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Main Markets

United States of America
US farm markets exhibited plenty of volatility, following Friday USDA’s acreage and stocks reports. Corn prices crumbled 4.56%. Soybean prices soared by 5.01%. The rest of the soy complex also found substantial gains, with soymeal rising 4.02% higher, and soyoil up almost 7% (+6.87%). Wheat prices were mixed but mostly lower, as Chicago SRW lost 2.57%, Kansas City HRW rose 0.88%, and MGEX HRS fell by 0.68%. While corn acres were significantly higher than expected, soybean acres were significantly lower. Thus, soybean prices soared on sharply, while corn suffered the opposite fate. Wheat prices followed corn prices lower, with sellings partly spurred by an acreage increase in wheat too. Notably, the USDA showed corn planted area for all purposes in 2023 is estimated at 94.1 million acres, up 6 percent or 5.52 million acres from last year. This represents the third highest planted acreage in the United States since 1944. Compared with last year, planted acreage is expected to be up or unchanged in 43 of the 48 estimating States. The highest trade guess going in was 93 million, and the average of estimates was for no change. Area harvested for corn, at 86.3 million acres, is up 9 percent from last year. Soybean planted area for 2023 was cut by 4 million at 83.5 million acres. That was down 5 percent from last year. Compared with last year, planted acreage is down or unchanged in 21 of the 29 estimating States. The average of trade guesses was to see a slight 200k acre increase, but even the lowest estimate was only for a 500k acre cut. All wheat planted area for 2023 is estimated at 49.6 million acres, up 9 percent from 2022. That was a slight reduction from the March report as winter wheat dropped 500k acres and spring wheat was raised by 600k. The 2023 winter wheat planted area, at 37.0 million acres, indeed is up 11 percent from last year but down 1 percent from the previous estimate. Of this total, about 25.7 million acres are Hard Red Winter, 7.66 million acres are Soft Red Winter, and 3.68 million acres are White Winter. Area expected to be planted to other spring wheat for 2023 is estimated at 11.1 million acres, up 3 percent from 2022. Of this total, about 10.5 million acres are Hard Red Spring wheat. Durum planted area for 2023 is expected to total 1.48 million acres, down 9 percent from the previous year. Meantime, NASS reported corn stocks in all positions on June 1, 2023 totaled 4.11 billion bushels, down 6 percent from June 1, 2022. The average trade guess was to see 4.25 bbu. That was a 5.6% reduction from last year’s volume and compared to 4.6% tighter stocks last quarter. Of the count, USDA had 2.221 bbu on farms and 1.885 bbu off farms – compared to 2.121 and 2.228 respectively from last year. The March – May 2023 indicated disappearance is 3.29 billion bushels, compared with 3.41 billion bushels during the same period last year. Soybeans stored in all positions on June 1, 2023 totaled 796 million bushels, down 18 percent from June 1, 2022, when were at 967.5 mbu. The trade average guess were for 805. On-farm stocks totaled 323 million bushels, down 3 percent from a year ago. Off-farm stocks, at 473 million bushels, are down 26 percent from a year ago. Indicated disappearance for the March – May 2023 quarter totaled 891 million bushels, down 8 percent from the same period a year earlier. As for wheat, all old crop wheat stored in all positions on June 1, 2023 totaled 580 million bushels, down 17 percent from a year ago. The average trade guess was to see 612 mbu, though the June WASDE was figuring 598 mbu of carryin. On-farm stocks are estimated at 124 million bushels, up 34 percent from last year. Off-farm stocks, at 456 million bushels, are down 25 percent from a year ago. The March – May 2023 indicated disappearance is 366 million bushels, up 11 percent from the same period a year earlier. Old crop Durum wheat stocks in all positions on June 1, 2023 totaled 28.0 million bushels, up 18 percent from a year ago. On-farm stocks, at 12.8 million bushels, are up 38 percent from June 1, 2022. Off-farm stocks totaled 15.3 million bushels, up 6 percent from a year ago. The March – May 2023 indicated disappearance of 7.77 million bushels is up 18 percent from the same period a year earlier. Meantime, private exporters reported to the USDA having sold 132,000 metric tons of soybeans for delivery to China during the 2023/2024 marketing year. For the week, corn prices tumbled all week, with July contract down 12.08%, and Sep 16.46%. New crop December lost 15.86% since the prior Friday. As for soybean, prices got a boost from a nice 70+ cent increase on Friday. July contract indeed, was 4.2% higher sice the prior Friday. August closed 2.7% higher on the week. New Crop November was up 2.53%. Meal joined the rest of the complex, with a 2.06% gain in July contract. Bean oil showed a limit day gain’s, rallying by 12.2% week on week. As for wheat, the complex joined corn with a collapse of its own, last week. Chicago SRW led the bear charge, with losses totaling 12.79% for Sep. Kansas City HRW was pulled down, with a 7.17% drop. MGEX HRS was down 6.49% on the week. Monday’s Crop Progress report tallied corn condition ratings slipping another 5% as of June 25, to 50% gd/ex. As for soybean, data indicated that the US soybean crop was pegged 51% gd/ex, a 3% decrease on the week. As for wheat, data showed the winter wheat crop at 24% harvested, behind the 33% average pace. Condition ratings for winter wheat were up 2% this week at 40% gd/ex. Spring wheat conditions, in contrast, slipped 1% to 50% gd/ex. However, rain across the Corn Belt likely helped some of the drought stressed areas past week, although a derecho tagged along with the precip on Thursday that had some implications on the crop, not known yet. Rainy weather will continue also into this week, with some fields likely to gather another 0.5” to 1” or more until Tuesday. Further out, NOAA’s new 8-to-14-day outlook predicts widespread seasonally wet weather across the central U.S. between July 7 and July 13, with a return to cooler-than-normal conditions for the Midwest and Plains during that time. EIA data on Wedsneday confirmed ethanol producers averaged 1.052m barrel output per day through the week that ended 6/23. That matched prior week’s output level as stocks increased by 175k barrels to 22.979 million. On Thursday, the weekly Export Sales report indicated corn exports improved on the week. However, were just 140,387 MT of corn sold in the week that ended on 6/22. New crop bookings totaled 123,537 MT. Export commitments are still just 89% complete vs. the 5-year average of 101%. As for soybean, the report pegged soybean booking backing off to 227,375 MT during the week. New crop sales were just 17,000 MT. Commitments for old crop are now 96% of the USDA forecast, compared to the 5-year average pace at 102%. As for wheat, data showed 23/24 wheat bookings at another weak number of 155,467 MT during the week that ended on June 22. New crop export commitments are at 4.22 MMT. That is now 28% below a year ago and 20% of the USDA full year export projection, vs. the 29% average pace. It is still early but things are getting off to a very slow start. In this context, corn basis bids were steady to mixed after moving as much as 10 cents higher at an Illinois ethanol plant and as much as 7 cents lower at an Iowa river terminal. Soybean basis bids held steady across the central U.S.. As for wheat, basis ended the week down for most wheat classes and export points. HRS was steady in the Gulf and down in the Pacific Northwest (PNW). With the upcoming Fourth of July holiday, selling interest has turned quiet. However, as harvest approaches, traders indicated that farmers may look to sell remaining wheat stocks, and exporters are positioning themselves for some potential demand. HRW basis continues to drift downward, finding little support as the harvest pace gains momentum in the Southern Plains. SRW basis and SW prices decreased, a function of the volatile futures prices over the last week. As a result, as for June 29, 2023, FOB prices for US wheat No 2 Hard Red Winter (HRW) were at $329/mt, down $33/mt week on week. US wheat No 2 Soft Red Winter (SRW) was valued at $260/mt, down $32/mt from prior week. Northern Durum offers from the Great Lakes, for June 2023 delivery were at $9.93/bu ($365.00/mt, UNCH), unchanged. As for corn, US corn 3YC (Gulf) was at $249/mt, down $33/mt. As for soybean, US soybean 2Y (Gulf) quoted at $571/mt, down $4/mt. USDA’s weekly National Ethanol report showed ethanol quotes were 6-10c higher through the week to $2.42-$2.55/gal regionally. The DDGS market was mixed for the week with quotes as low as $200 and as high as $235/ton regionally. Corn oil was also mixed within a nickel, from 55 to 64 cents/lb. USDA reported the B100 cash price 15c higher to $5.05/gal in MN and unchanged at $6.07/gal in IL for the week. After the sessions close, Friday’s Commitment of Traders report showed money managers trimming back their net long in corn futures and options by 5,454 contracts as of Tuesday to 52,845 contracts. As for soybean, the report showed managed money piling on another 22,530 contracts to their net long position in soybeans futures and options as of Tuesday. That took their net long position to 99,480 contracts on June 27. As for wheat, the report indicated managed money spec traders slashing their net short in Chicago wheat by 31,966 contracts to -52,168 contracts as of June 27. In KC wheat, they added 6,475 contracts to their net long position, at 12,419 contracts by Tuesday. On this morning, soybean prices gained more ground, rising almost 2% and climbing to a more than one-week high. Corn firmed after dropping to a two-and-half-year low, while wheat slid almost 1%. Notably, the most-active soybean contract on the Chicago Board of Trade (CBOT) gained 1.8% at $13.67-3/4 a bushel, as of 02:29 GMT, after hitting its highest since June 22 at $13.69 a bushel. Corn rose 0.4% to $4.96-1/4 a bushel, after sliding to its weakest since January 2021 at $4.89 a bushel earlier on Monday, while wheat lost 0.9% to $6.45 a bushel.
Canadian farmers seeded the most wheat in 22 years, slightly more than expected, and also planted more canola than the industry was forecasting, a government report showed on Wednesday. Notably, Statistics Canada estimated plantings of all wheat – including winter wheat sown last year for harvesting this summer – at 26.9 million acres, above average industry expectation of 26.5 million. Wheat sowings are up nearly 7% from a year ago and are the most since 2001. It is the fourth-largest wheat area on record when winter wheat is included, which StatsCan has tracked since 1997. Spring wheat makes up 19.47m acres with 6.034 million for durum and the balance winter wheat. StatsCan expected 3.824m acres for corn production in 2023. That is up from 3.62 million last year and was above the range of estimates. Farmers also planted 22.1 million acres of canola, higher than StatsCan’s April estimate of 21.6 million and 3% more than last year. The average trade estimate was 21.8 million acres. StatsCan reported 2023’s soybean area at 5.631m acres. That was up from 5.27m last year, and was at the top end of estimates. Farmers, meantime, reduced plantings of oats, lentils and peas. Meantime, the Saskatchewan Crop Report, for the week ending 26 June noted that while some areas received heavy showers, most parts of the province remained dry, aiding rapid crop development. However, 2023-24 winter wheat condition rated at 64pc good/excellent (69pc fortnight ago), spring wheat at 70pc (81pc), barley at 63pc (82pc) and canola at 66pc (77pc). Provincial topsoil moisture conditions for cropland rated at 54pc surplus/adequate (73pc week ago, 76pc year ago) and 46pc short/very short (28pc, 24pc). The report also noted crop damage over the past week was largely linked to hot, dry weather, grasshoppers, gophers, flooding and hail. On the demand side, the Grain Statistics weekly report showed producers’ deliveries of common wheat at 534,4k mt in the week 47 of this shipping season. That was up from 444,7k mt posted prior week. Deliveries of durum wheat, in contrast, were weaker at 78,8k mt, compared with 111,5k mt showed in prior week. Canada exported 357,7k mt of common wheat in week 47. That was down from 384,1k mt of a week earlier. Durum wheat exports, were also weaker, moving down from 137.3k mt to 66.7k mt. Total Commercial Stocks of common wheat stood at 2.164,8k mt, up from 1.998,5k mt in the previous week. Total durum commercial stocks also were higher, moving up from 259,0k mt a week earlier, to 273,6k mt. Cumulative exports for common wheat were at 17.771,8k mt. That is compared 10.077,7k mt a year ago. Durum cumulative exports reached 4.814,0k mt vs 2.334,7 a year ago. In this context, as of June 30, the 1CWAD (Canadian durum wheat with 13,5% protein) average regional price was at C$390.49/t, down C$0.73/t. Meanwhile durum wheat price –CA St Lawrence (CWAD) was offered at US$360/t FOB, down C$10/t from a week earlier. The 1 CWRS (Canadian common wheat with 13,5% protein) average regional price was at 369.37/t, down C$26.33/t. (USD/CAD = $1.3241 up from $1.3180 the prior week).
South America
From Brazil, AgRural reported Brazilian 2nd corn crop harvest in the Center-South region at 9.3% finished. That is up from 4.7% last week but trails the 20% pace from last year. Meantime, Brazil’s Anec estimates corn shipments at 1.157 MMT for June. However, farmers are grappling with low corn prices as Brazil harvests this bumper crop. Thus, Brazil’s government is set to buy 500,000 metric tons of corn, as it looks to start rebuilding public food stocks, fulfilling one of President Luiz Inacio Lula da Silva’s campaign pledges, the head of food agency Conab said on Thursday. Conab President Edegar Pretto told reporters the initial move would cost public coffers about 350 million reais ($72 million), and said the government may return to the market by the end of the year for additional purchases. On the other hand, Brazil’s Abiove modestly raised its estimates for the country’s 2022/23 soybean production, which is expected to carve out a new record of 156 MMT. Brazilian soybean exports are also likely to reach record levels this season, with Abiove currently estimating that total will reach 97 MMT. Anec estimates the June meal exports at 2.32 MMT, with 14.2 MMT of whole bean shipments. In Argentina, wheat harvest for the 2023/2024 season is estimated at 18-19 million metric tons, according to a government forecast issued on Thursday, up by about half compared to the previous drought-stricken harvest. The wheat harvest during the previous 2022/2023 crop totaled just 12.6 million metric tons. Argentine farmers began sowing new wheat fields in recent weeks, which will be harvested mainly between December and January. Argentina’s agriculture secretariat estimates that the 2023/2024 wheat planting area will total some 6.1 million hectares, in line with the area forecast by the Buenos Aires grains exchange. On Thursday, the exchange however slightly cut its estimate for the wheat planting area to 6.0 million hectares from 6.1 million hectares previously forecast, with wheat planting now seen as 72pc complete (78pc five-year ave.). In its weekly report, the Exchange also reported that for the week ending 28 June, Argentina’s maize harvest was 47pc complete (58pc five-year avg), with conditions rated at 49pc fair/excellent (47pc previous week, 74pc previous year). Soybean harvest was largely complete, with production estimated at 21.0Mt (43.3Mt previous year) with average yields at a decade-low of 1.5t/ha (2.8t/ha). In this context, as of June 29, price for Argentina wheat Grade 2 quality, delivered Up River was at US$342/t, down $18/t from the prior week. Price for Argentina feed corn (Up River) was at US$230/t, down $15/t w.o.w.. Price for Argentina feed barley (Up River) was at US$235/t, up $5/t. Price for Argentina soybean (Up River) was at US$557/t, down $11/t. Price for Brazilian feed corn (Paranagua) was at US$217/t, down $23/t. Price for Brazilian soybean (Paranagua) was at US$516/t, up $18/t.
In Europe, grain prices fell between 1% and 2%, while rapeseed rose 3.21%, after USDA’s acreage and quarterly stocks reports were published. Notably, September wheat was down 1.07% at 230.75 euros ($251.75) a metric ton. On Thursday, it had hit its lowest since June 8 at 229.00 euros, before closing higher. However, over June, the contract set with a 6.53% rise, after a volatile month in which it scaled its highest since April before retreating. The European Commission on Thursday sharply cut its monthly forecast for this year’s cereals harvests in the bloc with usable production of common wheat now seen 2.6 million tons lower than last month at 128.9 million metric tons. The sharp drop in its wheat crop supply outlook led the Commission to cut its projected stocks on June 30, 2024 to 20.5 million tons, from 23.9 million previously. In supply and demand data, it kept unchanged its estimate of EU wheat exports in 2023/24 at 32.0 million tons, up from an estimated 31.0 million in 2022/23. In contrast, the Commission raised its outlook for wheat stocks at the end of the 2022/23 season ended last Thursday to 20.6 million tons from 19.9 million seen last month as it increased its import estimate. For maize, the Commission cut its projection for the 2023 maize usable production to 63.7 million tons, from 64.1 million previously while keeping imports unchanged at 17.0 million tons. But it increased its estimate of EU maize imports in 2022/23 by 1 million tons to 25.5 million tons. The 2023 barley usable production was now expected at 49.7 million tons, down from 52.0 million estimated last month. However, U.S. weather has remained the overarching influence on European grain markets too last week. Meantime, harvesting continues in France. Soft wheat harvesting is under way, with 1% of the area harvested by June 26, running behind the 5% harvested by the same time last year. Harvesting of winter barley was 31% complete. The durum wheat and spring barley harvests were also under way, with both at 5% progress by June 26. Yields are still uneven, as a result of the mixed weather conditions of recent months. The condition of French soft wheat fell again in the week to June 26, with 81% of crops rated to be in good or excellent condition compared with 83% the previous week, farm office FranceAgriMer said on Friday. For winter barley, 82% of the crop was rated good or excellent, down from 84% from the previous week, while durum wheat fell to 69% from 77%. Exporters of European Union wheat were focusing on Morocco as the country plans to import of up to 2.5 million metric tons over July-September. However, export competition hung over the market, with Russian wheat seen dominating export demand at start of 2023/24. Russian wheat, indeed, become still more cheaper with the falling value of the rouble, as that reduced internal buying costs for exporters selling in U.S. dollar terms. Thus, Russian 12.5% protein wheat for August shipment from Novorossiysk was quoted about $26 a metric ton below fob prices in German ports and Russian 11.5% about $24 below German prices. In France, there was talk of interest from Chinese wheat buyers but it was unclear if any deals had been done. Differently, large shipments of French barley to China, possibly as much as 1 million metric tons, are expected in the coming months after a previous round of sales, with the first two vessels due to load in July at La Pallice on the west coast.
North Africa
In Morocco, government has released its first wheat and barley production estimates for the 2023 crop, including 2.98 MMT of common wheat, 1.18 MMT of durum wheat, and 1.35 MMT of barley. Although the MY 2022/23 wheat and barley production estimates are up 62 percent compared to previous season, Morocco has experienced drought four of the last five seasons, and wheat production is well-below historic averages. On May 31, 2023, the government of Morocco had stopped its common wheat import support program as global prices fell with the new world wheat crop ($227-$251 per MT) and other declining inflationary pressures. However, Morocco’s ONICL will offer subsidies for the import of up to 2.5 million tonnes of milling wheat between July 1 and September 30, the state grains agency said on its website. Traders had expected the North African country to resume wheat imports after harvesting a below-average crop this year. The authorities will provide subsidies for wheat origins including Russia, Ukraine, France, Germany, Argentina and the United States. The scheme will pay importers the difference each month between the cost of foreign wheat and a benchmark import price of 270 dirhams per quintal ($271.60 per ton). Additionally, the government of Morocco will keep wheat and barley import duties at zero until December 31, 2023, in order to encourage stock building.
The National Grain Council (UHT) has revised its wheat production estimate for 2023 from a previous 20.75 million tons to 21.5 million tons amid better-than-expected precipitation. The size of wheat cultivation areas will be around 7.3 million hectares during the 2022-2023 production year. It is estimated that the wheat production in the Marmara region will remain the same compared with the long-year’s average, while the output will be 3 percent higher in the Aegean and the Mediterranean regions and 20 percent and 12 percent higher in the Black Sea and Eastern Anatolian regions. The average annual wheat production in the past years was 20 million tons, said the report. In May, Turkish Statistical Institute (TÜİK) said that wheat production was forecast to increase by 3.8 percent in 2023 compared with 2022 to 20.5 million tons. It estimated that the country’s grain production will be around 39.5 million tons this year, rising by 2.1 percent from 2022. Vegetable production will increase 1.9 percent to 2.6 million tons, while fruit output is expected to rise by 0.3 percent to 26.9 million tons, according to TÜİK.
According to the State Statistics Service, in 2022/23 MY, as of June 30, Ukraine exported 48.996 mln tonnes of grains and pulses, including 3.658 mln tonnes in June, reported the press service of the Ministry of Agrarian Policy of Ukraine. Last season, as of June 29, 2022, the total Ukrainian grains export totaled 48.355 mln tonnes. In particular, in the current season, Ukraine exported: – wheat – 16.836 mln tonnes (18,72 mln tonnes in 2021/22 MY); – barley – 2.704 mln tonnes (5.747 mln tonnes); – rye – 18 thsd tonnes (161.5 thsd tonnes); – corn – 29.128 mln tonnes (23.409 mln tonnes). In 2022/23 MY, as of June 30, the total export of flour from Ukraine amounted to 153.6 thsd tonnes (70.7 thsd tonnes in the previous season), including wheat flour – 147.1 thsd tonnes (69.2 thsd tonnes). Meantime, Ukraine started harvesting wheat and rapeseed. According to the operational data of the Ministry of Agriculture, as of June 29, in Ukraine grains and pulses were harvested from 66.17 thsd ha, with grain production reaching 26.93 thsd tonnes with an average yield of 32.8 t/ha. As noted, the main part of the harvest (205.61 thsd tonnes) accounts for barley, which was harvested from 61.46 thsd ha with a yield of 33.5 t/ha. In addition, 3.8 thsd tonnes of wheat were harvested from 1.1 thsd ha (yield – 34.5 t/ha) and 7.62 thousand tons of peas from 3.61 thsd ha (yield – 21.1 t/ha). In addition, Ukraine started rapeseed harvesting – 0.9 thsd tonnes were harvested from 0.7 thsd ha with a yield of 2.9 t/ha. Meantime, the UCAB club has estimated grain production for 2023 at 42.5 million tonnes, including 16.3 million tonnes of wheat, 21.1 million tonnes of corn and 4.2 million tonnes of barley. On the other hand, according to a farmers’ survey, Ukraine’s 2023 wheat harvest may far exceed official expectations of 17 million metric tons and reach at least 24 million metric tons. UGA and UkrAgroConsult, indeed said, “this year’s wheat yield could be high, ranging from 3 to 8 metric tons per hectare”, adding that the average yield could reach 5.46 metric tons per hectare. Thus, taking into account the agriculture ministry data on winter and spring sowing, this year’s gross harvest could total 24.4 million metric tons in bunker weight or 23.5 to 24 million metric tons in clean weight. “This is significantly higher than the current market expectations, which we see at 15.6 to 18 million metric tons,” UGA and analysts said.
Russia’s grain sowing campaign has almost been completed, with the sown areas in line with plans, Agriculture Minister Dmitry Patrushev said on Wednesday. “According to preliminary data, 55.6 million hectares have been sown. This is higher than last year and in line with plans,” he said. Including surviving winter crops, the area of sown grains and pulses was estimated at 28.1 million hectares as of June 1, 2.5% more than at the same date of 2022, Rosstat said. However, Russian state statistics service Rosstat also said that 4.3%, or 249,000 hectares, of the sown area of winter grains and pulses had died as of June 1, as drought hit many Russian regions. Meantime, the harvesting campaign is already underway in six regions of southern Russia and the North Caucasus. According to the Russian AgMin, farmers harvested 1.5 MMT of grain as of June 26. That was compared with 875k mt, at the same date last year, and rapresents a growing of 1.7 times. Of that, wheat harvested was 83.4k mt from 18.7k ha, with a 4.45 MT/HA averagege yield. Meanwhile barley was 845.8k mt. All grain and leguminous crops harvested so far, comes from 352.4K ha. The ministry predicted a grain harvest of 123 million tonnes in 2023, including 78 million tonnes of wheat. Meantime, Russian June wheat export was 3 times higher y-o-y. Notably, according to RGU data, from June 1 to 27, the export of quota crops (wheat, barley, corn, rye) amounted to 4.54 mln tonnes, which is 2.5 times higher y-o-y. In particular, corn export increased by 15% to 392`000 tonnes, and barley export more than doubled to 378`000 tonnes. As for export geography, the shipment of wheat to Egypt this month increased 4.8 times, to 788 thsd tonnes, and to Turkey – 1.6 times, to 732 thsd tonnes. Brazil emerged as a third-largest importer, with 226`000 tonnes of Russian grain were shipped to this country. According to the director of the Russian Grain Union analytical department, Elena Tyurina, the increase in shipments can be explained by the expected grain harvest decline in the current year and a possible price rise amid declining supplies. “Our main importers are interested in bringing as much grain as possible at today’s low price,” the expert indeed said. In addition, she added, the significant increase in shipments is also related to the low base of last year, when in this period exporters were just adapting to the conditions of sanctions and had big problems with insurance and freight of ships. On the geopolitical side, the probability of Russia’s withdrawal from the Black Sea grain deal in July remains high, although talks continue, Russia’s RIA news agency cited an anonymous source as saying on Wednesday. On Friday Russia said it saw no reason to extend the Black Sea grain deal beyond July 18 because the West had acted in such an “outrageous” way over the agreement, but assured poor countries that Russian grain exports would continue. Meantime, the United Nations said it was concerned as no new ships had been registered under the Black Sea deal since June 26 – despite applications being made by 29 vessels.
Weekly rainfall totals have been impressive across southeast WA, SA and Vic with most areas receiving 15-50mm with some areas now too wet. Most cropping regions in NSW have seen 10-25mm although it has been patchy with the northwest missing out again and Qld was relatively dry. The forecast for this week has 15-50mm for northern NSW and Qld. Rural Bank has pegged the 2023-24 Australian wheat crop at 28Mt, with Queensland at 1.2Mt, NSW at 8Mt (subject to further reduction if more hectares remain fallow in northern NSW). Victoria’s crop is forecast at just under 4Mt, SA at 4.7Mt and WA at 10Mt. However, widespread rain across southern Australia coupled with weaker offshore markets has seen prices for feed wheat and barley fall in the past week. Prices in the south indeed have fallen by up to $30 per tonne on barley, and $25/t on wheat but falls have been more modest in the north, where many crops are in need of a drink to preserve yield potential. The new financial year started on Saturday, and growers are already giving brokers and traders offers in order to clear some current-crop stocks. However, consumers are seen as mostly well covered in the near term, and the market appears to have more downside than upside for July.


International tender: Milling Wheat
A group of South Korean flour mills bought around 50,000 metric tonnes of milling wheat to be sourced from the United States in an international tender on Friday. The purchase included several different wheat types and was all bought on an FOB basis for shipment between Sept. 1 and Sept. 30. The purchase involved soft white wheat of between 9.5% to 11% protein content bought at an estimated $255.61 a tonne, hard red winter wheat of 11.5% protein bought at $309.36 a tonne, and northern spring/dark northern spring wheat of 14% protein bought at $322.36 a tonne, traders said. The seller was believed to be trading house Bunge. Algeria’s state grains agency OAIC has issued an international tender to purchase a nominal 50,000 metric tonnes of durum wheat. The deadline for submissions of price offers in the tender is Tuesday, July 4, with offers having to remain valid until Wednesday, July 5. Shipment is sought in four periods between Aug. 1-15, Aug. 16-31, Sept. 1-15 and Sept. 16-30.
International tender: Durum Wheat Tender
Algeria’s state grains agency OAIC has issued an international tender to purchase a nominal 50,000 metric tonnes of durum wheat. The deadline for submissions of price offers in the tender is Tuesday, July 4, with offers having to remain valid until Wednesday, July 5. Shipment is sought in four periods between Aug. 1-15, Aug. 16-31, Sept. 1-15 and Sept. 16-30.
International tender: Corn
South Korea’s Major Feedmill Group (MFG) purchased an estimated 69,000 metric tons of animal feed corn expected to be sourced from South America or South Africa in an international tender on Friday. It was bought in one consignment at an estimated $249.99 a ton c&f plus a $1.50 a ton surcharge for additional port unloading, the same price as paid by South Korean importers in corn deals on Thursday. Seller was believed to be trading house Bunge. The tender sought corn from optional origins for arrival in South Korea around Nov. 10. The tender sought shipment between Sept. 12-Oct. 1 if sourced from South America or between Sept. 22-Oct. 11 if from South Africa with the seller free to select the origin. If South African corn is used, only 50,000 tons need be supplied.


Energy Markets
Oil prices settled higher on Friday but posted their fourth straight quarterly loss. Notably, Brent crude futures for August delivery which expires on Friday, settled up 56 cents, or 0.8%, at $74.90. In the three months to the end of June, the contract finished down 6%. U.S. West Texas Intermediate crude (WTI) settled up 78 cents, or 1.1% at $70.64 a barrel. It posted its second straight quarterly drop, down about 6.5% in the latest three months. Prices have been under pressure from rising interest rates in key economies and a slower than expected recovery in Chinese manufacturing and consumption. Signs of strengthening U.S. economic activity and sharp declines in U.S. oil inventories last week supported prices, in contrast. Prices also were bolstered by a U.S. Commerce Department report showing annual inflation rising last month at its slowest pace in two years. Signs of moderating inflation could hold the Fed off rising interest rates again. However, demand for crude and petroleum products fell slightly to 20.446 million bpd in April, though remained seasonally strong, EIA data showed. Meantime, U.S. energy firms past week cut the number of oil and natural gas rigs operating for a ninth week in a row, energy services firm Baker Hughes said on Friday. Notably, U.S. oil rigs fell by one to 545 last week, their lowest level since April 2022, while gas rigs fell six to 124, their lowest since February 2022. U.S. crude output fell in April to 12.615 million barrels per day (bpd), its lowest since February, the U.S. Energy Information Administration said on Friday. On this morning, oil prices were roughly unchanged, as concerns about global macroeconomic headwinds and possible further interest rate hikes from the U.S. Federal Reserve offset forecasts of tighter supplies amid OPEC+ cuts. Notably, Brent crude futures were last up 4 cents to $75.45 a barrel by 04:04 GMT. U.S. West Texas Intermediate crude was at $70.67 a barrel, up 3 cents.
Ocean Freight Markets
In ocean freight markets, the Baltic exchange’s main sea freight index, BADI, recorded its worst week in four. The overall index, indeed, fell 21 points, or 1.9%, to 1,091 on Friday. The index shed about 12% for the week, its worst since June 2, and also marked its fifth straight quarterly drop at 21.5%, despite it advanced 11.7% for the month. That monthly increase, was dued mostly by a near 40% monthly jump in the capesize segment, which also rose about 2.3% for the quarter. The capesize index, however, lost 55 points, or 3.1%, at 1,704, on Friday retreating 18.1% for the week. Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, decreased $456 to $14,133. The panamax index shed 11 points to 1,030, declining for the ninth straight session. It was down 8.6% for the week. The index lost 1.4% for the month, its third consecutive monthly fall. Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, declined $95 at $9,273. Among smaller vessels, the supramax index lost 1 point, to 749.
Equity Markets
In equity markets, Wall Street blazed to another rally Friday to close a winning week, month and first half of the year. Friday’s reports indeed suggested pressure on inflation may be easing. May PCE deflator, the Fed’s preferred inflation measure, indeed, rose +0.1% m/m and +3.8% y/y, which was in line with market expectations. The May core PCE deflator rose +0.3% m/m, which also was in line with market expectations. Additionally, the May core PCE deflator on a year-on-year basis rose by +4.6%, which was slightly weaker than market expectations of +4.7%. May U.S. personal income rose +0.4% m/m, slightly stronger than expectations of +0.3%, although April was revised lower to +0.3% m/m from +0.4%. The final-June University of Michigan U.S. consumer sentiment index was revised higher by +0.5 points to a 4-month high of 64.4, stronger than expectations for no revision. The revision left the index up by +5.2 points from May’s level of 59.2. Thus, markets are discounting the odds at 81% for a +25 bp rate hike at the next FOMC meeting on July 25-26. The markets are anticipating a peak funds rate of 5.42% by November, which indicates that the market is discounting an overall rate hike of +33 bp through November from the current effective federal funds rate of 5.07%. As a result, yields in the bond market turned lower. Easier interest rates help prices for all kinds of investments. But technology and other high-growth stocks tend to be seen as some of the biggest winners, and they helped to lead the market higher. Nvidia rose 3.7%, for example. Apple climbed 2.3%. Cruise line operators also helped drive the rally, as travel stocks have been hot recently on expectations for strong demand as vacationers head back out. Carnival led all stocks in the S&P 500 with a 9.7% gain, while Norwegian Cruise Line climbed 4.2%. Elsewhere, China’s PMI reports were roughly in line with market expectations but reinforced the view that China’s economy is losing steam after an initial post-Covid boom. China’s June manufacturing PMI rose +0.2 points to 49.0, which was in line with market expectations but remained below the expansion-contraction level of 50. China’s June non-manufacturing PMI fell -1.3 points to 53.2, weaker than market expectations for a decline to 53.5. In this context, the Dow Jones Industrial Average rose 285.18 points, or 0.84%, to 34,407.6, the S&P 500 gained 53.94 points, or 1.23%, to 4,450.38 and the Nasdaq Composite added 196.59 points, or 1.45%, to 13,787.92. For the week, the S&P 500 added 2.35% while the Nasdaq added 2.20% and the Dow climbed 2.02%. For the quarter, the S&P 500 added 8.3% while the Nasdaq climbed 12.8% and the Dow rose 3.4%. The Nasdaq registered its strongest first-half performance in 40 years with a more than 31% gain. The Nasdaq 100 index of top technology stocks boasted its biggest first half gain on record, adding around 39%. The S&P 500 closed out its sixth winning week in its last seven and its best month since October. The index’s gain of 15.9% through the first six months of the year is better than it’s done in 16 of the last 23 full years. Still, the Fed will remain worried about sticky core inflation, with the core deflator still at a very high (+4.6% y/y), far above the Fed’s +2% inflation target. On this morning, Asian shares were mostly higher. Notably, Japan’s benchmark Nikkei 225 rose nearly 1.7% to 33,738.80 in morning trading. Australia’s S&P/ASX 200 added 0.5% to 7,239.80. South Korea’s Kospi jumped 1.4% to 2,601.00. Hong Kong’s Hang Seng surged 1.7% to 19,243.80, while the Shanghai Composite gained 1.3% to 3,243.24.
In currency trading, the dollar index fell 0.41%, after personal consumption expenditures report showed that inflation is going in the right direction, stoking optimism that the Fed is approaching the end of its tightening cycle. As a result, yields in the bond market turned lower after the release of the economic data. Notably, the 10-year Treasury yield fell to 3.82% from nearly 3.87% just before the report’s release. The two-year Treasury yield slipped to 4.88% from 4.90% just before the report’s release. Meantime, the June Eurozone CPI report of +0.3% m/m was in line with market expectations. The June CPI on a year-on-year basis eased to +5.5% y/y from May’s +6.1% y/y and was slightly weaker than market expectations of +5.6%. But the June core CPI rose slightly to +5.4% y/y from May’s +5.3% although it was slightly weaker than market expectations of +5.5% y/y. Also, the May Eurozone unemployment rate was unchanged from April at 6.5%, in line with market expectations. In this context, the euro closed up 0.39% to $1.0908. Meantime, the Japanese yen rose 0.33% to 144.30 per dollar, as Japanese officials continued to threaten FX intervention to address the yen’s chronic weakness While sterling was last trading at $1.2699, up 0.69% on the day.
Watching this week’s market…
US markets will have only a 4-sessions week reacting to any weather/forecasts changes over the weekend. Monday will be a normal schedule, with the weekly Export Inspections and Crop Progress reports. We will also get May’s monthly domestic use data from USDA, via the Grain Crushing, Fats & Oils, and Cotton Systems reports. However, US markets and government offices will be closed on Tuesday for the July 4th Independence Day holiday. There will be no Tuesday night trade, with a hard open on Wednesday morning. The holiday will push back the weekly EIA report for ethanol production and stocks to Thursday afternoon. Census trade data from May will also be published on Thursday. The weekly Export Sales data is delayed to Friday afternoon.

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We wish you a nice day.

Author: Sandro F. Puglisi

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