Good afternoon Farmer Family and good weekend …
USDA’s latest World Agricultural Supply and Demand Estimates report, out yesterday, didn’t cause much of a shake-up in US farm markets.
Corn, after worked both sides of unchange, ultimately picked up modest gains, up 0.03% by the close.
Soybean prices fell more than 1.3% despite USDA showing tightening US domestic stocks and robust export demand, as traders locked their profits after seeing prices rise to the highest level in nearly a decade earlier this week.
Soymeal pricees went into the weekend with 0.37% gains.
Bean oil prices ended Friday session 2.2% weaker.
Most wheat contracts finished Friday’s session slightly higher, with Kansas City HRW contracts showed the most upside, moving 0.76% higher.
Chicago SRW wheat prices were fractionally mixed, with July contract ended 0.05% lower.
Minneapolis spring wheat prices closed the day with 0.2% losses.
For the week, corn prices clawed back most of last week’s losses with July up 6.36% on the week, a 46 ¼ cent move.
New crop Dec was up 4.42% (30 ½ cents).
Soybeans rallied up 2.81% or 47 ¾ cents for the week.
Product values were mixed, with meal up 5.2%.
July meal, indeed, closed the week up by $21.20/ton, while soy oil lost 1.27% or $1.04.
Wheat prices were higher in all three markets, with Chicago SRW up 2.95%.
KC HRW was up 3.7% and MPLS gained 2.49% for the week.
Going inside the numbers, during the week CBOT corn prices, closed up $0.463 at $7.73/bu.
CBOT soybean prices finished the week $0.477 stronger at $17.46/bu.
Soymeal jumped by $21.2/smt at $429.1 smt.
Soy oil shedded $1.04 cents, to close at $80.81.
CBOT soft red winter (SRW) prices gained $0.307 to close at $10.71/bu.
KCBT hard red winter (HRW) prices rose $0.415 ending at $11.63/bu.
MGE hard red spring (HRS) prices lifted $0.297 to close at $12.22/bu.
Meantime, as of June 09, 2022, FOB prices saw US corn 3YC (Gulf) was at $344/mt (up $16/mt from last week).
US soybean 2Y (Gulf) quoted at $703/mt (up $12/mt from last week).
As for wheat, US wheat No 2 Hard Red Winter (HRW) was valued at $483/mt (up $2/mt from last week).
US wheat No 2 Soft Red Winter (SRW) was at $416/mt (up $1/mt from last week).
USDA’s weekly Ethanol Report showed the average cash price for corn oil rose from between 73.33-76.89 c/lb regionally last week to 76.00-78.20 cents this week.
DDGS FOB prices decreased in the Gulf from $295-$308/ton to $295-$305/ton, while PNW offers were non available.
Cash ethanol prices averaged $2.71-$2.86 regionally, compared last week when were between $2.67-$2.76/gal.
USDA had the B100 price in IA as $7.79/gal for the week, with no comparison to the past few weeks.
Meanwhile gasoline futures ended the week at $4.1581, that was down from $4.1980/gal posted last week.
USDA’s weekly Crush report, showed processing value of soybeans at $20.05/bu on $17.77 cash beans.
Past week showed processing value of soybeans was at $19.67/bu on $17.57 cash beans.
June WASDE reports showed USDA’s updated new corn cash average price estimate is $5.95 for old crop – up another 5 cents, but still $6.75 for new crop.
As for soybean, USDA lifted the old crop cash average price from $13.25 to $13.35/bu, and added 30 cents to the new crop average cash price now at $14.70/bu.
As for wheat, USDA has the average cash price as $10.75/bu, which is unchanged from May’s figure.
On the weather side, this week’s drought map included widespread improvements resulting from considerable rainfall across all wheat growing areas.
Broad category-1 improvements occurred across the Plains states and PNW for the week ending June 7.
Heavy rain was seen in western Texas and Oklahoma.
Custer County in western Oklahoma recorded 8 inches of rain for the week.
Heavy rainfall allowed for 1-category improvements in southeastern, southwestern, and central Kansas.
Southeastern Colorado, Nebraska, South Dakota, and western Wyoming also saw broad improvements.
In the west, consistent springtime moisture supported widespread improvements to soil moisture conditions in Oregon, eastern Washington, western Idaho, and Montana.
NOAA’s latest 72-hour cumulative precipitation map shows more rain is possible across large areas of the Midwest and Plains between today and Monday, although few places will gather much more than 0.25” during this time.
Most of North Dakota could see 0.75” or more over the weekend, however.
NOAA’s 8-to-14-day outlook predicts a return to seasonally dry conditions between June 17 and June 23, with much hotter-than-normal weather likely across the eastern two-thirds of the country.
On the supply side, weekly Planting and Crop Progress report showed corn planting was 94% complete as of June 5 in the US. Emergence still trailed average at 78% vs. 81%.
The condition of the corn crop was rated 73% good/excellent and 4% poor/very poor.
This compares with the previous-year average of 72% good/excellent and 5% poor/very poor.
Sorghum planting reached 56% complete, up 16% points wk/wk and 1% point ahead of the average pace.
The initial milo conditions were a 46% good/ex.
For soybean, the report has 78% of soybeans planted.
That was up from 66% last week, but down compared with 79% for the previous five-year average.
56% has emerged compared with 59% for the previous five-year average.
Spring wheat planted was reported at 82% compared with 97% for the prior five-year average; 55% has emerged compared with 83% for the previous five-year average.
Winter wheat headed came in at 79% vs the 84% five-year average.
Winter wheat condition was 30% good/excellent and 40% poor/very poor.
This compares with the previous-year average of 50% good/excellent and 18% poor/very poor.
Harvest is under way in AR, CA, MO, NC, OK, and TX, with 36% of Texas wheat out.
Their average pace would be 38% harvested.
National harvest is 5% finished, compared to 6% on average.
Oats planted was reported at 94% vs. the five-year average of 97%, and 80% of oats had emerged as of June 5, compared with 91% for the previous five-year average.
Oat condition was 55% good/excellent and 22% poor/very poor.
This compares to the previous-year average of 46% good/excellent and 18% poor/very poor.
The report also indicated that nationwide, topsoil moisture is rated as 63% adequate and 12% surplus.
The previous year was 56% adequate and 10% surplus.
On the demand side, weekly EIA data showed ethanol producers averaged 1.039m barrels per day through the week that ended 6/3.
That was a 32k bpd pullback from last week’s calendar year high, but marked the 3rd consecutive +1m bpd weekly output.
Ethanol stocks increased by 675k barrels to 23.638 million.
The Weekly Exports Sales report released by USDA, showed 280,416 MT of old crop corn was sold for export during the week that ended 6/2.
That was up 51% wk/wk, up 48% yr/yr, and matched expectations.
New crop bookings were reported as only 73,548 MT.
Shipments of 1,381,600 MT were down 13% from the previous week and 12% from the prior 4-week average.
The destinations were primarily to Mexico (344,900MT), China (266,600MT).
For sorghum, the USDA reported 10,177 MT were sold during the week that ended 6/2.
That was down from 32k MT the week prior.
Milo exports were a 4-wk high of 217k MT, setting the MYTD total at 5.889 MMT.
As for soybean, data from the FAS Export Sales report confirmed 429,945 MT of old crop beans were sold during the week of 6/2.
That was sharply above both last week and the same week last year and near the top of the expected range, but included 121k MT of previously announced business.
New crop soybean sales were 595,306 MT during the week.
That was the most since April 14, led by 297k MT to Pakistan (previously known) and 261k MT to China (66k MT previously known).
That left forward sales at 12.697 MMT for the 22/23 season, a 68% lead over forward sales for this season at the same time last year.
FAS data had soymeal bookings at 134,376 MT from the week of 6/2. That was down 29% wk/wk and below estimates.
Meal exports from the week were a 4-wk high of 229k MT and set the MYTD total at 8.238 MMT – matching last year’s pace.
For soybean oil, the weekly report had 1,258 MT sold and 7,714 MT shipped.
Those were each 3-wk lows.
For wheat, the report showed export sales for the period May 27-June 2, 2022 and delivery in 2022/23 season, which began June 1, were at 451,000 MT.
Sales were primarily for unknown destinations (117,600MT) and Mexico (73,200MT).
A total of 740,300 MT in sales were carried over from the 2021/22 marketing year, which ended May 31.
Export shipments for the period ending May 31, of 138,800 MT brought accumulated exports to 18,668,900 MT, down 25% from the prior year’s total of 24,806,600 MT.
The destinations were primarily to South Korea (50,700MT) and Guatemala (25,100MT).
Export shipments for June 1- 2 of 212,000 MT were primarily to Mexico (62,700MT) and the Philippines (57,900MT).
As we can see, US wheat exports ended the 2021-22 marketing year at their lowest in 50 years, as the product remained uncompetitive with all key origins throughout the season.
In this context, corn basis bids were steady to firm after rising 2 to 10 cents higher at three Midwestern locations on Friday.
An Illinois ethanol plant bucked the overall trend after dropping 5 cents.
U.S. basis levels continue to rise amid strong commercial demand, with the average Midwest basis reaching 6N (6 cents over July futures) this week.
That is up from 1N last week and near the five-year high of 9N recorded this time last year.
The strong basis and inverted futures curve signal commercial demand for corn remains strong, which is further supporting spot futures values.
Soybean basis bids showed some volatility in either direction on Friday, tumbling as much as 20 cents lower at two interior river terminals while firming 10 cents higher at two Midwestern processors.
Wheat basis this week, was mixed in both the Gulf and Pacific Northwest (PNW).
Aggressive spring wheat planting progress eased HRS basis in the Gulf.
Freight costs also eased due to reduced railroad congestion.
Ahead of soft white wheat harvest historically tight soft white stocks pushed nearby prices higher, however, good growing conditions in the PNW are keeping new crop soft white prices competitive with other origins.
Meantime, the weekly Commitment of Traders report showed managed money firms liquidated both sides on corn to the tune of 34,193 contracts (8.3%) through the week that ended 6/7.
Particularly, commercial corn traders added 18k new longs for a 19.5k weaker net short of 594,145 contracts as of 6/7.
The managed money spec funds trimmed 4,637 contracts from their net long, taking it down to 264,327 contracts of futures and options.
It peaked at 384,101 back in March.
For soybean, the report showed the managed money spec funds cutting back their net long position in soybeans by 5,702 contracts in the week ending June 7, putting them net long 158,928 at that point.
Commercial bean traders reduced their net short by 9,599 contracts to 242,071.
In soymeal, speculative traders closed shorts during the week for a 5.8k contract stronger net long of 53,169.
The CoT report showed managed money funds were 4,362 contracts more net long in soy oil, which left the group 68,823 contracts net long as of the 6/7 settle.
For wheat, CFTC showed the Chicago wheat specs were 2,349 contracts less net long at the close of 6/7, taking it to a modest 12,675 contracts.
In KC wheat, the funds were 37,498 contracts net long as of 6/7.
That was 3,152 contracts less net long due to long liquidation.
Managed money firms were 13,922 contracts net long in MPLS spring wheat.
That was down 1,601 contracts also from long liquidation.
In energy markets, oil prices fell on Friday, after U.S. consumer prices rose more than expected and China imposed new COVID-19 lockdown measures.
Brent crude fell $1.06 to settle at $122.01 a barrel. U.S. West Texas Intermediate crude fell 84 cents to settle at $120.67 a barrel.
Both benchmarks still posted weekly gains, 1.9% for Brent and 1.5% for WTI.
For the day, oil prices sank along with Wall Street stocks after news that U.S. consumer prices accelerated in May.
Gasoline prices have hit a record high and the cost of food has soared, leading to the largest annual increase in about 40 years.
That raises expectations that the Federal Reserve will tighten policy more aggressively.
Oil had risen more than $1 earlier in the session from fears of a potential disruption in supplies in Europe and Africa.
Norway’s oil output could be reduced if workers go on strike on Sunday, the Norwegian Oil and Gas Association said.
Some 845 of roughly 7,500 employees on offshore platforms plan to strike from June 12 if annual pay negotiations fail.
Oil output at Libya’s Sarir field has been reduced after the ports of Ras Lanuf and Es Sider were closed and as a group threatened to close Hariga port, two oil engineers at the field said.
In U.S. supply, the U.S. oil rig count, an indication of future supply, rose six to 580 this week, their highest since March 2020.
Iran on Thursday dealt a near-fatal blow to chances of reviving the nuclear deal as it began removing essentially all the International Atomic Energy Agency monitoring equipment installed under the deal, IAEA chief Rafael Grossi said.
Money managers cut their net long U.S. crude futures and options positions by 1,674 contracts to 284,171 in the week to June 7, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
In freight markets, the Baltic Exchange’s main sea freight index extended its slide on Friday and closed a straight third weekly loss.
The overall index, indeed, lost 22 points to 2,320 points.
The index was down 12% for the week.
Rates weakened across smaller vessel segments.
Particularly, the capesize index on Friday inched up 2 points to 2,371 but has lost about 19% this week.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, increased by $22 to $19,665.
The panamax index dropped 45 points, or 1.7%, to 2,629 points and has lost about 7.8% in this week.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased by $402 to $23,662.
The supramax index lost 32 points to 2,495.
In contrast, on week 23, a sharp increase in freight rates was recorded in the Azov-Black Sea region.
The rate for a 3K wheat parcel from Azov to Marmara Sea ports is $46 per ton.
According to Sea Lines shipbrokers, despite the end of the grain season, more and more cargo is appearing in the market every day.
Some farmers offer lower prices on the eve of the new harvest in order to sell the remains of their crops, although this can hardly be called massive.
In addition, shipments from the Russian river ports are being actively discussed, and are expected to start at the end of this month.
Ukrainian grain still continues to be actively exported at prices lower than those for Russian grain, but the difference in cost is leveled by freight.
Indeed, due to the military risks and long queues for loading, the difference in freight rates can be as much as $50.
According to Sea Lines, on week 23, freight rates for shipping wheat by 3,000 dwt bulkers from Azov make $44to the Black Sea, $46 to Marmara, $60 to Mersin and $66 to Egypt.
Freight rates from Rostov AB (after bridge) are $1 above, from Rostov BB (before bridge) the same, from Yeisk and Taganrog $1 below, and from Temryuk $3 below those from the port of Azov.
In the Caspian, freight rates remain on the previous week’s level.
On week 23, freight rates for shipping corn by 3,000 dwt bulkers to Iran make $20 from Aktau, $27 from Makhachkala, and $32 from Astrakhan.
In equity markets, as we said, US stocks fell sharply on the unfavorable CPI and consumer sentiment reports, adding to Thursday’s sharp losses when the S&P 500 index plunged by -2.38% and the Nasdaq 100 index fell by -2.74%.
Friday’s U.S. May CPI report of +1.0% m/m and +8.6% y/y was stronger than expectations of +0.7% and +8.3%, respectively.
Friday’s May core CPI of +0.6% m/m and +6.0% y/y was slightly stronger than expectations of +0.5% and +5.9%, respectively.
The headline May CPI rose to a new 40-year high of 8.6% y/y, but the core CPI eased to a 4-month low of +6.0% from April’s +6.3% in April and March’s 40-year high of +6.5%.
That, added more concerns that the Fed will be forced to raise interest rates aggressively and put the U.S. economy into a recession by next year to cool inflation to more acceptable levels.
In this context, markets on Friday added expectations for an extra +31 bp of Fed rate hikes by year-end with the 31 bp move in the Dec federal funds futures contract to an implied yield of 3.08%.
That represents expectations for an overall +225 bp rate hike through year-end.
The FOMC at its meeting next week is fully expected to raise its funds rate target range by +50 bp to 1.25%/1.50% from the current 0.75%/1.00%.
The stock market was also undercut by Friday’s news that the University of Michigan’s preliminary-June U.S. consumer sentiment index fell sharply by -8.2 points to a record low of 50.2 (data since 1977).
That was much weaker than expectations for a small -0.3 point decline.
The plunge in consumer sentiment increases the risk of a sharp cut-back in consumer spending and a U.S. recession.
Consumers are currently enjoying strong employment income, but are very worried about inflation, sky-high gasoline prices, and a possible recession.
The USA high inflation, plus the expectations for an aggressive Fed, have sent the two-year Treasury yield to its highest level since 2008 and the S&P 500 down 18.7% from its record set in early January.
The worst pain has hit high-growth technology stocks, cryptocurrencies and other particularly big winners of the pandemic’s earlier days.
Microsoft fell 4.5%, Amazon dropped 5.6% and Nvidia sank 6%.
Companies that depend on strong spending from consumers were also particularly weak following the reading on consumer sentiment. Caesars Entertainment fell 9.3%, and cruise operator Royal Caribbean dropped 7.3%.
In this context, stocks on Wall Street and in Europe fell more than 2%.
The pan-European STOXX 600 index fell 2.69% and MSCI’s gauge of global equity markets shed 2.79%.
On Wall Street, the Dow Jones Industrial Average fell 2.73% or 880.00 points to 31,392.79, the S&P 500 lost 2.91% or 116.96 points to 3,900.86 and the Nasdaq Composite dropped 3.52% or 414.20 to 11,340.02.
Combined with its losses from Thursday, the three indices posted their biggest weekly declines since January, tumbling roughly 5% each.
In currency trading, the dollar rose to a near four-week high against a basket of currencies.
The dollar index (Sep ’22) rose 0.932% to104.013, with the euro down 0.97% to $1.0517 while the yen was at 134.4 vs dollar.
From Canada, seeding in Saskatchewan took another jump forward to 75% seeded compared to 97% on average.
In Alberta, spring wheat was 97% seeded, but moisture deficits in the south of Alberta remain worrisome.
Manitoba was only 40% seeded overall last Thursday.
Durum seeding in Saskatchewan reached 91% seeded compared to 98% on average.
In Alberta, durum wheat was 100% seeded, but moisture deficits in the south of Alberta remain a problem.
As we can note, planting progress in Canada were quite good last week, and there does not seem to be an immediate yield threat on the horizon.
Meantime, Canadian wheat exports were small last week (week 43) at 169k mt, advancing year-to-date wheat exports to 9.5 million mt, 7.1 million mt lower (-43%) than last year-to-date.
Durum exports for week 43 were small at 31k mt, for a year-to-date total of 2.1 million mt, compared to 5.4 million mt last year-to-date. This is now 60% behind last year’s pace.
Canadian canola seedings have progressed markedly, posted at 91%, which nevertheless remains slightly below the 97% sown on average to date.
In this context, as of June 06, 2022, Canadian wheat prices for FOB delivery West Coast were (Cdn$/mt):
– for the N1 class CWRS 13.5% – $614.25 per tonne, down C$33.98/t from prior week;
– for the N2 class CWRS 13.0% – $602.69/t, down C$33.96 wow;
– for the N3 CWRS – $600.38/t, down C$29.32 from prior week.
As of June 06, 2022, for the N1 CWAD 13% (durum wheat first class) deferred average street prices for delivery in Jun ’22 were at C$606.28 unchanged week on week.
However, export basis West Coast & Central SK decreased from C$ 143.89 to 142.01 per tonne, as delivered FOB price Great Lakes was posted at C$ 748.28, down C$1.89 from prior week.
Meantime, per latest data from the European Commission, as of June 8, 2022, Durum wheat – CA St Lawrence (CWAD) was offerd at C$730/t, up $12.09/t from prior week.
As of June 10, 2022, for the N1 CWAD 13% (durum wheat first class), average street prices in REGIONAL ZONES were at C$590.74 per tonne, down C$8.23 from prior week.
(1USD=Cnd$1.2696 up from past week when was 1.2595).
In South America, Argentina‘s 2022/23 wheat crop will likely come in at 18.5 million tonnes, down from 19 million tonnes previously estimated, the Rosario grains exchange said early on Thursday, citing reduced planting by farmers due to dry weather.
The exchange cut its forecast for the planting area of the crop to 6.2 million hectares from a 6.35 million-hectare estimate previously.
That was the lowest in 12 years.
Planting of the crop is ongoing.
Argentina produced a record 23 million tonnes of wheat last season, however, dry weather linked to the La Nina climate phenomenon, is putting the brakes on farmers planting wheat in key farming regions.
Some 80% of the key Pampas region was in dry to very dry conditions.
Farmers have planted 17% of the estimated area for wheat, some 13 percentage points behind the same stage last season.
Rains will be key to help complete planting by early July, but weather forecasts are not encouraging.
Meantime, the exchange said that the 2021/22 soybean harvest had ended with some 42.2 million tonnes, above the 41.2 million that it had previously estimated, due to yields higher than expected.
Argentina’s government proposed a bill Monday to tax companies that earn “extraordinary income” from the war in Ukraine.
The measure would particularly affect the country’s grains industry.
The bill aims to levy an additional 15% tax on companies with profits of over 1 billion pesos (about $8.3 million) in 2022 whose profit margin is either more than 10% in real terms or is 20% higher than in 2021.
Sectors like food, energy and agriculture would be most affected.
Brazil was seen starting harvest for their 2nd crop, with Patria Agronegocios reporting 3.3% of the crop pulled in the fastest start to harvest.
Meantime, CONAB reported Brazil’s 2nd corn crop estimate at 88.015 MMT, up 323k MT from May on a slight yield boost.
Their total corn crop was lifted by 635k MT (0.5%) relative to the May report to 115.223 MMT.
This increase confirms the record volumes expected this year in the country.
As for soybean, CONAB put their June estimate for soybean production at 124.268 MMT.
That was up slightly from last month’s 123.829 MMT figure.
Yields were hardly lifted implying a larger harvested area.
Conab also expects to see corn exports at 37 MMT in the current marketing year.
Abiove projects soybean exports will come in around 76,99 MMT.
Soymeal exports are steady from prior estimates of 18.3 million metric tons, with soybean oil exports anticipated to reach 2.0 MMT.
In other news, Brazilian officials are considering a biodiesel blend of 15% for later this year, up from the current 10% requirement, citing trucking fuel shortages domestically – according to wire reports.
Responding to the news, Abiove suggestscurrent production and stocks would allow for a 12% blend, though to reach 15% they would need to crush 3 MMT more beans per year, or import soy oil.
In this context, as of June 9, 2022 – Argentina Wheat Grade 2 export price, (Up River) was at $492, up $12 from prior week.
Argentina corn feed was up $5/t for the week, closing at $310.
Brazilian corn feed (Paranagua) was valued at $334, up $13 from prior week.
Argentina feed barley, was unchanged to $376.
Argentina soybean was up $14 at $685.
Brazilian soybean gained $2 finishing the week at $696.
In Europe, grain prices took advantage of a contraction in the eurodollar parity.
Rapeseed has been partially penalized by the rapid drop in oil prices, and in a context of lack of competitiveness of rapeseed oils compared to other vegetable oils.
The partial re-containment of the city of Shanghai and a relaxation of export restrictions in Indonesia was indeed weighing heavily on the market.
Farm office FranceAgriMer on Thursday lowered its forecast for French soft wheat exports outside the European Union this season for a third month in a row, saying high prices due to the war in Ukraine had curbed international demand.
French soft wheat exports to non-EU destinations in the 2021/22 season that ends on June 30 are now expected at 9.1 million tonnes, down from 9.25 million projected in May, FranceAgriMer said in a cereal supply and demand update.
Morocco, whose harvest was hit by drought, was proving an exception with steady demand for French wheat.
FranceAgriMer kept its forecast of French soft wheat exports within the 27-country EU unchanged at 8.0 million tonnes.
It also held its projection for French soft wheat stocks at the end of the season steady at 3.2 million tonnes, with the reduced outlook for non-EU exports offset by a downward revision to harvest supply.
Meantime, analyst firm Strategie Grains reduced its forecast for EU soft wheat exports by nearly 2 million tonnes, also citing a drag on demand from elevated prices.
The French firm expects the 27-member bloc to export 28.0 million tonnes of soft wheat during the 2021/22 season ending on June 30, down from 29.9 million projected in May and 31.4 million seen in April.
Strategie Grains also reduced its EU wheat export outlook for 2022/23, to 30.3 million tonnes from 30.8 million forecast last month, due to weak global demand and rising competition from North American and Russian grains.
Sluggish exports in the final part of the campaign also prompted Strategie Grains to cut estimated EU barley exports in 2021/22 by 0.5 million tonnes to 7 million tonnes.
Traders nonetheless expect EU wheat to be in strong demand in the upcoming 2022/23 season, with availability of Ukrainian supplies uncertain despite talks to re-open the country’s ports.
For this summer’s harvest, showers and cooler temperatures in recent days have brought relief for spring crops, and damage from storms last weekend was thought to be very localised, Catherine Cauchard, head of FranceAgriMer’s crop monitoring service, said.
But Strategie Grains cut its forecasts for the EU’s 2022 wheat and barley harvest this month, citing overly dry conditions during the first half of the growing season in many countries, notably France.
The EU wheat crop, indeed, was expected at 124.4 million tonnes, down from 126.2 million projected in May and 130.5 million harvested last year but close to the five-year average.
The barley harvest was seen at 50.3 million tonnes, down from 51.7 million last month and 52.0 million in 2021 with the fall mainly due to a lower spring barley output, it said.
In contrast, the corn crop outlook had improved slightly, with the EU 2022 seen harvesting 66.8 million tonnes, up from 66.7 million last month but still well below the 69.5 million harvested last year
As for ending stocks, FranceAgriMer forecasted corn stocks in 2021/22 were increased to 2.6 million tonnes from 2.2 million as the office revised up supply and lowered projected demand for livestock feed.
France’s worst-ever bird flu outbreak and wider difficulties in the livestock sector have reduced feed demand.
Projected barley stocks also were raised to 1.4 million tonnes from 1.3 million last month, reflecting cuts to expected exports and feed demand, FranceAgriMer’s data showed.
Meantime, farm office FranceAgriMer showed on Friday growing conditions for wheat and barley crops in France continued to decline for a sixth straight week.
An estimated 66% of French soft wheat was in good or excellent condition by June 6, against 67% the previous week and 81% a year ago, the office’s data showed.
The rating has dropped by 25 percentage points since the start of May
Durum conditions also moved down to 62% from 64% a week ago and down from 70% a year ago.
French barley conditions also dropped, as in the previous week.
The good to excellent rating for winter barley fell 1 percentage points to 64%.
Ditto the corresponding score for spring barley dropped 1 percentage points to 53%, FranceAgriMer’s report showed.
Rating for emerged maize plants, was at 88%, down from 90% of the crop valued in good or excellent conditions last week.
In this context, Paris-based Euronext exchange saw September’s wheat prices to close the week at €391.75, an increase of €13.5 from past week.
August corn price was up €5.25/t for the week, closing at 334.75 euros per ton.
Rapeseed for August deadline, rose €9.25/t for the week, to close €785/t.
July-22 UK wheat feed contract, closed at £294.9/t, up £6.9/t week on week.
Meantime, as of June 9, 2022, FOB prices in US dollar for French wheat with 11.5% protein and June delivery, were at $417/mt, down $17 from prior week.
German wheat Deposilo Hamburg, was at $424.89/t, down $30.66/t from prior week.
Baltic wheat, delivery first Vilnius, was at $398.59/t, down $8.73/t from prior week.
French durum wheat – basis La Pallice, was at $525.85/mt, down $20.82 from prior week.
Italian durum wheat Bologna (Delivered to first customer), was valued this week at $571.07 per tonne down $4.54 from past week.
Corn, delivered Bordeaux port was at $342.85 per tonne, up $5.04/t from past week.
Corn FOB Rhin Spot – July 2021 basis was up $12.58 to $349.16/t.
Feed barley FOB Rouen was at 359.68$/t, down $6.91 per tonne.
Malting barley FOB Creil Spot – July 2021 basis was at $473.27 per tonne, down $3.74/t from prior week.
Rapessed FOB Moselle – 2021 harvest was at 830.84$/ton, down $34.18 compared to prior week.
Standard sunseed FOB Bordeaux – 2021 harvest was down 61.86$ from prior week at $988.6 per tonne.
(Eur/USD = 1.0517 vs last week 1.0719 ).
From the Black Sea basin, Russian wheat export prices rose last week.
According to the IKAR, prices for wheat with 12.5% protein content and for supply from Black Sea ports in June rose $15 to $425 free on board (FOB) at the end of last week.
Prices for domestic 3rd class wheat European part of Russia, excludes delivery were at 15,075 rbls/t ($247.74), down 50 rbls from prior week (Sovecon);
price for sunflower seeds was at 33,700 rbls/t down 1,050 rbls (Sovecon);
price for domestic sunflower oil was at 97,500 rbls/t -3,000 rbls (Sovecon);
price for domestic soybeans was at 44,400 rbls/t -1,300 rbls (Sovecon);
export price for sunflower oil was at $1,860/t -$60 (Sovecon);
export price for sunflower oil was at $1,750/t -$100 (IKAR);
Price of white sugar, Russia’s south was at $933.7/t -$33.3 (IKAR).
($1 = 60.8500 roubles).
SovEcon said Russia exported 620,000 tonnes of grains last week compared with 360,000 tonnes a week earlier.
On this wake, the consultancy raised its forecast for Russia’s wheat exports in the new July-June marketing season by 1.3 million tonnes to a record high of 42.3 million tonnes.
Spring grains were planted on 26.8 million hectares as of June 2 vs 28.4 million hectares a year ago as the planting campaign is still delayed in the European part of Russia, Sovecon said.
Russia’s IKAR raised their 22/23 wheat crop by 2 MMT to 87 MMT.
Turkey led unsuccessful negotiations this week to reopen Ukrainian ports for grain exports.
However, Russian demands to demine ports and lift western sanctions blocked progress on negotiations.
Russia was also blamed for the destruction of Ukraine’s largest agricultural commodities terminal in the Black Sea following heavy shelling last weekend said the facility owner.
Meantime, Russia has set out its grain export taxes for June 16-21, 2022.
It will increase for wheat to $131.6 per ton against $$129.2 per ton this week, according to the materials of the Ministry of Agriculture.
The duty on corn also will increase to $84.0 from $78.7 a week ago.
Ditto for barley to $92.8 fromof $76.5 per ton.
The wheat rate is calculated based on the indicative price of $386.4 per ton, for barley — $317.6 per ton, for corn $305.5 per ton.
That, it’s compared with the prior week when indicative prices were at $383.4 per ton for wheat, $294.3 per ton for barley, $297.5 per ton for corn.
In Ukraine, according to APK-Inform, the prices of Ukrainian wheat continued growing last week.
Particularly, the indicative offer prices of old-crop 12.5%, 11.5% and feed wheat increased by 5-10 USD/t to 410-435, 405-430 and 365-390 USD/t FOB.
Trade activity on the forward market remained low due to high risks and unclear prospects of Ukrainian export.
The indicative offer prices of new-crop 12.5%, 11.5% and feed wheat increased by average 20 USD/t to 405-430, 400-425 and 370-390 USD/t FOB (July-August).
The export prices of Ukrainian corn, in contrast, decreased sizably at the western borders last week.
Along with the bearish factors on the ports of the Danube, the prices were pressured by limited export, expected lowering of the demand from the EU, partially due to high transportation costs as well as delays of deliveries.
Thus, the bid/offer prices of Ukrainian corn decreased significantly and totaled 225-245/245-260 USD/t DAP Izov and Yahodin (June).
The bid/offer prices totaled 250-260/255-265 USD/t DAP Chop.
The export prices of crude sunflower oil on DAP basis were decreasing in May.
The downward trend was based on lower demand from importers amid stronger shipments of sunflower seed.
Shipments of Ukrainian sunflower seed in May was almost 2 times higher compared to the full previous season.
Importers raised their own sunflower seed crushing to cover partially the demand for sunflower oil.
Previous growth of sunflower oil export that allowed EU’s buyers to accumulate stock pressured the prices too.
Thus, the bid prices of crude sunflower oil decreased by 150-250 USD/t over the reporting period and as of morning of June 8 totaled 1550-1700 USD/t DAP for delivery to importing country, mainly Poland, Bulgaria, Romania and Lithuania.
The government of Ukraine is preparing for harvesting campaign in wartime, the prime minister of Ukraine Denys Shmyhal wrote on his Facebook page on June 8.
The first challenge is export.
The Ministry of Infrastructure is working on extension of capacities at the western land borders.
There are 23.5 mln tonnes of grains and oilseeds in Ukraine that cannot be exported.
Another problem is storing of the new harvest.
On this wake, the Ministry of Agrarian Policy and Food is studding an option of mobile storages taking into account international experience.
It will let to raise storage capacity by 10-15 mln tonnes.
In Kazakhstan, in the first quarter of 2022, the country exported 2 mln tonnes of wheat and meslin (up 64%) at the general sum of 592.3 mln USD (up 2.1 times), informed energyprom.kz.
CIS countries were the key destinations for Kazakh wheat, which imported 1.3 mln tonnes, up 43.9% y/y.
Particularly, Uzbekistan imported 874.1 thsd tonnes of Kazakh wheat, Tajikistan – 175.8 thsd tonnes and Turkmenistan – 149.5 thsd tonnes.
Rest 744.7 thsd tonnes of Kazakh wheat were exported outside the CIS, up 2.2 times y/y.
Particularly, Iran imported 358.4 thsd tonnes (up 3.9 times), Afghanistan – 227.4 thsd tonnes and Italy – 110.1 thsd tonnes.
In March 2022, the export prices of wheat increased by 9.2% m/m, by 12.1% since the start of the year, and by 32.1% y/y.
Meantime, prospects for the development of the flour processing sector are not good.
Flour mills of Kazakhstan, indeed, are ready to transfer production to Russia.
The market is not profitable.
In this situation, the country’s millers thought about moving their enterprises to Russia, where there is cheap grain, and flour exports are not limited in any way.
Now Kazakh wheat at the Saryagash station costs $420-430 per ton.
Russian flour also costs $460 there.
Thus millers can offer Kazakh flour no cheaper than $480 although the fair price, taking into account current prices for raw materials, is $525 per ton (plus 25% to the price of grain).
That is, it’s not that we don’t earn now – we lose 10% on each ton of flour, millers said.
“Working in Russia on the Russian wheat, we will be able to sell flour to Afghanistan or Uzbekistan at $380 per ton – cheaper than Kazakh wheat, – highlighted Talgatbek Alikhan Kairatbekuly, Vice-President of the Union of Grain Processors of Kazakhstan said.
As a result, the demand for grain in the domestic market of Kazakhstan will fall by 3-4 million tons per year.
And, of course, it will decrease in the foreign market under the increasing pressure of the Russian flour supplied to the same Central Asian countries, he added.
From the Middle Kingdom, China will sell 500,000 tonnes of imported soybeans from its state reserves on June 17–National Grain Trade Center.
Beijing has been releasing the oilseed from its reserves in weekly sales in an effort to boost supplies in the domestic market and cool prices.
Archer Daniels Midland (ADM) said that China’s state stockpiling company is buying newly harvested domestic wheat for the national reserves at prices 30% higher than the minimum purchase price in 2021.
An agriculture consultant said that high prices will incentivize farmers to boost production.
From Australia, ABARES released their latest crop report with key takeaways.
National area planted to winter crops in 2022–23 is forecast to be the second highest on record at 23.4 million hectares.
Australia is forecast to produce 30.3 million tonnes (Mt) of wheat in 2022-23, with barley forecast at 10.9Mt and canola at 5.6Mt, according to figures released today by ABARES in its Australian Crop Report June 2022 edition.
Both wheat and barley production from the crop now being planted are forecast to be the fourth-largest on record, while canola production at 5.6Mt is the second largest on record, behind only last year’s crop.
Winter-crop production including pulses, oats and other crops is forecast to reach 50.9Mt, the fourth highest on record.
Summer crops production in 2021–22 is estimated to reach a new national record of 5.5 million tonnes.
Particularly, sorghum at 2.7Mt and cotton lint at 1.3Mt.
Meantime, prices moves in eastern Australia’s feedgrain market have been mixed and modest in the past week as traders weigh up the impact of rain in New South Wales, and grower interest in selling grain from July onwards increases.
Traders are reporting a drop-off in export demand for SFW-type wheat, which has consumers more comfortable about securing supplies and also booking trucks to carry it from bulk and on-farm storages.
While barley appears to be in short supply, prospects of an average or better season across southern Australia, and a late swing into barley in the north because of the excessively wet conditions, have consumers feeling confident that tonnes will be flowing to market in coming months.
In this context, indicative delivered prices in Australian dollars per tonne were:
Barley Downs: $475 down $5 from June 2;
SFW wheat Downs: $505, up $10 from June 2;
Sorghum Downs: $400, up $2 from June 2;
Barley Melbourne: $462, up $7 from June 2;
ASW wheat Melbourne: $480 up $5 from June 2.
SFW wheat Melbourne: $475 up $8 from June 2.
(AUD/USD=> US$0.7052 vs. US$0.7208 past week).
JUNE WASDE REPORT IN PILLS
USDA lifted domestic corn’s food seed and industrial use by 5 mbu but left ethanol unchanged.
Old crop exports were reduced by 50 mbu to 2.45 billion, which loosened the carryout by 45 to 1.485 bbu.
For new crop, USDA lifted the carryin by the same 45 mbu, but also raised the FSI by 5 mbu for a 40 mbu looser carryout.
On the global side, USDA lifted their projection for Ukraine corn production by 5.5 MMT to 25 MMT.
Ukraine’s exports were also 1.5 MMT higher to 1.7 MMT compared to 23 MMT for old crop.
The full global output was lifted by 5.09 MMT.
Global stocks were also 5.3 MMT higher.
For old crop output, South America was steady from May with Brazil at 116 MMT and Argentina at 53 MMT.
USDA gave the market a 205 mbu carryout for old crop soybeans.
That was down by 30 mbu from May as exports were lifted by the same 30.
New crop stocks were reduced by 30 mbu, reflecting the lighter carry-in and no other changes.
New crop stocks are now figured at 280 mbu, compared to the trade average guess of 294.
Global 22/23 soybean numbers were seen as 395.37 MMT of output, up less than 1 from May, with 100.46 MMT of carryout.
USDA lifted Brazilian production by 1 MMT for 21/22.
Argentina’s 21/22 output was figured as 43.4 MMT, up by 1.4 from May on better yields.
Global old crop carryout was 86.15 MMT, compared to 85.2 MMT last month.
USDA showed no changes to the demand side for either old crop or new crop wheat.
New crop supply was lifted by 8 mbu.
That came with a 581.8 mbu HRW estimate, down 7.2 mbu from May vs a 3.9 mbu bump in SRW and an 11.8 mbu increase in white winter wheat.
The implied spring wheat output was steady at 556 mbu from May.
The extra 8 mbu was carried through to 22/23 stocks, now figured at 627 mbu.
WHEAT OVERVIEW FOR 2022/23
Global wheat production was reduced by 1.4 MMT to 773.43 MMT this month primarily on smaller crops in India and the European Union, only partially offset by an increase for Russia.
India was cut by 2.5 MMT and the U.S. was upped.
Global consumption is lowered this month.
Ending stocks are revised down at 266.85 MMT mostly on lower supplies in India.
Imports are nearly unchanged as higher imports for Iran and Pakistan are mostly offset by lower imports for Bangladesh and Sri Lanka.
Exports are up for Russia (1 MMT higher), Argentina, and Uzbekistan, but mostly offset by reductions to India.
The U.S. season-average farm price is unchanged at $10.75 per bushel
WHEAT OVERVIEW FOR 2021/22
Global production is down slightly this month mostly on a smaller crop in Chile.
Global consumption is fractionally lower as higher feed and residual use only partly offsets lower FSI consumption.
Ending stocks are revised lower mostly on reductions in Argentina, Morocco, and Egypt.
Imports are revised lower with reduced demand from Morocco, Sri Lanka, and United Arab Emirates.
Exports are also revised lower as larger exports from Argentina are only partially offset by lower exports from Russia.
The U.S. season-average farm price is unchanged at $7.70 per bushel.
All U.S. quotes spiked following the May WASDE report and subsequent announcement of India’s restrictions on wheat exports.
However, prices have started to subside as export demand for U.S.
wheat remains muted.
Hard Red Spring (HRS) tumbled $15/ton from last month to $503 as spring wheat planting progressed in the Northern Plains and Canada.
Hard Red Winter fell $30/ton to $483 and remains uncharacteristically high, reflecting the poor conditions across much of the Southern Plains as harvest gets underway.
Soft White Winter (SWW) slid $3/ton to $448. Soft Red Winter (SRW) declined $34/ton to $417, reflecting favorable conditions in advance of the harvest.
Global wheat prices continued to fluctuate greatly over the past month as the market reacted to announcements about the Indian wheat export ban and ongoing negotiations regarding Ukraine’s ability
EU quotes are currently the most competitive and have fallen $11/ton over the past month.
Canadian quotes fell $9/ton with the near completion of spring wheat plantings.
U.S. quotes slid $30/ton from exceptionally high levels as the winter wheat harvest begins.
Argentina, the most competitive exporter only 2 months ago, has become the most expensive origin as large exports have diminished available supplies.
Likewise, Russian quotes shot up $31/ton on tight Black Sea supplies.
Australian quotes rose $38/ton with robust international demand.
Watching next week’s market, the week starts with the weekly Export Inspections report from USDA on Monday afternoon, with he Crop Progress report released overnight after the session close.
The FOMC meet nest Tuesday and Wednesday, with most expecting a 0.5% rate hike.
Wednesday will have the weekly EIA report showing ethanol production and stocks with the monthly NOPA report also out that morning.
On Thursday, the USDA will release the weekly Export Sales report.
Inflation grabbed the headlines on Friday, with US CPI up 8.6%, the highest in 40 years.
There is a lot of confusion about the likely impacts.
The stock market took the news badly, closing sharply lower for the day and posting yet another down week.
Consumers are cutting back on non-essential purchases.
Commodities typically outperform equities in a high inflation environment, but at least to now, they weren’t acting that way.
Certantly USDA reports on Friday complicated things a bit.
Also, the US dollar, which typically is weaker in a high inflation environment, in contrast was up sharply this week.
If dollar had been weaker, more dollars per bushel or pound wolud been necessary for ag commodity.
But its expect Fed will raise rates faster then forecats, that makes the US a more attractive place to park “hot money”, selling other currencies and buying dollars.
There are other pieces to the puzzle, but these are enough to make it hard to solve!
That’s all, thank you.
To all of you, I wish you a good weekend and …
Good harvest 2022!
Author: Sandro F. Puglisi