GRAIN MARKET VIEW
August 7, 2023 – Market Focus
Good morning, Farmer Family …
Main Markets
USA
US farm markets were mixed on Friday.
Corn prices gained 0.73%. Soybean prices picked up 0.36%. Soymeal faded 1.05% lower, while soyoil improved 2.11%. Wheat prices were mixed but mostly lower. Chicago SRW rose 0.96%, while Kansas City HRW fell 1.95% and Minneapolis spring wheat dropped 1.35%.
Commodity funds were net buyers of CBOT soybean, soyoil, wheat and corn futures contracts, and net sellers of soymeal futures contracts, traders said.
For the week, corn fell out of bed all week, with nearby September dropping 7.05% since the prior Friday. New Crop December was 6.22% lower on the week. Soybeans couldn’t regain strength from Monday’s selling, as nearby September fell 3.21% on the week. New crop November was down 3.56% since the prior Friday. The products added to the weakness, with meal down 2.54% and bean oil 0.38% lower. The wheat complex was in free fall mode past week. Kansas City HRW was the leader of the collapse, with a drop of 12.12% in September. Chicago followed suit, with a 10.12% loss. MPLS spring wheat brought up the rear, with nearby September down 8.23%.
Corn basis bids were mostly steady across the central U.S. on Friday but did trend 5 cents lower at an Iowa processor and 5 cents lower at an Iowa river terminal.
Soybean basis bids held steady across most Midwestern locations, but did tilt 10 cents lower at an Indiana processor.
Wheat basis ended the week mixed. HRS basis was back down in the Gulf and steady in the Pacific Northwest (PNW). HRW was steady in the Gulf and up in the PNW where traders attributed the change to continued wide protein spreads. SRW basis strengthened with increased commercial sales. SW prices are decreasing as harvest marches forward in the PNW.
CFTC data showed managed money traders adding corn positions through the week that ended 8/1. As for soybean the report showed a long liquidation from managed money soybean traders.
Canada
The Saskatchewan crop report noted that hot and mostly dry weather was prevalent across the province, which adversely impacted soil moisture levels.
Harvest is now underway in west-central and south-western regions.
South America
Brazil
Wire sources suggest Brazilian ports are transitioning from soybean loads to corn loads as the 2nd crop corn harvest expands and creates significant volumes that need to move.
Argentina
Buenos Aires Grain Exchange reported for the week ending 2 August the 2022-23 maize harvest was 73pc complete. Wheat planting 2023-24 was 99pc complete with conditions rated at 88pc fair/excellent.
Wire sources suggest Brazilian ports are transitioning from soybean loads to corn loads as the 2nd crop corn harvest expands and creates significant volumes that need to move.
Argentina
Buenos Aires Grain Exchange reported for the week ending 2 August the 2022-23 maize harvest was 73pc complete. Wheat planting 2023-24 was 99pc complete with conditions rated at 88pc fair/excellent.
Europe
Wheat rebounded from a three-week low, after some Ukrainian attacks on a Russian port zones. Wheat quality grades in the Northern Europe will likely show a volume of feed wheat larger than expected. European Union data showed the bloc’s soft wheat exports since July 1 were 13% below the year-ago level.
Corn crops have benefited from the recent rain, with the French Ministry of Agriculture revising upwards its estimate. European Union corn imports are trending 28% below last year’s pace so far.
EU barley exports are 69% lower year-over-year, and soymeal imports are also trending moderately lower year-over-year.
In the oilseed market, November rapeseed rose 3.5%, extending a rally, on disappointing harvest yields in Europe, and as heavy rain hampered field work in the north. EU soybean imports are tending 25% below last year’s pace so far.
North Africa
Tunisia is regularly confronted with shortages of basic commodities, and now is faced a new shortage of subsidized bread.
Ukraine
Ukraine has harvested 16.6 MMT of 2023 grain crop so far, meanwhile grain exports reached a total of 2.56 MMT so far.
Russia
U.S. bank JPMorgan JPM.N last week stopped processing payments for the Russian Agricultural Bank, Russia said on Friday.
China
Floodwaters from Typhoon Doksuri continued to deluge farms and cities in northeast China on Saturday, while authorities in other parts of the country struggled to deal with the aftermath of one of the strongest storms in years.
Southeast Asia
Malaysian palm oil futures ended higher on Friday, but clocked a second weekly loss. The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange closed up 41 ringgit, or 1.07%, at 3,865 ringgit ($848.89) a metric ton. For the week, the contract has declined 3.5%.
Indonesia wheat imports decline in 2022-23.
India might cut or abolish wheat import tax and no plan to import wheat from Russia or engage in a government-to-government deal.
Indonesia wheat imports decline in 2022-23.
India might cut or abolish wheat import tax and no plan to import wheat from Russia or engage in a government-to-government deal.
Australia
Aussie local markets finished last week positively. The big positive news focused on barley with China lifting all tariffs on Australian barley effective 5 August.
Australia exported 2,571,013 tonnes of wheat in June, down 22 percent from 3,308,101t shipped in May, according to the latest data from the Australian Bureau of Statistics.
Auctions
Milling wheat
Egypt’s state grains buyer, the General Authority for Supply Commodities, is seeking wheat in an international tender for shipment Sept. 15-30 and/or Oct. 1-15, 2023. GASC said the deadline for submitting offers was Aug. 8 at GASC’s offices in the New Administrative Capital. Suppliers should submit offers on a free-on-board basis for payment via 180-day letters of credit and 270-day letters of credit. GASC will choose between both offers.
Macroeconomics
Energy markets
Oil prices rose more than a dollar a barrel on Friday to record a sixth consecutive week of gains, after top producers Saudi Arabia and Russia extended supply cuts through September, adding to undersupply concerns.
Notably, Brent crude futures rose $1.10, or 1.3%, to settle at $86.24 a barrel, while the U.S. West Texas Intermediate crude gained $1.27, or 1.6%, to close at $82.82 a barrel.
Both benchmarks hit their highest levels since mid-April on Friday.
This morning, prices edged down, but were still near their highest levels since mid-April.
Brent crude futures indeed slipped 15 cents, or 0.2%, to $86.09 a barrel by 06:40 GMT, while U.S. West Texas Intermediate crude was at $82.67 a barrel, down 15 cents, or 0.2%.
Ocean freight markets
The Baltic Exchange’s main sea freight index in London rose for the second straight week on Friday, led by strong demand in the panamax vessel segment.
The index increased by 2% during the week.
Equity markets
On Wall Street, US stock indexes fell on Friday to close out a rare losing week, following mixed reports on the U.S. job market and two of the market’s most influential stocks.
The Dow Jones Industrial Average dropped 150.27 points, or 0.4%, to 35,065.62, the S&P 500 sank 23.86, or 0.5%, to 4,478.03, and the Nasdaq composite gave up 50.48, or 0.4%, to 13,909.24.
In the bond market, the yield on the 10-year Treasury dropped to 4.04% from 4.18% late Thursday.
The two-year Treasury yield fell to 4.77% from 4.89%.
This morning, Asian shares were trading mostly lower.
Japan’s benchmark Nikkei 225 recouped losses earlier in the day and gained 0.2% to finish at 32,254.56.
Australia’s S&P/ASX 200 shed 0.2% to 7,309.20.
South Korea’s Kospi fell 0.5% to 2,590.63.
Hong Kong’s Hang Seng lost 0.3% to 19,484.90, while the Shanghai Composite dropped 0.8% to 3,262.12.
Currency trading
The dollar index fell by -0.50%, with the dollar pressured by falling T-note yields after U.S. Jul nonfarm payrolls rose less than expected, and Atlanta Fed President Bostic said there is no need to raise interest rates further to ease inflation.
The EUR/USD rose by +0.54% also supported by German Jun factory orders which unexpectedly rose by the most in 3 years.
The USD/JPY fell by -0.53%.
This morning, the U.S. dollar edged up to 142.27 Japanese yen from 141.71 yen. The euro cost $1.0979, down from $1.1012.
