Good morning, Farmer Family …
US farm markets, mostly suffered heavy losses, in Wednesday’s selloff.
Soybeans spilled 1.26% lower, soymeal lost1.95%, while soyoil tumbled 2.84%% lower.
The wheat market continued lower, and SRW led the way down as lost 2.89%
Kansas City HRW dropped 1.1%.
Minneapolis spring wheat closed 1.42% in the red.
Corn, has found immunity among the widespread selloff, gathering 0.56% gains.
Wheat and soybeans closed down, as investor scrambled to liquidate long positions, before the Federal Reserve raised interest rates by a quarter of a percentage point and indicated it may pause further increases.
Wheat prices were also weighed down by timely rains in France and elsewhere in western Europe, which eased concerns over dry conditions for their wheat crops.
As for soybean, Brazil’s soybean output and exports will be higher than expected in 2023, Brazilian oilseed lobby Abiove said, as local farmers harvest a bumper crop.
Corn prices, in contrast, turned higher underpinned by another flash sales to China of 178,000 tonnes of corn confirmed by USDA.
Ethanol production faded lower in the week through March 17, with a daily average of 997,000 barrels, according to the latest data from the U.S. Energy Information Administration.
It was also the first time since early January that the daily average failed to reach the 1-million-barrel benchmark.
However, stocks eased to 26.188 million.
That was a1% decrease week on week, or a drawn of 206k barrels.
Meantime, traders were watching for the USDA’s weekly report on net export sales of U.S. grains and soy, due on Thursday.
Analysts expect the weekly FAS data to have between 1.7 MMT and 3.4 MMT of old crop sales in the weekly update.
China’s bookings last week were nearly 2.2 MMT via weekly announcements, and most of that business should be included in todays report.
In the latest 7 day total China bookings reached to 2.4 MMT.
New crop corn sales are estimated between 0 and 350k MT.
As for soybean, traders expect between 400k and 900k MT of old crop soybeans were booked during the week that ended 3/16.
New crop sales are estimated below 200k MT.
Soymeal sales are estimated to be between 125k MT and 300k MT for the week that ended 3/16.
Bean oil bookings are expected to come in below 10k MT.
As for wheat, analysts expect between 140k MT and 555k MT of old crop wheat was sold during the week that ended 3/16.
New crop sales are estimated to come in between 50k MT and 200k MT.
In this context, corn basis bids were steady to weak across the central U.S. after trending 2 cents lower at an Iowa river terminal and 3 cents lower at a Nebraska processor.
Soybean basis bids were mostly steady across the central U.S., but did trend 2 cents higher at an Illinois river terminal and 2 cents lower at an Iowa river terminal.
Commodity funds were net sellers of CBOT corn, soybean, wheat, soymeal and soyoil futures contracts.
On this morning, Chicago soybeans edged higher, rising for the first time in three sessions and recovering from a three-month low, although expectations of an all-time high production in Brazil limited gains.
Wheat rose from its lowest in eight months, and corn also edged higher.
Notably, the most-active soybean contract on the Chicago Board of Trade was up 0.2% at $14.50-3/4 a bushel as of 03:02 GMT, rebounding from Wednesday’s low of 14.43-1/4, its weakest level since Dec. 6.
Corn edged 0.2% higher at $6.35 a bushel and wheat gained 0.8% at $6.69 a bushel.
In energy markets, oil prices rose about 2% to a one-week high on Wednesday as the dollar slid to a six-week low after the U.S. Federal Reserve delivered an expected small rate hike while hinting that it was on the verge of pausing future increases.
Brent crude futures indeed rose $1.37, or 1.8%, to settle at $76.69 a barrel, while U.S. West Texas Intermediate crude (WTI) ended $1.23, or 1.8%, higher at $70.90.
That was the highest closes for both crude benchmarks since March 14.
However, this morning oil prices fell.
Notably, Brent crude futures had fallen 46 cents, or 0.6%, to $76.23 a barrel by 07:20 GMT, while U.S. West Texas Intermediate crude (WTI) dropped 50 cents, or 0.7%, to $70.40.
The U.S. Energy Information Administration’s (EIA) weekly data showed crude stockpiles rose 1.1 million barrels last week to a 22-month high.
That was down from a 3.3-million barrel increase reported on Tuesday by the American Petroleum Institute (API).
However, analysts had forecast a 1.6-million barrel withdrawal.
Gasoline and distillate inventories, meanwhile, fell last week by more than analysts expected.
Gross U.S. exports of crude oil and oil products hit a new high just shy of 12 million barrels per day, way above any other country’s supply levels.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, extended losses on Wednesday and marked its biggest one-day fall since mid-February due to weaker demand for larger vessels.
The overall index, indeed, fell 56 points, or about 3.7%, to 1,456, its biggest daily percentage fall since Feb. 15.
Notably, the capesize index was down 129 points, or about 6.7%, at 1,752.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, fell $1,073 to $14,528.
The panamax index fell 52 points, or about 3.1%, to 1,606, its biggest one-day dip since Feb. 7.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $465 to $14,454.
Among smaller vessels, the supramax index rose 2 points, to 1,337.
In equity markets, US stock indexes gave up their gains when Fed Chair Powell said “we still don’t have inflation progress in non-housing service prices and Fed officials “just don’t” see any Fed interest rate cuts this year”.
Stock indexes extended their losses in the afternoon as bank stocks tumbled to lead the overall market lower when Treasury Secretary Yellen said U.S. regulators aren’t looking to provide “blanket” deposit insurance to stabilize the U.S. banking system.
The FOMC raised the federal funds target range by 25 bp as expected to 4.75%-5.00%.
On the hawkish side, the Fed said it would continue with the same pace of quantitative tightening, leaving in place monthly caps of $60 billion for Treasuries that are allowed to mature without being reinvested and $35 billion for mortgage-backed securities.
Also, the Fed cut its U.S. 2023 GDP forecast to 0.4% from 0.5% in Dec and raised its 2023 core PCE forecast to 3.6% from 3.5% in Dec.
The Fed said the U.S. banking system is “sound and resilient,” but the financial turmoil is “likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation” to an uncertain extent.
Meantime, global bond yields were mixed.
The 10-year T-note yield fell -11.5 bp at 3.494%.
The yield on the two-year Treasury, which tends to track expectations for the Fed, tumbled to 3.46% from 4.13% just before the projections were released.
However, European government bond yields moved higher on hawkish comments from ECB President Lagarde and an unexpected acceleration of UK consumer prices in February.
Thus, the 10-year German bund rose +3.6 bp to 2.328%, and the 10-year UK gilt yield jumped to a 1-week high of 3.562%.
UK Feb CPI unexpectedly accelerated to +10.4% y/y from +10.1% y/y in Jan, stronger than expectations of an easing to +9.9% y/y.
As a result, on Wall Street, the S&P 500 fell 1.6% for its first drop in three days. It closed at 3,936.97.
The Dow Jones Industrial Average lost 1.6% to 32,030.11, while the Nasdaq composite dropped 1.6% to 11,669.96.
On this morning, Asian shares were mixed, as a risk-off tone following the recent Fed meeting has set the stage for the Asian region to follow through with some losses.
Notably, Japan’s benchmark Nikkei 225 shed 0.2% to 27,419.61.
Australia’s S&P/ASX 200 slipped 0.7% to 6,968.60.
South Korea’s Kospi gained 0.3% to 2,424.48.
Hong Kong’s Hang Seng gained 1.7% to 19,923.04, while the Shanghai Composite rose 0.5% to 3,282.11.
Shares rose in India and Taiwan.
In currency trading, the dollar index fell by -0.90% and posted a 6-week low, as the British pound rose due to an unexpected increase in the UK Feb CPI, and the hawkish comments from ECB President Lagarde pushed the euro up to a 5-week high.
Notably, the EUR/USD rose by +1.01%.
The USD/JPY fell by -0.85%.
On this morning, the U.S. dollar fell to 130.58 Japanese yen from 131.39 yen.
The euro cost $1.0899, up from $1.0857.
Going back to analyzing the other agricultural markets …
From Canada, Agriculture and Agri-Food Canada (AAFC) issued its March supply and demand estimates yesterday keeping nearly all of its numbers unchanged from February.
Notably, wheat production was pegged at 34.3Mt (33.8Mt previous year).
Projected Canadian wheat exports for the 2022-23 marketing year were raised to 24.3 million tonnes, up by 200,000 from the February estimate.
Domestic usage was lowered by 100,000, at 8.911 million tonnes, leaving the projected ending stocks down by only 100,000 as well, at 4.4 million tonnes.
Canadian wheat exports for 2023-24 were left unchanged at 24 million tonnes, but domestic usage was lowered by 100,000 tonnes, to 9.152 million.
As a result, new-crop Canadian wheat ending stocks were unchanged at 5.7 million tonnes, (4.4Mt previous year).
The balance sheet for canola was left unchanged on the month.
Canola production for 2023-24 is still pegged at 18.5Mt (18.1Mt previous year), with projected exports of 8.6 million tonnes during the current marketing year and 8.8 million in 2023-24.
Canola ending stocks were pegged at 800,000 tonnes for 2022-23 and 850,000 for the next year.
However, the government agency did raise its average price forecast for canola during the current marketing year to $890 per tonne, from $880 per tonne in February.
The new-crop canola price projection was left unchanged at $850 per tonne.
Pulse and special crop projections were all unchanged on the month.
Statistics Canada’s acreage estimates will be released at the end of April.
From Central America, according to the USDA attaché, due to continued elevated agricultural input costs, Mexico’s corn production in marketing year (MY) 2023/24 is forecast at 27.4 million metric tons (MMT), unchanged from the year prior.
Lower than expected planting intentions data accounts for slightly lower rice and wheat production forecasts.
Sorghum production is forecast to remain steady based on consistent demand from the feed and beverage sectors.
Mexico’s MY 2022/23 corn imports are estimated to decrease following a January 2023 Decree which places export tariffs on white corn, and a February 2023 Decree which restricts the use of genetically engineered (GE) corn in the tortilla industry.
Driven by increased demand from the livestock and starch sectors, corn imports are forecast at 17.9 MMT in MY 2023/24, a 3% increase over the previous year.
On the other hand, Mexico’s corn imports are estimated down to 17.4 MMT in MY 2022/23.”
From South America, Brazil’s Agroconsult reported that based on nationwide survey data, despite the impact of drought-like conditions in Rio Grande do Sul, 2022-23 soybean production is seen 2.0Mt higher than before, at 155.0Mt (125.5Mt previous year).
Total exports is seen at 96.0Mt (78.7Mt previous year), with processing placed at 53.9Mt (49.4Mt).
On this wake, Brazil’s soybean output and exports will be higher than expected in 2023, Brazilian oilseed lobby Abiove said.
Local farmers are harvesting a bumper crop, Chinese demand remains strong and Argentine growers grapple with weather issues, the lobby said.
Abiove now estimates Brazil’s soy production at a record 153.6 million tonnes, 1 million more than the projection in January.
As for corn, total maize production forecasted by Agroconsult was at 125.5Mt (113.1Mt previous year).
Exports potentially to exceed 50.0Mt (46.7Mt previous year).
In Europe, grain prices continued their fall, in an uncompetitive context, mainly linked to the rise in the euro against the dollar.
The prices of vegetable oils also continued to fall, with rapeseed posted a further significant drop in prices on Euronext.
Only feed barley found some support in the face of good export demand, leading to prices that are above those of wheat on close deliveries.
The European Commission will allocate a total of 56 mln euros in compensation to three EU countries – Romania, Bulgaria and Poland in connection with the grain deliveries growth from Ukraine, Janusz Wojciechowski stated, the Commissioner for Agriculture.
“This is a support for countries whose farmers have suffered from increased imports from Ukraine. We are observing an increase in supply, a huge growth in imports to bordering countries,” the European Commissioner said.
In particular, the decision regarding Bulgaria and Poland was made due to the fact that the combination of their own production and imports from Ukraine exceeded the five-year average before the beginning of the war.
Romania was added to the list because it is a hub country for the so-called “Solidarity Lanes”.
According to the decision adopted, Romania will receive 10 mln euros from the total amount, Bulgaria – about 17 mln euros, and Poland – 30 mln euros.
At the same time, the specified amount can be doubled owing to co-financing from the budgets of the EU member states.
“Hungary and Slovakia also received more Ukrainian grain. But they will not receive support from the fund, as their combined production and import volumes do not exceed the average five-year indicator,” – added Y. Wojciechovskyi.
In other news, Sweden has reported an outbreak of the highly pathogenic H5N1 bird flu virus on a farm in the south of the country, the Paris-based World Organisation for Animal Health said on Wednesday.
The virus killed 1,137 birds, with the rest of the 23,598-strong flock slaughtered, WOAH said, citing a report from the Swedish authorities.
Meantime, per lates data published by Euronext on Wednesday, non-commercial market participants reduced their net short position in Euronext’s milling wheat futures and options in the week to March 17.
Notably, non-commercial participants, which include investment funds and financial institutions, lowered their net short position to 63,046 contracts from 78,285 a week earlier, the data showed.
Commercial participants similarly decreased their net long position to 54,274 contracts from 69,396 a week earlier.
In Euronext’s rapeseed futures and options, non-commercial market participants also reduced their net short position to 36,571 contracts from 38,380 a week earlier.
Commercial participants lowered their net long position in rapeseed to 33,567 contracts from 36,050 a week earlier.
From Ukraine, according to preliminary estimates of APK-Inform Agency, in February 2022/23 MY, Ukraine processed about 916 thsd tonnes of sunflower seeds, which almost corresponds to the level of the previous month (+2%).
Still, at the same time, it is the second-lowest monthly volume in the current season (in January).
The main reason for the low processing rate was a complicated “grain corridor” operation, an active offer of Ukrainian sunflower on the export market, and a downward price trend and a decrease in demand on the export market of sunflower oil.
In the first half of the 2022/23 season, the volume of sunflower seeds processing in Ukraine was the lowest over the last 8 seasons – only about 6.5 mln tonnes.
At the same time, sunflower seeds export from Ukraine reached a new historical maximum, amounting to 1.54 mln tonnes since the beginning of 2022/23 MY (September-February).
According to the State Statistics Service, as of March 22, Ukraine exported 148 thsd tonne of flour, which is significantly higher compared to the previous season (91.2 thsd tonnes), and the wheat flour export reached 106.8 thsd tonnes (66.9 thsd tonnes last season), reported the press service of the Ministry of Agrarian Policy of Ukraine.
In particular, in March Ukraine exported 16.3 thsd tonnes of flour, including 11.9 thsd tonnes of wheat flour.
Also, it is reported that since the beginning of the current season, Ukraine exported 36.286 mln tonnes of grains and pulses, including 3.989 mln tonnes in March.
In particular, in 2022/23 MY wheat export reached 12.42 mln tonnes (1.082 mln tonnes in March), barley – 2.253 mln tonnes (203 thsd tonnes), corn – 21.297 mln tonnes (2.693 mln tonnes), and rye – 16.8 thsd tonnes (1.2 thsd tonnes).
From Russia, according to SovEcon, Russia is likely to experience a significant reduction in crop production next season at an estimated 85.3Mt, 18.9Mt lower than 2022-23 but close to the five year average.
Lower production reflects a fall in the area planted and the expectation of generally average weather conditions, unlike the extremely favourable conditions experienced last season.
On this wake, according to UkrAgroConsult, Russian grain production is forecasted 19% lower for 23/24, with 82.6 MMT of wheat output.
From the Middle Kingdom, China has agreed to resume imports of Brazilian boneless beef aged under 30 months from March 23, according to a statement released by China’s General Administration of Customs on Thursday.
Sales of Brazilian beef to China were voluntarily halted by Brazilian authorities on Feb. 23, following the discovery of an atypical case of mad cow disease, the statement said.
From South East Asia, according to India’s Meteorological Department, as at 21 Mar, cumulative month to date rainfall is estimated to be 20pc above the long-term average, with excessive or normal rainfall at 69pc of monitoring stations.
From Australia, prices for feed wheat and barley have traded mostly sideways in the past week as growers in the north concentrate on harvesting sorghum, and those in the south sell pulses into the stronger market.
Domestic consumers are seen as adequately covered out to July in some cases, although good-quality barley in the north is getting hard to find.
News over the weekend that the Black Sea Grain Initiative has been extended to at least May 18 has been bearish for global values, and trade sources say a pull-back in Australian grower selling has stopped the local market from following the softening offshore trend.
Meantime, local markets continued to drift lower yesterday with wheat values off $5-6/t across the boards, barley was also off a few bucks and canola continued its downward move.
Bids were hard to come by in general in the market.
The 8-day rainfall forecast now has a bit more pencilled in for WA with most cropping regions looking at 10-25mm. NSW looking at 15-50mm for the eastern half of the state, which is similar in VIC. SA totals are lower with 5-15mm on the cards for most, with similar totals expected in southeast Qld.
On the international trade scene, the Turkish Grain Board is reportedly seeking to buy 695 000 tonnes of red milling wheat in a tender that closes March 28.
China is set to auction 140k MT of wheat from state reserves on March 29.
The country has offered a series of similarly sized auctions in recent months in an attempt to supplement local supplies and cool high prices.
Jordan’s barley tender saw MIT purchasing from Ameropa 50k FH august shipment and 60k from Viterra for SH August shipment both at $267 C&F.
Other offers in line up were, Olam at $289, LDC at $283, Cargill at $279.5, and Grain flower at $271.
Jordan issued a new international tender to purchase 120,000t of milling wheat from optional origins that closes on March 28.
The grain is for shipment in September and October.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
