Good afternoon Farmer Family …
U.S. farm markets ended lower on Friday!
Wheat prices fell on a stronger dollar and hopes of progress in negotiations to maintain the Ukrainian Black Sea grain export corridor.
Corn and soybeans followed wheat lower, weighed down by lackluster demand and pressured by lower energy and equities markets.
Particularly, Chicago SRW wheat contract was 3.64% lower, flipping on red for the week and closing on a 2.33% loss from prior Friday.
Kansas City HRW wheat contract settled 3.05% lower for the session, and ended the week down by 1.7%.
Minneapolis spring wheat price was 2.53% lower on Friday and settled net red by 1.42% from Friday to Friday.
The corn market closed on a 1.15% loss on Friday limiting the week’s move to a 0.95% gain.
Soybean price was down 0.86% on the last trading day of the week. However, for the week, posted a net 1.23% higher.
Meal closed with just a 0.02% gain on Friday, but was around 2.6% higher for the week.
Bean oil dropped 1.7%, that send the contract 1.95% lower from prior Friday.
Going inside the numbers, for the week corn prices closed up by $0.065 at $6.90/bu.
Soybean prices finished the week $0.168 higher at 13.84/bu.
Soymeal gained $10.4/smt, closing at $411.10 smt.
Soy oil fell $1.3, to close at $65.30.
CBOT soft red winter (SRW) prices tumbled $0.205 to close at $8.60/bu.
KCBT hard red winter (HRW) prices shedded $0.165, ending at $9.52/bu.
MGE hard red spring (HRS) prices were $0.137 weaker to close at $9.54/bu.
Wheat prices surged during the week after Russia’s Geneva U.N. ambassador said Moscow could reject a renewal of the Ucraine grain deal.
However, there were hopes of progress in negotiations after the meeting between Russian President Vladimir Putin and Turkish counterpart Tayyip Erdogan.
Then Friday’s strengeten dollar, and poor export demand saw in the delayed weekly export sales report, weighened still more on grain prices.
The dollar firmed on higher bond yields and weak stocks (read more below)
Meantime, poor export demand pressured both corn and soybean price, as corn net sales last week, were below trade expectations, while soybeans sales were tepid, although in line with estimates.
Particularly, USDA’s weekly Export Sales data showed 200,191 MT of corn was sold during the week ending 10/6.
That was down from last week’s sale and was just 20% of the same week last year.
USDA had 422,590 MT shipped for a season’s total of 2.67 MMT.
That trails last year’s campaign by 22%.
Total corn commitments trail last year’s pace by 51% at 13.423 MMT.
As for soybean, FAS data had soybean bookings as 724k MT for the week that ended 10/6.
That was down 7% on the week and was just 26% of the same week last year.
Several large daily soybean export sales announcements by USDA this week totalling 1.622 million tonnes, mostly to top importer China, offered little support to futures as the deals are considered routine sales
Meantime, soybean shipments were a MY high of 888k MT taking the accumulated total to 2.72 MMT.
Total soybean commitments were 28.2 MMT, down by 3% from the same week last year.
In the products, USDA finished out the 21/22 meal season with weekly total shipments of 11.7 MMT.
Meal sales on the books then began the 22/23 season with 2.98 MMT.
Bean oil finished weekly reporting with 678,426 MT for the 21/22 season.
CMY bookings are at 19,798 MT.
As for wheat, USDA reported 212k MT of wheat was sold for export during the week that ended 10/6, dropping to a 3-week low.
That was down from 229k MT last week and from 567k MT during the same week last year.
Wheat commitments trail last years sluggish pace by an additional 4% at 11.127 MMT.
After the sessions close, weekly CFTC data showed managed money corn spec traders were net buyers through the week that ended 10/11.
Particularly the report indicated managed money spec funds increasing their net long position in corn futures and options by 23,649 contracts.
That took them to net long 267,377 contracts as of Tuesday.
Commercials added 51k new hedges through the week, extending their net short by 23k contracts to 463,633.
As for soybean, report had sell pressure from spec traders via 8k contracts of closed longs and 3.8k new shorts through the week of 10/11.
That reduced the managed money net long to a 44-wk low of 65,738 contracts and was down 11,750 contracts from the prior week.
Commercial soybean traders were adding hedges, with 27.4k new longs and 16.4k new shorts.
The commercial net short was reduced to 95,875 contracts as of the 10/11 settle – that is their weakest net short since Feb 2020.
On the products side, CFTC showed long liquidation, reducing the managed money net long in soymeal by 9.3k contracts to 70.4k and their net long in bean oil by 1,770 to 60,984 contracts.
As for wheat CFTC data showed the managed money wheat traders were selling SRW through the week that ended 10/8.
The 7.5k new shorts left the group at a 19.5k contract net short.
In the hard red wheats the funds were closing shorts.
For KC wheat that left the group 877 contracts more net long to 26,508, and in MPLS wheat that left the group 328 contracts more net long at 4,116.
In this context, as at October 13, 2022, FOB prices saw US wheat No 2 Hard Red Winter (HRW) valued at $444/mt (up $7/mt from last week).
US wheat No 2 Soft Red Winter (SRW) was valued at $401/mt (up $5/mt from last week).
Northern Durum offers from the Great Lakes for November 2022 delivery was valued at $11.43/bu, up 0.55 c/bu week on week ($420.00/MT +$20).
As for corn, US corn 3YC (Gulf) was at $355/mt (up $18/mt from last week).
As for soybean, US soybean 2Y (Gulf) quoted at $592/mt (up $20 from last week).
This week, basis were mixed in the Gulf and Pacific Northwest (PNW).
Gulf HRS basis experienced the most significant drop in basis this week after navigation along the Mississippi River was restored.
Rising rail rates, reflected in the secondary rail market and a large soybean purchase by China also kept basis firm across wheat classes as the additional business squeezes available export capacity.
Meantime, the weekly National Ethanol Report from USDA had spot prices as 5 – 9 cents/gal lower through the week regionally, to $2.25 – $2.50/gal regionally.
USDA reported the average cash corn oil price for the week was mostly 1-2 cents higher from 71 to 75c/lb regionally.
DDGS were shown $5 higher to $20/ton lower regionally from $220 in IN, MN, and WI to $260/ton in W. IA.
The week’s average B100 cash price was $6.65 in MN, up by 27 cents/gal.
Meantime, analysts expect NOPA members processed 161.3 mbu in September to start the 22/23 season.
The full range of estimates is from 152 – 170.4 mbu.
Soybean oil stocks are expected at 1.522b lbs, which would be down from 2.7% from August.
In energy markets, oil prices plummeted more than 3% on Friday as global recession fears and weak oil demand, especially in China, outweighed support from a large cut to the OPEC+ supply target.
Brent crude futures, indeed, dropped $2.94, or 3.1%, to settle at $91.63 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell $3.50, or 3.9%, to $85.61.
The Brent and WTI contracts both oscillated between positive and negative territory for much of Friday but fell for the week by 6.4% and 7.6%, respectively.
The International Energy Agency (IEA) on Thursday cut its oil demand forecast for this and next year, warning of a potential global recession.
In U.S. supply, energy firms this week added eight oil rigs to bring the total to 610, their highest since March 2020.
Meanwhile, money managers raised their net long U.S. crude futures and options positions by 20,215 contracts to 194,780 in the week to Oct. 11, the U.S. Commodity Futures Trading Commission (CFTC) said.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index edged up on Friday to snap a six-session losing streak, but posted its worst week since late August on sombre demand for all its vessel segments.
The overall index, indeed, rose 20 points, or about 1%, to 1,838.
However, the main index was down 6.3% for the week, its worst since late August.
Particularly, the capesize index, which also snapped a six-session declining streak, rose 72 points, or 3.4%, to 2,166.
However it was down 9.6% for the week.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore used in construction, were up $600 to $17,965.
The panamax index, in contrast, lost 7 points, or 0.3%, to 2,081 and marked a weekly fall of about 7%.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, dropped $67 to $18,729.
The supramax index was down 6 points at 1,690.
In equity markets, on Friday the S&P 500 fell 86.84 points, or 2.37%, to 3,583.07.
The Dow dropped 403.89 points, or 1.34%, to 29,634.83.
The Nasdaq slid 327.76 points, or 3.08%, to close at 10,321.39.
For the week, the Dow gained 1.15%, the S&P 500 lost 1.56% and the Nasdaq fell 3.11%.
Small company stocks also fell sharply on Friday.
The Russell 2000 gave up 46.01 points, or 2.7%, to close at 1,682.40.
The pan-European STOXX 600 index rose 0.56% and MSCI’s gauge of stocks across the globe shed 1.30%.
Emerging market stocks rose 1.03% as Latin American currencies fell due to the dollar strength.
US inflation was a headline item this week.
CPI was down in September, but is still at 8.2%.
Core inflation, ex-food and energy, was a 40 year high 6.6%.
The US equity markets struggled with that Thursday news, initially sharply lower, closing sharply higher by Thursday night, and then selling off in a bad case of buyer’s remorse ahead of the weekend.
The sell off has been somewhat justified, as core inflation tends to spill over into wages and can feed a self-reinforcing spiral.
The Fed has to put a stop to it, because it hurts those on a fixed income, and because wages tend not to keep up.
As the Wall Street Journal pointed out in an article on Thursday night, real wages since President Biden took office have fallen more (-4.3%) than they did during the 2006-2009 financial crisis.
Bond yields rose after the Michigan report.
The yield on the 10-year Treasury, which influences mortgage rates , rose to 4.02% from 3.86% shortly before the report came out.
It’s trading near its highest level since 2008.
The yield on the 2-year Treasury, which tends to track expectations for future Fed action, rose to 4.51% from 4.40% just before the report came out.
Consequentially, the U.S. Dollar Index remains firm this week.
The index increased from last week’s 112.39 to close at 113.25
In currency trading, indeed, the dollar kept rising against Japan’s yen, hitting a fresh 32-year peak of 148.86.
Japanese Finance Minister Shunichi Suzuki on Thursday reiterated the government’s readiness to take steps against excessive currency volatility.
The euro was down 0.55% at $0.9719.
The dollar rose also against the sterling after the British prime minister’s firing of her finance minister.
Sterling fell sharply after Britain’s Liz Truss fired finance chief Kwasi Kwarteng and scrapped parts of their economic package, which had caused an uproar in financial markets.
Sterling was last trading at $1.1171, down 1.39%, after falling as low as $1.1149.
Friday was expected to be the last day of the Bank of England’s bond buying program set up to stabilize government bond, or gilt markets, after investors were spooked by unfunded tax cuts announced in a “mini-budget” last month.
Investors appeared to have little confidence in the prime minister’s position or the likelihood that her decisions on Friday could restore Britain’s credibility in financial markets.
Going back to analyzing the other agricultural markets, in Canada,
Producers’ deliveries of common wheat in week 10 of the shipping season, were at 477,7k mt.
That was firmer from 459,8k posted a week erlier.
Deliveries of durum wheat increased to 149.6k mt down from 134.5k mt a week earlier.
Meantime, Canada exported 593.9k mt of common wheat in week 10 of the shipping season.
That was firmer from 380.4k mt a week earlier.
Durum wheat exports, in contrast, were lower at 48.6k mt, down from 75.k mt a week earlier.
Consequentially, total Commercial Stocks of common wheat stood at 3.056,4k mt, down from 3.300,7k mt a week earlier.
As for durum, total commercial stocks were at 886,2k mt, up from 759,8k mt a prior week.
In this context, as at October 11, 2022, Canadian wheat prices for FOB delivery West Coast were (Cdn$/mt):
– for the N1 class CWRS 13.5% – $554.62 per tonne, up C$12.98/t from prior week;
– for the N2 class CWRS 13.0% – $548.12/t, up C$14.5 wow;
– for the N3 CWRS – $577.49/t, up C$11.27 from prior week.
As at October 11, 2022, for the N1 CWAD 13% (durum wheat first class) average street price were at C$450.11, rising by C$20.57 week on week.
The export basis West Coast & Central SK, in contrast, moved down from C$129.66 to 102.98 a tonne.
Thus, delivered FOB price Great Lakes was posted at C$553.09 (US$ 401.52/t).
That represent a C$6.11/t decline from prior week.
Per latest data from European Commission, as at October 12, 2022, Durum wheat – FOB CA St Lawrence (CWAD) was offerd at C$624.39/t, up C$32.18/t week on week.
As at October 14, 2022, for the N1 CWAD 13% (durum wheat first class), average street price in REGIONAL ZONES were at C$475.77 per tonne, up C$20.78 from prior week.
(1USD=Cnd$1.3879, up from 1.3738 a week earlier).
From South America, USDA’s attaché had Argentina’s ‘soy dollar’ expanding September soybean export sales to the largest volume in recent years at 16 MMT.
That makes up ~70% of their updated full year forecast, which is still below 17/18 and 18/19’s pace.
According to the Rosario Grains Exchange, Argentina’s wheat harvest is likely the lowest in 7 years.
The Exchange adjusted its forecast down 500,000 MT to 16.0 MMT.
Analysts blamed cool weather and drought conditions for the crop
adjustment.
The Buenos Aires Grains Exchange (BAGE) forecast the wheat harvest at 16.5 MMT, down 6% from their previous forecast of 17.5 MMT.
Meantime, as at October 13, 2022 – Argentina Wheat Grade 2 export price, (Up River) was at $421, up $1/t from prior week.
Argentina corn feed was up $6/t for the week, closing at $313.
Brazilian corn feed (Paranagua) was valued at $302, was up $8/t from prior week.
Argentina feed barley, was unchanged for the week to $310.
Argentina soybean was up $27 at $592.
Brazilian soybean was up $26, finishing the week at $608.
In Europe, France has planted 21% of their 23/24 wheat crop through 10/10, which is up from 3% last week and compares to 11% at the same time last year, FrancAgriMer said on Friday.
French corn was 83% harvested through 10/10 according to FrancAgriMer.
That is up from 14% last year.
However, rain this week and persisting fuel shortages linked to oil refinery strikes may slow sowing progress.
Meantime, December wheat prices on Euronext closed the week at 350.75 euros a tonne, up €2.75/t for the week.
November corn price, was up €3.75/t for the week, closing at 340.25 euros per ton.
Rapeseed Nov contract closed at €633.75/t, up €4.25/t for the week.
Nov-22 UK wheat feed contract, closed at £279/t, down £3.5/t week on week.
In this context, as of October 13, 2022, FOB prices in US dollar for French wheat with 11.5% protein and Oct delivery, were at $354/mt, up $7 from prior week.
German wheat, Deposilo Hamburg, was valued at $308.15/t, down $27.07 from prior week.
Baltic wheat, delivery first Vilnius, was quoted $314.96, up $1.17 from prior week.
Spanish durum wheat Sevilla (Depo Silo), this week was valued at $476.33/t, down $6.04 from past week.
French durum wheat – delivered La Pallice Spot – July 2022 basis, this week was valued at $461.75/mt, up $8.61 from prior week.
French durum wheat – FOB Port la Nouvelle, this week was n.q..
Italian durum wheat Bologna (Delivered to first customer), was valued $466.61/t, up $3.72 from prior week.
Corn, delivered Bordeaux Spot – July 2022 basis, was at $339.26 per tonne, down $1.81/t from past week.
Corn FOB Rhin Spot – July 2022 basis, was up $0.16 to $326.62/t.
Feed barley delivered Rouen was at 302.32 $/t, up $6.07 per tonne.
Malting barley FOB Creil Spot – July 2022 basis was at $349.96 per tonne, down $0.86/t from prior week.
Rapessed FOB Moselle – 2022 harvest was at 615.34$/ton, up $14.07 compared to prior week.
Standard sunseed FOB Bordeaux – 2022 harvest was up 46.99$ from prior week at $699.91 per tonne.
(Eur/USD = 0.9721 vs last week 0.9745).
From Russia, “the country is prepared to quit the Black Sea grains deal”, Gennady Gatilov, Russia’s ambassador to the United Nations (U.N.) in Geneva, said in a statement.
Russian government, indeed, delivered a letter to the U.N. Secretary-General with a list of Moscow’s complaints.
The deal, which the U.N. and Turkey brokered, enabled Ukraine to resume grain exports through the Black Sea.
Russia has repeatedly complained that it faces difficulty exporting grain and fertilizer despite the third consecutive week of increased wheat exports.
Russia has exported 13.2 MMT of wheat this season which runs from JulyJune.
This week the agriculture ministry revised the export tax for wheat increasing it by 34% to $46.53/MT.
Particularly, as of October 19, the export duty on wheat will increase to 2,934.3 from 1,926.8 rubles per ton a week earlier.
The duty on barley, also will increase to 2,479.9 rubles from 1,632.0 rubles per ton a week earlier.
For corn, in contrast, it will down to 2,410.1 rubles from 3,114.1 rubles a week earlier.
This new duty rates will be in effect through October 25, inclusive.
The duties were calculated based on indicative prices: $308.3 per ton for wheat ($307.7 a week earlier), $279.8 for barley ($280.9), $278.2 for corn ($317.6).
Officials from the U.N. will be in Moscow this weekend to discuss renewing the agreement, which expires in November.
In Ukraine, the Ag Ministry showed the 3.7 MMT of wheat exports for the year trail last season’s pace by 63%.
However, all grain exports out of Ukraine are down by 36% yr/yr through 10/12.
The Ukrainian Ag Ministry released data showing corn exports unseasonably high at 5.6 MMT through 10/12.
That is up by 263% yr/yr, likely driven by last years unshipped stocks and active exports ahead of a potential grain corridor loss threatened by Russia.
From Australia, widespread rainfall across eastern Australia could impact wheat quality.
National weather service authorities have warned that extreme weather events could trigger flash floods for some areas while bringing a quarter of annual rainfall in just two days.
Nearly half the wheat crop is at risk of quality downgrades in New South Wales.
Prompt prices for feed wheat, barley and sorghum have rallied in the past week as rain and localised flooding limit access to stored grain in New South Wales.
Harvest is now under way in Queensland, Western Australia and South Australia, but showery and mild weather this week is certain to make an already late crop mature even later.
Recent rain, with more forecast, has forced some shorts into the market to look for whatever grain can be outturned at short notice.
While southern new-crop barley and SFW prices are under forecast supply-side pressure, the northern market has firmed across the board.
Global factors, especially the weak Australian dollar, are supporting values for new-crop feedgrain.
In this context, indicative delivered prices in Australian dollars per tonne for old crops past week were:
Barley Downs: $395, up $17 from Oct 6;
SFW wheat Downs: $415, up $15 from Oct 6;
Sorghum Downs: $392, up $12 from Oct 6;
Barley Melbourne: $395, up $27 from Oct 6;
ASW wheat Melbourne: $460, up $40 from Oct 6.
SFW wheat Melbourne: $420, up $20 from Oct 6.
As for new crops, past week indicative prices for delivery in Jan-Feb were:
Barley Downs: $385, up $10 from Oct 6;
SFW wheat Downs: $400, up $5 from Oct 6;
Sorghum Downs: $385, up $40 from Oct 6;
Barley Melbourne: $360, down $8 from Oct 6;
ASW wheat Melbourne: $440 unchanged from Oct 6;
SFW wheat Melbourne: $390, down $10 from Oct 6.
(AUD/USD=> US$0.6203 vs. US$0.6370 prior week).
Watching next week’s market, the week begins with the weekly Export Inspections report on Monday in the afternoon, with the Crop Progress report that night after the sessios close.
NOPA will also release the monthly update to their crush report for September.
Skip ahead to Wednesday and EIA will publish their weekly update for ethanol production and stocks.
The weekly Export Sales report will be back on normal schedule with a Thursday morning release.
Finally on Friday, NASS will put out the monthly Cattle on Feed report.
That’s all, thank you.
We wish you a good day and a good weekend.
Author: Sandro F. Puglisi
