Good morning Farmer Family …
US farm markets ended a good week with great gains after have realized there are some crop production problems in the US, Europe and China arising from the heat and related dryness occurred during this summuer.
The Monday Crop Progress report from NASS showed 75% of the corn crop in the dough stage as of 8/21 and 31% dented, both 4% slower than the 5-year average pace.
Crop conditions dropped with gd/ex ratings down 1% to 55%.
As for soybeans, NASS reported 84% of the soybean crop was setting pods as of 8/21, now 2% point behind the average.
1% of the crop dropped out of the gd/ex category, now at 57%.
As for wheat the report showed 95% of the winter wheat had been harvested by 8/21 now 2% behind normal, mainly in the PNW states.
Spring wheat was still lagging this week with harvest 33% complete, 21% below normal pace.
Condition ratings were unch at 64% gd/ex.
As for durum, the Montana crop is now 38% harvested while North Dakota durum is estimated at 23% harvested, mainly in the southwest.
The Montana harvest pace is close to average while the North Dakota harvest is well behind average.
Of the remaining North Dakota crop, 60% is mature and 91% is turning color.
Crop condition ratings in North Dakota increased his week with 78% rated in good to excellent condition.
There is a slight chance of rain with average temperatures through August 28.
High temperatures are forecast for next week which should help maturity and harvest advance.
Meantime, after four days of a Midwest Crop Tour, Pro Farmer pegged the US national corn yield at 168.1 bpa +/-1%.
Their production estimate is then for a 13.759 bbu crop, compared to the August USDA figure of 14.359 billion.
As for soybean, they pegged US bean crop yield at 51.7 bpa +/-2%, with production at 4.535 billion bushels (on 500k additional acres), compared to the USDA estimate of 4.531 billion and 4.435 billion bushels last year.
Thus grain prices came charging back from the lows set in July.
Particularly, September corn contract extended the bounce by double digits on Friday gaining 1.71%.
Soybeans rallied into the weekend with 3.4% gains.
Soymeal was the strongest of the complex gaining 4.39%.
Bean oil prices were 2.5% higher on the day.
The wheat complex also rallied double digits on Friday.
Particularly, Chicago wheat price went home with 1.95% gains.
Kansas City wheat prices closed 1.64% stronger on Friday.
Minneapolis spring wheat prices closed with 1.33% gains.
For the week, corn prices posted the highest close in nearly 2 months, as September was up 6.84%.
New crop December was 6.58% higher since last Friday.
Soybeans rallied too this week, recovering more than prior week’s losses.
September contract, indeed, closed the week up 7.82%, posting contracts highs.
New crop November was up 4.08% on the week.
Product values joined the party, with soymeal 6.55% higher and soy oil up 4.30% for the week.
The wheat complex joined the grain rally this week, with all three exchanges showing active front months higher.
Kansas City HRW led the way, up 4.56% for the week.
Chicago SRW was 4.18% higher.
Minneapolis spring wheat saw a 2.26% gain from the previous week.
Going inside the numbers, during the week, corn prices, closed up $0.428 at $6.69/bu.
Soybean prices finished the week $1.165 stronger at 16.05/bu.
Soymeal jumped $29.4/smt, closing at $478.10 smt.
Soy oil, rose $2.92, to close at $70.82.
CBOT soft red winter (SRW) prices lifted $0.315 to close at $7.85/bu.
KCBT hard red winter (HRW) prices was $0.385 firmer, ending at $8.83/bu.
MGE hard red spring (HRS) prices gained $0.198 to close at $8.95/bu.
Meantime, heavy rainfall this week significantly improved conditions in Texas.
Parts of north central Texas had not recorded any measurable precipitation in over two months, the second longest dry stretch dating back to 1898.
However, this week’s rain event tied for the second highest rainfall in 24 hours, 9.19 inches.
The rain was so heavy that it took down data communications, leaving the weather service unable to update the drought monitor for that region fully.
In the High Plains, warm and dry conditions remained, leading to some expansion of moderate drought.
Persistent warm and dry weather in Idaho and Montana increased abnormal dryness in those areas.
Dry weather is benefiting harvest progress in Washington and Oregon.
Rainy weather is likely across most of the Corn Belt between today and Tuesday – particularly in Iowa, where large parts of the state could gather 1.5” or more during this time, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts a return to seasonally dry conditions for the northern third of the country between September 2 and September 8, with warmer-than-normal conditions spreading across the Plains, western Corn Belt and upper Midwest.
In this context, corn basis bids moved 10 cents higher at an Illinois processor and firmed 3 cents at an Illinois river terminal while holding steady elsewhere across the central U.S., on Friday.
Soybean basis bids sank 15 cents lower at an Ohio elevator and firmed 3 cents higher at an Illinois river terminal while holding steady elsewhere across the central U.S..
As for wheat, basis was mixed this week.
In the Gulf basis was down while in the Pacific Northwest (PNW) basis was down for HRS but up for HRW and soft white wheat.
The wheat market followed bullish corn and soybean production news putting U.S. wheat at a price disadvantage slowing export sales.
Harvest pace is tightening storage space as wheat bins fill, decreasing storage space and consequently pushing up elevation costs further out.
Meantime, as of Aug 25, 2022, FOB prices saw US wheat No 2 Hard Red Winter (HRW) valued at $387/mt (up $24/mt from last week).
US wheat No 2 Soft Red Winter (SRW) was at $338/mt (up $20/mt from last week).
Northern Durum offers from the Great Lakes for September 2022 delivery was quoted at $11.43 14.15/bu, down $2.72/bu week on week ($420.00/MT – $100/MT w.o.w.).
As for corn, US corn 3YC (Gulf) was at $313/mt (up $15/mt from last week).
As for soybean, US soybean 2Y (Gulf) quoted at $644/mt (up $27/mt from last week).
The weekly Ag Energy Roundup report from USDA had the week’s cash ethanol markets range $2.38 to $2.65/gal regionally.
Prices were generally 12 to 20c/gal higher wk/wk.
Corn oil cash markets were within 5 cents/lb of last week, though mostly higher and averaged 72.43 to 77 c/lb regionally.
The B100 cash price for the week was unchanged in Iowa/Minnesota to $6.56 and unq in IL/IN/OH.
Meantime, Friday’s CFTC Commitment of Traders report revealed that managed money spec funds added 28,376 contracts to their net long position during the week that ended August 23.
That came mostly via short covering, with an extra 7.9k new longs added.
That put them net long 182,216 contracts as of Tuesday.
That was their largest net long since June 28.
Commercial traders reduced their end user long hedges by 19.6k contracts while they buffed their short by 25.2k contracts.
That extended their net short by nearly 44.8k contracts to 428,404 contracts.
As for soybean, the CFTC update had spec funds 104,471contracts net long in soybeans as of August 23.
That was up 5,135 contracts from the previous week.
Commercial bean traders added hedges through the week, with a 19.5k OI increase and a 8,540 contract stronger net short to 145.9k contracts.
The CoT report showed managed money firms were 9,454 contracts more net long in meal to 95,718 contracts.
In bean oil, spec traders were 8,973 contracts more net long to 42,208 contracts
As for wheat, CFTC Commitment of Traders data showed money managers in CBT wheat futures and options adding another 7,962 contracts to their net short position in the week ending 8/23.
The group was 26,069 contracts net short SRW as of 8/23.
In KC wheat they added 1,905 contracts to their net long position, bumping it up to 9,425 contracts by Tuesday.
That ended a 13-week streak of reductions in long exposure.
Spec funds were shown adding HRS shorts through the week for a 707 contract stronger net short of 1,464 contracts.
As a reminder, after USDA’s FAS division worked for months to role out a new weekly Export Sales reporting system, the actual rollout on August 25 was a disaster, with numbers that were clearly wrong.
Thus, the report was retracted, leaving us with no sales numbers for the week ending August 18 until further notice.
In energy markets, oil prices ended higher on Friday.
The United Arab Emirates became the latest OPEC+ member to state it is aligned with Saudi Arabia which flagged the possibility of production cuts to offset the return of Iranian barrels to oil markets should Tehran clinch a nuclear deal with the West.
However, trading was volatile as oil prices briefly fell after Fed Chair Jerome Powell said tight monetary policy may be in store “for some time” to fight inflation.
Meantime, investors digested and ultimately shrugged off warnings from the head of the U.S. Federal Reserve about economic pain ahead.
The oil drilling rig count in US, an indication of future production, rose by 4 to 605 in the week to Aug. 26.
Meanwhile, money managers raised their net long U.S. crude futures and options positions in the week to Aug. 23 by 24,215 contracts to 179,039, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
In this context, Brent crude futures rose $1.65 to settle at $100.99 a barrel.
U.S. West Texas Intermediate (WTI) crude futures rose 54 cents to settle at $93.06 a barrel.
Both contracts rose and fell by $1 throughout the session.
Overall, Brent gained 4.4% for the week, while WTI was set to rise 2.5%.
In freight markets, the Baltic Dry index, which measures the cost of shipping goods worldwide fell 41 points, or 3.7% to an over two-year low of 1,082 points on Friday, extending losses for the third straight session.
For the week, the Baltic Dry index slumped by 15.4%, the sixth consecutive decline, amid continued weakness in all its vessels segments.
Particularly, the capesize index, which tracks iron ore and coal cargos of 150,000 tonnes, slumped by 13.3% to an over two-year low of 411 points.
The Capesize market is going through a rough period as trading pushed valuations into untenable sub-operating expense territory over the week.
The Capesize 5TC dropped -$2,854 week on week to finish at $3,413.
With rates so low and the outlook remaining poor, there is some speculation as to how far the sector will, and can, go.
The Atlantic Basin has fallen dramatically from grace as the transatlantic C8 hovered at $3,111 as scrubber-fitted vessels were heard to be particularly aggressive in the region on the little cargo availability.
In the Pacific, the West Australia to China C5 settled at $7.625 to end the week as iron ore demand from China continued to ebb.
It remains to be seen what the upcoming week holds in store for the sector.
As for the panamax index, which tracks about 60,000 to 70,000 tonnes of coal and grains cargoes, continued its month-long decline, falling 3.7% to 1,372 points.
The North Atlantic made a large correction over the week, with limited enquiry said to be an ongoing issue.
A 82,000-dwt was fixed from Las Palmas via North Coast South America to Singapore-Japan at around $19,000. A 80,000-dwt, meanwhile, was rumoured to have been fixed for a trip from Gibraltar via North Coast South America to the Continent at around $8,000.
East Coast South America also lacked impetus.
A 84,000-dwt fixing for early September delivery for a trip to Singapore-Japan at $16,400, plus a ballast bonus of $640,000.
A 82,000-dwt was fixed from Paranagua for a transatlantic run at $20,000.
The Pacific also weakened.
A 82,000-dwt fixed from Ulsan for a North Pacific round at $16,000, whilst a 77,000-dwt open in Nantong also fixed a similar trip at $11,000.
There was limited fresh enquiry further south.
A 75,000-dwt fixing delivery Basuo via Indonesia redelivery North China at $18,000.
As for the supramax index, it fell for the second day on Friday, shedding 19 points to 1,744 points.
It was mixed fortunes for the sector over the week.
The general tone from the Atlantic remained slow, but the Asian arena did make gains in the first part of the week.
However, as the week closed some felt the positive undertones were lacking.
Period activity was seen and a 58,000-dwt open Japan fixing 11/13 months trading redelivery worldwide at $18,000.
From the Atlantic, it was limited activity from East Coast South America. However, a 55,000-dwt fixed delivery Nouakchott trip via Santos redelivery Algeria at $20,500.
Elsewhere, rates struggled.
A 55,000-dwt fixing a scrap run from the Continent to the East Mediterranean at $16,000.
Asia remained relatively active in the south.
A 64,000-dwt fixed delivery Gresik for a trip via Kalimantan redelivery WC India at $28,000.
Demand was patchy further north.
A 56,000-dwt fixed delivery Kunsan trip redelivery Mediterranean at $19,500.
For transpacific business a 61,000-dwt fixed delivery Japan via North Pacific redelivery South East Asia at $21,850.
In equity markets, Wall Street ended Friday with all three benchmarks more than 3% lower.
The U.S. economy will need tight monetary policy “for some time” before inflation is under control, Powell said on Friday.
That means slower growth, a weaker job market and “some pain” for households and businesses, he added.
He was speaking at an annual economic symposium in Jackson Hole, Wyoming, which has been the setting for market-moving Fed speeches in the past.
That has nixed nascent hopes for a more modest path among some investors, thus the S&P 500 lost 141.46 points, or 3.37%, to end at 4,057.66 points, while the Nasdaq Composite lost 497.56 points, or 3.94%, to 12,141.71.
The Dow Jones Industrial Average fell 1,008.38 points, or 3.03%, to 32,283.40.
The Russell 2000 index of smaller companies fell 64.81 points, or 3.3%, to finish at 1,899.83.
High-growth and technology stocks were the most hammered.
Nvidia Corp and Amazon.com Inc fell 9.2% and 4.8%, respectively.
Google-parent Alphabet Inc, Meta Platforms Inc , and Block Inc also dipped between 4.1% and 7.7%.
Dell Technologies Inc fell 13.5%.
Affirm Holdings Inc tumbled 21.3%.
Friday’s falls wiped out the modest August gains which all three benchmarks had previously carved out, and sent the trio to their second straight week of declines, as the Nasdaq slid 4.4% for the week, the Dow lost 4.2%, and the S&P 500 fell 4% from previus week.
Following the reports and Powell’s comments, the two-year Treasury yield rose for much of the day, but slipped by late afternoon to 3.36% from 3.37% late Thursday.
It tends to track expectations for Fed action.
The 10-year Treasury yield, which follows expectations for longer-term economic growth and inflation, initially rose then slipped to 3.02% from 3.03% late Thursday.
In currency trading, the dollar index on Friday rose by +0.30% to 108.760, shooking off early losses and moving higher on hawkish comments from Fed Chair Powell.
However, gains in the dollar Friday were limited by mixed U.S. economic news and by the selloff in stocks which boosted the liquidity demand for the dollar.
Particularly, the University of Michigan Aug consumer sentiment, indeed, was revised upward by +3.1 to 58.2, stronger than expectations of 55.5.
Conversely, July personal spending rose +0.1% m/m, weaker than expectations of +0.5% m/m.
Also, July personal income rose +0.2% m/m, weaker than expectations of +0.6% m/m.
In this context, the EUR/USD on Friday fell by -0.10% to 0.9964, erasing an early rally.
Concern that soaring energy prices will push the Eurozone economy into recession has been bearish.
European nat-gas prices jumped more than +6% Friday to a new 5-1/2 month high, which pushed German electricity prices for next year to a record 995 euros a megawatt-hour and French electricity prices to a record 1,130 euros a megawatt-hour.
EUR/USD Friday initially moved higher after that some ECB officials said they want to discuss a 75 bp rate hike at next month’s policy meeting due to rising inflation.
The USD/JPY, meantime, rose by +0.76% to 137.54.
From Canada, Agriculture and Agri-Food Canada (AAFC) this week said crop yields were higher than expected, leading it to revise upwards its August projections.
AAFC’s supply and demand estimates for August were released on Aug. 22, in advance of the first official Statistics Canada production estimates as well as Statistics Canada’s July 31 stocks estimate.
Season 2022/23 all wheat production was raised by 0.8Mt, to 34.5Mt (21.7Mt previous year) and exports were increased by 0.6Mt, to 23.0Mt (15.0Mt).
The largest production revision was seen in estimates for durum, with the production estimate revised 786,000 metric tons higher to 6.265 million metric tons, while ending stocks were revised 200,000 mt higher to 900,000 mt.
AAFC increased its estimated durum yield from 34.2 bushels per acre to 39 bpa.
This yield is well-above the 18.3 bpa average estimated for 2021, while the 2016-20 average, which excludes the drought-reduced yield from 2021, is 40.3 bpa.
Note that this yield estimate is despite the Aug. 9 crop condition for Alberta at 46.2%
Good to Excellent, while the Saskatchewan Crop Report as of August 15 describes the Southwest Region and the West-Central Region facing the potential for below to well-below average yields for crops in general.
Estimated durum production of 6.265 mmt would be 136% higher than realized in 2021.
Another interesting adjustment was made for 2021-22 durum, resulting in a modest 46,000 mt increase in ending stocks to 496,000 mt.
An adjustment was required as the week 52 commercial stocks are reported at a level which is close to AAFC’s July estimate for total stocks.
At the same time, this revision was made possible by a downward revision of the feed, waste and dockage estimate to a negative 97,000 mt, which stands out on the report as one of three revisions into negative territory, which also saw domestic use of both 2021-22 mustard and canary seed revised lower and to a negative volume.
Similar increases were seen in yield estimates for both barley and oats, with the barley yield estimate increased to 67.3 bpa (69.8 bpa) and the oat yield increased to 91.8 bpa (92.2 bpa), with the 2016-20 five-year average in brackets.
Estimated barley production would be up 35.3% from 2021, while oat production would by 76% higher.
Barley production forecast, indeed, was raised by 0.3Mt, to 9.4Mt (7.0Mt) and exports seen 0.4Mt higher, at 3.5Mt (2.6Mt).
Agriculture and Agri-Food Canada this week estimated 2022-23 canola output at 18.4 million tonnes.
Another interesting adjustment this month is a 2 mmt increase in estimated corn imports to 6.4 mmt.
As of June’s official Statistics Canada merchandise trade data, corn imports totaled 5.387 mmt, with 531,677 mt imported in the month of June.
This pace of movement has been evident in official data, yet the revision to the supply and demand tables was slow to appear.
StatsCan estimates will out on Monday.
Meantime, Canada exported 129.6k mt in week 3 of the shipping season, down from 298.4k mt in the second week.
Durum wheat exports were at 40.3k mt vs 58.8k mt a week earlier.
In this context, as of August 22, 2022, Canadian wheat prices for FOB delivery West Coast were (Cdn$/mt):
– for the N1 class CWRS 13.5% – $465.08 per tonne, down C$8.82/t from prior week;
– for the N2 class CWRS 13.0% – $459.17/t, down C$8.93 wow;
– for the N3 CWRS – $470.84/t, down C$4.96 from prior week.
As of August 22, 2022, for the N1 CWAD 13% (durum wheat first class) average street price were at C$422.56, shedding by C$11.39 week on week.
Export basis West Coast & Central SK, however, sharply increased from C$ 236.62 to 255.89 a tonne.
Thus, delivered FOB price Great Lakes was posted at C$678.45.
That was up C$7.88 from prior week.
The weekly European Commission report was not published this week.
It will out on Sep 01.
Meantime, per latest data from , as of August 17, 2022, Durum wheat – CA St Lawrence (CWAD) was offerd at C$597.68/t.
As of August 26, 2022, for the N1 CWAD 13% (durum wheat first class), average street price in REGIONAL ZONES were at C$410.39 421.69 per tonne, down C$12.3 from prior week.
(1USD=Cnd$1.3034, up from 1.2993 a week earlier).
From South America, in Argentina the Buenos Aires Cereal Exchange (BdeC) reported 79.9% of Argentina’s wheat crop in “normal-to-good condition” on Thursday.
Harvest will begin in November, said the exchange.
The BdeC reported 6.1 million hectares (15.1 million acres) planted with wheat in 2022/23, less than the 6.7 million hectares (16.5 million acres) planted last season.
In terms of corn production, the exchange said harvesting had now ended for the outgoing 2021/22 season, with a final production of 52 million tonnes worth of corn.
In sunflower production, the exchange said Argentine producers had planted 15% of the 2 million hectares planned for the 2022/23 cycle, up from the 1.7 million seen in the previous season.
“Improvements in the condition of the crop were observed in those sectors affected by the rains during the past weeks,” said BdeC, noting however that dry conditions and frost are still concerns, especially in the northern part of the country.
In Brazil, Conab is very optimistic about Brazil’s soybean production at the start of 2023, integrating an increase in surface areas of +3.54% and an increase in yields, leading to a first production estimate of 150.36 million tonnes, which would be a record.
Climatic conditions are currently favorable for future sowing.
Brazil could also reap a large corn crop this coming season, with Conab projecting a total of 125.51 MMT.
AgroConsult estimates Brazillian 2022/23 grain and oilseeds production at 300.0Mt (271.4Mt government estimate for previous year) with area seen expanding by 2.5Mha, mainly linked to larger projected soybean sowings.
Meantime, Brazil’s Anec estimates that the country’s corn exports will exceed 7.5 MMT in August.
That’s 7.3% below the association’s prior projection made a week ago.
Brazil’s Anec expects the country’s soybean exports in August will reach 5.5 MMT, which is moderately below its prior projection made a week ago.
Conab estimates that the greater soybean availability will lead Brazil to export an estimated 92 million tonnes.
If confirmed, this would represent an increase of 22.2% compared to soy exports during the 2021/2022 harvest, and record exports for the crop, Conab said.
Anec also estimates that Brazilian soymeal exports will reach 1.9 million metric tons this month.
On the other hand, a Brazilian flour milling association, Abitrigo, estimates that the country’s wheat production could reach 10 MMT, which is noticeably above governmental estimates of 9 MMT.
Brazil is currently a net importer of wheat, but Abitrigo expects improvements to planted area and yield potential will allow self-sufficiency within five years.
In this context, as of August 25, 2022 – Argentina Wheat Grade 2 export price, (Up River) was at $408, ubchanged from prior week.
Argentina corn feed was up $3/t for the week, closing at $284.
Brazilian corn feed (Paranagua) was valued at $294, up $3 from prior week.
Argentina feed barley, was down $15/t for the week to $330.
Argentina soybean was up $17 at $613.
Brazilian soybean gained $17 finishing the week at $631.
In Europe, the European Commission on Thursday cut its monthly forecast for European Union corn production by 10% bringing it to 59.3 MMT.
If realized, this would be the smallest European Union (E.U.) maize harvest in seven years.
However, the EU’s executive also revised up its estimate of this year’s EU soft wheat crop by over 2 million tonnes.
They indeed raised their forecast for common wheat (soft wheat) this week from 123.9 MMT to 126.0 MMT.
The Commission did not change its forecast for soft wheat exports, estimated at 36.0 MMT in 2022/23.
The Commission gave no reason for the increased wheat forecast, but news from Germany, are talking about the wheat harvest has been better than expected, with the winter wheat crop estimated up 4.6% on 2021 to just over 22 million tonnes, the agriculture ministry said on Friday.
On the quality side, FranceAgriMer said that soft wheat (non-durum) protein levels would be lower year-over-year.
The agency said that nearly complete quality results showed 27% of French soft wheat (non-durum) below 11% protein on a dry moisture basis.
FranceAgriMer said that in 2021/22, only 5% of wheat harvested was below 11% on a dry moisture basis.
The agency noted that 31% of wheat harvested fell between the 11-11.5% protein range, while 23% of the crop ranged between 11.5-12% protein and 19% was above 12% protein.
In this context, all three markets on Euronext turned higher on Friday, although in choppy trading session.
Dealers, indeed, reacted to exchange rate moves and assessed northern hemisphere crop prospects and export competition.
A sharp rise in the euro against the dollar had weighed on Euronext, before the euro pared gains in volatile trading marked by comments from the U.S. Federal Reserve’s chief.
Dealers said technical adjustments linked to the upcoming expiry of September futures, as well as demand from consumers taking advantage of the earlier fall, had helped Euronext to firm.
European weather forecasts showing more showers in the week ahead also eased concerns about upcoming planting.
Thus, September wheat price, on Euronext closed the week at €330.25 per tonne, up €15.25/t from past week.
December contract closed the week at 319.25 euros a tonne.
November corn price, was €5.25/t firmer for the week, closing at 316 euros per ton.
Rapeseed Nov contract closed at €629.25/t, up €18.75/t for the week.
Nov-22 UK wheat feed contract, closed at £262.5/t, up £5.25/t week on week.
Meantime, as of August 25, 2022, FOB prices in US dollar for French wheat with 11.5% protein and Oct delivery, were at $329/mt, up $6 from prior week.
The weekly European Commission report was not published this week.
It will out on Sep 01.
Meanwhile, in Germany, sellers of standard 12% protein wheat for September delivery in Hamburg were offering an unchanged 20 euros a tonne over the Euronext December contract, with buyers seeking about 18 euros over.
German wheat, Deposilo Hamburg, past week was valued at $355.20/t.
Baltic wheat, delivery first Vilnius, was quoted $324.10.
Spanish durum wheat Sevilla (Depo Silo), was valued past week at $491.66 per tonne.
French durum wheat – delivered La Pallice Spot – July 2022 basis, this week was valued at $438.42/mt, down $3.84 from prior week.
Italian durum wheat Bologna (Delivered to first customer), was valued $492.22/t; past week not quoted.
Corn, delivered Bordeaux Spot – July 2022 basis, was at $327.82 per tonne, down $2.3/t from past week.
Corn FOB Rhin Spot – July 2022 basis, was up $2.84 to $308.88/t.
Feed barley delivered Rouen was at 283.97$/t, up $11.05 per tonne.
Malting barley FOB Creil Spot – July 2022 basis was at $343.76 per tonne, up $1.6/t from prior week.
Rapessed FOB Moselle – 2022 harvest was at 621.75$/ton, up $15.70 compared to prior week.
Standard sunseed FOB Bordeaux – 2022 harvest was up 4.86$ from prior week at $737.34 per tonne
(Eur/USD = 0.9964 vs last week 1.0034).
From the Black Sea basin, “cheap sales offers of wheat from Ukraine and Russia are continuing to gain market attention” a German trader said.
Larger volumes are being offered each day for shipment through the (Ukraine) corridor ports.
Ukraine has now exported one million tonnes of agricultural products from its Black Sea ports under the terms of the grain deal, Ukrainian President Volodymyr Zelenskiy said on Friday.
Zelenskiy also said 44 ships had been sent to 15 nations.
A further 70 applications for ships to be loaded had been received, he added, reiterating that Kyiv’s goal was to export three million tonnes a month.
Ukraine’s total grain exports for the 2022/23 harvest stood at 3.41 million tonnes on Aug. 26, just under half of the volume at the same time of last year’s harvest, according to data from Ukraine’s agriculture ministry.
According to the agriculture ministry, 2.18 million tonnes of corn and 937,000 tonnes of wheat have been exported this harvest season.
In Russia, analysts at Rusagrotrans estimate a decline in wheat exports (including EAEU countries) in July-August by 25%, to 5.7 million tons compared to last year.
The Russian Union of Grain Exporters, on its part, anticipates the country’s July-August wheat sales will slump as much as 20% lower from year-ago totals.
The union cites “invisible barriers” and other logistical challenges, despite the lack of sanctions following the Russian invasion of Ukraine.
On this wake, from August 31, the export duty on wheat from the Russian Federation will decrease by 14.45%, according the Ministry of Agriculture.
Particularly, the export duty on wheat will decrease to 4,053.8 from 4,794.7 rubles per ton a week earlier.
The duty on barley also will decrease to 2,729.3 rubles from 3,092.1 rubles per ton.
Ditto for corn – down to 3,569.9 rubles from 3,852.4 rubles a week earlier.
This new duty rates will be in effect through September 6, inclusive.
The duties were calculated based on indicative prices: $348 per ton for wheat ($358.1 a week earlier), $297.5 for barley ($299.8), $317.6 for corn ($317.6).
Since September 1, 2022, the export duty on sunflower oil in Russia will be decreased from 15,987 RUR/t acting in August to 8,621 RUR/t, Ministry of Agriculture of Russia informs.
Also, the export duty on sunflower meal will be decreased from 2,265 RUR/t to 1,579 RUR/t.
The indicative prices serving as a base for duties calculations are 1,583 USD/t for sunflower oil and 269 USD/t for sunflower meal.
It is noted that since July 6, duties on grain have been calculated in rubles, not dollars.
Export prices for Russian wheat with 12.5% protein for delivery in September continued to fall – by $18 per week, to $310-315 per ton FOB, and the decline over the last month was about 13%.
Prices for wheat 11.5% are $25 per ton lower.
Prices for wheat (grade 4, 12.5% protein) in deep-water ports fell by 850 rubles, to 13,000-13,500 rubles per ton without VAT, against 17,000 rubles a year ago.
Purchase prices for low water decreased by 700 rubles, to 12,500 rubles per ton without VAT, last year – 16,200 rubles per ton.
At the same time, the estimated price of CPT Novorossiysk at current FOB levels, USD/RUB rate (59.9) and the current duty of 4.8 thousand rubles per ton is about 12,400 rubles per ton.
In the Southern part of Russia, EXW prices for grade 4 wheat (12.5% protein) dropped by 800 rubles, to 11,300–11,600 rubles per ton without VAT.
In the Central part of Russia, prices remained unchanged at 10,800-11,400 rubles per ton without VAT, in the Volga region (Volgograd and Saratov regions) – 11,200-11,600 rubles per ton.
At the same time, feed wheat is actively becoming cheaper, having reached the levels of spring 2018 against the backdrop of a high share in the crop.
The price of feed wheat in the Center is about 7,800–8,000 rubles without VAT, in the Volga region – 6,300–7,000 rubles.
In Siberia, the indicative average price for wheat of 12.5% based on EXW elevator remained about 11,300–11,500 rubles without VAT.
The market remains inactive, there is no mass arrival of a new crop yet.
Overall grain production may reach 145 mln tonnes in Russia in 2022 that will allow exporting 55-56 mln tonnes, general director of Prozerno Vladimir Petrichenko said on August 26.
“Wheat export may reach 44 mln tonnes. Carry-over stocks may increase from 14-15 mln tonnes to 19.5 mln tonnes”, – he said.
V. Petrichenko added that the domestic consumption of grain will raise this season amid higher demand from livestock sector.
He estimates growth of livestock grain consumption at 1.5 mln tonnes to 45.5 mln tonnes.
From the Middle Kingdom, as China’s record heatwave starts to subside, farmers are assessing the damage caused by a prolonged drought.
China’s water ministry said on August 11 that the drought had already affected nearly 33 million mu (22,000 square kilometers) of arable land and 350,000 livestock, but the final impact is likely to be far bigger.
Meantime, the government is urging farmers to replant or switch crops where they can.
The agriculture ministry, indeed, in an emergency notice on Tuesday called on farmers to harvest and store rice and take action to strengthen grain growth in coming weeks, encouraging to switch to late-autumn crops like sweet potatoes.
Meantime, China again plans to auction off another 500.000t of its imported soybean reserves on September 2.
China has offered similarly sized auctions regularly throughout 2022 to boost local supplies and cool high prices.
From South East Asia, Indian cooperative Krishak Bharati Cooperative has signed a long-term deal to import one million tonnes of phosphatic fertilisers from Saudi Arabia, Indian fertilisers minister Mansukh Mandaviya tweeted on Thursday.
KRIBHCO will invest in the new phosphate project of Saudi miner, Ma’aden, Mandaviya said.
India is signing long-term fertiliser import deals to hedge against international price volatilities.
Meantime, India’s cabinet on Thursday approved a policy to restrict wheat flour exports to calm prices in the local market, the government said in a statement.
In July India asked traders to secure permission before exporting wheat flour.
The ban on wheat exports boosted demand for Indian wheat flour and the country’s flour exports jumped 200% during April-July 2022 from a year ago and lifted prices in the local market, the government said.
Local wheat prices jumped to a record 24,500 rupees ($306.71) per tonne this week.
($1 = 79.8800 Indian rupees)
From Australia, markets for feed wheat, barley and sorghum have softened this week to prices that most growers are not prepared to take, while consumers have ratcheted back their buying in the hope of further falls.
Overshadowing the market is the groaning supply chain, particularly into Brisbane, Newcastle and Port Kembla, which is redirecting some tonnages, bought with export in mind, into the domestic market.
In this context, indicative delivered prices in Australian dollars per tonne for old crops past week were:
Barley Downs: $380, down $5 from Aug 18;
SFW wheat Downs: $395, down $5 from Aug 18;
Sorghum Downs: $345, down $5 from Aug 18;
Barley Melbourne: $360, down $8 from Aug 18;
ASW wheat Melbourne: $400, down $20 from Aug 18.
SFW wheat Melbourne: $380, down $20 from Aug 18.
Growers continued offering new crops.
Particularly, past week prompts were:
Barley Downs: $350, down $25 from Aug 18;
SFW wheat Downs: $385, down $13 from Aug 18;
Sorghum Downs: $330, down $2 from Aug 18;
Barley Melbourne: $363, down $2 from Aug 18;
ASW wheat Melbourne: $405 down $7 from Aug 18;
SFW wheat Melbourne: nq.
(AUD/USD=> US$0.6891 vs. US$0.6872 prior week).
Watching next week’s market, grain traders will begin Monday reacting to any surprise futures positions inherited at September options expiration on Friday.
Sunday night action will also reflect crop tour yield projections released on Friday afternoon.
The Monday afternoon Export Inspections report should be “per usual” and the Crop Progress data will be updated later overnaight after the sessions close.
On Wednesday EIA will release ethanol numbers for stocks and production.
Wednesday is also the first notice day for September grain futures and the last trading day for August live cattle futures.
On Thursday, September 1, FAS is scheduled to release the weekly Export Sales (we hope).
We also receive the monthly Fats & Oils, Grain Crushing, and Cotton Systems report from NASS that night.
Friday is the last day for serial September live cattle options.
That’s all, thank you.
We wish you a good weekend.
Author: Sandro F. Puglisi
