Good morning Farmer Family and good weekend …
US farm markets, have been crazy this week, although some operators likely not thrown the towel in just yet on the element of surprise.
Meantime, wheat prices tumbled to a five-month low on Friday.
Hopes for a pick-up in exports from Ukraine, a strong dollar and harvest pressure, surpassed a lot the renewed interest for U.S. supplies, and the board dropped another double digits on Friday.
Particularly, CBOT SRW wheat price closed the last trading day of the week with 2.3% losses.
Kansas City wheat prices closed 1.33% lower.
Minneapolis spring wheat prices went home firmer, however at the bell, Sep contract was down 0.41% from Thursday’s settle.
For the week, Chicago was the leader of the downside, losing 12.87% and dropping below $8.
That was the biggest weekly loss in percentage terms for the most-active contract since March 2011.
Kansas City HRW wheat was close behind, down 11.45%.
MPLS spring wheat was 8.57% lower on the week.
Corn prices, ended the Friday session mixed as Sep contract was fractionally lower down 0.12%, while Dec contract was up 0.46%.
For dec contract, that was their seventh gain in the last eight sessions, on concerns about hot weather stressing the U.S. crop as it passes through pollination.
However, the rain forecasts across the eastern Corn Belt through early next week led to a drop in prices.
For the week, indeed, corn prices after rose to start the week tumbled and never recovered, with nearby September slipping 4.58%, while Dec contract gained only 7.4 cents week on week.
Nov soybeans posted modest gains up 0.09% on Friday, also supported by weather concerns, but gains were limited as the crop was not in a critical development phase.
However, the August and Sep contracts were red at the bell.
Particularly, Aug was down 0.39%, with Sep 0.02% lower, meanwhile, Nov contract was 0.09% higher by the close.
In the products, the board was mixed going into Friday.
Meal closed 1.8% to 2.5% in the red, while soy oil prices were 3.3% to 4.4% higher.
For the week, soybeans held steady from Wednesday to the Friday close, but early week losses were too much, as August was down 3.12% since last Friday.
Product values were lower, with soymeal leaking 0.07% for the week and bean oil was down 4.01%.
Going inside the numbers, during the week, corn prices, closed down $0.290 at $6.04/bu.
Soybean prices finished the week $0.473 lower at 14.66 /bu.
Soymeal fell $0.3/smt, closing at $431 smt.
Soy oil, continued to shed, losing another $2.51, to close at $60.08.
CBOT soft red winter (SRW) prices tumbled $1.148 to close at $7.77/bu.
KCBT hard red winter (HRW) prices fell $1.083, ending at $8.38/bu.
MGE hard red spring (HRS) prices shedded $0.850 to close at $9.07/bu.
This week, wheat basis was mixed in both the Gulf and Pacific Northwest (PNW).
U.S. export sales hit a multi-year high, tightening export capacity and pushing basis up for Gulf SRW and HRW, as well as PNW HRW.
A positive crop progress report continued to show a strong HRS crop providing reassurance for grain traders.
Soft white (SW) prices lowered as the delayed SW wheat harvest gets underway.
In this context, as of July 14, 2022, FOB prices saw US wheat No 2 Hard Red Winter (HRW) was valued at $372/mt (down $16/mt from last week).
US wheat No 2 Soft Red Winter (SRW) was at $325/mt (down $2/mt from last week).
As for corn, US corn 3YC (Gulf) was at $313/mt (down $5/mt from last week).
As for soybean, US soybean 2Y (Gulf) quoted at $581/mt (down $39/mt from last week).
Meantime, USDA reported the average regional corn oil cash prices were between 66 to 67.2 cents/lb through the week, compared to 66.4 – 71 c/lb last week.
DDGS were mostly firm compared to last week with $265-$285/ton bids from the Gulf and $299/ton out of the PNW.
USDA cited the week’s average B100 cash price was $6.41/gal through the week that ended 7/15.
That is down from last week’s $6.50/gal in IA, while the ECB bids were up to $6.94 from $6.21/gal last week.
Ethanol prices were $2.32 – $2.55/gal regionally this week, from $2.32 – $2.43 last week.
Meanwhile gasoline futures ended the week at $3.2408, that was down from $3.4340/gal posted last week.
USDA’s weekly Crush report, showed processing value of soybeans at $17.87/bu on $15.77 cash beans.
Past week showed processing value of soybeans was at $18.80/bu on $16.46 cash beans.
NOPA members reported a June crush of 164.677 mbu.
The trade average guess was close at 164.48, and compares to 152.4 mbu last year.
Soybean oil stocks were 1.767b lbs.
September-June crush stands at 1.738 billion, 33 mbu/2.0% ahead of the 20-21 pace but remains below the level suggested by the 3.0% increase forecast by the USDA.
Meantime, Friday‘s Commitment of Traders report indicated spec funds closed another 17k longs contract in the week ending July 12.
The group also added some shorts for a 21,693 contract lighter net long of 151,174 contracts.
That is their lowest net long since October of 2020.
The commercials were also less net short wk/wk, but by the way of net new buying.
As for soybean, spec traders reduced exposure through the week that ended 7/12.
The weekly CoT report confirmed 25,717 fewer contracts were in play compared to the prior week, for a 9,337 contract reduced net long of 95,711 contracts.
That was the group’s weakest net long since last December. Commercial soybean traders also reduced exposure by way of 19.9k fewer short hedges and 8.8k fewer long hedges.
That reduced their net short to 157k contracts.
As for wheat, data had the SRW spec traders as 6,444 contracts net short as of 7/12.
That was a 6,402 contract stronger net short wk/wk by way of further long liquidation.
In KC wheat, spec traders were 5,650 contracts less net long to 16,387 contracts.
That long liquidation left the group at their weakest net long since June of last year.
Managed money firms were 2,477 contracts less net long in MPLS wheat as from 7/5 to 7/12.
The group was still 2,654 contracts net long.
In energy markets, oil gained 2.5% on Friday after a U.S. official said that an immediate Saudi oil output boost was not expected.
Thus, Brent crude futures settled at $101.16 a barrel, rising $2.06, or 2.1%, while West Texas Intermediate crude settled at $97.59 a barrel, gaining $1.81, or 1.9%.
However, both benchmarks saw their biggest weekly percentage drops in about a month, largely on fears that a nearing recession would chop away at demand.
Brent, indeed, lost 5.5% in its third weekly drop, while WTI was down 6.9% in its second weekly decline.
The U.S. oil rig count, an early indicator of future output, inched up by two to 599 this week to their highest since March 2020.
Also signalling more oil supply on the horizon was Libya’s oil chief, who said crude output will resume after meeting groups that have blockaded the country’s oil facilities for months.
That could mean a return of 850,000 barrels per day.
Bearish market sentiment has also followed renewed COVID-19 outbreaks in China, which have hampered a demand recovery.
China’s refinery throughput in June, indeed, shrank nearly 10% from a year earlier, with output for the first half of the year down 6% in the first annual decline for the period since at least 2011, data showed on Friday.
In freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships ferrying dry bulk commodities, logged its first weekly gain since mid-June, as a jump in capesize rates outweighed declines in other vessel segments.
The overall index, which factors in rates for capesize, panamax and supramax shipping vessels, indeed, was up 140 points, or nearly 7%, at 2,150 points, its highest since July 4.
It rose 4% for the week.
Particularly, the capesize index rose 462 points, or 18.8%, to 2,919 points, its highest since June 20.
The index gained 29% for the week.
The capesize sector is witnessing modest strength, driven mainly by iron ore exports from Brazil, underpinning the Baltic index, analysts said.
There is also demand for coal from Colombia and South Africa in Europe, and this helps the dry bulk market, as it translates into earning of around $20,000, which is very good,” they added.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $3,834 at $24,209.
The panamax index, in contrast, was down 35 points, or 1.8%, at 1,885 points, its lowest since Feb. 7.
Down 15.2%, the panamax index had its worst week since Jan. 21 and logged its fourth straight weekly fall.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $311 to $16,969.
The supramax index fell by 11 points to a new five-month low of 2,039 points, registering its eighth consecutive weekly decline.
In equity markets, U.S. stock indexes Friday moved sharply higher.
A rally in bank stocks Friday lifted the overall market.
Hopes for a less-aggressive Fed boosted stocks after Friday’s data from the University of Michigan showed that 5-10 year inflation expectations fell more than expected to the lowest level in a year.
Indeed, the University of Michigan’s July U.S. consumer sentiment index unexpectedly rose +1.1 to 51.1, stronger than expectations of unchanged at 50.0.
The 5-10 year inflation expectations level fell to 2.8%, lower than expectations of 3.0% and the lowest in a year.
In addition, inflation concerns subsided a bit after June import prices unexpectedly declined.
Particularly, U.S. June import prices ex-petroleum fell -0.4% m/m, weaker than expectations of +0.2% m/m and the largest decline in more than 2 years.
The strong dollar should in theory be pushing import prices lower.
U.S. June retail sales rose +1.0% m/m and +1.0% m/m ex-autos, stronger than expectations of +0.9% m/m and +0.7% m/m ex-autos.
Also, U.S. June manufacturing production fell -0.5% m/m, weaker than expectations of -0.1% m/m.
The U.S. July Empire manufacturing survey general business conditions index unexpectedly rose +12.3 to 11.1, stronger than expectations of a decline to -2.0.
Meantime, the yield on the 10-year Treasury slipped to 2.92% from 2.96% late Thursday.
The yield on the two-year Treasury rose to 3.14% from 3.13% late Thursday.
In this context, Wall Street capped a week of losses with a broad rally for stocks Friday.
The S&P 500 rose 1.9%, snapping a five-day losing streak.
Still, the gains weren’t enough to pull the benchmark index out of the red for the week.
The Dow Jones Industrial Average rose 2.1% and the Nasdaq gained 1.8%. Smaller company stocks outgained the broader market, sending the Russell 2000 index 2.2% higher.
Those indexes also posted losses for the week, however.
All told, the S&P 500 rose 72.78 points to 3,863.16.
The Dow rose 658.09 points to 31,288.26 and the Nasdaq rose 201.24 points to 11,452.42.
The Russell 2000 gained 36.87 points to 1,744.37.
In currency trading, the U.S. Dollar Index increased from last week’s 107.3 to close at 108.24.
From Canada, as of July 11, 2022, Canadian wheat prices for FOB delivery West Coast were (Cdn$/mt):
– for the N1 class CWRS 13.5% – $506.91 per tonne, up C$13.90/t from prior week;
– for the N2 class CWRS 13.0% – $501.04/t, up C$13.82 wow;
– for the N3 CWRS – $496.89/t, up C$6.24 from prior week.
As of July 11, 2022, for the N1 CWAD 13% (durum wheat first class) deferred average street prices for delivery in Sep ’22 were at C$477.67 down C$91.86 week on week.
Export basis West Coast & Central SK increased from C$ 157.68 to 184.85 per tonne.
However, delivered FOB price Great Lakes was posted at C$662.52, down C$64.69 from prior week.
In contrast, according to the European Commission, as of July 13, 2022, Durum wheat – CA St Lawrence (CWAD) was offerd at C$749/t, up $4.55/t from prior week.
As of July 15, 2022, for the N1 CWAD 13% (durum wheat first class), average street prices in REGIONAL ZONES were at C$468.78 per tonne, up C$7.9 from prior week.
(1USD=Cnd$1.3026 up from past week when was 1.2947).
From South America, as of July 14, 2022 – Argentina Wheat Grade 2 export price, (Up River) was at $428, down $5 from prior week.
Argentina corn feed was up $1/t for the week, closing at $274.
Brazilian corn feed (Paranagua) was valued at $274, down $9 from prior week.
Argentina feed barley, was unchanged for the week to $353.
Argentina soybean was down $5 at $581.
Brazilian soybean lost $3 finishing the week at $600.
In Europe, Paris-based Euronext exchange saw September’s wheat prices to close the week at €325.50 per tonne.
That was an decrease of €31.5/t from past week.
Rapeseed for August deadline, fell €18.25/t for the week, to close €675.25/t.
August corn price, in contrast, was up €7.25/t for the week, closing at 323.25 euros per ton.
Nov-22 UK wheat feed contract, closed at £257.95/t, down £27.05/t week on week.
Meantime, as of July 14, 2022, FOB prices in US dollar for French wheat with 11.5% protein and Aug/Sep delivery, were at $353/mt, down $4 from prior week.
German wheat Deposilo Hamburg, was at $356.04/t, down $10.69/t from prior week.
Baltic wheat, delivery first Vilnius, was at $323.76/t, down $26.67/t from prior week.
French durum wheat – basis La Pallice, was at $458.91/mt, down $14.79 from prior week.
Spanish durum wheat Sevilla (Depo Silo), was valued this week at $539.6 per tonne, down $10.5 wow.
Italian durum wheat Bologna (Delivered to first customer), was valued this week at $534.56 per tonne, down $20.64/t week on week.
Corn, delivered Bordeaux port was at $320.73 per tonne, up $23.27/t from past week.
Corn FOB Rhin Spot – July 2021 basis was up $22.30 to $315.69/t.
Feed barley FOB Rouen was at 301.57$/t, up $1.51 per tonne.
Malting barley FOB Creil Spot – July 2021 basis was at $398.4 per tonne, up $1.1/t from prior week.
Rapessed FOB Moselle – 2022 harvest was at 673.74$/ton, down $30.18 compared to prior week.
Standard sunseed FOB Bordeaux – 2021 harvest was down 8.18$ from prior week at $816.97 per tonne
(Eur/USD = 1.0086 vs last week 1.0187).
From the Black Sea basin, Russian wheat export prices fell last week.
Prices for the new wheat crop with 12.5% protein content and for supply from Black Sea ports, fell by $17 to $358 a tonne free on board (FOB) at the end of last week, the IKAR said.
Sovecon, said wheat prices for supply in July and August were at $365-$370 a tonne vs $375-$385 a week ago.
Wheat prices in the domestic market, in contrast, rose on higher demand from exporters.
Indeed, domestic 3rd class wheat, European part of Russia, excluded delivery was at 13,575 rbls/t ($222.5) +150 rbls according to Sovecon.
Price for sunflower seeds was at 25,900 rbls/t -1,425 rbls (Sovecon);
price for domestic sunflower oil was at 74,000 rbls/t -1,000 rbls (Sovecon);
price for domestic soybeans was at 35,125 rbls/t -975 rbls (Sovecon); export price for sunflower oil was at $1,540/t -$20 (Sovecon);
export price for sunflower oil was at $1,370/t -$20 (IKAR);
price for white sugar, Russia’s south, was at $1,013.6/t -$75.7 (IKAR).
(as of July 11, $1 = 61.0000 roubles).
Meantime, the Ministry of Agriculture of the Russian Federation approved the minimum and maximum prices, upon reaching which, in 2022-2023, procurement and commodity interventions in the grain and sugar markets can be carried out.
Both price groups are calculated with VAT, are the same for all regions and will be valid from July 31, 2022 to June 30, 2023.
Purchase prices:
– wheat of the 3rd class — 15.84 thousand rubles/t;
– wheat of the 4th class — 15.07 thousand rubles/t;
– rye not lower than the 3rd class — 11.11 thousand rubles/t;
– barley – 12.98 thousand rubles/t;
– sugar – 36.96 thousand rubles/t;
Sales prices from the intervention fund:
– wheat of the 3rd class — 17.38 thousand rubles/t;
– wheat of the 4th class — 16.61 thousand rubles/t;
– rye not lower than the 3rd class — 12.21 thousand rubles/t;
– barley — 14.3 thousand rubles/t;
– sugar – 40.7 thousand rubles/t.
On Friday, Russia has set out its grain export taxes for July 20-26.
According to the agriculture ministry the export duty will increase for all products wheat, barley and corn.
Particularly, for wheat will increase to 5,984.9 roubles/tonne, from 5,558.9 roubles/tonne of a week earlier.
For barley, will move up to 4,413.7 roubles/tonne, from 3,775.9 roubles/tonne the prior week.
For corn, the tax will up to 3,144.9 roubles/tonne, from 3,075.1 roubles/tonne the previus period.
As for indicative price, for wheat will be 386.8 $/tonne, for barley 332.9 $/tonne, and for corn 303.0 $/tonne.
That is compared with 401.6 $/tonne for wheat, 340.7 $/tonne for barley, and 323.0 $/tonne for corn of a week earlier.
(as of July 15, $1 = 57.1650 roubles).
In Ukraine, according to APK-Inform, the bid prices of wheat in hryvnia terms decreased last week in Ukrainian ports of Reni and Izmail.
The range of prices in dollar terms also narrowed.
The bid prices in hryvnia term of food and feed wheat, indeed, deceased by 1000 USD/t last week to 5500-6500 and 5000-6000 UAH/t CPT-port.
Only few companies announced the maximal prices.
The bid prices in dollar terms of 2-grade, 3-grade and feed wheat totaled 190-205, 185-200 and 170-190 USD/t СРТ-port in Reni and Izmail.
The indicative export prices of Ukrainian wheat and barley also continued declining in deep-sea ports last week.
The indicative offer prices of 12.5%, 11.5% and feed wheat of harvest 2022 for delivery in July-August decreased by 15-25 USD/t to 370-395, 365-390 and 325-355 USD/t FOB Black Sea last week.
The offer prices of new-crop barley declined by 10-15 USD/t to 330-355 USD/t FOB.
A spread between offer and bid prices remained quite wide and was 15-20 USD/t for wheat and 10-15 USD/t for barley.
Also the bid prices of corn continued to decline at western borders of Ukraine last week.
Indeed, the bid prices of corn for delivery in July-August decreased by 10 USD/t to 195-210 USD/t DAP Poland, and by 20-25 USD/t to 190-200 USD/t DAP Hungary.
From the Middle East, Iran’s purchases of domestically-grown wheat have exceeded five million metric tons in the harvesting season that began in early April, a sign the country has been successful in its plans to ensure food security.
Iran’s agriculture minister Javad Sadatinejad said on Thursday that that the government had spent 110 trillion rials ($344 million) on domestic wheat purchases this year.
He said payments to farmers will be fast-tracked in the upcoming weeks to meet a target of at least six million tons in domestic wheat purchase at the end of the harvesting season in late July.
Iran announced in February that it will nearly double its guaranteed purchase price for wheat to 110,000 rials ($0.35) per kilogram to ensure it will have access to enough supplies of domestically-grown wheat and to avoid problems in the global market because of the war between Ukraine and Russia.
Wheat imports into Iran would fall by 57% year-on-year in 2022-23 thanks to this major increase in domestic production of the crop.
Meantime, Iran’s Government Trading Corporation (GTC), which is responsible for grains supplies in the country, said on Thursday that hundreds of thousands of tons of wheat had been imported into Iran over the past four months despite the surge domestic output.
From the Middle Kingdom, China will release 500k MT of state reserve soybeans via auction on Friday the 22nd.
From Australia, indicative delivered prices in Australian dollars per tonne this week were:
Barley Downs: $390 down $35 from July 7;
SFW wheat Downs: $410, down $10 from July 7;
Sorghum Downs: $345, down $10 from July 7;
Barley Melbourne: $388, down $2 from July 7;
ASW wheat Melbourne: $425 unchanged from July 7.
SFW wheat Melbourne: $415 down $5 from July 7.
(AUD/USD=> US$0.6792 vs. US$0.6859 past week).
On international trade scene, Bangladesh called off its second wheat tender in 3 weeks.
After received a single bid from Singapore firm at $476.38 a tonne in the latest one, Bangladesh has called off its second wheat import tender in three weeks to purchase 50,000 tonnes.
The trade house, Intra Business Pte Ltd, had offered wheat of any origin such as Australia, Germany, Bulgaria, Romania or Canada.
Egypt issued an international tender for 3k MT of soy oil and 1k MT of sunflower oil for August delivery.
Watching next week’s market, Monday start with Export Inspections data release in the afternoon, and the Crop Progress report released that overnight after the session close.
The weekly EIA ethanol numbers will be out on Wednesday.
Thursday will feature the weekly Export Sales report from USDA’s FAS division.
Friday marks the expiration of August grain options.
NASS will also release monthly Cattle on Feed and Cold Storage reports and the bi-annual Cattle Inventory report overnight.
That’s all, thank you.
To all of you, we wish you a good weekend and … Good Harvest 2022!
Author: Sandro F. Puglisi
