports to drop to 14.8 million metric tons, down 1.4 percent from the previous marketing year, based on reduced feed demand.
From Australia, local markets markets continued to feel heavy and very slow with prices on wheat barley and canola all peeling off over the day.
A favourable rainfall forecast for the next 8-15 days for a large part of eastern Australia and some parts of Western Australia saw the market soften on what could be a decent early break.
The feedgrain market in Queensland remained well supported and SA values held some ground.
Pulse markets also continue to hold up with lentils in SA trading around $820/t port price and high $700s local depot Victoria.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
