Good afternoon Farmer Family …
US farm markets rebounded on Friday.
Corn prices rose 1.18%.
Soybean prices earned 1.85%.
Soymeal closed 0.33% higher.
Bean oil prices ended the last trade day of the week with +4.09% gains.
Wheat prices mostly saw double-digit gains, in December contracts.
Particularly, Chicago SRW wheat prices rose 2.11%.
Kansas City HRW prices added 1.12%, and Minneapolis spring wheat prices picked up 0.39%.
Broader markets have drived commodity ags higher.
A weakening U.S. Dollar, after Friday’s data showed the U.S. labor market was starting to loosen, lent some support, leding up crude oil and other commodities as fears waned about aggressive interest rate hikes from the Federal Reserve.
Meantime, operators squarred their positions ahead of a three-day weekend.
US markets, indeed, will stay closed on monmday, in observance of the Labor Day holiday.
Also, traders started to adjust positions ahead of the USDA’s monthly WASDE reports on Sept. 12.
In this context, for the week, corn prices slipped Tuesday through Thursday, but Monday’s and Friday’s gains helped new crop December to bump 0.21% on the week.
Soybeans were sent into a tailspin this week, despite the strong Friday session, as November closed 2.79% lower on the week.
Oct meal was a weak spot in the product values down 2.33%, while soy oil was just up 0.03% for the week.
Chicago SRW wheat prices in Dec contracts, had a big rally on Monday and nasty sell off on Thursday but were up 0.72%% net for the week.
Kansas City HRW wheat wasn’t as well balanced, losing 0.52% on the week.
Minneapolis spring wheat saw a 2.13% net decline.
Going inside the numbers, during the week, corn prices closed up $0.014 at $6.66/bu.
Soybean prices finished the week $0.408 weaker at 14.02/bu.
Soymeal fell $10.1/smt, closing at $424 smt.
Soy oil, lifted $0.02, to close at $67.94.
CBOT soft red winter (SRW) prices lifted $0.058 to close at $8.11/bu.
KCBT hard red winter (HRW) prices shedded $0.046, ending at $8.78/bu.
MGE hard red spring (HRS) prices fell $0.194 to close at $8.90/bu.
Friday’s CFTC Commitment of Traders report revealed that managed money spec funds corn traders were buying corn through the week that ended August 30.
Particularly, they added 30.4k contracts on top of 8.8k fewer shorts for a 39,251 contract stronger net long position of 221,467 contracts.
That was their largest net long since June 28.
Commercials were lifting hedges through the week, with a net 46,200 fewer open contracts as of 8/30.
They closed more longs than shorts and expanded their net short to 449,986 contracts.
As for soybean the report had spec funds 101,801contracts net long in soybeans as of August 30.
That was down 2,670 contracts from the previous week.
Commercial soybean traders were adding long hedges and reduced the group’s net short by 6,641 contracts to 139,295.
In the products, CFTC data had the funds 93,626 contracts net long in meal as of 8/30 and 49,186 contracts net long in bean oil.
For meal that was a weekly decline of 2,092 contracts to their net long, though soy oil specs extended their net long by 6,978 contracts wk/wk.
As for wheat, data showed money managers in CBOT wheat futures and options paring 3,822 contracts from their net short position in the week ending 8/30.
They were net short 22,247 contracts as of Tuesday.
In KC wheat they added 3,033 contracts to their net long position, bumping it up to 12,458 contracts by Tuesday.
Spring wheat spec traders reduced exposure on both sides for a net 23 contract weaker net short of 1,441 contracts.
Meantime, corn basis bids faced a few wild swings on Friday, jumping as much as 60 cents higher at a Nebraska elevator while tumbling as much as 35 cents lower at an Ohio elevator.
Soybean basis bids also showed plenty of volatility after sliding 15 to 85 cents lower at two Midwestern elevators while firming 10 to 60 cents higher at three other Midwestern locations.
As for wheat, this week, basis was mixed in the Gulf and Pacific Northwest (PNW).
In the Gulf, HRS and SRW basis was up while HRW basis was unchanged.
In the PNW, HRS basis was down slightly while HRW and soft white were marginally up.
Durum prices declined significantly in August as good growing conditions and higher yields have lifted analysts’ production expectations.
Dry conditions in the HRW growing areas of the High Plains have encouraged farmers to hold on to wheat with the expectation that prices may rally.
The ocean freight market has softened recently, but a strong U.S. dollar reduced U.S. wheat competitiveness.
The Surface Transportation Board held its annual Grain Car Council meeting this week.
Railroad executives said they are optimistic they can hire enough workers to move trains on time.
The major class I railroads have faced extensive logistical challenges over the last year.
In this context, as of September 01, 2022, FOB price saw US wheat No 2 Hard Red Winter (HRW) valued at $382/mt (down $5/mt from last week).
US wheat No 2 Soft Red Winter (SRW) was valued at $336/mt (down $2/mt from last week).
Northern Durum offers from the Great Lakes for October 2022 delivery was quoted at $11.15/bu, down $0.28/bu week on week ($410.00/MT – $10/MT w.o.w.).
As for corn, US corn 3YC (Gulf) was at $318/mt (up $5/mt from last week).
As for soybean, US soybean 2Y (Gulf) quoted at $618/mt (down $26/mt from last week).
The weekly Ag Energy Roundup report from USDA had the week’s cash ethanol markets range $2.40 to $2.67/gal regionally.
Prices were generally 2c/gal higher wk/wk.
Corn oil cash markets were regionally -1c to +5c/gal compared to last week within 73.75 cents and 77 cents/gal.
DDGS were $5 to $45/ton higher wk/wk regionally to within $230 in WI and IN to $288 in KS. .
USDA reported cash B100 prices were $6.90/gal in IL and $6.83 in MN through the week.
That was a 27c/gal increase for MN.
It should to note, the USDA botched the rollout of their new weekly Export Sales reporting system, so we have no data for the next two weeks.
In energy markets, oil prices rose on Friday on expectations that OPEC+ will discuss output cuts in its meeting on Sept. 5.
Brent crude futures, indeed, rose 66 cents to settle at $93.02 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 26 cents to settle at $86.87 a barrel.
However, concern over China’s COVID-19 curbs and weakness in the global economy loomed over the market.
Data showed Chinese factory activity in August contracted for the first time in three months in the face of weakening demand, while power shortages and COVID-19 outbreaks also disrupted output.
Iran said it had sent a “constructive” response to U.S. proposals aimed at reviving Tehran’s 2015 nuclear deal with world powers, although the United States gave a less positive assessment.
In this context, both benchmarks slid during the week with Brent posted a weekly drop of 7.9%, and WTI of 6.7%.
Meantime, G7 finance ministers agreed on Friday to impose a price cap on Russian oil, but provided just few new details to the plan, keeping Russian crude flowing to avoid price spikes.
U.S. energy firms this week cut by five to 760, the number of oil and natural gas rigs operating for the fourth time in five weeks.
Russia’s Gazprom said on Friday that natural gas supplies via the Nord Stream 1 pipeline would remain shut off after the main gas turbine at Portovaya compressor station near St Petersburg was found to have an oil leak.
Meantime, per latest data from CFTC showed on Friday, money managers cut their net long U.S. crude futures and options positions by 10,607 contracts to 168,431 in the week to Aug. 30.
In ocean freight markets, the Baltic Dry index, advanced 8.4%, to 1,086 points on Friday, the highest since August 25th, extending gains for the second straight session, helped by bigger vessel segments.
The capesize index, which tracks iron ore and coal cargos of 150,000 tonnes, increased for the second day, jumping 56.3% to 733 points; and the panamax index, which tracks about 60,000 to 70,000 tonnes of coal and grains cargoes, rose 3.3% to 1.271 points, on its best day in over a month.
Meanwhile, the supramax index was down for the sixth consecutive session, losing 45 points to 1,514 points.
Consequentially, the Baltic Dry index recorded a weekly gain of 0.4%, after six consecutive declines.
In equity markets, US stocks closed out the trading week on a down note on Friday.
Stocks on Friday were initially buoyed by news that the U.S. Aug unemployment rate rose +0.2 points to 3.7%.
That could give the Fed an opening for a less hawkish approach to monetary policy and allowed U.S. interest rates to drop.
However, the U.S. labor market remains generally strong, with Friday’s +315,000 rise in Aug nonfarm payrolls, stronger than expectations of +298,000, average hourly earnings rose 0.3%.
U.S. July factory orders unexpectedly fell -1.0% m/m, weaker than expectations of a +0.2% m/m increase and the biggest decline in 2-1/4 years.
Stocks were undercut also by disappointment that the Biden administration apparently does not plan to drop tariffs on Chinese goods anytime soon.
Additionally, gains were erased after Gazprom said it could not safely restart deliveries to Europe until it had fixed an oil leak found in a vital turbine and did not give a new time frame.
In this context, the Dow Jones Industrial Average fell 337.98 points, or 1.07%, to 31,318.44; the S&P 500 lost 42.59 points, or 1.07%, to 3,924.26; and the Nasdaq Composite dropped 154.26 points, or 1.31%, to 11,630.86.
All the three main indexes suffered their third straight weekly loss, as the Dow fell 2.99%, the S&P 500 declined 3.29% and the Nasdaq dropped 4.21%.
Energy was the only major S&P sector to end the session in positive territory, up 1.81%.
The focus now shifts to the August consumer price report due mid-month, the last major data available before the Fed’s Sept. 20-21 policy meeting.
In currency trading, the dollar index on Friday fell -0.09% to 109.575 and eased from Thursday’s 20-year high.
However, for the week gained 0.75%.
The EUR/USD rose slightly by +0.11% to 0.9955 on Friday.
European energy crisis concerns eased and gave the euro a boost after European nat-gas prices plunged -11% to a 3-week low.
Eurozone economic news was bearish for EUR/USD.
German July exports fell -2.1% m/m, the biggest decline in 4 months.
Also, German July imports fell -1.5% m/m, the biggest decline in 6 months.
The Eurozone July PPI rose a record +37.9% y/y, stronger than expectations of +37.3% y/y.
The USD/JPY was little changed in the end week session, up 0.01% to 140.21.
The yen recovered from an early 24-year low on jawboning from Japanese Finance Minister Suzuki, who said sudden moves in the yen are not desirable and that the currency market needs to be closely monitored.
In Canada, as of August 29, 2022, Canadian wheat prices for FOB delivery West Coast were (Cdn$/mt):
– for the N1 class CWRS 13.5% – $480.01 per tonne, up C$14.93/t from prior week;
– for the N2 class CWRS 13.0% – $474.12/t, up C$14.95 wow;
– for the N3 CWRS – $470.84/t, up C$20.64 from prior week.
As of August 29, 2022, for the N1 CWAD 13% (durum wheat first class) average street price were at C$413.37, shedding by C$9.19 week on week.
Export basis West Coast & Central SK, was sharply down from C$ 255.89 to 133.09 a tonne.
Thus, delivered FOB price Great Lakes was posted at C$546.46.
That was down C$131.99 from prior week.
However, per latest data from European Commission, as of August 31, 2022, Durum wheat – CA St Lawrence (CWAD) was offerd at C$590.85/t.
Meantime, as of September 2, 2022, for the N1 CWAD 13% (durum wheat first class), average street price in REGIONAL ZONES were at C$395.26 per tonne, down C$15.13 from prior week.
(1USD=Cnd$1.3130, up from 1.3034 a week earlier).
In South America, as of September 01, 2022 – Argentina Wheat Grade 2 export price, (Up River) was at $400, down $8/t from prior week.
Argentina corn feed was up $2/t for the week, closing at $286.
Brazilian corn feed (Paranagua) was valued at $291, down $3 from prior week.
Argentina feed barley, was down $10/t for the week to $320.
Argentina soybean was down $16 at $597.
Brazilian soybean lost $21 finishing the week at $610.
In Europe, September wheat price, on Euronext closed the week at €323.75 per tonne, down €6.5/t from past week.
December contract closed the week at 320 euros a tonne, up €0.75/t for the week.
November corn price, was €0.25/t firmer for the week, closing at 316.25 euros per ton.
Rapeseed Nov contract closed at €612.75/t, down €16.5/t for the week.
Nov-22 UK wheat feed contract, closed at £266/t, up £3.5/t week on week.
Meantime, as of September 01, 2022, FOB prices in US dollar for French wheat with 11.5% protein and Oct delivery, were at $333/mt, up $4 from prior week.
German wheat, Deposilo Hamburg, was valued at $334.49/t, down $13.26 from prior week.
Baltic wheat, delivery first Vilnius, was quoted $306.61, down $5.26 from prior week.
Spanish durum wheat Sevilla (Depo Silo), was valued past week at $497.75 per tonne, up $9.51 from prior week.
French durum wheat – delivered La Pallice Spot – July 2022 basis, this week was valued at $428.07/mt, down $10.36 from prior week.
Italian durum wheat Bologna (Delivered to first customer), was valued $482.32/t, down $9.9 from prior week.
Corn, delivered Bordeaux Spot – July 2022 basis, was at $331.5 per tonne, up $3.68/t from past week.
Corn FOB Rhin Spot – July 2022 basis, was up $10.68 to $319.55/t.
Feed barley delivered Rouen was at 287.70$/t, up $3.73 per tonne.
Malting barley FOB Creil Spot – July 2022 basis was at $348.43 per tonne, up $4.67/t from prior week.
Rapessed FOB Moselle – 2022 harvest was at 602.28$/ton, down $19.47 compared to prior week.
Standard sunseed FOB Bordeaux – 2022 harvest was down 0.67$ from prior week at $736.67 per tonne
(Eur/USD = 0.9955 vs last week 0.9964).
In Russia, the export duty on wheat from the Russian Federation will decrease once again by 16.9%, according the Ministry of Agriculture.
Particularly, the export duty on wheat will decrease to 3,368.9 from 4,053.8 rubles per ton a week earlier.
The duty on barley also will decrease to 2,699.2 rubles from 2,729.3 rubles per ton.
As for corn – it will up to 3,663.7 rubles from 3,569.9 rubles a week earlier.
This new duty rates will be in effect through September 13, inclusive.
The duties were calculated based on indicative prices: $329.3 per ton for wheat ($348 a week earlier), $294.7 for barley ($297.5), $317.6 for corn ($317.6).
In Australia, indicative delivered prices in Australian dollars per tonne for old crops past week were:
Barley Downs: $372, down $8 from Aug 25;
SFW wheat Downs: $390, down $5 from Aug 25;
Sorghum Downs: $355, up $10 from Aug 25;
Barley Melbourne: $365, up $5 from Aug 25;
ASW wheat Melbourne: $405, up $5 from Aug 25.
SFW wheat Melbourne: $395, up $15 from Aug 25.
Growers continued offering new crops.
Particularly, past week prompts were:
Barley Downs: $360, up $10 from Aug 25;
SFW wheat Downs: $375, down $10 from Aug 25;
Sorghum Downs: $340, up $10 from Aug 25;
Barley Melbourne: $365, up $2 from Aug 25;
ASW wheat Melbourne: $400 down $5 from Aug 25;
SFW wheat Melbourne: $370, as at Aug 25 was nq.
(AUD/USD=> US$0.6813 vs. US$0.6891 prior week).
Main News of the Week
In Canada, Statistics Canada said this week that total Canadian wheat production would increase 55% this season to 34.6 MMT, the third largest harvest since 1908.
Meantime, Saskatchewan’s wheat harvest was 23% complete at 8/29 – compared to 26% on average.
In South America, Brazilian export data showed 7.554 MMT of corn was shipped during August, compared to 4.336 MMT during August ’21.
Brazilian data showed 6.16 MMT of beans were shipped in August. That was down from 6.48 MMT during the same month last year.
Brazilian mills have limited imports of wheat due to rising prices and the impact of domestic inflation on consumption, which affected demand for pasta, cookies and bread, industry representatives and analysts said on Friday.
Wheat imports through July reached the lowest levels since 2017, totaling about 3.7 million tonnes, according to government data.
In August, the downward trend continued, as imports fell 9.7% compared to the same month last year, to 536,600 tonnes.
The average price of the imported tonne shot up to $441 last month from $276.3 in August of last year, according trade data.
Brazilian wheat production could reach a new record of almost 10 million tonnes in 2022 after a historical high of 7.6 million tonnes in 2021.
The country should end the year with about 3 million tonnes exported and domestic demand of 12 million, meaning it will continue to be net importer for some time.
Imported wheat is currently cheaper than domestic wheat.
BAGE reported that 23.7% of Argentina’s wheat area is facing poor conditions and will have below trend yields.
In Europe, French weekly corn crop ratings declined, reflecting the impact of dry and hot summer weather. Farm office FranceAgriMer rated 45% of French maize in good or excellent condition by Aug. 29, down from 47% the previous week and the lowest rating in more than 10 years.
From North Africa, Egypt’s state grains buyer, the General Authority for Supply Commodities, is believed to have bought 120,000 tonnes of Russian wheat via direct talks with suppliers.
The cargoes are believed to have been sold by trading company Solaris at a price of $340 per tonne on a cost and freight basis.
Egypt, since mid-July, opted to buy around 1.5 million tonnes of wheat through private direct talks with global companies.
From the Black Sea basin, Ukraine’s agriculture minister said agricultural exports could be between 6 and 6.5 MMT in October, doubling the export
volume in July after the reopening of Ukraine’s seaports.
Ukraine’s 2022 grain harvest is expected to be 50.0 MMT, including 19.0 MMT wheat.
However, Ukraine’s Agri Council lobby group expect to see ~50% reductions to winter grain planted area.
Last year’s area included 8.4m HA (~20.8m acres) with 6.2m HA (~15.35m acres) of wheat.
Russia is ready to export up to 30 million tonnes of grain in the second half of 2022, its agriculture ministry said in a statement on Friday.
“This will support countries in need and help stabilise the global food situation,” the ministry added.
On September 10, the Kazakhstan government will lift the restrictions on wheat and flour exports it set in May to lower domestic prices.
Agriculture Minister Yerbol Karashukeyev said that “the situation has changed now,” adding that the outlook for wheat production has improved.
He said Kazakhstan would produce 13.0 MMT of wheat this season compared to 11.8 MMT last season.
FAO Food Price Index – August 2022
The United Nations food agency’s world price index fell for a fifth month in a row in August, further from all-time highs hit earlier this year, as the resumption of grain exports from Ukrainian ports contributed to improved supply prospects.
Particularly, it averaged 138.0 points last month versus a revised 140.7 for July.
The July figure was previously put at 140.9.
The August reading was, however, 7.9% higher than a year earlier.
Watching next week’s market, in the USA, the start of next week is a day late with Labor Day on Monday.
European markets are open.
Tuesday we will have the weekly Export Inspections reportand the Crop Progress.
On Wednesday Census will release monthly export data for July.
Thursday will show a delayed version of the EIA report for ethanol stocks and production.
Friday would normally have been the Export Sales report, but due to difficulties in switching to a new system, the next data dump is on September 15.
That’s all, thank you.
We wish you a good weekend.
Author: Sandro F. Puglisi
