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Main Markets

United States of America
US farm markets closed mixed but mostly higher, on Friday. Corn prices climbed 2.63% higher. Soybeans slid 0.30% lower. The rest of the soy complex was mixed as soymeal gained 0.36%, while soyoil faded 0.97% lower. Wheat prices pulled in double-digit gains, as Chicago SRW gained 3.40%, Kansas City HRW rose 2.85%, and MGEX HRS climbed 2.61%. Wheat rose, as lingering questions over US potential productions and rising geopolitical challenges in the Black Sea region supported prices. Drought conditions in Canada and the northern Plains lent additional support. Also, there were some bargain-buyings during the end week session, after the most-active soft red winter wheat contract on CBOT hit a one-month low on Thursday. Corn followed wheat up on yield concerns. Old-crop soybeans fell while new-crop soybeans ticked up. Investors indeed, continue to question the massive USDA harvests forecast. Also, the most active soybean contract touched a nearly two-week high during the session, thus some funds and investors sold off beans in profit-taking. Still, longer-term forecasts of wetter weather coming to the U.S. grain belt capped any hope for a big rally, traders said. The eastern Corn Belt could see a fair amount of rainfall between until Tuesday, with some areas likely to gather another 1” or more during this time. Further out, NOAA’s new outlook predicts a return to seasonally dry conditions for most of the Corn Belt between July 21 and July 27, with cooler-than-normal conditions developing throughout the Ohio River Valley. Also, Ag commodities overall on Friday were bolstered by recent weakness in the U.S. dollar. In this context, commodity funds were buying 10,000 lots of corn, 7,500 lots of wheat and 500 lots of soybeans. For the week, corn ended up 3.9% and back above $5. Soybeans took back all of the previous week’s weakness, with a 3.68% move higher. Soymeal gained 5.21%, and bean oil rose another 3.96%. The wheat complex also pushed higher this week, thanks Friday’s strength. Minneapolis spring wheat led the charge, with a 4.31% weekly move. Chicago SRW contracts tagged along, up 1.85%. Kansas City HRW went home with a 1.31% gain. The weekly Crop Progress report from NASS on Monday showed 22% of the corn crop was silking as of 7/9. That was up from 8% a week erlier and is 1 ppt ahead of the 5-yr average. The report also showed 3% of the crop reached the dough stage, up 1% point from the average. NASS showed corn conditions improved to 55% as good-to-excellent from 51% a week earlier and above the average expectation for 53%. However, the rating is the worst for this time of year since 2012 when drought in the United States raised global crop prices. As for soybean, the report showed 39% of the national soy crop was blooming as of 7/9. That compares to 35% on average. NASS had 10% setting pods, up from 4% a week earlier and 3% points ahead of the average. National conditions were 1% point better with Good/Ex now at 51%, but below analysts’ expectations of 52%. As for wheat, only 47% of the spring wheat crop was rated as good-to-excellent, down from 48% a week earlier, defying analysts’ expectations for an improvement to 49%. NASS also reported spring wheat was 72% headed as of 7/9, up from 51% a week earlier and 5% points ahead of the average pace. Finally, the report showed winter wheat harvest advanced 9% points to 46% complete nationally, and 40pc of the crop was rated good to excellent, unchanged from a week earlier. The 5-yr average harvest pace would be 59% harvested by 7/9, however. Kansas was shown 59% harvested compared to 84% on average. HRW wheat areas reported ongoing wet weather across Kansas and Oklahoma which continued to delay harvest progress and raised more concerns over quality and abandonment. On Wednesday, the USDA released its latest WASDE report, offering up generally unfavorable data for traders to digest. The reaction overall bearish primarily based on US corn yield estimate at 177.5 bushels per acre (bu/ac) whereas the trade was looking for 176.5bu/ac. On wheat, US 2023/24 production was forecast 47.3Mt, 1.5Mt above expectations and 2Mt above the June report. The winter wheat production is seen up 6 % from June forecast. Hard Red Winter production is up 10 percent from last month. Soft Red Winter is up 5 percent from the June forecast. White Winter was down 1 percent from last month. Durum wheat production was forecast, down 16 percent from 2022. Other spring wheat production was forecast, down 1 percent from last year. The increase came from both from acres (+600k) and yield (+1.2bpa). Feed use was increased 20 million bushels (Mbu) which saw ending stocks increased up 30Mbu. On corn, the decreased yield along with last week’s additional 2 million acres (Mac) saw production up 55Mbu from the June report. Ending stocks were up 5Mbu at 2.262Mbu, use unchanged. Soybean yield was left unchanged at 52bpa however when coupled with the 4Mac lost last week in the June planting report, production was down 210Mbu. This was offset with lower crush (-10Mbu) and lower exports (-125Mbu) to see ending stocks down 50Mbu, but 100Mbu above trade expectations. Globally, 23/24 corn production was up 1.7Mt from the June report with increases in US and Ukraine offset by a reduction in the EU. World wheat production was forecast down 3.5Mt the increase in the US offset by reductions in Argentina (-2Mt), Canada (-2Mt) and the EU (-2.5Mt). Australian forecast was left unchanged at 29Mt. Soybean world production was down 5.4Mt, reflecting the US losses and saw a tightening of global ending stocks by 4.2Mt. As a result, 2022/2023 world wheat ending stock rose by +2.65 Mt to 269.31 Mt. 2023/2024 world wheat ending stock was seen with a downward revision of by -4.18 Mt to 266.53 Mt. 2022/2023 world corn ending stock declined by -1.25 Mt to 296.30 Mt, but 2023/2024 was revised up by +0.22 Mt to 314.12 Mt As for soya 2022/2023 world ending stock increased by +1. 58 Mt to 102.90 Mt, while 2023/2024 ending stock was revised down by -2.36 Mt to 120.98 Mt. As for cash average prices USDA left the cash average corn prices at $6.60 and $4.80 in the July WASDE. USDA left the old crop soybean cash average price at $14.20, but raised the new crop price estimate by 30 cents to $12.40. The meal cash price was set at $375/ton and bean oil at 60 c/lb. As for wheat the cash average price fell by 20 cents from the June WASDE to $7.50. Meantime, weekly EIA data showed a 28k bpd loss in ethanol output vs last week as producers averaged 1.032m barrels per day through the week that ended 7/7. Ethanol stocks were 398k barrels looser at 22.658 million. On Thursday, Weekly Export Sales data pegged corn bookings at 468,400 MT, a sharp increase on the week. New crop bookings also improved to 470,800 MT. Export commitments are now 94% of the newly revised 1.65 bbu, compared to the 5-year average of 102%. As for soybean, the report tallied old crop bean bookings falling to just 80,600 MT. New crop sales were also lighter at 209,200 MT. Commitments for old crop are now 98% of the USDA forecast, compared to the 5-year average pace at 103%. As for wheat, data showed wheat bookings slipping slightly to 395,700 MT during the week of July 6. That was down 2.5% from last week and by 61% from the same week last year. New crop export commitments are 5.025 MMT, 25% of the USDA full year export projection, vs. the 33% average pace. Finally, ahead of the NOPA report due later today, analysts estimate the NOPA members processed 170.568 mbu of soybeans in June. That would be 4.1% lower than May’s tally 177.9 mbu if realized, but 3.6% higher than June 2022’s crush, and still a new record for the month. There was one less processing day in June. Soy oil stocks are expected to be between 1.816-1.872 billion lbs through June 30. In this context, corn basis bids were steady to mixed on Friday after moving as much as 10 cents higher at an Indiana ethanol plant and as much as 10 cents lower at an Iowa river terminal. Soybean basis bids were steady to weak after eroding 10 to 20 cents lower across four Midwestern processors and easing 2 cents lower at an Ohio elevator. For wheat, basis ended the week mixed across classes and export regions. HRS basis was down in the PNW and the Gulf. HRW was up in the Gulf and flat in the PNW indicating that basis may hit its lowest point. A stronger basis could signal that exporters are poising themselves to originate more grain. SRW basis was down, pressured by the harvest progress, while SW prices remained flat, supported by concerns of dryness in the PNW. As a result, as for July 13, 2023, FOB prices for US wheat No 2 Hard Red Winter (HRW) were at $330/mt, down $15/mt week on week. US wheat No 2 Soft Red Winter (SRW) was valued at $247/mt, down $9/mt from prior week. Northern Durum offers from the Great Lakes, for August 2023 delivery were at $10.89/bu ($400.00/mt, up $35/t), up $0.96/bu. As for corn, US corn 3YC (Gulf) was at $255/mt, up $11/mt. As for soybean, US soybean 2Y (Gulf) quoted at $582/mt, down $3/mt. USDA’s weekly Ethanol report had cash ethanol prices were 2 to 10 cents higher for the week from $2.30 to $2.42/gal regionally. Cash DDGs traded from $185 to $215 through the week, mostly $5-10/ton lower. Corn oil quotes were mostly 3 to 7 cents higher this week from 58 to 66 cents/lb regionally. USDA showed the cash B100 price was stronger in MN by 55 cents to $5.60/gal, but weaker in IL to $5.73/gal. After the sessions close, CFTC Commitment of Traders report showed managed money was shown to increase their net short position by 44,843 contracts as of Tuesday. That took the bearish position to -65,052 contract by July 11 according to CFTC data. As for soybean, data pegged managed money spec funds at a net long position of 82,748 contracts in soybeans futures and options as of Tuesday. That was a reduction of 6,394 contracts on the week. For wheat, data showed spec traders trimming 1,878 contracts from their net short in Chicago wheat, now at -52,128 contracts as of July 11. In KC wheat, they added just 824 contracts to their net long position, at 14,584 contracts by Tuesday. On this morning, Chicago corn and soybean prices gained more ground, building on last week’s rise. Wheat climbed more than 1% as slowing exports from the Black Sea region and lower output in China supported prices. Notably, as of 6:52 am (GMT), soybeans climbed 0.68% to $14.90 a bushel, corn rose 0.89% to $5.11 a bushel, while wheat gained 1.44% to $6.71 a bushel.
The Alberta Crop Report for the week ending 11 July, rated spring wheat condition at 46.4% good/excellent (it was at 45.3pc as of June 27), durum wheat at 34.3% (47.4pc as of June 27) barley at 43.4pc (39.8pc June 27) and canola at 43.6pc (42.9pc). Over the last 30 days, parts of the province have received much-needed rains. However, some areas, as well as the entire South Region, only received 0-50 mm of rain. Currently, 45 per cent of all crops are rated in good to excellent condition, well below the 5- and 10-year averages of 66 and 68 per cent, respectively. All crops are ahead of the 5-year average as half complete head emergence and 75 per cent flowering is average for this time of year. Provincially, the best rated crops are spring wheat, oats, lentils, potatoes and chickpeas. The lowest rated crops are durum, mustard and flax. In Manitoba, crop development has been rapid. Winter cereal crops ranged from hard dough growth stage to early dry down. If weather allows, harvest could begin in ten days to two weeks in some areas. Winter cereals remained in good to excellent condition. Corn growth continues to progress quickly, and varies greatly depending on soil moisture and region. Spring wheat is done flowering. The wheat crop is rated mostly fair to good. In Saskatchewan, for the period July 4 to July 10, 2023, crops continued to progress with the warm temperatures across the province. Canola is beginning to pod and wheat is beginning to flower in many areas. Dry conditions are impacting parts of the province and many producers are hoping for rain immediately. Crops are either ahead or at normal stages of development for this time of year. Fall cereals are 31 per cent ahead and 66 per cent at normal stages of development. Spring cereals are 33 per cent ahead and 60 per cent at normal stages of development. Oilseeds are also 33 per cent ahead and 58 per cent at normal stages of development. Pulse crops are 28 per cent ahead and 67 per cent at normal stages of development. Crops are generally in good to fair condition. Provincially, winter wheat and soybean crops are in the best condition, with 60 per cent of winter wheat in good condition and 67 per cent of soybean in good condition. Spring wheat condition was at 50% as good or excellent, and 34% as fair. Durum wheat in good or excellent condition was just 26%, while in fair conditions was 40%. 34% was as poor or very poor condition. Thirty-five per cent of mustard and 21 per cent of canary seed is in very poor condition. Meantime, as of week 49, or the week ended July 9 the Canadian Grain Commission in its Grain Statistics Weekly showed producers’ deliveries of common wheat were at 310,4k mt. That was down from 455,5k mt posted prior week. Deliveries of durum wheat were also weaker at 59,2k mt, compared with 81,2k mt showed in prior week. Canada exported 335,7k mt of common wheat in week 49. That was down from 396,4k mt of a week earlier. Durum wheat exports, tumbled moving down from 87.6k mt to 23.0k mt. Total Commercial Stocks of common wheat stood at 2.118,7k mt, slightly down from 2.121,1k mt in the previous week. Total durum commercial stocks in contrast were higher, moving up from 278,1k mt a week earlier, to 299,4k mt. Cumulative exports for common wheat were at 18.504,0k mt. That is compared 10.537,8k mt a year ago. Durum cumulative exports reached 4.924,6k mt vs 2.451,1 a year ago. Commercial grain stocks of principal field crops at 4.7888 million metric tons, were down 44,200 metric tons from the previous week. That was down 499,160 mt or 9.4% from the five-year average while is the tightest commercial stocks reported for this week in 10 years. June’s Canada outlook for principal field crops had estimated total stocks of all principal field crops to increase by 947,000 mt from 2021-22 to 2022-23 to 10.583 mmt. While this will include estimated row crop stocks in the east, note that the current forecast shows corn stocks falling by 346,000 mt while soybean stocks are forecast to rise only modestly. Should exports continue at their current pace over the remaining weeks of the crop year, it would appear that overall stocks will tighten year over year. Over the past five years, commercial stocks reported for week 52 accounted for a range from 31.8% to 42.3% of total stocks, while averaging 36% over the five years. In this context, as of July 14, the 1CWAD (Canadian durum wheat with 13,5% protein) average regional price was at C$402.06/t, up C$11.43/t. Meanwhile durum wheat price –CA St Lawrence (CWAD) was offered at US$380/t FOB, up C$10/t from a week earlier. The 1 CWRS (Canadian common wheat with 13,5% protein) average regional price was at 399.38/t, up C$12.81/t. (USD/CAD = $1.3214 down from $1.3276 the prior week).
South America
Brazilian farmers will reap an estimated 317.5 million metric tons of grains this season. CONAB reported Brazilian corn production was 127.8 MMT, just a 2.05 MMT increase from the previous estimate and well below USDA’s 133 MMT. They had 2nd crop specifically as 98.04 MMT, up from 96.3 million in June. Also, CONAB unexpectedly trimmed their soybean output – mainly with a 1.5 MMT loss in RGDS, for a 154.566 MMT figure. USDA left their estimate at 156 MMT in the WASDE report. 2023-24 wheat production was revised up by 0.7Mt, to 10.4Mt (10.6Mt previous year). Meantime, Brazil’s Anec estimates that the country will export 10.45 MMT of soybeans this month. That would be a year-over-year increase of more than 49%, if realized. Anec also anticipates Brazilian soymeal exports will reach 2.5 million metric tons in July. In Argentina, the Rosario grains exchange cut its forecast for Argentina’s ongoing wheat harvest by about 4%, compared to a prior crop estimate, according to a report issued on Wednesday that blamed the revision on a lack of rainfall in some farming areas. Notably, the exchange estimates that the 2023/2024 season will yield 15.6 million metric tons, down from its prior forecast of 16.2 million metric tons. It added that the estimate for the 2023/2024 wheat planting area has been cut by 200,000 hectares, to total 5.4 million hectares. It noted that the cut would have been greater if there was no recent rainfall. In its monthly report, the exchange also projected the recently completed 2022/2023 soybean harvest – Argentina’s top cash crop – at 20 million metric tons, down about 2% from the 20.5 million tons previously expected. The exchange also maintained its 2022/2023 corn harvest estimate at 32 million metric tons, with 60% of the farming area for the grain planted so far. Buenos Aires Grains Exchange reported that 58% of corn fields were harvested, maintaining their 34 MMT estimate. USDA has Argentina corn at 34 MMT as well. The Exchange also reported that for the week ending 12 July, 2023-24 wheat planting was 86pc complete (91pc previous year, 93pc avg), with conditions rated 88pc fair/excellent (86pc previous week, 77pc previous year). Varied rainfall was noted across cropping regions, with strong rainfall across the south, in parts of Buenos Aires and Entre Ríos hampering progress. 2023-24 barley sowing was 77pc complete (86pc previous year). While recent rainfall improved overall soil moisture levels, there were some cases of flooding in the southeast of the agricultural region. In this context, as of July 13, price for Argentina wheat Grade 2 quality, delivered Up River was at US$332/t, down $8/t from the prior week. Price for Argentina feed corn (Up River) was at US$223/t, down $2/t w.o.w.. Price for Argentina feed barley (Up River) was at US$235/t, unchanged. Price for Argentina soybean (Up River) was at US$548/t, down $12/t. Price for Brazilian feed corn (Paranagua) was at US$230/t, up $12/t. Price for Brazilian soybean (Paranagua) was at US$521/t, up $6/t.
In Europe, grain prices rose on worry about the safe shipments of Ukraine’s grain exports, while rapeseed fell on profit takings and decline in other oils. Notably, September wheat on the Paris-based Euronext exchange rose 1.09% to 231.75 euros ($260.05) a metric tonne, although July 14 was a public holiday in France and kept some market participants away. President Vladimir Putin had said on Thursday Russia was set to withdraw from the Ukrainian shipping deal unless its own demands are met, reaffirming Moscow’s tough stance ahead of the deal’s expiry. Turkish President Tayyip Erdogan had anticipated on Friday he agreed with Putin that the deal should be extended and that it would hopefulled be extended from today deadline. The market is already pricing in a high chance of cancellation. Thus, if actual cancellation would happens, prices will increases more, only whether the EU will receive more wheat export demand. Currently, indeed, there are very large and cheap supplies of Russian wheat available to world importers. Also, the EU wheat crop is being harvested, making new supplies available. However, Stratégie Grains revised EU production estimates downward in its July update, reflecting reduced yield prospects from the advancing harvests across Europe. It cut 2023-24 common wheat forecast by 2.5Mt to 126.2Mt (125.1Mt previous year). A larger than anticipated proportion of the crop was expected to be downgraded to feed due to wet conditions. Barley production was cut by 0.8Mt, to 47.1Mt (51.2Mt), mainly on reductions for Scandinavia and Germany where dry conditions adversely affected crops. Low yields were confirmed in Spain, tied to severe drought. Maize production forecast was cut by 0.4Mt, to 60.8Mt (52.2Mt), predominantly due to unfavourably dry weather across many growing regions. Yields potentially could decline even further, unless significant precipitation was received during July. In France, French farm office FranceAgriMer slightly lowered its ratings for the current soft wheat crop, which is now 80% in good-to-excellent condition through July 10 (81pc previous week, 64pc previous year), durum was at 68pc (70pc, 55pc), winter barley at 80pc (80pc, 62pc), spring barley at 73pc (76pc, 51pc), and maize at 82pc (83pc, 83pc). The 2023-24 common wheat harvest was at 33pc complete (10pc previous week, 45pc previous year), durum at 65pc (26pc, 78pc), winter barley at 95pc (77pc, 95pc) and spring barley at 35pc (16pc, 37pc). Harvesting is now drawing to a close south of the Loire, while wheat cuts are stepping up north of the Seine. However, showers in the east and then north of France have slowed harvesting progress over the past two days. Wheat yields continue to be extremely heterogeneous, even within individual farms. Each plot and each variety seems to be drawing its own conclusions from what was once again an atypical spring. For soft wheat, FranceAgriMer took the Agreste production figure to 35 Mt. The Agreste report animated the debates, as the soft wheat yield estimated at 7.34 t/ha by Agreste notably came out lower than that of Arvalis-Intercéreales published last week at 7.5 t/ha. However, this remains higher than last year’s 7.17 t/ha. Additionally, durum wheat is displayed at 1.297 Mt against 1.346 Mt last year. In Germany too, the association of farm cooperatives trimmed its wheat forecast, confirming its expectation of a smaller crop this year. However, a 16-month high for the euro against the dollar capped gains, underscoring weak export prospects for the new season. Per the latest data from the European Commission, the 2023/24 soft wheat marketing year has begun slower so far, after reached 360.867t through July 9. That was a 46% year on year decline. Corn imports, which reached 225.008 t over the first nine days of July are 35% below last year’s pace so far. Soybean imports, which have reached 141.542 t during the first nine days of July, were 67% below last year’s pace so far. EU soymeal imports reached 206,060 metric tons during the same period, which was 54% below last year’s pace so far. On this wake, Farm office FranceAgriMer forecast that French soft wheat exports outside the European Union in the 2023/24 season that began this month would reach 9.6 million metric tons, down from 10.1 million in 2022/23. In contrast, French soft wheat exports within the 27-country EU were projected to rise in 2023/24 to 7.79 million metric tons from 6.38 million last season, as demand within the EU is expected to be bolstered by weather damage to crops in Spain and Italy. The estimate of non-EU soft wheat exports in the 2022/23 season had been revised down from 10.2 million expected a month ago. In its first supply and demand outlook for 2023/24, FranceAgriMer projected French soft wheat stocks at the end of the season at 2.67 million metric tons, down from 2.79 million in 2022/23. Durum wheat is seen at a historically low stock of only 70,000 t at the end of the 2023/2024 campaign. For barley, FranceAgriMer forecast 2023/24 exports outside the EU at 2.5 million metric tons, down from 3.2 million in 2022/23, and shipments within the bloc at 3.75 million metric tons, up from 3.18 million last season. Barley stocks at the end of 2023/24 barley stocks were seen rising to 1.53 million metric tons from 1.18 million in 2022/23. For 2022/23, it cut its maize ending stocks estimate to 2.00 million metric tons from 2.11 million last month, mainly reflecting a reduced supply estimate. However, even if Ukrainian grains would be blocked, is not sure north European grains will regain competitiveness, especially in Spain, which is expected to be such a big buyer in coming months. On this wake, the import tender held by Algeria on Thursday showed once again that Russian wheat remained cheaper than western European supplies, with purchases reported were around $269 to $269.50 a metric ton cost and freight (c&f).
As of July 13, in Ukraine, early grains and pulses were harvested through 643.76 thsd ha (6%), with the yield at 3.35 t/ha and production – 2.157 mln tonnes, reported the press service of the Ministry of Agrarian Policy of Ukraine. In particular, harvest pace includes: barley – through 352.36 thsd ha (25%), with the yield at 3.72 t/ha and production at 1.311 mln tonnes; wheat – 211.82 thsd ha (5%), with the yield at 3.68 t/ha and production at 778.65 thsd tonnes; peas – 44.99 thsd ha (31%), with the yield at 2.08 t/ha and production at 93.74 thsd tonnes. The harvesting campaign is being conducted in all regions of Ukraine, except Luhansk. According to indicators of the harvested area and the total gross collection, as of July 13, the agricultural producers of the Odesa region are in the lead – 241.6 thsd ha (25%) and 746 thsd tonnes, respectively. The highest average grain yield is currently recorded in the Chernivtsi region – 6.8 t/ha, but the harvesting campaign in the region was only 2% completed. As of the reporting date, winter rapeseed in Ukraine was harvested from 158.13 thsd ha (11%), and production reached 329.48 thsd tonnes with an average yield of 2.08 t/ha. Meantime, according to the State Statistics Service, in 2023/24 MY, as of July 12, Ukraine exported 894 thsd tonnes of grains and pulses, reported the press service of the Ministry of Agrarian Policy. That is compared with 598 thsd tonnes last year. In particular, in the current MY Ukraine shipped: – wheat – 283 thsd tonnes (119 thsd tonnes on 2022/23 MY); – barley – 81 thsd tonnes (40 thsd tonnes); – rye – 0.1 thsd tonnes (0) – corn – 525 thsd tonnes (431 thsd tonnes). The total export of flour from Ukraine, in 2023/24 MY, as of July 12, amounted to 3.5 thsd tonnes (1.7 thsd tonnes a year earlier), including wheat flour – 3.4 (1.4) thsd tonnes.
As of July 10, Russian farmers harvested 11.1 million tons of grains. Grains and legumes have been threshed from an area of 2.9 million hectares, according to the Ministry of Agriculture of the Russian Federation. That included wheat for 6.3 million tons, barley for 2.6 million tons, and rapeseed for 262.8 thousand tons. The current harvesting rates and yields for a number of crops exceed the level of the previous year. SovEcon expects Russia’s July wheat exports to total between 3.7Mt and 4.1Mt, compared to an average of 2.8Mt. The high export pace is facilitated by favourable market conditions and record-high stock levels. According to Interfax, Russian Railways report that during the first six months of 2023, railway transportation of grain cargo, including grain, feed, cereals, flour and other products of milled grain is estimated at 18.5Mt, 39pc more than over the same period last year. Russian origin wheat remains the cheapest in the world with the price spread to the next cheapest origin – EU Black Sea 12% – at least around $15/mt. The CPT Novorossiysk price index for 12.5% was seen at RUB16,100/mt. Domestic prices have picked up since late June by around RUB1,240/mt. The government encouraged to sell not below a minimum price of $240/mt for August, but to now it is a challenge to sell at $230/mt FOB even. Indeed, there has been a lack of firm demand in recent days and, as such, 12.5% wheat offers were placed at $230-235/mt FOB NTTK officially – close to the price floor indicated. Russia harvested its biggest-ever wheat crop in 2022/23, weighing in at 104.5 million mt. Even though the export levels have also set new records, the country’s wheat stocks are also huge. Furthermore, the forecast for the just-started marketing year has also come in at a high level – with ideas of crop indicated at up to 87 million mt by local analysts. That means Russia need to show record exports in the 2023/24 marketing year too.
China’s summer wheat output fell 0.9 per cent this year, official data showed on Saturday, the first decline in seven years after heavy rain hit key growing areas just ahead of the harvest. Output in the world’s top grower of the grain fell to 134.53 million metric tons, the National Bureau of Statistics said, although it added that this year still brought a bumper harvest. Wheat acreage increased by 0.4 per cent but yields were down 1.3 per cent, the statistics bureau said. The output drop is expected to have at most a minor impact on China’s plentiful state stocks, analysts said. On the other hand, China’s CASDE forecasted the 23/24 soybean production at 21.46 MMT which was unchanged from last month and 1.17 MMT higher yr/yr. Their projected imports were marked at 94.22 MMT, also unchanged from the June report. China imported 10.27 million metric tons of soybeans in June, up 24.5% from a year earlier, customs data showed on Thursday. However, Chinese imports were significantly lower than the record 12.02 million tons in May. Total soy arrivals in the first six months of the year reached 52.58 million metric tons, up 13.6% year-on-year, the General Administration of Customs data showed. Another 10-11 million metric tons are expected to arrive this month.
Southeast Asia
Malaysian palm oil prices ended with a modest recovery on Friday and logged a third consecutive weekly gain as the strength in rival edible oils countered a firmer yen. Notably the benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange closed 12 ringgits, or 0.3%, higher at 3,877 ringgit ($857.17) a metric ton. Palm rose 1.1% for the week, up a third consecutive week for its longest-winning streak since February. India’s palm oil imports jumped 56% to a three-month high in June as buyers took advantage of a dip in prices to increase purchases, a leading trade body said on Friday. Malaysia has maintained its August export tax for crude palm oil at 8% and raised its reference price, a circular on the Malaysian Palm Oil Board website showed on Friday. Meanwhile, top producer Indonesia is planning to set its crude palm oil reference price higher at $791.02 per metric ton for July 16-31, senior economic ministry official Musdhalifah Machmud said on Wednesday, making it less competitive against the Malaysian palm oil. Elsewhere, there is growing concern that India is considering banning rice exports in a bid to tackle inflation, as reported by Bloomberg. India is the world’s biggest rice exporter, and any move to limit exports could set off a scramble to secure alternative supplies and drive prices up even higher.
According to the latest data from the Australian Bureau of Statistics, the country exported 447,776 tonnes of canola in May, up 56 percent from the 287,086t shipped in April. The largest markets for May-shipped canola were Pakistan on 166,529t, the United Arab Emirates on 148,856t and Japan on 120,694t. May shipments to Europe comprise only 64t to Belgium, in contrast to May 2022, when 416,352t was exported to European nations to form 77pc of the monthly total shipped of 542,396t. According to some private analysts, monthly shipping rates this year are expected to drop to around 400,000t in June and July. Currently estimate has the Australian canola crop now in the ground is pegged at 5.72 million tonnes (Mt), 29pc smaller than the record 2022-23 crop. However, new-crop estimates from private analysts is well above ABARES initial figure released last month of 4.91Mt. Also, Australia exported 599,767 tonnes of barley and 452,182t of sorghum in May, according to the latest data from the Australian Bureau of Statistics. Barley comprised 535,102t of feed and 64,665t of malting. The feed barley figure is up 14 percent from the 469,640t shipped in April, while the malting figure of 64,665t is down 48pc from the April total of 123,223t. Sorghum had a huge month, with 452,182t shipped in May, up 25pc from the 361,058t exported in April. The three largest-volume feed barley markets were Saudi Arabia on 126,325t, Japan on 105,203t, while China on 445,641t accounted for 99pc of sorghum exports. The major malting markets for May-shipped barley were Vietnam on 34,803t, Peru on 17,941t and Ecuador on 5000t. Meantime, local markets ended the week without much fanfare with ASX Jan 24 wheat unchanged at AUD$381/t. After a relatively dry week last week we can expect more of the same this week, with the rainfall map showing less than 5mm on the forecast for most major cropping regions with the exception of eastern Vic and southern WA, where 10-15mm is expected. In eastern Australia, the northern markets continue to trade at a premium to the south reflecting the drier conditions. The GIWA July crop report notes that the WA grain crop could potentially reach 18Mt in 2023-24, although if the predicted dry spring eventuates, this will not be the case.



Energy markets
Oil prices fell more than a dollar a barrel on Friday, as the dollar strengthened and oil traders booked profits from the strong rally. Crude benchmarks however, recorded their third-straight weekly gain. Notably, the Brent crude futures settled at $79.87 per barrel, down $1.49, or 1.8%, while the U.S. West Texas Intermediate crude futures fell $1.47, or 1.9%, to settle at $75.42 a barrel. Oil prices gained nearly 2% on a weekly basis. Supply disruptions in Libya and Nigeria heightened concerns that the markets will tighten in coming months. Russian oil exports have also decreased significantly and, if this trend continues next week, it would probably drive prices up further since Russian oil exports are set to be reduced by 500,000 bpd in August. Also, U.S. energy firms past week cut the number of oil and natural gas rigs operating for a 10th time in 11 weeks, energy services firm Baker Hughes said on Friday. The oil and gas rig count, an early indicator of future output, fell by 5 to 675 in the week to July 14. Baker Hughes said that puts the total count down 81 rigs, or 11%, below this time last year. U.S. oil rigs fell 3 to 537 last week, their lowest since April 2022, while gas rigs fell 2 to 133. In the Permian drillers cut five rigs, bringing the total oil and gas count down to 337, the lowest since May 2022, according to Baker Hughes. Data provider Enverus, which publishes its own rig count data, said drillers kept the number of rigs operating flat at 732 in the week ended July 12. That put the total count down about 17 rigs in the last month and down 14% year-over-year. Thus, this week the rally could resume as easing inflation, plans to refill the U.S. strategic reserve, supply cuts and disruptions could support the market again. However, this morning oil prices extended their decline into a second session. China’s second-quarter growth came in weaker than expected, fuelling concern about Chinese demand. China’s gross domestic product indeed grew 6.3% year on year in the second quarter, data released by the National Bureau of Statistics showed. That was down from analysts forecast of 7.3%, although better than the 4.5% expansion in the January-March quarter. Chinese refineries processed 1.6% more crude daily in June than May as they ramped up operations after spring maintenance. Apparent oil demand grew at a strong pace year on year, but the market seems focused on the headline (GDP) numbers. Beijing is likely to be cautious in timing any new stimulus measures, to avoid a driving commodities prices higher. Meanwhile Libya resumed production on the weekend. Thus, Brent crude futures fell 91 cents, or 1.1%, to $78.96 a barrel by 06:28 GMT, and U.S. West Texas Intermediate crude was at $74.55 a barrel, down 87 cents, also down 1.1%.
Ocean freight markets
The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, marked its first weekly gain in three even as it inched lower on Friday on weaker demand in the larger vessel segments. The overall index, indeed, fell 13 points, or 1.2%, to 1,090. However, the main index rose 8% for the week, its best since the week ended June 23. Notably, the capesize index shed 36 points, or about 2.1%, to 1,655. For the week, the index gained 8.7%. Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, decreased $306 to $13,722. The panamax index dropped 6 points, or 0.5%, to 1,095. It was up 11.3% for the week, its biggest weekly percentage gain since April 7. Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $53 to $9,853. Among smaller vessels, the supramax index remains unchanged at 743.
Equity markets
Positive inflation news were bullish for stocks after the U.S. June import price index ex-petroleum fell -0.3% m/m, a slightly larger decline than expectations of -0.2% m/m. However, US stocks settled mixed on Friday as bond yields rose on hawkish Fed comments, and after the University of Michigan U.S. July inflation expectations indicator unexpectedly rose. Notably, the index rose +8.2 to a 1-3/4 year high of 72.6, stronger than expectations of 65.5. The University of Michigan U.S. July 1-year inflation expectations indicator unexpectedly rose to 3.4% from 3.3% in June, worse than expectations of a decline to 3.1%. Also, the 5-10 year inflation expectations rose to 3.1%, above expectations of no change at 3.0%. As a result, the 10-year Treasury yield rose to 3.82% from 3.77% late Thursday, after the University Michigan report. But it was still well below the 3.98% it sat at late Tuesday, before the inflation reports were released. The two-year Treasury yield, in contrast, closed at 4.73%, down from 4.89% late Tuesday. In this context, the S&P 500 slipped 4.62, or 0.1%, to 4,505.42 to edge back from its highest closing level since April 2022. The Dow Jones Industrial Average rose 113.89, or 0.3%, to 34,509.03, and the Nasdaq composite fell 24.87, or 0.2%, to 14,113.70. For the week, the Dow was up 2.3%, the S&P 500 rose 2.4% and the Nasdaq advanced 3.3%. The S&P 500 remains up 17% for the year to date. On this morning, Asian shares were mostly lower after China reported weaker growth than forecast in the last quarter. Markets in Japan were closed for a holiday and Hong Kong’s market was shuttered due to a typhoon. Notably, the Shanghai Composite index dropped 1.1% to 3,201.09 after China reported its economy grew data. The economy is expected to slow further in coming months, though investors will be expecting moves from Beijing to prop up growth. In Seoul, the Kospi shed 0.4% to 2,617.03, while Australia’s S&P/ASX 200 edged less than 0.1% lower, to 7,301.90. Bangkok’s SET gained 0.6% and the Sensex in India gained 0.2%.
Currency trading
The dollar index rose by +0.15%, with the dollar recovering from a 15-month low, on higher bond yields and U.S. consumer sentiment strength, which rose more than expected to a 1-3/4 year high. Notably, the EUR/USD fell sligthly by +0.05% but posted a 16-1/2 month high. The EUR/USD fell after the German June wholesale price index fell by -2.9% y/y, the most in 3 years, which is dovish for ECB policy. The USD/JPY rose by +0.59%, with the yen retreating from a 1-3/4 month high against the dollar, after Japan May industrial production was revised lower to -2.2% m/m from the initially reported -1.6% m/m, the largest decline in 4 months. However, the dollar index was down 2.3% for the week. The weekly decline was exacerbated by June U.S. producer and consumer inflation data that showed easing price pressures. On this morning, the dollar slipped to 138.57 Japanese yen from 138.82 yen. The euro rose to $1.1236 from $1.1229.
Watching this week’s market …
The Black Sea grain deal expires today and while Turkish President Erdogan said on Friday that Russia had agreed to an extension the Kremlin has not made any statements. Erdogan told reporters that he had spoken with Putin over the phone and claimed he and Putin “are on the same page” when it comes to renewing the deal. A UN spokesperson said on Friday that Secretary-General Antonio Guterres was waiting for a response from Putin. The last ship approved under the deal left Odesa early yesterday. As for the reports from the US, this week begins as any other normal one does, with the Monday afternoon Export Inspections report. We will also get the monthly NOPA report, showing June bean crush, with the NASS Crop Progress report out that night after the sessions close. Skip ahead to Wednesday, and EIA will publish their weekly report including ethanol production and stocks. Thursday afternoons have the release of the weekly Export Sales report. NASS will release their monthly Cattle on Feed and bi-annual Cattle Inventory reports to round out the week.

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

Author: Sandro F. Puglisi

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