Daily Update – July 26, 2023

Good morning, Farmer Family …

Main Markets

US farm markets, were mixed but mostly lower on Tuesday. Corn prices fell 0.54%. Soybeans faded 0,51% lower. The products firmed in the afternoon and ended the day higher. Soymeal indeed closed 1.45% in the black, and bean oil closed 0.79% higher. Wheat prices were down initially, following the sharp gains on Monday, but staged a late session rally to close mixed on the day. Chicago SRW, indeed, gained 0.36%, but Kansas City HRW was still down 0.63%, and Minneapolis spring wheat eased 0.43%. Wheat prices pared gains after setting five-month highs on Tuesday. Traders are awaiting further developments from the Black Sea region, where maybe the offensive has slowed down a little bit, as there was no bombing overnight. The International Monetary Fund estimated that Russia’s exit from the Black Sea export deal, could drive global grain prices up by 10-15%, but said it was continuing to assess the situation. But it appears that damage to key Danube port in Monday strike were limited. Reni, indeed, was operating at maximum capacity on Tuesday, with seven ships due to enter, according to a Romanian official, who is responsible for ship piloting in the area. On the other hand, scouts on the first day of an annual U.S. crop tour on Tuesday projected spring wheat in southern and east-central North Dakota will produce yields that are slightly lower than last year but bigger than the five-year average. The Wheat Quality Council tour said participants estimated an average hard red spring wheat yield of 48.1 bushels per acre after surveying 130 fields, compared to the tour’s day-one findings in 2022 of 48.9 bushels. The five-year average is about 40.2 bushels. Hot, dry weather has hurt the crop, which is used in artisanal breads, pizza dough and bagels or blended with lesser grades of wheat to improve flour quality. However, “despite the less than ideal conditions, the crop is hanging in there,” the commission said. The tour will assess fields in northern North Dakota on Wednesday before releasing a final yield estimate on Thursday. Meanwhile, corn and soybean prices fell, with traders continuing to monitor crop weather in the U.S. Midwest. The region corn’s is finishing pollinating, while soybeans approach their pod-setting phase in August. Crop consultant Michael Cordonnier lowered his expected US corn yield 1 bu. per acre to 174 bu. due to limited rainfall over the past week and continued limited rainfall in the forecast. Temperatures have turned hot as well, further pressuring the crop, especially in areas both hot and dry. Dr Cordonnier kept his soybean estimate unchanged at 50.5 bu. per acre, though retains a neutral to lower bias in both crops. He estimates corn production at 15.01 billion bu. and soybean production at 4.17 billion bu. Meantime, with the Ukraine corridor closed, traders are again examining substitution veg-oils trade due to the potential restriction on supplies. Ukraine’s full year sunflower oil exports are forecast to reach 4.75 mmt for the 2023/24 MY. This represents 38% of the global sunflower oil trade, but is slightly less than 5% of the total vegetable oil trade. In this context, corn basis bids were mostly steady across the central U.S., but did trend as much as 5 cents higher at an Iowa river terminal and as much as 5 cents lower at an Iowa processor. Soybean basis bids were largely steady across the central U.S., but did jump as much as 15 cents higher at an Illinois processor while slumping as much as 30 cents lower at a Nebraska processor. Commodity funds were net sellers of CBOT corn, soybean and soyoil futures contracts, and net buyers of soymeal and wheat futures. On this morning, Chicago corn prices lost more than 1% and soybeans extended losses. Wheat slid 2%. Notably, the most-active corn contract on the Chicago Board of Trade gave up 1.2% to $5.58-3/4 a bushel, as of 02:50 GMT, and soybeans dropped 0.7% to $14.10 a bushel. Wheat lost 2% to $7.45-1/2 a bushel after climbing to its highest since Feb. 21 at $7.77-1/4 in the last session. Rains forecast for this week will ease some of the concerns over dryness in major portions of the U.S. corn-belt.
South America
Exports through the eastern corridor of Brazil’s second busiest port totaled 11.1 million metric tons in the first half. That was the highest volume for a single semester since the port’s establishment 50 years ago, Paranagua port authorities said on Tuesday. Officials cited a significant increase in grain shipments across the board, but highlighted soybeans, whose export volumes jumped 22.4%. Brazil harvested its soybean largest-ever crop in 2023. Soy exports represented 6.5 million metric tons of the total shipped in the first half via Paranagua, or almost 60%, authorities said. Next came soymeal, with nearly 24% of total shipments, and corn, which represented around 17% — or 1.9 million metric tons. Brazil ships most of its soybeans to China and for this season, due crop failure, also in Argentina.
In Europe, grain markets pared some of the previous session’s gains. Traders assessed the concrete drop in Ukraine export potential after Russia hit some facilities in ports on the Danube river. Ukraine’s grain export sector along the Danube on Tuesday seemed to be returning to work, though remains a great concern about any escalation in the fighting. No new international wheat purchase tenders were reported despite those supply concerns. Importers, indeed, have been unwilling to pay this week’s high prices. According to the EU Agriculture Commissioner, the European Union should consider using its funds to support the cost of transiting Ukrainian grain through its member states. This was after he met agriculture ministers from Poland, Hungary, Slovakia, Romania and Bulgaria on the sidelines of an EU ministers meeting earlier on Tuesday to discuss the transit of Ukrainian grain through their territories. However, German agriculture minister criticised the 5 countries for proposing curbs Ukraine grain imports despite they taking €100mn from EU as compensation for lost income. “It’s not acceptable that states receive funds from Brussels as a form of mitigation and still close their borders”. Meanwhile, widespread rain, especially in south Germany, was hindering the start of Germany’s wheat harvest, but is expected to gather speed in coming weeks. Ditto in France, where the recent rains have led to a slowdown, or even in some areas to a temporary halt to harvesting sites. As we already said on Tuesday, the latest EU MARS update noted that owing to prolonged dry conditions in western, central and northern Europe, as well as in eastern growing areas of Romania, coupled with above normal temperatures in some areas, 2023-24 yield outlooks for spring barley, and sunflowerseed have been adversely impacted. However, productivity potential for other crops remains in line with, or are slightly above average. Heatwaves in southern areas, notably in Spain and Portugal, as well as in northern Italy, have negatively impacted summer crops, likely resulting in irreversible yield losses. Elsewhere, heavy precipitation was noted in Bulgaria, Romania, Slovenia, Croatia and Hungary, leading to harvesting delays and reduced grain quality. All told, the 2023-24 common wheat yield is estimated at 5.8t/ha, down 2pc from June, but similar to the 5-year avg. Winter barley unchanged at 5.9t/ha (2pc above avg) and spring barley at 3.6t/ha (-3pc from June, 14pc below avg). Maize at 7.5 t/ha (-1pc from June, 1pc above avg), rapeseed at 3.2 t/ha (-3pc from June but 3pc above avg) and sunflowerseed at 2.1t/ha (-4pc from June and 5pc below average). Meantime, France’ soft wheat crop is expected to rise by nearly 4pc from last year helped by June showers ahead of harvesting, according to the farm ministry. The ministry forecast the crop at 35Mt compared with 33.69Mt last year. The euro’s decline below 1.1060 ahead of today’s FED meeting provided little support for prices yesterday. The euro has been in decline for 6 consecutive sessions, losing nearly -2% since its recent highs against the dollar. Thus, European exporters are obviously following also this downward trend with the greatest interest given the current price levels of the various products departing from European ports. Meantime, weekly data on European Union exports and imports of cereal and oilseed products will not be published until next week due to ongoing technical issues, the European Commission said on Tuesday in a message posted on its website. In this context, front-month September milling wheat on Paris-based Euronext closed 0.9% lower at 262.25 euros ($289.73) a tonne. That was still 34% lower than the record high of 400.00 euros hit in March 2022.
According to the State Statistics Service, in 2023/24 MY, as of July 26, Ukraine exported 1.905 mln tonnes of grains and pulses, reported the press service of the Ministry of Agrarian Policy of Ukraine. Last year, as of July 29, grain export totaled 1.405 mln tonnes. In particular, Ukraine shipped to foreign markets: – wheat – 649 thsd tonnes (325 thsd tonnes as of July 25, 2022); – barley – 238 thsd tonnes (31 thsd tonnes); – rye – 0.4 thsd tonnes (0) – corn – 1.014 mln tonnes (941 thsd tonnes). As of July 26, the total export of Ukrainian flour reached 10.9 thsd tonnes compared to 4.9 thsd tonnes last year, including 7.9 (3) thsd tonnes of wheat flour.
Russian wheat export prices jumped last week. According to the IKAR, indeed, the price of 12.5% protein Russian wheat scheduled for free-on-board (FOB) delivery in the second half of August jumped to $242 a ton at the end of last week, from $228 a ton the week before. The harvest is lagging amid persistent rains, Sovecon noted. The wheat harvest as of July 20 totalled 16.9 million tons (versus 25.7 million tons а year earlier) from 4.3 million hectares (versus 5.9 million hectares). This accounts for 14% of the total area, the slowest pace in recent years. However, for the next week, weather models predict mostly dry weather in the South, southern Centre, and southern Volga Valley. The passage of cargo ships through the Kerch Strait was closed from July 16 to 20. The Strait is the route for around a third of Russia’s grain exports. However, Russia was able to export 1.2 million tons of grain last week, up compared to 960,000 tons a week earlier. That included 1.1 million tons of wheat, up compared to 820,000 tons a week earlier, according to port data. On this wake, Sovecon estimates total Russian wheat exports in July at 4.3 million tons, compared to 2.5 million tons in July 2022 and 2.8 million tons on average historically for the month of July. Russian wheat exports have been at record highs in recent months due to large stocks and high yields. U.N. Secretary General Antonio Guterres on Monday urged Russia to resume allowing Ukraine to export grain safely from its seaports. But the Kremlin said on Tuesday it was impossible for Russia to return to the Black Sea grain export deal until an agreement related to Russian interests was honoured. Kremlin spokesman Dmitry Peskov indeed, said Putin had made clear that Moscow would be ready to revive the deal when the memorandum related to Russia was fulfilled. Meantime, Peskov said for now is important for Russia to discuss grain supplies with African countries at a Russia-Africa summit on Thursday and Friday. Russia has spoken of the possibility of supplying cheap or free grain to Africa’s poorest nations.
Aussie local markets rallied yesterday on new and current crop wheat with most bids up A$10/t over the day. Some buyers pulled back a few bucks late in the day as tonnage limits got filled. ASX wheat Jan24 closed up $8/t at A$411/t. The July line ups are currently showing 3.76Mt of total grain on the shipping stem down from 3.85Mt last week. Wheat is at 2.7Mt down slightly from 2.8Mt, Barley is unchanged at 386kt, Canola is showing 318kt down from 363kt and Sorghum is showing 322kt up from 300kt. Average wait times at Australian ports are variable. Brisbane QBT, Geraldton and Thevenard saw a decrease in wait time, while Albany, Esperance, Kwinana, Mackay and Port Lincoln wait time increased. There are currently 12 vessels anchored and 10 loading at Australian ports.


Algerian state agency ONAB has issued an international tender to purchase up to 120,000 metric tons of animal feed corn to be sourced from Argentina or Brazil. The deadline for submission of price offers in the tender is today Wednesday, July 26. Corn shipment is sought in three 40,000 metric ton consignments, two are sought for shipment between Aug. 1-Aug. 15 and one between Aug.15-Aug. 31. In its last reported corn tender on July 19, ONAB is believed to have bought an unknown volume expected to be sourced from Argentina or Brazil after seeking offers for up to 240,000 metric tons.
Milling wheat
Japan’s MAFF is seeking to buy a total of 123,770 tonnes of food-quality wheat from the United States, Canada and Australia in a regular tender.


Energy markets
Oil prices rose to three-month highs on Tuesday, as signs of tighter supplies and pledges by Chinese authorities to shore up the world’s second-biggest economy lifted sentiment. Brent futures indeed settled up 90 cents at $83.64 a barrel, after hitting $83.87 earlier, the highest since April 19. U.S. West Texas Intermediate (WTI) crude rose 89 cents to $79.63. The contract earlier rose to $79.90 a barrel, also the highest since April 19. The crude benchmarks have already clinched four weekly gains in a row. Still, some economic data limited gains. In the euro zone, business activity shrank more than expected in July. In the United States, business activity slowed to a five-month low in July. Also, U.S. crude oil and distillate inventories gained last week, while gasoline stockpiles fell, according to market sources citing American Petroleum Institute figures on Tuesday. Notably, crude stocks gained by about 1.32 million barrels in the week ended July 21. Gasoline inventories fell by about 1.04 million barrels, while distillate inventories rose by about 1.61 million barrels. U.S. government data on inventories is due on Wednesday. On this morning, oil prices eased, off three-month highs. Brent crude futures indeed slipped 46 cents, or 0.55%, to $83.18 a barrel by 04:51 GMT, while U.S. West Texas Intermediate (WTI) crude was at $79.18 a barrel, down 45 cents, or 0.57%. Investors are also cautious about the impact of the Fed decision on oil demand. The Fed meeting ends on Wednesday. Also, concerns about how China will actually step up economic policy support remained, keeping a further lid on prices. Investors are also waiting to see if major producer Saudi Arabia will roll over voluntary production cuts into September. Saudi oil exports fell almost 40% in May from the same period a year ago, latest government data released on Tuesday showed.
Ocean freight markets
The Baltic Exchange’s main sea freight index, extended declines on Tuesday pressured by lower demand for panamax and supramax vessel segments. The overall index, indeed, fell by 5 points or 0.5% to 962, its lowest in more than seven weeks. Notably, the capesize index edged up by 2 points to 1,424. Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes carrying commodities such as iron ore and coal, increased by $11 to $11,806. The panamax index also shed 15 points or 1.7% to 895,continuing its declining streak for the eighth straight session. Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, declined by $132 to $8,054. Among smaller vessels, the supramax index fell by 4 points to 753.
Equity markets
US stocks indexes moved higher, as earnings optimism underpinned stock prices. General Electric rallied 6.3%. Another industrial giant, 3M, rose 5.3%. Home builder PulteGroup climbed 6.2%. Stocks also found support after Tuesday’s news showed U.S. July consumer confidence rose more than expected to a 2-year high, bolstering the outlook for a soft landing of the U.S. economy. The Conference Board U.S. Jul consumer confidence index indeed rose +6.9 to a 2-year high of 117.0, stronger than expectations of 112.0. The U.S. Jul Richmond Fed manufacturing survey fell -1 to -9, a smaller decline than expectations of -10. The U.S. May S&P CoreLogic composite-20 home price index fell -1.70% y/y, a smaller decline than expectations of -2.35% y/y. Also, Tuesday’s action by the IMF to boost its global growth outlook for this year supported equity markets. In Tuesday’s World Economic Outlook, the International Monetary Fund (IMF) raised its global 2023 GDP forecast to 3.0% from an April estimate of 2.8%. However, stock gains were tempered after the 10-year T-note yield rose to a 1-1/2 week high. Uncertainty over what the Fed might say regarding interest rates and the economy following the Tue/Wed FOMC meeting limited the upside in stocks. The markets are expecting the Fed and the ECB this week to both raise their respective interest rates by 25 bp. As a result, the 10-year US T-note yield climbed to a 1-1/2 week high of 3.920% and finished up +2.9 bp at 3.902%. In this context, on Wall Street, the S&P 500 rose to 4,567.46 for its highest close since early April 2022. The Dow Jones Industrial Average gained 0.1% to 35,438.07. The Nasdaq composite climbed 0.6% to 14,144.56. On this morning, Asian stock markets retreated. Shanghai, Tokyo, Hong Kong and Seoul declined. Notably, the Hang Seng in Hong Kong sank 0.6% to 19,311.50, giving up part of Tuesday’s 4.1% surge following the Chinese announcement. The Shanghai Composite Index declined 0.2% to 3,225.75. It rose 2.1% the previous session. The Nikkei 225 in Tokyo shed less than 0.1% to 32,669.00 and the Kospi in Seoul lost 0.3% to 2,627.26. Sydney’s S&P-ASX 200 surged 1% after the government reported Australian inflation eased to 5.4% in June from the previous month’s 5.5%, reducing pressure on the central bank for another interest rate hike to cool upward pressure on prices.
Currency trading
The dollar index was little changed ahead of the expected Fed rate hike, though rose by +0.01% and posted a 2-week high. Higher T-note yields were supportive for the dollar. Also, expectations for the Fed to raise the fed funds target range by 25 bp was bullish for the dollar. The dollar raced to its high Tuesday after the Conference Board U.S. Jul consumer confidence index rose more than expected to a 2-year high. However, the dollar gave up most of its advance as the yuan strengthened to a 1-week high against the dollar after China’s Politburo signaled more support for China’s economy. Meantime, the EUR/USD fell by -0.13% and posted a 1-1/2 week low. The USD/JPY fell by -0.37%. On this morning, the dollar declined to 140.44 yen from Tuesday’s 141.04 yen. The euro gained to $1.1062 from $1.1045.

That’s all, thank you.
We wish you a nice day.

Author: Sandro F. Puglisi

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