Good afternoon Farmer Family

Euphoria, greed, hope, fear and panic have drove market action always. 

Lately, however, the situation has gotten slightly more complicated due to the Covid pandemic, runaway inflation, trade wars and a real war.

Therefore, things have become much more risky and, as we have learned during this week market, sometime we also can witness totally senseless or at least incomprehensible actions to our eyes.

This was resulting in some big price swings in grain markets. 

Indeed, US farm markets saw corn prices slipped just 0.32% since last Friday.

Meanwhile, soybeans were up 3.6% during the week, with soymeal prices rallied by 5.03%. 

Soybean oil, in contrast, lost 3.4% on the week as Indonesia indicated it would resume palm oil export shipments this coming Monday. 

The wheat complex started the week with a very bullish note after India annunced exports ban on wheat last Saturday, but then collapsed on its self as the ban quickly turned to just restrictions and analysts said Russia’s 2022/23 wheat crop may reach 85 million tonnes.

Thus, Chicago SRW was down 0.75% for the week.  

KC wheat was down 2.29% and MPLS was down 3.47% from Friday to Friday.

Going inside the numbers, CBOT corn prices, closed down $0.025 at $7.79/bu. 

CBOT soybean prices finished the week $0.587 stronger at $17.05/bu.

Soymeal rallied $20.6/smt for the week at $429.9 smt.

Soy oil fell $2.86 cents, to close at $80.93.

CBOT soft red winter (SRW) prices shedded by $0.088 to close at $11.69/bu. 

KCBT hard red winter (HRW) prices tumbled $0.293 ending at $12.53/bu.

MGE hard red spring (HRS) prices skriketed down by $0.460 to close at $12.79/bu.

Meantime, as of May 19, 2022, US corn 3YC (Gulf) was at $348/mt (down $14/mt from last week).

US soybean 2Y (Gulf) quoted at $673/mt (up $15/mt from last week).

As for wheat, US wheat No 2 Hard Red Winter (HRW) was valued at $549/mt (up $11/mt from last week).

US wheat No 2 Soft Red Winter (SRW) was at $476/mt (unchanged from last week).

Per latest data released in USDA’s National Ethanol report, corn oil cash market showed prices were from 80.88 cents to 82.14 cents/lb regionally. 

That was firmer with last week’s 81-82 c/lb market. 

DDGS FOB prices were from $290 to $303/ton in the Gulf and $358 in the PNW. 

Last week’s bids were $290-$295 and $365/ton respectively. 

Cash ethanol prices averaged $2.65-$2.78 regionally, compared last week when were between $2.65-$2.87/gal. 

Meanwhile gasoline futures ended the week at $3.8465, that was up from $3.7917/gal posted last week.

USDA reported the B100 cash price unquoted through the week that ended 5/20. 

This is the second week in a row unquoted cash price. 

USDA’s weekly Crush reportwas not available this week.

Last week showed the estimated processing value of soybeans was $20.44/bu on $16.97 cash beans. 

In this context, corn basis bids were steady to mixed on Friday after firming 2 cents higher at an Indiana ethanol plant and eroding 3 to 17 cents lower at two Midwestern processors.

Soybean basis bids were steady to firm on Friday, climbing 2 to 10 cents higher at three Midwestern processors and firming 4 to 7 cents higher at two other central U.S. locations.

As for wheat basis this week was mixed in both the Gulf and Pacific Northwest (PNW). 

HRW basis softened as futures prices remain elevated. 

HRS basis was up slightly as rain continues to slow down planting. 

Meantime, the Friday Commitment of Traders report showed managed money spec funds in corn added on ly 1,149 contracts to their net long, however, taking it to 339,711 contracts of futures and options.

Commercial corn hedgers added 24.7k new shorts against 2.8k new longs, which expanded their net short to 693,535 contracts. 

As for soybeans the report showed the managed money spec funds expanding their net long position in soybeans by another 16,674 contracts in the week ending May 17, putting them net long 147,335 at that point.

Commercial bean traders added 5k new shorts for a 4,134k contract stronger net short of 233,528. 

In soymeal, the weekly CoT report showed managed money closed 11.8k existing longs and sold 4.56k contracts short for their weakest net long since December at 35,923 contracts. 

As of 5/17 managed money traders were 86,237 contracts net long in soy oil, a 2,139 contract lighter net position wk/wk. 

As for wheat, CFTC showed the managed money spec funds adding 11,039 contracts to their net long in the week ending 5/17, taking it to a still modest 26,586 contracts.

In KC wheat, the spec funds were 3,877 contracts more net long to 46,790. 

For Minneapolis wheat, managed money traders were reported 18,175 contracts net long, an 82 contract reduction on lighter OI wk/wk.  

In energy markets, oil prices settled slightly higher on Friday.

Brent futures for July delivery rose 51 cents, or 0.5%, to $112.55 a barrel. 

U.S. West Texas Intermediate (WTI) crude for June rose $1.02, or 0.9%, to settle at $113.23 on its on its last day as the front-month.

WTI notched its fourth straight week of gains, which it last did in mid-February. 

Brent gained about 1% this week after falling about 1% last week.

The more actively-traded WTI contract for July was up about 0.4% to $110.28 a barrel.

In freight markets, the Baltic Exchange Dry Index rose 55 points, or 1.7% to 3,344 points on Friday, the highest since December 8th, extending gains for the fourth straight session, amid stronger demand. 

The capesize index, which tracks iron ore and coal cargos of 150,000-tonnes, advanced 3.2% to 4,526 points; the panamax index which tracks cargoes of about 60,000 to 70,000 tonnes of coal and grains, increased 0.4% to 3,382 points; and the supramax index added 16 points to 2,816 points. 

On a weekly basis, the Baltic Exchange Dry Index advanced by 7.7%, extending gains for the sixth straight week.

In equity markets, the S&P 500 finished the end week session up 0.57 points at 3,901.36. 

The Dow Jones Industrial Average swung from an early loss of 617 points to close 8.77 higher, or less than 0.1%, at 31,261.90. 

The Nasdaq composite trimmed a big loss to finish 33.88 points lower, or 0.3%, at 11,354.62.

Stock indexes, on Friday morning had extended the week’s sell-off, with the S&P 500 and Dow Jones Industrials dropping to 14-1/2 month lows and the Nasdaq 100 falling to a 1-1/2 year low.  

But then stocks recovered most of their losses Friday afternoon after positive comments from St. Louis Fed President Bullard, who said, “we have a very good economy,” and that while U.S. economic growth may slow this year, it will still be above trend for 2022.

However, the S&P 500 this week fell 3.05%.

That is the seventh consecutive falling week, the longest stretch of declines since 2001. 

The Dow was 2.9% weaker from past week.

The Nasdaq was the drag of the markets closing by 3.81% weaker on the week.

The Russell 2000 fell 2.96 points, or 0.17% on Friday, to close at 1,773.27.

For the week it lost 19.4 points or 1.08%. 

In currency trading, the dollar index (Jun ’22) on Friday posted moderate gains by +0.422 (-0.41%) closing the week at 103.173.

The euro ended the end week session down 0.23% at $1.0562.

The Japanese yen also weakened by 0.05% to 127.86 per dollar.

However for the week, the euro rose by 0.015 points or 1,44%, while the yen gained 1.35 poits or 1.04%. 

The dollar index fell 1.38% from past week.

In Canada, as of May 13, 2022, Canadian wheat prices for FOB delivery West Coast were (Cdn$/mt): 

– for the N1 class CWRS 13.5% – $700.52 per tonne, up C$79.22/t from prior week; 

– for the N2 class CWRS 13.0% – $694.71/t, up C$74 wow;

– for the N3 CWRS – $699.57/t, up C$84.47 from prior week.

As of May 13, 2022, for the N1 CWAD 13% (durum wheat first class) deferred average street prices for delivery in May/Jun ’22 were at C$587.90 up C$73.48 week on week.

However, export basis West Coast & Central SK tumbled from C$ 257.56 to 179.44 per tonne, as delivered FOB price Great Lakes was posted at C$ 767.34, down C$4.64 from prior week.

As of May 18, 2022, Durum wheat – CA St Lawrence (CWAD) was valued at C$738.24/t, down $11.79/t from prior week.

As of May 20, 2022, for the N1 CWAD 13% (durum wheat first class), average street prices in REGIONAL ZONES were at C$583.91 per tonne, up C$13.16 from prior week. 

(1USD=Cnd$1.2839 down from past week when was 1.3044).

In South America, as of May 19, 2022 – Argentina Wheat Grade 2 export price, (Up River) was at $481, up $21 from prior week.

Argentina corn feed was up $8/t for the week, closing at $319.

Brazilian corn feed (Paranagua) was valued at $324, down $10 from prior week.

Argentina feed barley, was up $12 for the week to $382.

Argentina soybean was up $26 at $659.

Brazilian soybean gained $22 finishing the week at $674.

In Europe, the Paris-based Euronext exchange set a record closing price of €438.50 ($462.51) per MT on Tuesday after retreating from near all-time highs earlier in the trading session. 

By Thursday, prices on the Euronext exchange had fallen more than €20 per tonne.

On Friday September’s wheat prices closed the week at €420.75, just an increase of €4.25 from past week. 

June corn price was unchanged for the week, closing at 360.25 euros per ton.

Rapeseed for August deadline, slumped €40.5/t for the week, to close €870.5/t. 

July-22 UK wheat feed futures closed at £334.7/t, down £12.90/t week on week. 

Meantime, as of May 19, 2022, FOB prices in US dollar for French wheat with 11.5% protein and May delivery, were at $458/mt, up $28 from prior week.

German wheat Deposilo Hamburg, was at $427.76/t, up $3.99/t from prior week.

Baltic wheat, delivery first Vilnius, was at $407.69/t, up $59.93/t from prior week.

French durum wheat – basis La Pallice, was at $538.66/mt, up $49.3 from prior week.

Italian durum wheat Bologna (Delivered to first customer), was valued this week at $555.56 per tonne up $7.89 from past week.

Corn, delivered Bordeaux port was at $380.23 per tonne, up $5.4/t from past week.

Corn FOB Rhin Spot – July 2021 basis was up $2.13 to $369.67/t.

Feed barley FOB Rouen was at 412.97$/t, up $19.4 per tonne.

Malting barley FOB Creil Spot – July 2021 basis was at $491.13per tonne, up $33/t from prior week.

Rapessed FOB Moselle – 2021 harvest was at 881.93$/ton, down $12.46 compared to prior week.

Standard sunseed FOB Bordeaux – 2021 harvest was down 5.97$ from prior week at $1045.64 per tonne.

(Eur/USD = 1.0562 vs last week 1.0412).

In Russia, Russian wheat export prices rose last week.

Indeed, according to the IKAR, prices for wheat with 12.5% protein content and supply in May from Black Sea ports were at $390 free on board (FOB) at the end of last week.

That was up $5 from a week earlier.

Meantime, price for domestic 3rd class wheat, European part of Russia, excluded delivery was at 15,875 rbls/t ($248.91), down 175 rbls from the week earlier (Sovecon).

Price for sunflower seeds was at 40,650 rbls/t, down 250 rbls (Sovecon).

Price for domestic sunflower oil was at 111,700 rbls/t, down 2,650 rbls (Sovecon).

Price for domestic soybean was at 50,500 rbls/t, down 450 rbls (Sovecon).

Price for export sunflower oil was at $1,900-2,000/t, unchanged from the prior week (Sovecon).

According to the IKAR, price for export sunflower oil was at $1,940/t unchanged, from prior week.

Price for white sugar, Russia’s south, was at $960.6/t, down $2.5 (IKAR).

($1 = 60.2325 roubles).

Meantime, the Russian Ag. Min has amended the export tax for wheat, barley and corn for the week of May 25-31, 2022.

Particularly, the export duty will be $110.5 on wheat, $76.5 on barley and $76.5 on corn.

Indicative prices will be $357.9 for wheat, $294.3 for barley and $294.3 for corn.

That is compared, with prior week (May 18-24) when the tax was $111.9 for wheat, $76.5 for barley and $77.3 for corn, while indicative price were $359.9 for wheat, $294.3 for barley and $295.5 for corn.

In Ukraine, according to APK-Inform, the indicative forward prices of Ukrainian wheat increased last week.

Particularly, the indicative offer prices of new-crop 12.5%, 11.5% and feed wheat increased by 20-25 USD/t to 350-370, 345-365 and 310-330 USD/t FOB (July-August) last week.

Export prices of Ukrainian soybean oil also have been growing gradually since the beginning of the last week.

Last week, the bid prices of crude soybean oil increased by 150-220 USD/t. 

As of the morning of May 16, the prices are announced at 1400-1490 USD/t FCA.

Above-mentioned factors supported the prices of hydrated soybean oil too. 

However, they were partially offset by lower demand from the key importers. 

Thus, prices for hydrated soybean oil, totaled 1500-1550 USD/t FCA compared to 1450-1580 USD/t FCA the week ago.

The indicative export prices of Ukrainian new-crop barley also increased last week by average 20 USD/t to 330-355 USD/t FOB.

Meanwhile, the bid prices of corn increased by 10-20 USD/t to 225-250 USD/t CPT-port. 

The bid prices on the FOB market were mainly announced at 285 USD/t FOB in the ports of Reni and Izmail.

At the same time, the purchasing prices of corn were mainly declining last week in the ports of Romania and Moldova

Overloaded logistics, delays in contract performance high delivery costs weighted on the prices. 

Thus, the bid prices of corn totalled 285-305 USD/t or 275-290 EUR/t for delivery to the port of Constanta, and 245-255 USD/t for delivery to the port of Giurgiulești.

In Iraq, the economic ministerial council agreed on increasing the price for state purchases of local wheat by 100,000 dinars to 850,000 dinars ($583) per tonne, state news agency reported on Tuesday.

Iraq, is taking urgent measures to secure strategic stocks of wheat and support a local food subsidies programme.

Iraq’s current wheat reserves are sufficient for four months after buying 800,000 tonnes from local farmers, a trade ministry spokesman, Mohammed Hanoun, told state news agency INA on Tuesday.

($1 = 1,458.5200 Iraqi dinars).

In Australia, indicative delivered prices in Australian dollars per tonne were:

Barley Downs: $502 up $67 from May 12;

SFW wheat Downs: $505, up $45 from May 12;

Sorghum Downs: $382, up $ 22 from May 12;

Barley Melbourne: $440, up $12 from May 12;

ASW wheat Melbourne: $502 up $47 from May 12.

SFW wheat Melbourne: $502 up $57 from May 12.

(AUD/USD=> US$0.7039 vs. US$0.6940 past week).

Main events and news during this week

The 2022 Wheat Quality Council’s Hard Winter Wheat Tour across Kansas wrapped up on May 19. 

The three-day average yield for the fields that were calculated was 39.7 bushels per acre. 

While an estimated 7.4 million acres of wheat were planted in the fall, the Kansas wheat crop varies in condition based on planting date and amount of moisture received. 

What Mother Nature has in plan for the wheat crop still remains to be seen, but the tour captures a moment in time for the yield potential for fields across the state.

The official tour projection for total production of wheat to be harvested in Kansas is 261 million bushels, indicating that tour participants thought abandonment might be higher than normal at 11%. 

Based on May 1 conditions, NASS predicted the crop to be higher at 271 million bushels, with a yield of 39 bushels per acre and abandonment at only 6%.

Overall, the Kansas wheat crop is spotty and short, but the eastern half of the state generally had better growing conditions than the western half.

Another surprise of this year’s tour was the lack of disease pressure, especially wheat streak mosaic virus. 

Also, there was little to no insect pressure of concern for reducing yield.

The USDA estimate for the Nebraska wheat crop is ¬¬36.9 million bushels, down from 41.2 from last year. 

The estimated yield average is 41 bushels per acre. 

The Colorado crop is estimated at 49.6 million bushels, down from 69.6 million bushels last year. 

The estimate is for an average of 31 bushels per acre across the state. 

Brad Erker, executive director of Colorado Wheat, estimated the crop at 40.1 million bushels, based on a yield of 28.6 bushels per acre, 1.4 million acres harvested and 30% abandonment rate. 

Oklahoma reported that the state’s production is estimated at 60 million bushels, down from 115 million bushels last year, with 25 bushels per acre yield.

These fields are still 3-6 weeks from harvest. 

A lot can happen during that time to affect final yields and production.

On this wake, Planalytics estimates the US winter wheat yield at 48.7 bpa, from their initial 48.8 bpa estimate. 

Canadian wheat planting in Saskatchewan was 33% complete as of 5/16, trailing their 53% average pace due to excessive spring rainfall. 

Argentine President Alberto Fernandez said on Friday that higher food export tariffs would help curb rising food pricesbut admitted that he lacked support in Congress to push through legislation to raise levies in the major grains producer.

The South American country, is battling raging inflation heading towards 60%, which has forced the government to seek ways to bolster domestic supply and rein in prices.

The government in March hiked export taxes on soy oil and soymeal from 31% to 33% and created a wheat stabilization fund to tamp down local prices of flour.

Hiking tariffs on soybeans, corn and wheat, however, would need approval in Congress.

Argentina currently taxes shipments of wheat and corn at 12% and soybeans at 33%. 

Grains are the country’s major export and top source of foreign currency, which is sorely needed to replenish depleted reserves after years of debt crises.

Meantime, the Buenos Aires Grains Exchange estimated soybean harvest at 78% complete compared to 65% last week. 

Farm office FranceAgriMer showed growing conditions for wheat and barley crops in France fell sharply for a second straight week.

An estimated 73% of French soft wheat was in good or excellent condition by May 16, against 82% the previous week.

That followed a 7-percentage-point decline in the previous week and meant the rating was now below a year-earlier score of 79%, the office’s data showed.

Durum conditions also moved down to 74% from 77% a week ago.

Regional data in FranceAgriMer’s cereal report suggested contrasts in growing conditions. 

In the Ile de France region around Paris, just 45% of the soft wheat crop was rated good/excellent, while in the Hauts de France, a key production region in the far north, the score was 77%.

Showers on Friday and in the coming days could help crops recover although, as in a previous unsettled spell at the start of the week, rainfall may be erratic.

French barley conditions also dropped sharply, as in the previous week.

The good to excellent rating for winter barley fell 8 percentage points to 71%, while the corresponding score for spring barley dropped 7 percentage points to 69%, FranceAgriMer’s report showed.

Farmers were rounding off maize planting, with 98% of the expected area sown.

In a first published rating for emerged maize plants, FranceAgriMer said 93% of the crop was in good or excellent conditions against 95% a week earlier.

Russian analyst SovEvon raised the forecast for Russian wheat production this week by 1.2 MMT to 88.6 MMT.

If realized, this will be the second highest yield on record said SovEcon. 

Ukrainian export data showed 643k MT of grains were shipped MTD in May, down from 1.8 MMT during May 2021. 

Of that, just 16k MT were wheat and 617k MT was corn. 

While India is not typically a major wheat exporter, consecutive years of high production led an optimistic Prime Minister Narendra Modi to claim, “the farmers of India have stepped up to feed the world.” 

Yet, India surprised wheat markets May 15 by announcing a sudden ban on wheat exports. 

Many grain traders and prospective buyers of Indian wheat were caught off guard. 

The farm ministry this week said India is likely to harvest 106.41 MMT of wheat in 2022, 4.4% less than the previous estimate of 111.3 MMT. 

That would now be a reduction yr/yr from 109.6 MMT last season. 

Yields were slashed due to a sudden rise in temperatures.

Trade sources indicate that Indonesia will begin allowing palm oil exports again starting Monday. 

Shippers will still have to divert 20% of production to the domestic market. 

“May 2022 IGC Update”

The International Grains Council on Thursday cut its 2022/23 forecast for world corn production by 13 million tonnes to 1.184 billion.

In its monthly update, IGC lowered its forecast for the corn crop in the United States – where excessive rains have slowed planting – by 9.3 million tonnes to 367.3 million.

It kept its forecast for the 2022/23 corn crop in Ukraine – the world’s fourth-largest exporter of the grain – at 18.6 million tonnes, less than half its 42.1 million tonne forecast for this season.

The IGC cut its 2022/23 wheat production forecast by 11 million tonnes to 769 million, reflecting a lower forecast in the United States (46.8 million versus 49.9 million) and India (105 million versus 111.3 million).

For Russia, the IGC lifted its 2022/23 wheat crop forecast to 84.7 million tonnes from 82.5 million.

The IGC kept its forecast for next season’s wheat crop in Ukraine – the world’s 6th largest exporter of the grain – at 19.4 million tonnes, about 40% lower than the 33 million tonne forecast for this season.

Watching next week market

The week starts off with the weekly Export Inspections report on Monday afternoon and the NASS Crop Progress report overnight after the sessions close. 

NASS will also release their monthly Cold Storage report. 

Skip ahead to Wednesday and EIA will release ethanol production and stocks data. 

Thursday will feature the weekly Export Sales report in the morning, as well as the expiration of May Feeder Cattle futures and options.

That’s all.

To all of you, I wish you a good weekend.

Author: Sandro F. Puglisi  

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