Good afternoon Farmer Family and good weekend …

US farm markets were mixed overnight heading into Friday’s session but broke back into the red by the close. 

Losses on wheat were substantial.

The continued harvest pressure and spillover weakness from sharply lower crude oil prices, weighened on the markets. 

Thus, Chicago wheat prices went home 4.08% in the red on Friday. 

Kansas City wheats ended Friday’s session 3.79% lower. 

Minneapolis spring wheat prices settled with 3.27% losses.

Corn and soybeans after tested moderate overnight gains, both closed with modest losses of around 0.4% each.

Front month soybean oil prices continued their slide with losses of 3.34% on the day.

Soymeal prices, meanwhile, ended the Friday session with $8.40 gains or up 1.95%. 

For the week, stock markets had a leading roul, kepting to drop. 

The Fed to bring down inflation, increased interest rate with the largest single hike in decades. 

Higher rates made the dollar a more attractive place to park money.

However, other countries too indicated that they would raise rates, meantime. 

Thus, the dollar skyroketed immediately before the Fed rate hike, but then downsized, along Wednesday and Thursday, supporting the wheat in particular as a lower dollar makes U.S. exports more competitive globally.

But, the dollar rose again on Friday, thanks higher T-note yields and a fall of yen after the BOJ maintained its ultra-easy policies.

The U.S. dollar this week rose to its highest level since December 2002 against a basket of currencies, making all commodities traded i US dollars more expensive for buyers using other currencies.

In this context, crude oil was down all week, posting the lowest close since May 25.

Operators, indeed, believe a recession is caming.  

Ethanol and soy oil generally follow crude closely.

Thus, soybeans were hurt badly this week by an 8.69% drop in soy oil.

The spillover weakness from sharply lower crude oil prices, weighened into wheat markets too.

Corn, in contrast, gained ground, as it is more vulnerable to a hot and dry weather forecast in early July than are soybeans (yield typically more influenced by August).

Thus, corn prices added, to past week’s rally, another 1.46% from past Friday. 

Soybeans gave back most of last week’s rally, with July down 2.49% for the week. 

Product values were mixed, with meal up 2.1% during the week while soy oil collapsed by 8.69%.

The wheat complex was lower this week, with most of the drop on Friday. 

Kansas City wheat contract led the way to the downside, with 4.94% weekly losses.

Minneapolis spring wheat was down 4.26% for the week.

Chicago SRW was 3.41% lower from prior Friday.

Going inside the numbers, during the week CBOT corn prices, closed up $0.113 at $7.85/bu. 

CBOT soybean prices finished the week $0.435 weakger at $17.02/bu.

Soymeal jumped by $9/smt at $438.1 smt.

Soy oil tumbled $7.02 cents, to close at $73.79.

CBOT soft red winter (SRW) prices fell $0.365 to close at $10.34/bu. 

KCBT hard red winter (HRW) prices lost $0.575 ending at $11.05/bu.

MGE hard red spring (HRS) prices shedded $0.520 to close at $11.70/bu.

Meantime, as of June 16, 2022, FOB prices saw US corn 3YC (Gulf) was at $353/mt (up $9/mt from last week).

US soybean 2Y (Gulf) quoted at $676/mt (down $27/mt from last week).

As for wheat, US wheat No 2 Hard Red Winter (HRW) was valued at $481/mt (down $2/mt from last week).

US wheat No 2 Soft Red Winter (SRW) was at $418/mt (up $2/mt from last week).

USDA’s weekly Ethanol Report showed the average cash price for corn oil moved from between 76.00-78.20 c/lb regionally last week to 76.17-77.50 cents this week, mostly higher from last week. 

DDGS FOB prices decreased in the Gulf from $295-$305/ton to $290-$302/ton.

Whil $332 in the PNW was between steady to $5/ton lower wk/wk.  

Cash ethanol prices averaged $2.74-$2.89 regionally, compared last week when were between $2.71-$2.86/gal. 

USDA saw the B100 cash price in IA at $7.54/gal during the week that ended 6/17. 

That was down from last week’s $7.79/gal quotes. 

Meanwhile gasoline futures ended the week at $3.6829, that was down from $4.1581/gal posted last week.

USDA’s weekly Crush report, showed processing value of soybeans at $19.44/bu on $17.50 cash beans.

Past week showed processing value of soybeans was at $20.05/bu on $17.77 cash beans.

On the weather side, we saw another week of wet weather brought widespread improvements to key wheat-growing regions in the Northern Plains states and PNW. 

In the High Plains, temperatures were slightly above average for the week but have been below normal for the 30-day average. 

Above-average rainfall has led to widespread improvements in soil moisture for the upper Great Plains but has slowed crop planting in North Dakota and Minnesota. 

Texas continues to experience above-average temperatures, high winds, and scant rainfall. 

In the PNW, consistent rain has led to improvements in long-term precipitation deficits and improved groundwater supplies. 

Not much moisture is expected to fall in the Midwest or Plains between today and Tuesday, per the latest 72-hour cumulative precipitation map from NOAA. 

Minnesota and the Dakotas have the best chance at seeing trace to modest amounts during this time. 

Meantime, NOAA’s 8-to-14-day outlook predicts seasonally dry weather lingering in the eastern Corn Belt between June 24 and June 30, with widespread hotter-than-normal conditions across the entire central U.S.

On the supply side, the HRW harvest is expected to accelerate as temperatures trend hot. 

The 2022 HRW harvest is in full swing from Texas to southern Kansas, with Texas 61% complete, Oklahoma 58% and Kansas 7%. 

USDA estimates that HRW production will be 582 mil bu (15.8 MMT), a 22% decrease from last year and down 1% from the May forecast.

SRW harvest pace is picking up with combines rolling in seven states. 

The SRW harvest is well underway from Alabama to North Carolina. Harvest is expected to begin in Maryland this weekend and in Kentucky and Indiana next week. 

Recent wind and heavy rain will likely delay the Ohio harvest. 

USDA estimates that SRW production will be 358 mil bu (9.7 MMT), a 1% decrease from last year but up 1% from the May forecast.

Meantime, as of day 4 of the KS Wheat Harvest report, we had notes for 30-40 bpa fields in Meade county. 

Some earlier planted fields were 10-15 bpa. 

Protein reports ranged 11 to 15.5%. 

In Dodge county, yield reports were all over the place, though 35 is the most consistent estimate. 

Proteins were marked near 12-13%. 

HRS and northern durum planting is wrapped up, but development is lagging in North Dakota and Minnesota. 

The SW crop is 2 to 3 weeks delayed but in good condition. 

USDA estimates winter wheat production at 1.18 billion bushels (32.2 MMT), a decrease of 7% from last year; spring and durum wheat production estimates are expected in July.

On Monday NASS reported corn planting progress were at 97% finished nationally, up from 94% a week ago. 

Corn emergence was at 88% as of 6/12, that is up 10% points from the week prior and just 1ppt behind the average emergence. 

Corn quality ratings took a slight step back, with 72% of the crop now rated in good-to-excellent condition. 

Another 23% is rated fair (unchanged from last week), with the remaining 5% rated poor or very poor (up a point from last week).

Also from the report, milo was 66% planted nationally, up 10% points wk/wk and still 5% points behind their average pace. 

Sorghum conditions were 47% good/ex, compared to 46% last week. 

Barley condition were at 49pc g/e, vs. 46pc last week & 45pc last year.

For soybean, Crop Progress data as of 6/12 showed that soybean planting advanced 10% points wk/wk to 88% finished. 

KY had completed their planting as of 6/12. 

That’s identical to the prior five-year average but five points behind 2021’s pace of 93%. 

NASS reported the national emergence at 70%, compared to 56% last week and 74% on average. 

The first look at soybean conditions yielded a 70% good/ex, with 69% landing in those top two categories. 

Another 25% is rated fair, with the remaining 5% rated poor or very poor.

On the demand sideweekly ethanol production data from the EIA showed producers averaged 1.06m barrels per day through the week that ended 6/10. 

That was a 21k bpd increase from week to week, but was still below the CY high 1.071m barrels per day during 5/27. 

The stockpile shrank by 439k barrels to 23.197 million. 

The EPA announced that the United States generated 1.23 billion ethanol blending credits in May, up from April’s tally of 1.14 billion. 

Biodiesel blending credits also rose modestly higher, trending from 499 million in April up to 513 million in May.

NOPA members reported May’s soy crushing was 171.07 mbu. 

Estimates averaged 171.55 mbu. 

That was up 0.76% from April and was an all time high for the month of May. 

Soybean oil stocks were 1.774b lbs. 

That was up slightly from the expected 1.765b lbs, as soy oil yields matched the record at 12 lbs/bu.  

Meantime, weekly export sales saw corn bookings were at 140,935 MT for old crop and 138,866 MT for new crop. 

For old crop that was down 50% wk/wk, a MY low, and at the low end of expectations. 

For new crop, it brough total forward sales to 5.889 MMT going into the 22/23 season (+2.4% yr/yr). 

Old crop commitments were up to 59.663 MMT. 

That marks 96% of the USDA forecast for the year. 

Weekly data had the MYTD shipments at 78.9% of the June WASDE forecast. 

Sorghum export sales tumbled noticeably below the prior four-week average, with just 2,100 MT. 

Increases to China were largely offset by reductions to unknown destinations. 

Cumulative totals for the 2021/22 marketing year are slightly trailing last year’s pace, with 237.1 million bushels.

As for soybean, the report showed 317,157 MT of old crop beans were sold during the week that ended 6/9. 

That was down 27% wk/wk but still nearly 5x the same week last year. 

Estimates were to see between 100k and 500k MT. 

Old crop commitments were 60.278 MMT. 

That is 2.1% above the June WASDE export forecast. 

Accumulated exports reached 86% of the forecast as of 6/9. 

For new crop, the FAS data showed 407,995 MT were booked during the week, near the top end of estimates and up from just 6.5k MT during the same week last year. 

The forward book sits at 13.105 MMT, a 73% increase from last year’s pace. 

Soybean cake and meal had net sales of 256,300 MT for 2021/2022 were up 91 percent from the previous week and 32 percent from the prior 4-week average.

There were net sales of 35,600 MT for 2022/2023.

Exports of 224,500 MT were down 2 percent from the previous week, but up 15 percent from the prior 4-week average.

Soybean oil had net sales of 6,200 MT for 2021/2022.

That was up noticeably from the previous week and from the prior 4-week average.

Exports of 16,300 MT were up noticeably from the previous week and from the prior 4-week average.

As for wheat, USDA reported weekly wheat export sales total at 236,857 MT. 

That was near the low end of estimates going into the report and down 18% yr/yr. 

Half of the sale was HRW, followed by white wheat with 23%. 

SRW and spring wheat mostly split the remainder. 

Brazil was listed as the week’s top buyer, though 50k of their 28k purchase was previously reported as Switzerland. 

Mexico was the largest buyer with 58k MT of the total. 

USDA reported the week’s export at 370,137 MT – with HRW again marking ~ half the total. 

Accumulated shipments through the first full week and 2 days reached 582,159 MT, a 33% lead yr/yr. 

Meantime, private exporters announced two large corn sales to USDA on Friday. 

The first was for 144,907 metric tons for delivery to Costa Rica during the 2022/23 marketing year, which begins September 1. 

The second was for 105,664 metric tons for delivery to unknown destinations during the current marketing year.

In this conext, wheat basis was mixed in the Gulf and Pacific Northwest (PNW) this week. 

Slower than normal HRS planting will delay spring wheat harvest pushing up basis for HRS in the Gulf. 

According to grain traders, cooler than average temperatures and beneficial rain in the PNW will also delay the soft white harvest. 

Improved rail capacity helped keep basis within a narrow range week-overweek. 

Lack of high volume demand has also helped ease railroad backlogs.

Corn basis, in contrast, continued to rally and post 5-year highs, despite modest export sales last week.

On Friday, corn basis were steady to mixed after rising 2 cents higher at an Iowa river terminal while sliding 3 to 5 cents lower at two other Midwestern locations.

Soybean basis bids, meantime, were steady to weak after falling 2 to 10 cents lower across five Midwestern locations on Friday.

Meantime, CFTC’s weekly CoT report showed managed money funds were rotating from shorts back into longs in corn through the week that ended 6/14. 

That left the group 13,858 contracts more net long, to 278.2k contracts, on just 46 fewer spec positions in play. 

The commercials were adding hedges through the week, with the 13,160 contract OI boost taking their net short just 746 contracts lower. 

As for soybean, the report showed that soybean spec traders were 163,146 contracts net long as of 6/14. 

That was a 4,218 contract stronger net long wk/wk mostly via short covering. 

The commercial soybean traders added hedges, with a 22.1k contract boost to OI and a 1,329 contract stronger net short. 

In soymeal the managed money funds were closing longs for a 712 contract weaker net long of 52,457 contracts. 

Soy oil specs weakened their net long by 5,827 contracts through the week to 62,996. 

As for wheat, the report showed the funds were closing CBOT SRW longs through the week that ended 6/14. 

That left the group 5,736 contracts less net long to just 6,939 – their weakest net long since being net short on March 1st. 

In Kansas City wheat, the spec traders were 1,112 contracts less net long to 36,386 contracts. 

Their long liquidation took their net long position to the lowest since mid-Feb. 

In spring wheat, CFTC reported managed money as 14.2k longs vs 965 shorts. 

In energy markets, oil prices tumbled about 6% to a four-week low on Friday.

Operators, as we said, are worried that interest rate hikes by major central banks could slow the global economy and cut demand for energy.

Thus, Brent futures fell $6.69, or 5.6%, to settle at $113.12 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $8.03, or 6.8%, to settle at $109.56.

That was the lowest close for Brent since May 20 and the lowest for WTI since May 12. 

It was also the biggest daily percentage decline for Brent since early May and the biggest for WTI since late March.

For the week, Brent futures declined for the first time in five weeks, while WTI dropped for the first time in eight weeks.

Crude prices tumbled as the dollar rallied.

With the Fed expected to keep raising interest rates, open interest in WTI futures on the New York Mercantile Exchange fell on Thursday to its lowest level since May 2016 as investors cut back on risky assets. 

U.S. gasoline and diesel futures also slid over 4% on worries high pump prices will reduce demand.

Automobile group AAA said the price of diesel at the pump hit a record high $5.798 per gallon on Friday, while the price of gasoline hit a record high of $5.016 earlier in the week.

U.S. energy firms this week added just four oil rigs as President Joe Biden slammed producers for profiting from sky-high prices instead of doing more to boost output.

Russia, meanwhile, expects its oil exports to increase in 2022 despite Western sanctions and a European embargo, the Russian deputy energy minister said on Friday, according to Tass news agency.

Russian gas flows to Europe fell short of demand on Friday as an early heat wave in the south boosted demand for air conditioning.

Russia’s Gazprom has told Italy’s Eni that it would deliver similar gas supplies on Saturday to those it sent in recent days, Eni said in a statement, signalling a fourth consecutive daily shortfall.

Eni said on Friday it would receive only half of the gas it had requested from Gazprom, while on Thursday it received only 65% of the volumes it had requested and on Wednesday was sent 85% of what it wanted.

“Gazprom announced that today it will deliver volumes of gas in line with the quantities delivered in recent days,” Eni said, giving no further details.

Kremlin spokesperson Dmitry Peskov said on Thursday that reductions in supply were not premeditated and were related to maintenance issues, but Italian Prime Minister Mario Draghi has dismissed this explanation as a “lie”.

Meantime, an oil tanker chartered by Italy’s Eni SpA will soon depart Venezuela with first cargo in two years to Europe.

In freight markets, the Baltic Exchange’s main sea freight index rose for a fourth straight session and booked its first weekly gain in four on Friday, propelled by stronger demand across vessels.

The overall index, which factors in rates for capesize, panamax and supramax vessels, added 116 points, or 4.7%, to 2,578.

The index was up 11.1% for the week.

The capesize index gained 285 points, or 10.6%, to 2,987, notching a weekly rise of 26%, its biggest since mid-May.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, rose by $2,365 to $24,776.

The panamax index added 72 points, or 2.6%, to 2,862 points.

The index has gained nearly 9% this week, its best week since mid-April.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000-70,000 tonnes, increased by $644 to $25,757.

The supramax index edged up 7 points to 2,467.

Meantime, on week 24, freight rates have risen again by several dollars in the Azov and Black Sea region

The rate for a 3K parcel of wheat from Azov to Marmara Sea ports makes $49 per ton, Sea Lines shipbrokers report.

However, there is a lull in the grain market at the moment. 

The vast majority of charterers have already spent the quotas allocated to them for the export of wheat, corn and barley. 

And the strong ruble exchange rate coupled with the weakened Turkish lira do not allow traders to conclude contracts with Turkish partners.

The rates are rising primarily due to active shipments of coal, the export of which to European countries will be limited in less than two months, Sea Lines explain.

In addition, there are few spot vessels in the market, so most shipowners are already considering cargoes for week 26, when grain shipments could resume.

According to Sea Lines, on week 24, freight rates for shipping wheat by 3,000 dwt bulkers from Azov make $47 to the Black Sea, $49 to Marmara, $65 to Mersin and $73 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 lost a dollar.

On week 24, freight rates for shipping corn by 3,000 dwt bulkers to Iran make $19 from Aktau, $26 from Makhachkala, and $31 from Astrakhan.

In equity markets, U.S. stocks closed with a modest bounce on Friday.

Strength in technology stocks led the overall market higher.

Thus, the Dow Jones Industrial Average fell 38.29 points, or 0.13%, to 29,888.78, the S&P 500 gained 8.07 points, or 0.22%, at 3,674.84 and the Nasdaq Composite added 152.25 points, or 1.43%, at 10,798.35.

However, US stocks still suffered the biggest weekly percentage decline in two years.

Each of the three major Wall Street indexes fell the third week in a row. 

Particularly, the Dow lost 4.79% during the week.

That was its biggest weekly percentage drop since October, 2020.

The S&P 500 lost 5.79% and the Nasdaq slid 4.78% for the week.

The benchmark S&P 500 index suffered its biggest weekly percentage drop since March 2020, the height of the COVID-19 pandemic plunge.

The benchmark S&P index has slumped about 23% year-to-date and recently confirmed a bear market began on Jan. 3. 

The Dow Industrials was on the cusp of confirming its own bear market.

Economic data on Friday showed production at U.S. factories fell unexpectedly in the latest indication economic activity was on the wane.

U.S. May manufacturing production fell -0.1% m/m, weaker than expectations of +0.3% m/m and the first decline in four months.  

Also, May industrial production rose +0.2% m/m, weaker than expectations of +0.4% m/m.

Gains on Friday were led by the communication services and consumer discretionary sectors, which rose 1.31% and up 1.22%, respectively, on the session. 

The two have been among the worst performing of the 11 major groups on the year.

A positive for stocks is data from EPFR Global showing that U.S. stocks attracted $14.8 billion in inflows in the week through June 15. 

U.S. stock indexes also had carry-over support from a rally in European stocks after Bank of America Friday raised its recommendation on European stocks to neutral from negative.

Also contributing to choppy trading was the expiration of monthly and quarterly options contracts ahead of the Juneteenth market holiday on Monday.

Friday, indeed, was the quarterly expiration of stock futures and options known as triple witching.  

The expiration of $3.5 trillion in option positions and the weight-rebalancing of many indexes lent support to stocks Friday.

In contrast, energy, the year’s best performing sector, fell with a 5.57% tumble and suffered its biggest weekly percentage drop since March 2020.

Volatility, however, is the name of the game right now.

It is here to stay, and it is going to be here until we get a little bit more clarity on have we really reached peak inflation.

On Friday, Fed Chair Jerome Powell once again stressed the central bank’s focus on bringing back inflation to its 2% target while speaking at a conference.

Comments from Fed Chair Powell boosted T-note yields and bolstered speculation the Fed will pursue aggressive rate hikes to tame inflation.

In currency trading the dollar index (Sep ’22) on Friday rose by 1.071 (+1.04%) to 104.488 vs. 104.013 past Friday.

The euro on Friday was down 0.45% to $1.0500 while the yen was at 134.96 vs dollar.

Past week the euro closed at $1.0517 while the yen was at 134.4 vs dollar.

In Canada, other than in some areas of Manitoba, spring wheat seeding is essentially finished in Western Canada.

Canadian durum seeding is essentially finished too.

Meantime, at 234k mt, Canadian wheat exports improved last week (wk. 44), advancing year-to-date wheat exports to 9.7 million mt, 43% smaller than last year-to-date.  

Per StatsCan, Canada exported 806k mt of wheat (excluding durum) in April 2021, compared to 1.8 million mt in April 2022. 

Durum exports for week 44 were at an improved 73k mt, for a year-to-date total of 2.2 million mt, compared to 5.4 million mt last year-to-date. 

This is now 59% behind last year’s pace.

Per StatsCan, Canada exported 244k mt of durum in April 2021, compared to 661k mt in April 2022. 

Meantime, Refinitiv Commodities Research reported that it expects 2022/23 Canadian wheat production to reach 31 million tonnes amid generally favorable conditions. 

Planted acres are expected to increase nearly 6% from last season.

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

– for the N1 class CWRS 13.5% – $621.62 per tonne, up C$7.37/t from prior week; 

– for the N2 class CWRS 13.0% – $609.33/t, up C$6.64 wow;

– for the N3 CWRS – $607.44/t, up C$7.06 from prior week.

As of June 13, 2022, for the N1 CWAD 13% (durum wheat first class) deferred average street prices for delivery in July ’22 were at C$606.28 unchanged week on week.

However, export basis West Coast & Central SK increased from C$ 142.01 to 159.05 per tonne, as delivered FOB price Great Lakes was posted at C$ 765.33, up C$17.05 from prior week.

Meantime, per latest data from the European Commission, as of June 15, 2022, Durum wheat – CA St Lawrence (CWAD) was offerd at C$749/t, up $19/t from prior week.

As of June 17, 2022, for the N1 CWAD 13% (durum wheat first class), average street prices in REGIONAL ZONES were at C$597.64 per tonne, up C$6.9 from prior week. 

(1USD=Cnd$1.3026 up from past week when was 1.2696).

From South America, official export data from the Brazilian Trade Ministry showed corn shipments were 1.166 MMT in May. 

That was up sharply from the low 14k MT during May ’21. 

The Ag Rural reported Brazil’s 2nd crop harvest reached 7% completion. 

The harvest of the second 2021/22 corn crop in Mato Grosso reached 16.22%, according to the Mato Grosso Institute of Agricultural Economics (IMEA), with a number obtained until June 10. 

In the previous week, the rate was 5.98%. 

In the previous year, the percentage was 1.94%.

For soybean, Brail’s Trade Ministry reported the official May soybean export as 10.633 MMT. 

That was down 29% or by 4.3 MMT yr/yr marking the lowest May shipment in 5 years.

Meantime, Anec expects Brazilian corn exports to reach 1.79 MMT in June. 

That’s 23.4% above the group’s previous forecast issued a week ago.

Anec also predicts the country’s soybean exports will reach 10.84 MMT this month. 

That’s 15.2% above the forecast Anec made a week ago. 

The group also predicts Brazil will export 2.19 million metric tons of soymeal in June.

In Argentina, the President Alberto Fernández recently pledged that Argentina would seize the opportunity to help meet global wheat demand while taking advantage of the high prices following Russia’s invasion of Ukraine. 

Poor harvest, however, could change the picture.

According to the Buenos Aires stock exchange, wheat surfaces in Argentina could be in sharp decline this year, a consequence of the water deficit that is being lost in the country. 

At this stage, the stock market is showing areas of 6.4 million hectares against 6.6 estimated last month. 

Thus, appears that Argentina’s opportunity to fill the gap left by Ukraine is slipping away as the export quota has been reduced by 31% and the 2022/23 wheat harvest is likely to be the worst in 12 years.

Argentina was the 6th largest exporter of wheat in 2021, accounting for 7.2% of global export volumes. 

In the first four months of 2022, the country exported 9.5 million tonnes of wheat from the record 2021/22 harvest.

In March 2022, the government of Argentina set a wheat export quota at 10 million tonnes for the marketing year of 2022/23 to stabilize domestic prices and combat double-digit inflation.

In this context, Argentina’s exports for the 2022/23 marketing season are forecast to drop to 6.4 million tonnes. 

But, delays in wheat planting due to drought, particularly in the northeast, are casting doubt on whether the full export quota will be filled.

Also, with those risks, in the midst of high fertilizer prices and the inability to export their wheat to markets where prices are higher, farmers in Argentina are shifting towards other crops.

In other news, Argentina’s Economy Ministry will allow increased levels of biodiesel in fuel to address shortages of diesel fuel. 

The use of biodiesel will increase to 12.5pc from the current 5pc for a period of 60 days and remain at 7.5pc after the 60-day period.

In this context, as of June 16, 2022 – Argentina Wheat Grade 2 export price, (Up River) was at $482, down $10 from prior week.

Argentina corn feed was down $2/t for the week, closing at $308.

Brazilian corn feed (Paranagua) was valued at $331, down $3 from prior week.

Argentina feed barley, was down $11 for the week to $365.

Argentina soybean was down $29 at $656.

Brazilian soybean fell $32 finishing the week at $664.

In Europe, also European grain prices ended the end week session in the red, carried away by fears of a global recession.

Rapeseed prices, in contrast, rose slightly, but the trend remained heavy in the short term due to the decline in palm prices and other oils, a consequence of exports granted by the Indonesian government. 

The leaders of France, Germany and Italy visited Kyiv as part of a high-profile trip to smooth tensions over what Ukrainian officials perceive as lukewarm support in their fight against Russia.

During the week, we saw firmness on the grain markets in a context of weather market. 

An heat wave is hitting the western Europe.

Traders and analysts are now monitoring the impact of the heatwave that has spread northwards from Spain this week, with temperatures reaching 40 degrees Celsius (104°F) in southern France on Thursday.

While damage may be limited in the south, where wheat and barley crops are already mature, there is concern that temperature peaks in central France could hurt cereals beforethe heat eases from Sunday.

Meantime, the first returns from the winter barley cuts in France confirm very great heterogeneity in terms of yields depending on the region and the nature of the plots. 

It can go from simple to double.

The winter barley harvest is under way, with 2% of the crop area cut by Monday, FranceAgriMer said.

Coldiretti, an Italian agricultural lobby, said the effects of drought have cut wheat yields across the country. 

They added that the smaller yield will increase “dependence on foreign countries.” 

The group said that Italy grows around 36% of the soft wheat used in its domestic bread, biscuits, and cakes and 62% of the durum used in pasta.

Meantime, FranceAgriMer showed on Friday growing conditions for wheat and barley crops in France continued to decline for a seventh straight week.

An estimated 65% of French soft wheat was in good or excellent condition by June 13, against 66% the previous week and 81% a year ago.

The rating has dropped by 26 percentage points since the start of May.

Durum conditions also moved down to 61% from 62% 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 63%.

The corresponding score for spring barley, in contrast, increased by 1 percentage points to 54%, FranceAgriMer’s report showed.

Rating for emerged maize plants, was at 87%, down from 88% 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 €391.5, an decrease of €0.25 from past week. 

August corn price was up €2.75/t for the week, closing at 337.5 euros per ton.

Rapeseed for August deadline, fell €18.25/t for the week, to close €766.75/t. 

July-22 UK wheat feed contract, closed at £291.5/t, down £3.4/t week on week. 

Meantime, as of June 16, 2022, FOB prices in US dollar for French wheat with 11.5% protein and June delivery, were at $429/mt, up $12 from prior week.

German wheat Deposilo Hamburg, was at $422.1/t, down $2.79/t from prior week.

Baltic wheat, delivery first Vilnius, was at $395.85/t, down $2.74/t from prior week.

French durum wheat – basis La Pallice, was at $535.5/mt, up $9.65 from prior week.

Spanish durum wheat Sevilla (Depo Silo), was valued this week at $551.25 per tonne.

Italian durum wheat Bologna (Delivered to first customer), was valued this week at $570.15 per tonne down $0.92 from past week.

Corn, delivered Bordeaux port was at $353.85 per tonne, up $11/t from past week.

Corn FOB Rhin Spot – July 2021 basis was up $5.74 to $354.9/t.

Feed barley FOB Rouen was at 373.8$/t, up $14.12 per tonne.

Malting barley FOB Creil Spot – July 2021 basis was at $472.5 per tonne, down $0.77/t from prior week.

Rapessed FOB Moselle – 2021 harvest was at 802.2$/ton, down $28.64 compared to prior week.

Standard sunseed FOB Bordeaux – 2021 harvest was down 6.85$ from prior week at $981.75 per tonne.

(Eur/USD = 1.0500 vs last week 1.0517).

From Ukraine, MARS, the European Union (E.U.) crop monitoring service, said Ukraine’s upcoming wheat crop would be 26.9 MMT, 16% less than last year. 

The EU estimate is higher than Ukraine’s First Deputy Agriculture Minister’s forecast this week. 

He said a 25% fall in the total area sown for grains would produce around 17-20 MMT of wheat, while total Ukraine’s grain harvest was likely to drop to around 48.5 million tonnes this year from 86 million tonnes last year.

The EU forecast is also 20% higher than the recent wheat USDA supply and demand report estimate of 21.5 MMT.

Meantime, Ukraine harvests are starting in the south of the country, and storage problems will quickly resurface. 

On this wake, U.S. President Joe Biden said on Tuesday that temporary silos would be built along the border with Ukraine, including in Poland, in bid to help export more grain from the war-torn country and address a growing global food crisis.

“The Russia-Ukraine war will create a global wheat shortage for at least three seasons by keeping much of the Ukrainian crop from markets, pushing prices to record levels”, Ukraine’s agriculture minister said.

Ukraine’s Ag Minister suggested 15 MMT of grain storage capacity is lost, destroyed, or inaccessible for the 22/23 harvest. 

That is on top of the unshipped/unsold grain still present from 21/22’s crop. 

The Minister called on Eurpoean allies for temporary storage. 

Meantime, Russia said on Wednesday it has offered “safe passage” for Ukraine grain shipments from the country’s Black Sea ports, but is not responsible for establishing the corridors, as Turkey suggested that ships could be guided around sea mines.

Turkish Foreign Minister Mevlut Cavusoglu said earlier on Wednesday that it would “take some time” to de-mine Ukraine’s ports and a safe sea corridor could meanwhile be established in areas without mines under a U.N. proposal, adding that Ankara was still awaiting Moscow’s reaction, to the plan.

Turkey has said it is ready to take up a role within an “observation mechanism” based in Istanbul if there is a deal.

“Since the location of the mines is known, certain safe lines would be established at three ports,” Cavusoglu said. 

“These (commercial) ships, with the guidance of Ukraine’s research and rescue vessels as envisaged in the plan, could come and go safely to ports without a need to clear the mines.”

However, Kyiv fears that de-mining its ports would leave it far more vulnerable to Russian attack from the Black Sea.

Lavrov said the onus was on Ukraine to clear mines around its ports for commercial ships to approach.

Consequentially, Moscow denies responsibility for the food crisis, blaming Western sanctions.

Meantime, according to APK-Inform, the export prices of Ukrainian wheat continued growing last week.

The indicative offer prices of old-crop 12.5%, 11.5% and feed wheat increased by 5-10 USD/t to 420-440, 415-435 and 370-39 USD/t FOB (June). 

The indicative offer prices of new-crop 12.5%, 11.5% and feed wheat increased by 5-10 USD/t to 415-435, 410-430 and 380-400 USD/t FOB (July-August).

The export prices of Ukrainian new-crop rapeseed, in contrast, have been decreasing since the beginning of June.

As of June 13, the prices of new-crop rapeseed totaled 725-750 USD/t DAP Izov (July) compared to 820-850 USD/t DAP Izov at the beginning of June.

Ditto for the export prices of Ukrainian corn which continued decreasing last week.

The bid prices of Ukrainian corn for delivery in July-August decreased to 220-240 USD/t DAP Poland, 240-255 USD/t DAP Slovakia and 215-230 USD/t Hungary.

High carry-over stocks, coming finish of planting campaign and favorable weather remained the key bearish factors.

In Russian Federation, barley and corn production will be above the average annual level for 5 years!

Forecast of the total grain production in 2022 is 133.4 million tons.

Analytical center “Rusagrotrans” has improved the forecast for the harvest of barley and lowered the assessment of the harvest of corn, while the production of both crops is expected to be above the average annual level for 5 years, follows from the materials of the center.

Despite a slight decrease in the forecast for the gross wheat harvest, presented last week – by 0.3 million tons, to 85.7 million tons, Rusagrotrans analysts maintain their estimate of grain production at 133.4 million tons.

The assessment for barley was increased by 0.2 million tons to 19.7 million tons due to higher yields in the Center and on the Volga against the backdrop of high soil moisture reserves, and for corn it was slightly reduced by 0.1 million tons to 15 million tons due to the lower area than expected. 

Other grains can be harvested 13.1 million tons (0.3 million tons compared to the May forecast). 

“The production of barley and corn will be above the average annual level for 5 years (18.3 and 14.7 million tons, respectively),” the review notes.

In the South (Southern Federal District and North Caucasus Federal District), a grain crop of 50.6 million tons can be harvested, mainly due to wheat, which will break the record of 2017 – 49.1 million tons. 

The Center may be harvesting the second harvest after the abnormally high figure of 2020 – 35 million tons against 38.5 million tons. 

According to Rusagrotrans analysts, production in the Volga District will amount to about 26.2 million tons – the third result after 2017 and 2020.

Siberia is expected to see its lowest harvest since 2015 at 15.5 million tonnes due to continued relatively low moisture levels in all major grain-producing regions, with the exception of Omsk, despite past rains. 

However, the situation can be corrected by a significant decrease in temperatures and moderate rains in the coming days. 

Extremely high temperatures in the region were periodically recorded from the second decade of May and reached 30-35 degrees Celsius in places.

According to IKAR, Russia’s 2022 wheat crop is seen at 87 million tonnes, up from the 85 million tonnes it forecast on May 18. 

IKAR placed Russia’s export potential at 41 million tonnes, compared to 39 million tonnes previously. 

Meantime, Russia exported 340,000 tonnes of grains last week compared with 620,000 tonnes a week earlier, Sovecon, said, citing data from ports. 

Spring grains were planted on 28.5 million hectares as of June 9 vs 29.2 million hectares a year ago, the consultancy added. 

In this context, Russian wheat export prices were broadly flat last week. 

Prices for wheat with 12.5% protein content and for supply from Black Sea ports, indeed, were stable around $425 free on board (FOB) at the end of last week, IKAR said. 

Price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 14,975 rbls/t ($262.72), according to Sovecon.

That was down -100 rbls from prior week.

Price for sunflower seeds was at 32,700 rbls/t -1,000 rbls (Sovecon);

Price for domestic sunflower oil was at 93,675 rbls/t -3,825 rbls (Sovecon);

Price for domestic soybeans was at 43,500 rbls/t -900 rbls (Sovecon);

Export price for sunflower oil was at $1,820/t -$40, according to Sovecon; meanwhile according to IKAR was at $1,650/t -$100;

Price for white sugar, Russia’s south, was at $933.4/t -$0.3 (IKAR).

($1 = 56.4100 roubles).

The extremely strong ruble continues to depress domestic wheat prices in Russia, according to Andrey Siziv.

“Many farmers are still sitting on large stocks, esp in the South, while the new harvest is starting shortly”, he added.

Meantime, Russia has set out its grain export taxes for June 22-28, 2022.

It will increase for wheat to $142.0 per ton against $131.6 per ton this week, according to the materials of the Ministry of Agriculture. 

The duty on corn also will increase to $86.5 from $84.0 a week ago.

Ditto for barley to $117.5 fromof $92.8 per ton.

The wheat rate is calculated based on the indicative price of $399.4 per ton, for barley — $352.5 per ton, for corn $308.6 per ton.

That, it’s compared with the prior week when indicative prices were at $386.4 per ton for wheat, $317.6 per ton for barley, $305.5 per ton for corn.

From the Middle Kingdom, China was hit this week by a rare convergence of record rainfall, heatwaves, and a tornado in the southern megacity of Guangzhou, displacing millions of people, damaging properties and swamping farmland, with more storms and floods on the way.

Southern China is expected to see torrential rain until Tuesday, state media reported on Friday, with no immediate reprieve to the region inundated by downpours in the past week.

At least seven provinces and regions in the south issued alerts for severe storms and floods for the next 24 hours.

Authorities had issued warnings of “extreme weather events” as early as April, ahead of the rainy season that signals the seasonal transition from spring to summer in June.

China is historically prone to floods, triggering landslides and swamping many acres of farmland.

In recent times, the country has grown even more vulnerable, owing to deforestation, the reclamation of wetlands and the storage of water for power generation and irrigation.

Meantime, China plans to auction off another 500.000t of its state reserves of imported soybeans on June 24, according to a statement from the country’s National Grain Trade Center. 

China has offered a series of similarly sized sales throughout 2022 to cool high prices and assist with domestic demand.

From Australia, Rabobank’s Rural Confidence Survey showed the third consecutive quarterly decline in Australian net rural confidence. 

The survey said increasing costs of key farm inputs including fertilizer, fuel, freight, and machinery, along with broader inflation, weighed on farmer sentiment. 

Still, 53% of Australia’s farmers expect favorable growing conditions. 

The USDA expects Australian wheat production to be 30.0 MMT in 2022/23, 22% higher than the 5-year average, as growers continue to experience good growing conditions. 

Meantime, prices for feedgrain have fallen to reflect the disappearance of short positions and an improved flow of road transport during a week of very welcome dry weather for most districts.

While grower selling remains quiet ahead of the new financial year starting July 1, the trade appears to be unwinding some positions in the north especially.

Coupled with increased grower selling in the south, this week’s softer prices are encouraging consumers to advance coverage into August and beyond in some cases now that prices appear to have stabilised.

Sources in both the northern and southern regions say grain from the Port Kembla zone is not yet working into the northern domestic market, but this may change as unpriced stocks of sound wheat and barley run down in the north.

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

Barley Downs: $460 down $15 from June 9;

SFW wheat Downs: $470, down $35 from June 9;

Sorghum Downs: $390, down $10 from June 9;

Barley Melbourne: $455, down $7 from June 9;

ASW wheat Melbourne: $480 unchanged from June 9.

SFW wheat Melbourne: $475 unchanged from June 9.

(AUD/USD=> US$0.6935 vs. US$0.7052 past week).

On intenational trade scene, Jordan’s state grain buyer purchased about 60,000 tonnes of wheat to be sourced from optional origins in an international tender which closed on Tuesday.

The wheat was bought from trading firm Ameropa at $489.75 a tonne, cost and freight (c&f) included, for shipment in the first half of September.

One other firm, CHS, participated in the tender, offering to sell at $493.95 a tonne c&f.

Jordan’s state buyer had been seeking to purchase 120,000 tonnes in the tender.

Jordan’s state grain buyer has also purchased about 60,000 tonnes of animal feed barley to be sourced from optional origins in an international tender which closed on Wednesday.

It was bought at an estimated $428.50 a tonne c&f for shipment in the first half of September. 

The seller was believed to be trading house Viterra.

Four other trading houses participated in the tender, Ameropa which offered $439.00, TOI Commodities which offered $442.00, Bunge $444.00 and Cargill $449.85, all per tonne c&f.

Jordan’s tender sought offers for up to 120,000 tonnes. 

Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 186,441 tonnes of food-quality wheat from the United States, Canada and Australia in regular tenders that closed on Thursday.

Of the total, 53% was sourced from the U.S. .

The grain is for shipment in August.

Bangladesh’s state grains buyer has withdrawn an international tender to purchase and import 50,000 tonnes of wheat.

No reason was given.

The tender had been due to close on June 22.

Watching next week’s market, US market and government will be off on Monday in observance of Juneteenth. 

That pushes the weekly USDA Export Inspections report to Tuesday afternoon, with the Crop Progress report out overnight after the session close. 

Skip ahead to Thursday and we will have the weekly EIA report showing ethanol production and stocks. 

The monthly Cold Storage report will be out Thursday afternoon. 

Friday will mark the expiration of July grain options, as well as the monthly Cattle on Feed report from NASS.

That’s all, thank you.

To all of you, we wish you a good weekend and …

Good harvest 2022!

Author: Sandro F. Puglisi 

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