Daily Update – July 04, 2023

Good morning, Farmer Family …

Main Markets

US farm markets were mixed but mostly lower on Monday. Corn prices eased 0.10%. Soybeans climbed another 1.79%. The rest of the soy complex was mixed, as soymeal faded 0.53% lower, while soyoil raced about 3.2% higher. Wheat prices faded lower in all three markets, as Chicago SRW fell 1.42%, Kansas City HRW eased 0.44%, and MGEX HRS dropped 0.95%. Soybean rallied more following the shockingly low plantings estimate from the USDA on Friday. Corn prices remained under pressure from a larger-than-expected U.S. corn plantings figure. Wheat prices were lower, after rumors about the EU being ready to make banking concessions to Russia for the Black Sea corridor. Meantime, corn export inspections reached 642,900t last week. Analysts were generally expecting to see a higher tally. Also, cumulative totals for the 2022/23 marketing year continue to trend severely below last year’s pace, meantime, with 33.12 MMT, compared to 48,3 MMT a year ago. As for soybean, export inspections increased to 250,055t. Still, that was a bit on the low end of trade estimates. Cumulative totals for the 2022/23 marketing year are still trending modestly below last year’s pace, with 49.42 MMT, compared to 51.88 MMT a year ago. As for wheat, export inspections were solid after reaching 336,349t. That was also toward the higher end of trade guesses. However, cumulative totals for the 2022/23 marketing year are off to a somewhat sluggish start, however, with 1.09 MMT inspected since the beginning of June, compared with 1.61 MMT a year ago. The monthly Grain Crushing report showed 437.54 mbu of corn used for ethanol production in May. The trade was looking for NASS to report 431.3 mbu. That set the season’s total at 3.835 bbu, or 73% of the forecast with Q4 remaining. Barring a cut to the forecast, production needs to average 471.5 mbu/month to be at 5.25 bbu for the MY. Last year’s Q4 averaged 440.2 mbu/month. As for soybean, NASS reported crushers processed 189.28 mbu in May. That was a record for the month and up 4.6% from May ’22. The season’s crush reached 1.683 bbu through May, also a record, and is at 75.8% of USDA’s forecast. The Fats and Oils report also had 4.183m tons of soymeal production and 2.228b lbs of oil output for the month. Soymeal stocks, at 388.7k tons, were down 25% for the month. Soy oil stocks were shown as 2.836b lbs. In this context, corn basis bids showed some variability, after rising as much as 30 cents higher at a Nebraska processor and spilling as much as 15 cents lower at an Ohio elevator. Soybean basis bids were steady to mixed across the central U.S. after rising as much as 15 cents higher at an Illinois processor and falling as much as 25 cents lower at an Indiana processor After the sessions close, the Weekly Crop Progress report showed, corn crop condition improving by 1 point compared with last week, as 51% of corn areas are now judged to be in “good to excellent” condition. The corn crop reached 8% silking nationally. The average pace would be 9%. On the other hand, the crop condition rating for soybeans has deteriorated by 1 point, with 50% of acreage now judged to be in “good to excellent” condition. The report had a 24% of the 23/24 soy crop blooming. That is up from 10% last week and is 4ppts ahead of average. NASS also showed 4% was setting pods, which is 2ppts ahead of average. Spring wheat crop conditions have deteriorated by a further -2 points compared with last week, with 48% of areas rated as “good to excellent”. NASS reported spring wheat at 51% headed, compared to 31% last week and 46% during the same week last year. The winter wheat harvest is progressing rapidly, with 37% of the area now harvested, compared with the 24% estimated last Monday, but trails the average 46% pace. Texas’ harvest reached 86% completion, and KS was 46% finished. NASS rated the winter crop 40% good/ex. However, it should to note that the impact of recent rainfall has not yet been included in these figures. Also, a large portion of the Corn Belt could see rainfall totaling 0.5” to 1” between Tuesday and Friday. The agency’s new 8-to-14-day outlook predicts more seasonally wet weather for most of the Midwest and Plains between July 10 and July 16, with cooler-than-normal conditions possible for the eastern Corn Belt and Great Lakes region. The market is closed today in recognition of Independence Day and will resume with a hard open on Wednesday in the afternoon.
The Alberta Crop Report for the week ending 27 June noted that scattered rains were recorded across the province, with widespread thunderstorms. While the precipitation was mostly termed beneficial for crops, flooding concerns were noted in parts of the North West region. Moisture levels, however, remained sub-optimal in some dry areas of the South, Central and Peace regions. Spring wheat condition rated at 45pc good/excellent (51pc week ago, 82pc year ago), barley at 40pc (46pc week ago, 76pc year ago) and canola at 43pc (49pc, 71pc). However, rainfall during June has improved soil moisture levels in all regions.
South America
Brazil’s second corn crop is expected to hit 102.9 million metric tons in 2023, agribusiness consultancy AgRural said on Monday, increasing its May forecast of 97.9 million metric tons because of favorable weather. Farmers in the center-south region have harvested through last Thursday 17% of the area planted for their second crop, AgRural added, up 8 percentage points from the previous week although still lagging last year’s levels (31%). In spite of being planted outside the ideal climate window this season, production of Brazil’s second corn, which is planted after soybeans are sowed in the same fields, will be abundant. StoneX too, another agribusiness consultancy, on Monday raised its own projection for second corn output to 105.2 million metric tons from 102.9 million metric tons seen in its June forecast. In Argentina, the Rosario Grains Exchange reported Argentine crushers processed 6.4 MMT of soybeans through April and May, a 15-yr low for the initial volume. Argentina’s exports of grain, oilseeds and their derivatives totaled $1.58 billion in June, down 59% from a year earlier as the country struggles with the impact of a major drought, the CIARA-CEC grains exporters and crushers chamber said on Monday. June export revenues were down 62% when compared with the previous month, the chamber said, and fell 42% in the first half of the year on an annual basis.
In Europe, grain prices extended losses with wheat down 2%, as harvests are progressing in many production areas. Notably, September wheat on Paris-based Euronext unofficially closed down 2.0% at 226.00 euros ($246.61) a metric ton, after earlier hitting 225.50 euros, its lowest since June 5. Wheat faded, also because export competition from the Black Sea region weighed on the market, with low prices both offered for Russian and Romanian wheat. Traders reported 50,000 metric tonnes of Russian 12.5% wheat offered for sale at $233 a metric ton. While, several shipments of German milling wheat each of about 30,000 metric tons traded to North Africa last week, probably to Morocco, with sales including old crop 12.5% wheat reported sold at 6 to 7 euros a metric ton under Euronext September and 11.5% protein sold at 9 euros under September. Also, there has been the news about the EU being ready to make banking concessions to Russia for the Black Sea corridor, which has been not really supportive for prices. However, yields are important to monitor, with winter barley results very satisfactory so far, but yields in other crops are disappointing. Just for exemple, Germany’s 2023 winter wheat crop will fall some 7% on the year to an estimated 20.59 million metric tons after crops suffered from hot, dry weather, the association of German farmers DBV said on Tuesday. Meanwhile, rapeseed added 2% to a two-week high, in the wake of the soybean and canola higher. August contract rose, as the broad rally in oilseeds fuelled by the USDA’s lower than expected soybean acreage estimate continued. But also a sharp cut by Strategie Grains to its forecast of the EU’s rapeseed harvest supported prices. Notably, Strategie Grains has lowered its forecast for this year’s European Union rapeseed harvest by more than 600,000 metric tons, to 19.8 million metric tons, down from 20.4 million tons previously but still about 400,000 tons above last year’s harvest. Its main reduction was for Germany, with its forecast dropping by 200,000 tons. Harvest prospects were still satisfactory to good in France and central and eastern EU countries, it said. On the import front, Strategie Grains raised its forecast for purchases of Ukrainian rapeseed in 2023/24, given the high profitability of that origin. However, it cut its estimate for EU imports of Ukrainian sunseed, citing a lower exportable surplus in the country. Also, Strategie Grains cut its outlook for this year’s EU sunflower seed crop by about 350,000 tons to 10.9 million tons. However, that is still 19% above last year. The lower production estimates prompted Strategie Grains to cut its outlook for rapeseed and sunseed stocks at the end of June 2024 but balances remained in surplus, it said. On this wake, German farmers DBV said the winter rapeseed crop is expected to fall 4% on the year to about 4.11 million metric tons.
According to the ag Ministry, as at 29 Jun, 2023-24 winter barley harvest was 6pc complete, with average yields estimated at 3.4t/ha, wheat and rapeseed harvests were less than 1pc complete. Meantime, grain exports in the first days of July, the first month of the new 2023/24 July-June season, amounted to 34,000 metric tons, half as much as in the same period in 2022, the agriculture ministry said on Monday. The ministry said the volume in the new season so far included 9,000 tons of wheat and 25,000 tons of corn. Russian representatives of the Joint Coordination Centre have reportedly stopped inspecting inbound vessels. In this context, the Russian foreign minister has been asserting again that the Grain Corridor flow is not helping the poorest countries. He also said that the lack of the fulfillment of the deal was “outrageous”. However, Ukraine’s President Volodymyr Zelenskiy and German Chancellor Olaf Scholz called on Monday for an extension of the deal from three Ukrainian Black Sea ports. Ukraine grain exports for the whole 2022/23 season stood at almost 49 million tons, exceeding the previous season’s level of 48.4 million tons.
Last week Russian Ministry of Agriculture reported the end of the sowing campaign. According to preliminary data, 55.6 million hectares have been sown, which is higher than last year and in line with plans. The harvesting campaign has started in the south. As of June 29, farmers had harvested 2.4 million tonnes of grain in bunker weight compared to 1.2 million tonnes in 2022, with average yields of 3.98 tonnes per hectar (4.12 tonnes per hectar). The weather models predict mostly dry weather in the South that will speed up the harvest. Meantime, the country wrapped up its 2022-2023 agricultural year with an estimated record of 58-59 million tons of grain exports, reported RIA Novosti on Monday. On this wake, Sovecon raised the estimate for total Russian wheat exports in June by 300,000 tonnes to 3.5 million tonnes – a record high for the month, compared to 1.0 million tonnes in June 2022 and 1.4 million tonnes on average. Russia exported 920,000 tonnes of grain last week compared to 1.0 million tonnes a week earlier, including 750,000 tonnes of wheat compared to 970,000 tonnes a week earlier, according to port data. In this context, Eduard Zernin, chairman of the board of the Russian Grain Exporters Union, said the Agriculture Ministry’s estimate of the export potential was accurate, and Russian grain exporters had overcome hidden sanction barriers imposed by some western countries. The ministry’s estimate of export potential in the season of 2023-2024 is 50-55 million tons, Zernin said. Meantime, there are reports that the European Commission is considering allowing the Russian Agricultural Bank to set up a subsidiary to reconnect to SWIFT to handle payments related to grain exports if the deal is extended. In this context, Russian wheat export prices rose slightly last week amid continued strong demand from importers. Notably, according to the IKAR, the price of Russia’s new wheat crop with 12.5% protein content, delivered free on board (FOB) from the Black Sea late July-early August, was assessed at the end of last week at $232 a tonne, up from $231 a tonne the previous week. Domestic Russian purchase prices for grade 4 wheat, protein 12.5%, at port elevators of the Black and Azov Seas for the reporting period were: Azov – 13500 (+500) RUB/t; Novorossiysk – 15,000 (+500) RUB/t; Rostov-on-Don – 13500 (+500) RUB/t; Taganrog – 11700 (0) rub./t; Taman – 15,000 (+500) RUB/t. The Russian currency lost more than 10% against the dollar in June and more than 15% in the second quarter as a whole. A weaker ruble made Russian wheat prices still more competitiveness, for importers which buy in ruble and sell in US dollar, increasing demand. In this context, an additional quota for the export of grain from the Russian Federation was formed in the amount of 814.8 thousand tons. The quota was formed on the basis of exporters’ statements about the reduction of their previously received shares in the total quota. Meantime, from July 5, 2023, customs duties for wheat and meslin will rise to 2,609.6 rubles/t (+136.3 / +5.51%), for barley they will remain at the level of 0.0 rubles/t (0 / – —-), for corn will decrease to 832.7 rubles/t (-105.1 / -11.21%).
Local markets’ lack of enthusiasm perhaps was attributable to the continued rainfall, coupled with the volatile US stocks and acreage report on Friday. Russia continues to be the yardstick for value and Australian currency moves are followed more closely than Soft Red Winter wheat price. Delivered Darling Downs current crop did find some selling over the day with the much-anticipated start of the new financial year. Some rains overnight will help the buyers, with 15mm recorded across the southern Downs. The southern market was a little more opaque. Feed grain markets showed moderate signs of weakness but with little enthusiasm. Since the beginning of May Victoria is running around 150pc of normal rainfall – but the El Niño risk remains and the weather effect on crop outcomes, as we know, it’s all about the spring season. Meantime, less than half the intended wheat area has been planted on the north-west plains of New South Wales to date, and hopes for any significant increase are resting on forecasts for rain this week. The Bureau of Meteorology is forecasting up to 25mm of rain up to Thursday, but agronomists say more like 50mm is needed to connect with subsoil moisture reserves built up in last year’s sodden season. This region, which stretches from Wee Waa in the south to Walgett in the west and Mungindi to the north, is the only Australian winter-cropping region bearing out the bureau’s prediction for a return to El Niño conditions last seen in 2019. Canola, meantime, was one of the beneficiaries from the acreage adjustment in the USDA report. Local values took a kick with 2023-24 Melbourne grower bids poking their heads above $700/t. However, when considering how wide we have traded for the last 2 seasons it feels like good value.


Leading South Korean animal feed maker Nonghyup Feed Inc. (NOFI) has bought animal feed corn from optional origins in an international tender for up to 138,000 metric tonnes on Monday. The precise volume was unclear but said to be close to 138,000 metric tons, with some initial estimates at 136,000 tons. The corn was bought in two consignments both for the second shipment position sought with arrival around Nov. 25 in South Korea. One consignment was partly bought at the outright price of $240.70 a metric ton c&f, but with some bought at a separate premium of 113.69 U.S. cents a bushel c&f over the Chicago December 2023 corn contract, both with $1.25 a tonne surcharge for additional port unloading. Seller was believed to be trading house Viterra. The second consignment was bought at the outright price of $239.54 a tonne c&f plus a $1.50 a tonne surcharge for additional port unloading. Seller was believed to be trading house Sierentz. South Korea’s Feed Leaders Committee (FLC) is believed to have rejected all offers and made no purchase in an international tender on Tuesday for up to 69,000 metric tons of animal feed corn. Prices were regarded as too high. Lowest price submitted in the tender was believed to be $239.99 a metric ton c&f plus a $1.25 a tonne surcharge for additional port unloading said to have been offered by trading house Olam for 68,000 metric tons. The tender sought corn arrival in South Korea around Nov. 25. The lack of price indications from Chicago meant there was an unusually thin participation in the tender with only six trading houses submitting offers. The Korea Feed Association (KFA) Busan section in South Korea purchased about 66,000 metric tonnes of animal feed corn on Saturday in a private deal without issuing an international tender. The KFA’s Busan section had rejected offers and made no purchase in an international tender for corn early on Friday but re-entered the market after Chicago corn futures fell to around 2-1/2 year lows late on Friday. The corn in the private deal is expected to be sourced optionally from South America or South Africa with the seller free to select the origin. It was purchased at an estimated $243.75 a metric ton c&f plus a $1.25 a tonne surcharge for additional port unloading. Seller was believed to be trading house Cargill. Shipment was between Sept. 7-26 for arrival in South Korea around Nov. 5. If sourced from South Africa, only 50,000 metric tons need be supplied.
Durum wheat
ODC Tunisia issued a tender to buy 4 x 25k durum wheat. Closing date is for July 5, 2023.
Milling wheat
ODC Tunisia issued a tender to buy 4 x 25k of soft milling wheat. Closing date is for July 5, 2023.


Energy markets
Oil prices settled down 1%, as worries about a slowing global economy and possible U.S. interest-rate hikes outweighed supply cuts announced for August by top exporters Saudi Arabia and Russia. Thus, Brent crude futures settled down 1%, or 76 cents, at $74.65 a barrel while U.S. West Texas Intermediate crude settled down 1.2%, or 85 cents, to $69.79. Saudi Arabia on Monday said it would extend its voluntary cut of one million barrels per day (bpd) for another month to include August, the state news agency said. Russia, also will reduce oil exports by 500,000 bpd in August, Deputy Prime Minister Alexander Novak said. The cuts amount to 1.5% of global supply and bring the total pledged by OPEC+ oil producers to 5.16 million bpd. However, oil prices moved lower after business surveys showed global factory activity slumped in June as sluggish demand in China and in Europe clouded the outlook for exporters. On this morning, oil prices rose. Brent crude futures indeed climbed 34 cents, or 0.46%, at $74.99 a barrel by 06:18 GMT. U.S. West Texas Intermediate crude were at $70.12 a barrel, up by 33 cents, or 0.47%. However, fundamentals are not having as much influence on price direction as one would expect. Conversely, the uncertain macro outlook is what the market is focused on, analysts said.
Ocean freight markets
The Baltic Exchange’s main sea freight index recorded its lowest level in two weeks on Monday as demand fell across vessel segments. The overall index, indeed, fell 23 points, or 2.1%, to 1,068. Notably, the capesize index dipped 53 points, or 3.1%, to 1,651, declining for the sixth consecutive session. Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, decreased $441 to $13,692. The panamax index was down 16 points, or 1.6%, at 1,014 — hitting its lowest level since Feb. 22. Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, slid $143 to $9,130. Among smaller vessels, the supramax index fell 2 points to 747.
Equity markets
US stock indexes posted modest gains in a pre-holiday trading session. Strength in technology stocks came from Tesla which rallied more than +6%. Rivian Automotive, another electric-vehicle company, jumped 17.4%. Strength in regional bank stocks was also supportive for the broader market. In addition, U.S. stocks had carry-over support from a rally in Chinese stocks Monday on better-than-expected Chinese manufacturing news and an early rally in the Euro Stoxx 50 to a 15-year high. However, stock indexes fell back from their best levels on economic concerns after the U.S. Jun ISM manufacturing index unexpectedly fell -0.9 to 46.0, weaker than expectations of an increase to 47.1 and the steepest pace of contraction in more than three years. The Jun ISM prices paid sub-index fell to -2.4 to a 6-month low of 41.8, a bigger decline than expectations of 44.0. Also, an increase in inflation expectations was negative for stocks after the 10-year breakeven inflation rate rose to a 5-week high. U.S. May construction spending rose +0.9% m/m, stronger than expectations of +0.6% m/m. As a result, bond yields moved higher, with the 10-year T-note yield rising +2.6 bp to 3.862%. In this context, the S&P 500 rose to 4,455.59, its highest level since April 2022. The Dow Jones Industrial Average advanced 0.1% to 34,418.47, and the Nasdaq composite added 0.2% to 13,816.77. On this morning, Asian stock markets were mixed after Australia’s central bank kept its key lending rate unchanged. Tokyo and Seoul retreated. Hong Kong and Sydney advanced. Shanghai was unchanged. Notably, the Shanghai Composite Index held steady at 3,243.86 while the Nikkei 225 in Tokyo shed 0.9% to 33,445.55. The Hang Seng in Hong Kong advanced 0.4% to 19,393.33. Sydney’s S&P-ASX 200 gained 0.5% to 7,280.80. The Kospi in Seoul lost 0.3% to 2,594.32 while India’s Sensex opened up 0.1% at 65,292.46. New Zealand and Bangkok advanced while Singapore and Jakarta declined.
Currency trading
The dollar index rose +0.07% on the view the Fed will keep raising interest rates. The dollar, however, fell back from its best levels after the Jun ISM manufacturing index unexpectedly fell to a 3-year low. As for the EUR/USD, it rose +0.03%, with the euro recovering from early losses and posting modest gains on hawkish comments from ECB Governing Council member and Bundesbank President Nagel, who said ECB rate hikes are not yet finished. The EUR/USD initially moved lower after the Eurozone Jun S&P manufacturing PMI was revised downward to a 3-year low. As for the USD/JPY, it rose +0.28%, with the yen falling moderately and is just above last Friday’s 7-1/2 month low against the dollar on central bank divergence. The Fed and ECB continue to raise interest rates while the BOJ maintains QE and record-low interest rates. Losses in the yen were limited thanks an improvement in Japanese business confidence after the Q2 Tankan large manufacturing business conditions increased for the first time in the last seven quarters. On this morning, the dollar declined to 144.62 yen from Monday’s 144.72 yen. The euro fell to $1.0898 from $1.0913.

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

Author: Sandro F. Puglisi

My Agile Privacy
Questo sito utilizza cookie tecnici e di profilazione. Cliccando su accetta si autorizzano tutti i cookie di profilazione. Cliccando su rifiuta o la X si rifiutano tutti i cookie di profilazione. Cliccando su personalizza è possibile selezionare quali cookie di profilazione attivare.
Attenzione: alcune funzionalità di questa pagina potrebbero essere bloccate a seguito delle tue scelte privacy