Good afternoon Farmer Family …
All the bullish factors of the spring seem to have faded this week.
In the meantime, new bearish sentiments have come:
– A strongest dollar since ’02 is certantily deflationary.
– Brazil’s 2nd crop corn alone was larger than their 3 combine crops last season.
– Russia and Ukraine signed a landmark deal to reopen Ukrainian Black Sea ports for grain exports.
All of which has led to US farm markets mostly down this week.
Front month corn prices ended the Friday session with 2% losses.
Soybean prices were 0.8% to 1.13% higher on Friday, rebounding from multi-month lows, as soy processors have slowed purchases of pricey old-crop soybeans, opting to wait for the autumn harvest of the 2022 crop.
Soymeal prices closed with 0.67% losses on the day, as soy oil rallied 2.94% on Friday.
Meantime, for the week, Sep corn prices slipped another 6.62%.
Soybeans in spite had a promising start to the week, with prices up on Monday, had faded back throughout the week, with August deadlin down 3.12% for the week.
Product values were only marginally higher on the week, with soymeal up just 0.12% and bean oil 0.4% higher.
The wheat complex after the rally early in the week, failed, going sharply down into the back half of the week.
Minneapolis spring wheat prices fell the most with another net 3.94% drop from last Friday.
Chicago SRW wheat prices ended a net 2.29% weaker and were back below the $8 mark.
Kansas City wheat prices closed with a 2.06% loss from Friday to Friday.
Going inside the numbers, during the week, corn prices, closed down $0.400 at $5.64/bu.
Soybean prices finished the week $0.315 lower at 14.35 /bu.
Soymeal lifted $0.5/smt, closing at $431.5 smt.
Soy oil, stopped the downtrend after several week losses, gaining $0.240, to close at $60.32.
CBOT soft red winter (SRW) prices fell $0.178 to close at $7.59/bu.
KCBT hard red winter (HRW) prices lost $0.172, ending at $8.2/bu.
MGE hard red spring (HRS) prices shedded $0.358 to close at $8.71/bu.
As for wheat, this week, basis was mixed in the Gulf and Pacific Northwest (PNW).
The weekly USDA reports were positive both for harvest pace and wheat conditions.
USDA’s Export Sales report indicated sales well off the week prior, but still 511,100 MT.
Sales commitments YTD are 7.647 MMT, that left many international buyers covered.
Average export pace for U.S. wheat from the season started, has been slow, despite the plunge in futures.
CBOT September wheat has tumbled more than $5 a bushel, or 41%, since mid-May.
Buyers are also eager to capitalize on the lower wheat price trend.
But US wheat price is still $40 a tonne over world values.
Many farmers, in contrast, have plenty of on-farm storage and are reluctant to sell in the near term.
Hot weather ahead of other row crop harvests and winter wheat planting creates a “wait and see approach” for many farmers.
In this context, as of July 21, 2022, FOB prices saw US wheat No 2 Hard Red Winter (HRW) valued at $381/mt (up $9/mt from last week).
US wheat No 2 Soft Red Winter (SRW) was at $337/mt (up $12/mt from last week).
Northern Durum offers from the Great Lakes for August/September 2022 delivery are quoted at $13.88/bu ($510.00/MT).
As for corn, US corn 3YC (Gulf) was at $296/mt (down $17/mt from last week).
As for soybean, US soybean 2Y (Gulf) quoted at $586/mt (up $5/mt from last week).
USDA reported the average regional corn oil cash prices were between 65 to 76 cents/lb, compared 66 – 67.2 cents/lb, past week.
DDGS were between $200-$256/ton from the Gulf and $299/ton out of the PNW.
B100 biodiesel prices, averaged $6.94/gal in IL and $6.41 in MN this week, even with last week according to USDA’s weekly bioenergy report.
Ethanol prices were $2.40 – $2.59/gal regionally this week, up from $2.32 – $2.55/gal last week.
Meanwhile gasoline futures ended the week at $3.1495, that was down from $3.2408/gal posted last week.
USDA’s weekly Crush report, showed processing value of soybeans at $17.58/bu on $15.43 cash beans.
Past week showed processing value of soybeans was at $17.87/bu on $15.77 cash beans.
Meantime, data from the CFTC showed corn spec traders closed 24,916 of their open longs through the week of 7/19.
That left the group 125,303 contracts net long.
Commercial corn traders were adding new long hedges and closing short hedges for a net 35.5k contract reduction to their net short.
At 375,936 contracts, that is their weakest net short since October of 2020.
As for soybean, the report showed managed money firms were 87,832 contracts net long as of 7/19.
That was down 7,879 contracts by way of long liquidation to their weakest net long since December.
For the products, CFTC reported meal specs were 66,588 contracts net long as of 7/19.
That was down 1,702 contracts via net new selling through the week.
For soy oil, managed money firms were 1,033 contracts less net long via long liquidation.
As for wheat, CFTC reported CBOT SRW wheat spec traders as 6,816 contracts net short as of 7/19.
That was a net 372 contracts stronger net short as the new sellers offset the new spec buyers on a 7.1k contract increased OI.
For KC wheat, CFTC had the funds at 11,868 contracts net long.
That was down 4.5k wk/wk via net new selling.
MPLS spec traders were down to just 982 contracts net long as of 7/19’s settle.
That was via 5.3k longs vs 4.4k spec shorts.
In energy markets, U.S. crude prices settled below $95 a barrel for the first time since April in choppy trading on Friday after the European Union said it would allow Russian state-owned companies to ship oil to third countries under an adjustment of sanctions agreed by member states this week.
The EU announcement has came after Russian Central Bank Governor Elvira Nabiullina said it will not supply crude to countries that decide to impose a price cap on its oil and instead redirect it to countries which are ready to “cooperate” with Russia.
In this context, U.S. West Texas Intermediate crude (WTI) settled $1.65, or 1.7%, lower at $94.70 a barrel, while Brent crude futures fell 66 cents, or 0.6%, to $103.20.
Consequentially, WTI closed lower for the third straight week, pummelled over the past two sessions after data showed that U.S. gasoline demand had dropped nearly 8% from a year earlier in the midst of the peak summer driving season, hit by record prices at the pump.
In contrast, signs of strong demand in Asia propped up the Brent benchmark, which settled higher for the first time in six weeks.
Prices, however, were held back by worries of interest rate hikes that could slash demand.
Also, the resumption of some Libyan crude oil output, dragged price oil down.
Libya’s oil production is at more than 800,000 barrels per day (bpd) and will reach 1.2 million bpd by next month, the Libyan oil ministry said.
Also, Iraq has the capacity to increase its oil production by 200,000 bpd this year if asked, an executive of Iraq’s Basra Oil Co said.
U.S. oil rigs, an early indicator of future output, remained steady at 599 this week.
Meantime, money managers raised their net long U.S. crude and Brent futures and options positions in the week to July 19, per latest data from the U.S. Commodity Futures Trading Commission (CFTC) and Intercontinental Exchange.
In freight markets, the Baltic Exchange’s main sea freight index rose on Friday, as rates went up across its component vessel segments.
The overall index, which factors in rates for capesize, panamax and supramax shipping vessels, indeed, was up 28 points, or 1.3%, at 2,146 points.
It edged down 0.2% for the week.
Particularly, the capesize index snapped a three-day losing streak, gaining 43 points, or 1.6%, to 2,696 points.
However, the index saw its worst week since late-June, falling by 7.6%.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $363 at $22,362.
The panamax index was up 42 points, or 2,1%, at a 10-day high of 2,093 points.
The index also posted its highest weekly gain of 11% in nearly four months.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased by $383 to $18,838.
The supramax index rose by 7 points to 2,080 points, logging its first weekly rise of 2% since May 20.
In equity markets, U.S. stocks ended lower on Friday.
Still, all three major indexes posted weekly gains despite Friday’s losses with the tech heavy Nasdaq closing out the week 3.3% higher.
The S&P 500 advanced 2.4%, and the Dow gained 2%.
On Friday, indeed, the Dow Jones Industrial Average fell 137.61 points, or 0.43%, to 31,899.29, the S&P 500 lost 37.32 points, or 0.93%, to 3,961.63 and the Nasdaq Composite dropped 225.50 points, or 1.87%, to 11,834.11.
A disappointing earnings from Snap spooked investors as Snapchat owner posted its weakest-ever quarterly sales growth as a public company, sending Snap Inc’s shares down nearly 40%.
Shares in social media and ad tech firms also dropped.
Seagate Technology Holdings Plc, the world’s biggest maker of computer hard drivers, closed down more than -8% after giving a weak forecast for the current pricing period citing “weakening global economic conditions.”
Online companies that depend heavily on ads, such as tech giants Meta Platforms Inc and Alphabet Inc tumbled 7.6% and 5.6%, respectively, weighing on the Nasdaq.
The S&P 500 communication services and information technology tumbled 4.3% and 1.4%, respectively.
Verizon Communications Inc tumbled 6.8% after announcing it cut its annual adjusted profit forecast as inflation weighs.
Twitter Inc, in contrast, reversed earlier losses to add 0.8% following a surprise fall in revenue.
American Express Co rose 1.9% on strong earnings and an increased revenue forecast.
Also, a slide in T-note yields Friday supported stocks after the 10-year T-note yield dropped to an 8-week low of 2.76% from 2.91% late Thursday.
The two-year Treasury yield tumbled again, to 2.98% from 3.09% late Thursday and from 3.14% a week ago, on worries about the economy.
Friday’s U.S. economic data, indeed, was slightly supportive for stocks but showed a July U.S. S&P Global manufacturing PMI which fell -0.4 to a 2-year low of 52.3.
However, that was stronger than expectations of 52.0.
In Europe, European shares notched up their best week in two months on Friday as concerns over an energy supply crunch eased.
Russian gas flows to Europe, indeed, resumed after a scheduled maintenance outage.
Consequentially, the pan-European STOXX 600 index closed 0.3% up at its highest level since June 10, while for the week it jumped nearly 2.9%.
However, market participants are fretted, as euro zone business activity unexpectedly shrank in July.
Thus, gains were led by sectors that are more resilient to uncertainty such as real estate, up 4.3%, followed by utilities, and food and beverages stocks.
Just Eat Takeaway jumped 13.8% after the online takeaway food company’s German rival Delivery Hero forecast a smaller loss as it shifted its focus to profitability.
Aluminium-maker Norsk Hydro gained 6.4% after proposing an extra dividend and offering share buybacks.
Rising in oil prices lifted heavy-weigh energy stocks 1.2%.
Economy-linked stocks such as banks, in contrast, dropped 1.2%.
In earnings reports, Danske Bank fell 2.2% as it axed dividends
Swiss elevator and escalator manufacturer Schindler slipped 3.9% after cutting 2022 revenue guidance.
Uniper plunged 28.9% after the German government stepped in to rescue the gas importer with a 15 billion euro ($15.28 billion) bailout.
After a volatile session following the resignation of Prime Minister Mario Draghi on Thursday, Italian shares (FTMIB) inched up 0.1% as the country prepared for a snap national election on Sept. 25.
In currency trading, the dollar index on Friday fell by -0.20% and posted a 2-1/2 week low, due the sharp drop in the 10-year T-note yield.
Also, strength in the yen undercut the dollar after USD/JPY slid to a 2-week low.
Particularly, the U.S. Dollar Index decreased from last week’s 108.24 to close at 106.25.
The dollar recovered from its worst levels Friday after stocks fell, which boosted liquidity demand for the dollar.
Particularly, EUR/USD on Friday fell by -0.24%.
Signs of a slowdown in economic activity in the Eurozone weighed on EUR/USD Friday after the Eurozone July S&P Global manufacturing PMI fell to a 2-year low.
Also, the Bundesbank warned that worries about Russian gas “are weighing on the outlook” for German growth.
The Eurozone July S&P Global manufacturing PMI fell -2.5 to a 2-year low of 49.6, weaker than expectations of 51.0.
Also, the Eurozone July S&P Global composite PMI fell -2.6 to a 17-month low of 49.4, weaker than expectations of 51.0.
USD/JPY on Friday fell by -0.90%.
Friday’s data that showed a bigger than expected increase in Japanese consumer prices is hawkish for BOJ policy and sparked short-covering in the yen.
Japan’s June national CPI ex-fresh food & energy rose +1.0% y/y, stronger than expectations of +0.9% y/y and the biggest increase in 6-1/2 years.
The Japan July Jibun Bank manufacturing PMI fell -0.5 to a 10-month low of 52.2.
From Canada, other than the crop reports, there are not a lot of Canada specific news in the wheat market.
Rain in major North American growing regions added some bearish pressure.
Sask Ag rated spring wheat at 74% Gd/ Exc., 22% fair, and 4% poor.
Alberta Ag rated spring wheat at 83% Gd/Exc.
Sask Ag rated durum wheat at 58% Gd/ Exc., 32% fair, and 10% poor to very poor.
Alberta Ag rated durum wheat at 64% Gd/Exc.
Meantime, Canadian weekly wheat exports were poor at only 133k mt, for a YTD total of 10.5 million mt, compared to 18.8 million mt the year prior.
Durum exports for week 49 were an improved 105k mt, for a YTD total of 2.5 million mt, compared to 5.8 million mt last YTD.
On the other hand, Canada is said to have inked a deal to import new crop rapeseed supplies from Ukraine with shipments to be executed in August.
Meantime, as of July 18, 2022, Canadian wheat prices for FOB delivery West Coast were (Cdn$/mt):
– for the N1 class CWRS 13.5% – $488.94 per tonne, down C$17.97/t from prior week;
– for the N2 class CWRS 13.0% – $479.43/t, down C$21.61 wow;
– for the N3 CWRS – $475.16/t, down C$21.73 from prior week.
As of July 18, 2022, for the N1 CWAD 13% (durum wheat first class) deferred average street prices for delivery in Sep ’22 were at C$440.93 down C$36.74 week on week.
Export basis West Coast & Central SK jumped from C$ 184.85 to 218.59 per tonne.
However, delivered FOB price Great Lakes was posted at C$659.52, down C$3 from prior week.
World cereal prices report from the European Commission, was not posted this week.
On July 13, 2022, Durum wheat – CA St Lawrence (CWAD) was offerd at C$749/t.
As of July 22, 2022, for the N1 CWAD 13% (durum wheat first class), average street prices in REGIONAL ZONES were at C$458.85 per tonne, down C$9.93 from prior week.
(1USD=Cnd$1.2916 down from past week when was 1.3026).
From South America, Argentina’s BAGE reported corn harvest as 67.2% complete, trailing the 5-year average by 8 points. Production remains estimated at 49 MMT.
The Argentine Agriculture Ministry reports producer sales of the 20/21 soybean harvest total 20.4 MMT as of mid-July, down 19% versus a year ago.
Argentina has exported 1.4 MMT of soybean meal so far this month which puts the country on pace to ship 2.2 MMT.
This is 400 K below both last month and a year ago.
Argentina’s Buenos Aires Grains Exchange reported 22/23 wheat planting reached 97% complete on 6.1m HA.
That means a reducction of Argentine wheat area, by 100 K hectares, and are now down ½ million from a late May forecast.
Brazil’s corn export line-up was 508.000t week-to-week on Monday at 5,99 MMT, an increase of 2.67 MMT or 125% compared to the numbers from a year ago.
ANEC expects Brazil’s July soybean exports to reach 7.9 MMT, below the 8.7 MMT shipped in July of 2021.
Shipments the first 11 days of the month are however, running 16% ahead of last year at 5.0 MMT.
Rather than declining seasonally, Brazil’s soybean export line-up increased 272.000t to 5.44MMT, 190.500t fewer than a year ago.
Soybean exports from Brazil are expected to total 91.5 million tonnes in 2023, up from the 77.2 million estimated for 2022.
Soybean meal fell 97 K to 1.75 MMT but is 30%/400 K larger than a year ago.
Meantime, as of July 21, 2022 – Argentina Wheat Grade 2 export price, (Up River) was at $420, down $8 from prior week.
Argentina corn feed was down $11/t for the week, closing at $263.
Brazilian corn feed (Paranagua) was valued at $260, down $14 from prior week.
Argentina feed barley, was down $13/t for the week to $340.
Argentina soybean was down $17 at $564.
Brazilian soybean lost $30 finishing the week at $570.
In Europe, buyers from China purchased large volumes French wheat this week.
French wheat exports for the week of July 20th tripled to 119 K with the total destined for Morocco.
The French wheat crop is 84% harvested for soft and 96% for durum.
Soft wheat ratings fell 1 to 63%, 2 points below the average while the durum held at 56% G/E, 8 points below average.
On Friday, French wheat price for Sep deadline, tumbled €25/tonne on Ukraine/Russia port agreement.
However, Paris-based Euronext exchange saw grain prices substantially unchenged for the week.
September’s wheat prices, indeed, closed the week at €325.75 per tonne.
That was up just €0.25/t from past week.
August corn price, was down €0.25/t for the week, closing at 323 euros per ton.
Rapeseed for August deadline, in contrast, tumbled to €633.5/t losing €41.75/t for the week.
Nov-22 UK wheat feed contract, closed at £255.5/t, down £2.45/t week on week.
Meantime, as of July 21, 2022, FOB prices in US dollar for French wheat with 11.5% protein and Sep delivery, were at $370/mt, up $17 from prior week.
German wheat Deposilo Hamburg, was at $361.54/t, up $5.5/t from prior week.
Baltic wheat, delivery first Vilnius, not quoted, past week was at $323.76/t.
French durum wheat – basis La Pallice, was at $449.37/mt, down $9.54 from prior week.
Spanish durum wheat Sevilla (Depo Silo), was valued this week at $520.86 per tonne, down $18.74 wow.
Italian durum wheat Bologna (Delivered to first customer), was valued this week at $510.65 per tonne, down $23.91/t week on week.
Corn, delivered Bordeaux port was at $329.88 per tonne, up $9.15/t from past week.
Corn FOB Rhin Spot – July 2021 basis was up $13.17 to $328.86/t.
Feed barley FOB Rouen was at 312.52$/t, up $10.95 per tonne.
Malting barley FOB Creil Spot – July 2021 basis was at $384 per tonne, down $14.39/t from prior week.
Rapessed FOB Moselle – 2022 harvest was at 638.31$/ton, down $35.43 compared to prior week.
Standard sunseed FOB Bordeaux – 2021 harvest was down 5.04$ from prior week at $811.93 per tonne
(Eur/USD = 1.0213 vs last week 1.0086).
From the Black Sea basin, Russia exported 500,000 tonnes of grain past week, compared with 340,000 tonnes the previous week.
It’s currently expects the country to export more than 2 million tonnes of wheat this month.
The United States last week issued clarification reassuring banks, shippers and insurance companies that transactions with Russian food and fertiliser exports would not breach Washington’s sanctions on Moscow.
Traders consider this clarification “with very careful optimism”.
Russia AgMin said over 30 MMT of grain has harvested by July 21.
Of that, incleded 25.3 MMT of wheat and 3.9 MMT of barley.
Yield is significantly higher than last year at 4.17 MT/HA vs 3.33 MT/HA a year earlier.
Meantime, Russian wheat export prices rose slightly last week, helped by a stronger rouble.
Indeed, according to the IKAR, Russian prices for wheat with 12.5% protein content and for supply from Black Sea ports rose by $2 to $360 a tonne free on board (FOB) at the end of last week.
Wheat prices for imminent supply were at $355-360 a tonne.
As for other Russian products price for domestic 3rd class wheat, European part of Russia, excluded delivery was at 13,275 rbls/t ($234.13) -300 rbls (Sovecon).
Price for sunflower seeds was at 26,250 rbls/t +300 rbls (Sovecon).
Price for domestic sunflower oil was at 74,000 rbls/t, unchanged from prior week (Sovecon).
Price for domestic soybeans was at 34,925 rbls/t -200 rbls (Sovecon). Export price for sunflower oil was at $1,430/t -$110 (Sovecon).
Export price for sunflower oil was at $1,310/t -$60 (IKAR).
Price for white sugar, Russia’s south was at $1,089.9/t +$76.3 (IKAR).
($1 = 56.7000 roubles).
On Friday, Russia has set out its grain export taxes for July 27 – August 2.
According to the agriculture ministry the export duty will increase for all products wheat, barley and corn.
Particularly, for wheat will decrease to 4,951.7 roubles/tonne, from 5,984.9 roubles/tonne of a week earlier.
For barley, will move down to 3,002.6 roubles/tonne, from 4,413.7 roubles/tonne the prior week.
For corn, the tax will up to 2,923.4 roubles/tonne, from 3,144.9 roubles/tonne the previus period.
As for indicative price, for wheat will be 388.2 $/tonne, for barley 321.0 $/tonne, and for corn 319.0 $/tonne.
That is compared with 386.8 $/tonne for wheat, 332.9 $/tonne for barley, and 303.0 $/tonne for corn of a week earlier.
In Ukraine, according to APK-Inform, the indicative export prices of wheat and barley continued declining past week in deep-sea ports of Ukraine.
Indeed, the indicative offer prices of 12.5%,11.5% and feed wheat decreased by 10-25USD/t to 355-370, 350-365and 315-340 USD/t FOB Black Sea for delivery in July-August.
The indicative offer prices of barley declined by 15-25 USD/t to 315-330 USD/t FOB Black Sea.
According to APK-Inform, last week, also the export prices of corn at western borders and for delivery to European countries were fluctuating with slight dominance of downward trend.
The situation was additionally complicated by farmers of some EU’s countries (particularly Poland and Bulgaria), who were not happy with pressure on their local prices coming from a flow of Ukrainian agricultural products.
Thus, they asked their governments to limit this flow or close the border at all.
In this context, the bid prices of corn for delivery in July-August decreased by 10 USD/t to 185-200 USD/t DAP Poland, by 5 EUR/t to 205-215 EUR/t DAP Romania, while they increased by 5-10 USD/t to 195-210 USD/t DAP Hungary.
The bid prices of corn were announced at 250-260 USD/t DAP at Bulgarian border, at 215-225 and 250-265 EUR/t DAP in Romanian cities Botosani and Constanta.
The prices for delivery to port of Constanta increased to 270-285 EUR/t (July-August).
The Russia-Ukraine grain deal, which crowned two months of talks brokered by the United Nations and Turkey, raised hopes that an international food crisis can be eased.
Speaking at the signing ceremony in Istanbul, U.N. Secretary General Antonio Guterres said the deal opens the way to significant volumes of commercial food exports from three key Ukrainian ports – Odesa, Chernomorsk and Yuzhny.
On this wake, Ukraine continued to prepare to restart grain exports from its Black Sea ports despite a Russian missile strike on this morning, hit the port of Odesa, according to a statement of the Ukrainian Infrastructure Minister Oleksandr Kubrakov.
Turkish Defence Minister Hulusai Akar said in a statement that “In our contact with Russia, the Russians told us that they had absolutely nothing to do with this attack, and that they were examining the issue very closely and in detail”.
“The fact that such an incident took place right after the agreement we made yesterday really worried us,” he added.
From the Middle Kingdom, buyers from China purchased large volumes of Australian and French wheat this week.
Particularly, traders reported purchases of around 1 million tonnes of Australian wheat, both for animal feed and flour milling, this week for shipment periods between September and March.
In addition China bought at least two shiploads, possibly up to seven, of French wheat this week for shipment between September and November, they said.
The French purchase involved low-quality wheat of 10.5% protein for at least two of the shipments.
China’s weekly soybean crush for the week ending slipped 10 K to1.7 MMT, dropping below trade estimates as the result of declining feedstocks and slow soybean meal demand.
Meantime, China will release another 500k MT of soybeans from state reserves on 7/29.
From South East Asia, Indonesia continues to approve palm oil export licenses to reduce stock levels and keep production flowing.
The export levy has been reduced to zero for July and August.
according to the USDA attaché in New Delhi, the weak southwest monsoon in first half of June 2022 slowed ongoing plantings of the kharif (fall harvested) season crops.
Plantings will recover under adequate soil moisture conditions with the revival of monsoon starting the third week of June, along with expected normal precipitation in July.
On July 6, India’s Ministry of Commerce and Industry notified authorizing the export of wheat flour and other products … only on the recommendation of Inter-Ministerial Committee on the Export of Wheat.
Based on the domestic market supply situation, FAS New Delhi continues to estimate market year (MY) 2022/2023 wheat production at 99 million metric tons (MMT), exports at 6 MMT, and ending stocks at 8.5 MMT.
From Australia, Southern markets for wheat and barley firmed this week on renewed competition from container packers, while northern markets were mostly steady, despite some sell-side pressure.
A squeeze in the Sydney market tied to rail outages has now abated with the reopening of the Hunter and second Main South line.
Waterlogging remains an issue for some winter crops in southern Queensland and New South Wales, both of which had a mostly dry week which has enabled top-dressing and weed spraying to take place where paddocks are dry enough to allow field work.
Most of Western Australia’s growing areas had a welcome 15-30 millimetres of rain in the past week, and parts of Victoria and South Australia had a handy 5-10mm.
In this context, indicative delivered prices in Australian dollars per tonne this week were:
Barley Downs: $390 unchanged from July 14;
SFW wheat Downs: $410, unchanged from July 14;
Sorghum Downs: $345, unchanged from July 14;
Barley Melbourne: $390, up $2 from July 14;
ASW wheat Melbourne: $440 up $15 from July 14.
SFW wheat Melbourne: $425 up $10 from July 14.
(AUD/USD=> US$0.6924 vs. US$0.6792 past week).
Watching next week’s market, Monday will start out with traders reacting to Friday’s Cattle Inventory and Cattle on Feed reports.
USDA will be out with Export Inspections data in the afternoon and the Crop Progress report that overnight after the sessions close.
The Fed will meet next Tuesday and Wednesday to decide on the likely next rate hike.
The weekly EIA ethanol numbers will be out on Wednesday.
Thursday will have the weekly Export Sales report from USDA.
Friday marks first notice day for August soybean futures.
World Durum Wheat Update 2022/23
Total durum production in 2022/23 is expected to increase 10% to 33.9 MMT.
Worldwide, beginning stocks of durum, according to Stratégie Grains, are 7.9 MMT, 1.6 MMT less than 2021/22.
However, unlike last year, durum production estimates outside the E.U. and North Africa look good.
Very hot and humid conditions, have prevailed over North Dakota durum wheat crops in recent days.
The hot temperatures have been beneficial in advancing crop maturity.
Meantime, soil moisture conditions remain adequate to surplus over the bulk of the North Dakota, limiting overall stress to the crop.
In this context, the North Dakota durum crop condition remains at an exceptionally high level, with 84% rated good to excellent, although this is down slightly from last week’s level of 89 percent.
The Montana durum crop improved slightly in condition ratings to 59% good to excellent, up from 54% the previous week, as crops show the benefit of recent rains.
The maturity of the crop is most advanced in Montana, with 62% headed, near their 5-yr average.
In North Dakota, just 46% has reached the heading stage, well behind the 5-yr average of 85 percent.
There also remains about 20% of the ND crop that had not reached the jointing stage as of mid-July, compared to the 5-yr average of just 3% not jointed by this date.
US durum wheat production is forecast at 2.1 million mt.
Based on July 1 conditions, yields are expected to average 40.3 bu/ac, up 16 bushels from 2021.
Area expected to be harvested for durum wheat totals 1.92 million acres, up 25% from 2021.
All that, combined with the expected Canadian crop at 5.5-5.8 million mt, would recover N American production nicely from last year’s tightness.
US durum exports are expected to increase twofold to 800,000 MT.
Canadian durum exports are also expected to increase 72% to 4.3 MMT this season.
Durum production dominates Mexico’s total wheat production.
USDA’s Foreign Agricultural Service in June 2022 dropped its forecast of Mexican wheat production slightly to 3.26 MMT for 2022/23.
This change was based on information from industry and official government sources, reflecting unfavorable weather conditions and other factors.
Mexico’s total durum and wheat exports are forecast at 850,000 MT.
Nevertheless, record heat in across Europe and North Africa (albeit at the end of the growing period) should reduct production in this area, keepping local buyers in the market.
Stratégie Grains now forecasts EU durum production at 7.0 MMT, 9% behind 2021/22.
If realized, this would be the lowest durum production since 1997.
Reductions are led by Italy and France.
Coldiretti forecast Italian durum production at 3.4 MMT.
That means a 2.6 MMT additional needs, as Italian demand is pegged at 6.1 MMT.
The Italian Millers’ Industrial Association expects durum production to fall only 10% to 3.5 MMT.
US durum wheat sales to Italy are up 124% compared to the same time last year.
Countries across North Africa, including Morocco, Algeria, and Tunisia, have a durum production this year is forecast to be smaller, increasing the need for imports.
Meanwhile, Kazakhstan is expected to produce more durum but has banned wheat exports through September.
Australia, in contrast, see a sligtly reduction.
In this context, global demand for durum wheat is projected to increase 1.0 MMT to 32.9 MMT in 2022/23.
Global trade for durum is projected to increase 1.5 MMT to 7.4 MMT in 2022/23.
Stratégie Grains forecasted durum E.U. imports from non E.U. members to be 2.4 MMT.
That is 1.0 MMT more than last year.
Imports to Morocco are expected to increase 400,000 MT to 1.1 MMT.
Durum Outlook
The tight ending stocks and a poor European harvest kept durum prices initially high at the start of 2022/23.
However the increased planted acres both in the USA and canada, and the positive outlook for the upcoming N American harvest, have created an optimistic outlook and a potentially easing export prices.
However, it should to note, that another year of tight supplies on the one hand and unknown variables, especially meteorological, economic and geopolitical factors on the other, could mean big price fluctuations for the marketing year ahead.
That’s all, thank you.
To all of you, we wish you a good weekend and … Good Harvest 2022!
Author: Sandro F. Puglisi
