Good morning, Farmer Family …

US farm markets closed mostly higher on Friday, benefiting from some strong macroeconomic tailwinds that pushed a broad set of other commodities higher, including livestock, energy and much more.

Corn prices, indeed, jumped 2.78% higher.

Soybean prices gained 1.73%, though the rest of the soy complex was mixed, with soymeal easing 0.9% lower, while soyoil jumped 3.43% higher.

Wheat prices enjoyed of spillover support from other commodities, with some contracts capturing double-digit gains, as Chicago SRW added 1.35% to the previus close, Kansas City HRW gained 1.21%, and MGEX HRS rose 2.38%.

Corn and soybean closed higher, lifted by bargain-buying following past week’s multi-month lows.

Dryness in the Midwest crop belt and spillover strength from equities and crude oil, made an additional support.

Wheat followed the firm trend, drawing additional support from weather concerns in China and tensions over the Ukraine shipping corridor.

However, mediocre weekly export sales of U.S. corn, soybeans and wheat underscored market worries about poor demand.

USDA’s FAS indeed reported 186,695 MT of corn was sold for export during the week that ended 5/25.

That was in line with the estimated range.

However, old crop commitments were still marked just to 38.18 MMT through 5/25.

That was 36% behind last year’s pace, and is 84.6% of the WASDE estimate.

New crop bookings were shown as 312.6k MT for the week, slightly above the highest trade guess.

New crop commitments sit at 3.065 MMT, compared to the May WASDE estimate of 53 MMT for the full year.

As for for soybean, the USDA reported 123,396 MT of old crop beans were sold for export during the week that ended 5/25.

That was a 7% increase from prior week and was inline with estimates.

Accumulated commitments were up to 50.97 MMT, or 93% of the forecast.

New crop sales were 301k MT for the week which was near the top end of the expected range.

Accumulated new crop commitments reached 2.853 MMT, as the USDA forecast is set at 53.75 MMT.

As for the products, FAS data had soymeal bookings at 405k MT for 22/23 delivery and 62k MT for 23/24.

That left commitments at 10.969 MMT and 517k MT respectively.

For soy oil, the report showed 1,729 MT were booked for 22/23 and 3.2k MT for 23/34.

As for wheat, the weekly wheat export sales report had old crop cancelations of 210k MT.

That was a MY low led by 8.2k MT sold to Thailand and 41k MT cancelations to each Mexico and Ecuador.

Total wheat commitments were at 18.63 MMT as of 5/25, which is 88.3% of the forecast with 1 week left in the season.

Of that, 17.67 MMT have been exported according to the weekly update.

New crop sales were shown at 466k MT, bringing the forward book to 2.674 MMT.

The May WASDE had 23/24 exports reaching 19.7 MMT.

Also, USDA’s monthly Grain Crushings report had 415.74 mbu of corn used for ethanol in April.

That was a 4.7% drop from March but was near the same level as last season.

Total corn use was officially 64.8% of the WASDE forecast through April with 3.4 bbu.

As for soybean, NASS reported 186.97 mbu of soybeans were processed during the month of April.

That was down 5.5% from March on one less crush day, but was a new record for the month.

Traders were looking for 184.8 mbu on average going in.

Also, soybean oil stocks were 2.54b lbs, compared to 2.39b last month and 2.5b expected.

EIA’s weekly report on Thursday showed ethanol production picking up 21,000 barrels per day in the week ending on May 26, to 1.004 million bpd.

Stocks however, were up a marginal 291,000 barrels at 22.332 million.

Weekly Crop Progress data on Tuesday indicated that the US corn crop was 92% planted, with 72% emerging as of Sunday, now 8% and 9% above the respective averages, though initial conditions were tallied at 69% gd/ex, down 4% from last year.

As for soybean, the report had soybean at 83% planted by 5/28 compared to the 65% average.

The crop was also 56% emerged, above the 40% 5-year average.

Spring wheat crop planting pace picked quite a bit of ground in the week of May 28, just 1% below the average pace at 85% complete.

Emergence was 57%, behind the 59% average.

Meanwhile, the winter wheat crop was at 72% headed, 1% below the average pace.

Condition ratings improved another 3% at 34% gd/ex.

However, prices for all three grains rallied into the second part of the week, as traders focused instead on U.S. crop weather, with dryness building in portions of the Midwest.

Thus, for the week, benchmark corn rose 0.83%.

Sybeans rose 1.14%.

The rest of the soy complex was mixed, with soymeal tumbling 1.9% lower, while soyoil jumped 1.39% higher.

Wheat prices were also mixed but mostly lower, as Chicago SRW added just 0.49%, meanwhile Kansas City HRW lost 0.85%, and MGEX HRS tumbled 1.25%.

However, the Central and Southern Plains could gather rains totaling between 0.5” and 1” until Tuesday, although the Corn Belt will struggle to see much measurable moisture during this time, per the latest 72-hour cumulative precipitation map from NOAA.

Meantime, the agency’s new 8-to-14-day outlook predicts some seasonally wet weather in store for parts of the Plains between June 9 and June 15, with near-normal temperatures probable for much of the Corn Belt.

In this context, corn basis bids were steady to soft in the central U.S., after trending 4 to 25 cents lower across half a dozen Midwestern locations.

Soybean basis bids were mostly steady to firm across the central U.S. after improving 5 cents at two processors and 15 cents at an Iowa river terminal.

An Ohio elevator bucked the overall trend after sliding 2 cents lower.

As for wheat, basis ended the week down for nearly all classes and export regions, as seasonal pressure weighs on the market.

HRS basis was unchanged in the Gulf and down in the Pacific Northwest (PNW).

Little interest in selling from the farmer and low demand made for an unexciting week, though the PNW basis softened some as exporters repositioned themselves to incentivize buying interest.

HRW basis was down in the Gulf and the PNW, weighed by a lack of demand and harvest campaigns beginning in Texas and Oklahoma.

The PNW HRW and Gulf HRS spread continues to widen as production prospects remain optimistic in Montana.

SRW basis and SW prices continue to decrease, in line with competitor prices though dryness in the SRW and SW growing regions lent

some support.

As a result, as for June 1, 2023, FOB prices for US wheat No 2 Hard Red Winter (HRW) were at $354/mt, down $7/mt week on week.

US wheat No 2 Soft Red Winter (SRW) was valued at $252/mt, up $2/mt from prior week.

Northern Durum offers from the Great Lakes, for June 2023 delivery were at $10.07/bu ($370.00/mt, unch), unchanged.

As for corn, US corn 3YC (Gulf) was at $267/mt, up $3/mt.

As for soybean, US soybean 2Y (Gulf) quoted at $509/mt, down $11/mt.

USDA cited the weekly cash ethanol price near $2.38/gal with regional variance.

DDGS were mostly weaker through the week, from -$25/ton to +$5/ton.

Quotes were mostly $200-$240 depending on the region.

The cash corn oil market was within 2 cents/lb of last week from 55 to 57 cents/lb. 

USDA cited the MN cash B100 price at $3.82 for the week, UNCH from last week.

After the sessions close, the weekly CoT report had managed money corn traders short covering through the week that ended 5/30.

The spec short paper dropped 17.5%, but the group was still 51k contracts net short at the settle.

Commercial corn hedgers added new shorts through the week, expanding their net short by 46k contracts to 148k.

As for soybean, data had the soybean spec traders at just a 529 contract net long at the settle of 5/30.

That was a 3,618 contract weaker net long through the week as more longs were closed than were shorts.

The last time spec traders were net short in soybeans was April of 2020 during Covid.

Commercial soybean hedgers lightened their net short by 5k contracts to 74k as of 5/30.

The weekly update had managed money at a 59,676 contract net long in soymeal.

That was down 14k contracts wk/wk via long liquidation.

The spec funds were 37,449 contracts net short in soy oil as of Tuesday’s settle.

As for wheat, CFTC’s weekly CoT update had CBT wheat spec traders at a 126,998 contract net short on 5/30.

That was an 8,210 contract stronger net short through the week.

The funds were shown closing longs in KC wheat through the week, that left the group at a 9,628 contract net long.

MPLS spec traders were 7,703 contracts net short on 5/30.

That was a 1,301 contract stronger net short also fueled by long liquidation.

On this morning, Chicago wheat rose more than 1% to its highest in almost three weeks as concerns over Black Sea supplies and crop damage in China underpinned the market.

Corn jumped to a six-week high while soybeans gained for a fourth consecutive session with dryness in key growing U.S. Midwest supported prices.

Notably, the most-active wheat contract on the Chicago Board of Trade (CBOT) added 1.2% to $6.26-1/2 a bushel, as of 03:02 GMT, after climbing earlier in the session to its highest since May 17 at $6.28 a bushel.

Corn rose 0.7% to $6.13-1/2 a bushel, having risen to its highest since April 24 at $6.14 a bushel and soybeans gained 0.6% at $13.60-1/2 a bushel.

From Canada, the Saskatchewan government has estimated 89% of the province’s crop has been planted as of May 29, up from 68% last week and close to the five-year average of 92%.

While this is well ahead of the 76% seeded as of this week last year, the previous four years saw from 91% to 99% of the crop seeded as of this week.

The three regions on the west side of the province have completed from 90% to 97% of spring seeding (south to north), with the Northwest Region eight percentage points ahead of average.

The three regions on the east side of the province have completed 80% to 89% of intended acres (south to north), with the Northeast Region three percentage points ahead of average.

The two northern regions are the only regions ahead of their respective average pace.

By crop, 91% of the spring wheat (90.3%), 88% of the durum (95.3%), 84% of the canola (86.3%) and 95% of the field peas (96.3%) is planted as of past week, with an average in brackets calculated using available data from four of the past five years.

Cropland topsoil moisture has improved during recent week, most concentrated just north of Saskatoon and in the Melfort-Tisdale region in the northeast.

The area of the province rated as having adequate topsoil moisture increased by 13 points to 76%, the highest percentage reported this season.

The area rated short to very-short topsoil moisture fell by 16 percentage points to 19% over the past week, the lowest rating reported since the first report on May 8.

The crop was viewed as good-to-excellent overall, with spring wheat rated the highest at 87% G/E, durum at 87% G/E and canola at 81% G/E.

Meantime, the Grain Statistics weekly report showed producers’ deliveries of common wheat at 278,4k mt in the week 43 of this shipping season.

That was noticeably up from 194,3k mt posted prior week.

Deliveries of durum wheat, were also higher at 38,0k mt, compared with 20,1k mt showed in prior week.

Canada exported 340,9k mt of common wheat in week 43.

That was up from 144,4k mt of a week earlier.

Durum wheat exports, in contrast were weaker, moving down from 102,6k mt to 14.5k mt.

Total Commercial Stocks of common wheat stood at 1.927,3k mt, down from 2.007,6k mt in the previous week.

Total durum commercial stocks, in contrast, were higher, moving up from 295,3k mt a week earlier, to 330,7k mt.

Cumulative exports for common wheat were at 16.466,5k mt.

That is compared 9.515,7k mt a year ago.

Durum cumulative exports reached 4.498,1k mt vs 2.149,7 a year ago.

In this context, as of June 2, the 1CWAD (Canadian durum wheat with 13,5% protein) average regional price was at C$393.05/t, down C$9.02/t

The 1 CWRS (Canadian common wheat with 13,5% protein) average regional price was at 368.85/t, down C$10.33/t.

(USD/CAD = $1.3422 up from $1.3612 the prior week).

From South America, StoneX upwarded revision of Brazil’s corn production.

Notably, Brazil’s 2022/2023 total corn crop is now seen at 133.75 million tonnes, according to StoneX, up from its previous estimate of 131.59 million tonnes.

According to Agresource, Brazil’s total corn production will reach 127.43 MMT this season.

As for soybean, Agresource is projecting Brazil’s 2022/23 soybean production at 155.16 MMT – one of the more bullish estimates at this time.

That would also easily be a new record production, if realized.

Meantime, Brazilian export data had 385k MT of corn exports for the month of May.

That was well below the 1.09 MMT shipped last year.

In contrast, official Brazilian export data marked May’s soybean program at 15.61 MMT.

That was a 47% increase from May ’22.

In Argentina, farmers in core growing regions have begun sowing wheat for the 2023/24 season after intense rain in recent weeks.

Buenos Aires Grain Exchange reported for week ending 31 May, the 2023-24 wheat planting was estimated at 6n percent complete (14pc previous year).

Total sown area forecast at 6.3 million hectares (Mha) (5.9Mha Ag. Ministry previous year), with output projected to recover to 18.0 million tonnes (Mt), (12.4Mt previous year).

Recent rains across the centre-west were deemed beneficial and replenished soil moisture levels, enabling farmers to commence fieldwork, but further precipitation was required.

In this context, as of June 2, price for Argentina wheat Grade 2 quality, delivered Up River was at US$378/t, up $2/t from the prior week.

Price for Argentina feed corn (Up River) was at US$242/t, down $12/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$507/t, down $2/t.

Price for Brazilian feed corn (Paranagua) was at US$239/t, down $1/t.

Price for Brazilian soybean (Paranagua) was at US$459/t, down $9/t.

In Europe, wheat rose for a second straight session on Friday, recovering further from a 22-month low.

Notably, September wheat settled up 1.5% at 224.00 euros ($240.02) a tonne.

However, over the week it was down nearly 2% but well above Wednesday’s low of 215.25 euros.

Prices were supported by a weaker euro.

Weather risks turned in focus as rain damage to wheat crops in China and dryness in the U.S. corn belt have put attention back on weather forecasts.

In France, the condition of soft wheat declined last week amid a dry spell in the northern plains.

Notably, FranceAgriMer reported as at 29 May, common wheat crops rated 91pc good/excellent (93pc previous week, 67pc previous year), winter barley at 88pc (90pc, 65pc), spring barley at 93pc (95pc, 54pc) and maize at 92pc (94pc, 90pc). 

A vessel was due to load 15,000 tonnes of wheat at Rouen port in northern France for Spain, reflecting short-term demand as Spain faces drought losses to cereal crops

However, the 91% good/excellent score in French wheat conditions was still the joint-highest for the time of year in the past decade.

Also tensions in the Black Sea supported price, but large, competitively priced supplies in top exporter Russia continued to weigh on the wheat market.

From Ukraine, Ukraine’s combined spring and winter grain crops are still expected to total 44.5 million tonnes this year despite a reduced sowing area, the country’s agriculture minister said on Friday.

The harvest could include 18 million tonnes of winter grains and about 26.5 million tonnes of spring crops.

Winter wheat dominates Ukraine’s winter harvest output while corn accounts for the bulk of the spring grain harvest.

Ukraine’s deputy farm minister past week said that the spring grain sowing area could total 13.5 million hectares this year.

The ministry initially expected the area to be about 14 million hectares.

The Ukrainian Grain Association pegged 2023-24 grains and oilseeds production at 68.0Mt, down from 73.8Mt last year, including wheat at 17.9Mt (20.2Mt previous year), maize at 23.3Mt (27.3Mt previous), barley at 4.4Mt (5.8Mt), sunflowerseeds at 12.7Mt (11.1Mt), rapeseed 3.8Mt (3.6Mt), and soybeans at 4.4Mt (3.7Mt).

2023-24 grains and oilseeds export projected at 43.9Mt (56.4Mt), including wheat at 15.0Mt, maize at 19.0Mt, barley at 2.0Mt, sunflowerseeds at 1.2Mt, rapeseed at 3.5Mt, and soybeans at 3.0Mt. 

Meantime, Kyiv would be ready to continue exporting grain across the Black Sea as part of a “plan B” without Russian backing if Moscow pulls the plug on the current grain export deal and it collapses, Ukraine’s farm minister said.

Kyiv said on Thursday the U.N.-brokered Black Sea grain export deal had been halted again as Russia had blocked the registration of ships to all Ukrainian ports.

Since the extension of the deal 7 ships departed from the seaports of Odesa and Chornomorsk.

Total volume of shipments during this period was 255.47kmt, mostly corn to China.

18 ships are now under loading.

“Due to Russia’s actions, more than 1.5 mln tonnes of Ukrainian agricultural products are currently blocked in the Port of Pivdenny,” according to a statement from the President of Ukraine Volodymyr Zelenskyy.

“And this grain is expected by at least ten countries of the world, including Turkey, Egypt, Bangladesh, and China,” Zelenskyy added.

However, restrictions on the registration of “grain corridor” vessels bound for the Ukrainian Port of Pivdenny will remain in effect until the export of Russian ammonia resumes, according to the representative of the UN Secretary-General Stephane Dujarric.

“The Russian Federation informed the JCC about the restriction of vessel registrations in the Port of Pivdenny due to the lack of Russian exports of ammonia,” S. Dujarric said.

He also noted that starting from May 22, the number of registrations of “grain corridor” vessels decreased from three to two per day.

According to him, a total of 33 ships left Ukrainian ports in May – half as much as in April, and only three of them left the Port of Pivdenny.

As S. Dujarric clarified, the exports within the grain initiative in May amounted to 1.3 mln tonnes of grain and other food products, which is less than half of the April figure.

“We will continue to actively engage with the parties to fully restore operations within the framework of the continuation of the initiative. In particular, we are seeking commitments regarding unconditional vessel access to all three ports within the initiative, an increase in the number of successful inspections carried out per day and estimated registrations to avoid unnecessary vessel delays, the export of fertilizers, including ammonia, and restoration of work of the Tolyatti-Odesa ammonia pipeline,” the UN representative summarized.

From Russia, Russian data claimed 12 MMT of wheat stocks on May 1st, which was double the 5-yr average.

Traders noted a large sale offer for 50,000 tonnes of Russian 12.5% protein milling wheat for July 5-25 shipment at $230 a tonne FOB and a smaller handy sized shipment of Russian 12.5% wheat at $227 a tonne FOB for second half July shipment.

According to IKAR, indeed, Russian wheat prices dropped to $230.00/MT from $242.00/MT the week prior.

Meantime, excessive rains raise fears of a deterioration in the quality of wheat in southern of the country.

From the Middle Kingdom, China’s agriculture ministry is urging local authorities to speed up the harvesting and drying of damaged grain, after heavy rain flooded fields of ripe wheat in the country’s most important growing region.

Authorities should send emergency teams to drain water from fields, speed up access by harvesters and mobilise drying machinery to save as much of the crop as possible, said the ministry late on Tuesday.

Heavy rain across the southern half of central Henan province last week were raising concerns.

Henan produced 28% of China’s crop of 137 million tonnes in 2021, and though it is too early to say how much output would be affected, the harvest is definitely going to be impacted, as some areas have seen 400% precipitation anomalies over the past 10 days.

Some wheat in southern Henan has sprouted.

More than 90% of the wheat around the city of Nanyang has sprouted.

Meantime, buyers are purchasing the sprouted wheat at around 1,000 yuan ($144.67)to 1,200 yuan per tonne, half of the normal price.

The spot wheat price in Zhengzhou fell 1.5% to 2,700 yuan on Monday, weighed down by lower quality supply.

Sprouted wheat is also being seen in northern Shandong province.

However, the agriculture ministry urged buyers to purchase sprouted wheat that can still be used for feed or industrial purposes, while making sure it does not go to food.

Meantime, Chinese crushers are expected to slow their third-quarter 2023 demand coverage as soybean meal prices are on a downward trajectory, resulting in deteriorating crush margins and a lower estimate for total open demand.

Platts assessed China’s gross crush margin at minus $12.43/mt at the May 29 Asian close, down $10.67/mt week on week.

According to industry sources, the replacement crush margin stood at Yuan 164/mt on May 29, a 64% slump from a week ago.

Multiple market sources said the main factors driving down soybean meal prices and crush margins are the reduction in soybean meal sales and higher production in the coming month.

In April, the cargo collection of imported soybeans at China’s customs declined.

Notably, the volume of imported soybeans dropped 10% year on year to 7.26 million mt in April, the General Administration of Customs data showed, which is lower than the 10 million mt the Chinese market expected to arrive last month.

This led to tighter soybean meal supply in China, pushing soybean meal prices to soar 14% over the whole of April to May 10.

However, for March to May shipments, China bought more than 10 million mt of soybeans on average each month.

Though with stricter customs inspections in April and May, the total volume of imported soybeans over May-July was estimated to leap to 33 million mt, according to several industry sources, up 28% from a year ago.

The highest estimate stood at 36.5 million mt, equivalent to a 42% year-on-year jump.

As a result, the supply of soybean meal would increase rapidly as the weekly crushing volume has already increased from 1.2 million mt in April to 2 million mt in the week ended May 26.

In this context, soybean meal prices were in a downward trajectory since the week ended May 26.

According to market sources, the soybean meal spot price continued to fall below Yuan 3,800/mt, and reached Yuan 3,780/mt on May 29, down 8% week on week and 12.5% month on month.

The market’s expectations of an increase in soybean meal volumes in the coming months will drive prices even lower.

On this wake, there was an unwillingness to purchase soybean meal for nearby months.

China’s soybean meal sales for July delivery indeed reached 35%, approximately 7% lower compared with the 5-year average.

The bid and offer prices for soybean meal basis July delivery were Yuan 100/mt away as of May 29, and buyers were expecting the basis to fall from Yuan 150/mt to minus Yuan 50/mt in June.

On the other hand, a decline in soybean meal prices would continue to put pressure on crush margins and discourage crushers from purchasing more forward shipments.

In Q1, the market’s initial estimates for total open demand for Q3 shipments stood at 19.5 million mt — 7.5 million mt for July, 6.5 million mt for August and 5.5 million mt for September.

However, little recovery in the hog breeding industry and downstream meat consumption failed to support a healthy crush margin.

According to industry sources, the hog breeding margin was at minus Yuan 164 per head as of May 26.

($1 = 6.9121 yuan).

From South East Asia, Malaysian palm oil prices closed higher on Friday for a second straight session, as stronger rival oils and concerns about the impact of El Nino stoked buying interest after heavy losses earlier in the week.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange indeed gained 111 ringgit, or 3.39%, to 3,390 ringgit ($764.37) a tonne, its highest daily gain in nearly a month.

However, for the week, the contract has declined 5%.

The recent strong reversal in prices widened arbitrage trading in destination markets, especially in the forward month contracts, analysts said.

Also, palm oil demand is likely to improve in June and through the second half of the year, while early signs of hot, dry weather caused by El Nino are threatening food producers across Asia.

Malaysia’s financial markets will be closed today, June 5, for a public holiday.

Trading will resume on Tuesday.

From Australia, Rabobank has tipped Australia’s 2023-24 winter crop area to be up slightly year on year at 23.48 million hectares, with area for wheat, barley and pulses all up for the season, but with canola planting down. 

Despite the higher area planted, production is forecast to be lower, with expectations of drier growing conditions due to the likely transition to an El Niño climate cycle. 

Assuming normal seasonal rainfall, Rabobank said wheat production for 2023-24 could be expected to reach 29.9Mt, barley 10.8Mt and canola 5.4Mt. 

With climate models indicating a transition to weak El Nino conditions, it said production could drop lower, potentially to the lowest total crop in four years. 

Meantime, barley from southern New South Wales was pricing into the delivered Downs market past week in a move which is already narrowing the spread between the northern and southern markets considerably ahead of new crop.

The sorghum market has bounced as supplies out of northern NSW and southern Queensland shrink with the end of harvest, while in the southern market, barley and wheat values had drifted lower based on unappealing elevation margins in the face of Northern Hemisphere competition.

Dry conditions centred in northern NSW have some chance of improvement with 10-50mm forecast for all of NSW this week.

However, the best of the prior week’s falls have run across southern Australia, with most paddocks in Victoria and South Australia getting a perfectly timed 10-40mm.

As a result, feed grade wheat delivered Melbourne firmed at the end of last week as shorts were still in the market finding nearby offers. 

The rain on the forecast this week will be important as crop establishment will be key to outgrowing some of the current pest pressures impacting newly emerged crops.

On the international trade scene, South Korea’s Major Feedmill Group (MFG) purchased about 55,000 to 65,000 tonnes of animal feed wheat in a private deal on Friday without issuing an international tender which is expected to be sourced from the Black Sea region or east Europe.

One consignment was purchased at an estimated $258.60 a tonne c&f plus a $1.50 a tonne surcharge for additional port unloading.

It was believed to have been bought from trading house Cofco with the precise volume in the range subject to confirmation.

The wheat is expected to be sourced from the Black Sea region with shipment in September but loading cannot be undertaken in Ukrainian ports.

The MFG had also bought about 55,000 tonnes of animal feed wheat on Wednesday at $263.90 a tonne c&f also from Cofco for August shipment which was also expected to be sourced from the Black Sea region.

The latest deal continued a series of feed wheat purchases by South Korean importers this week after prices fell.

South Korea’s Nonghyup Feed Inc. reportedly purchased 64,000t feed wheat from optional origins, at US$258.70/t c&f, for Nov arrival. 

Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), said on Friday it had canceled an international vegetable oils tender that had a deadline for offers on June 6.

On Thursday, GASC had changed the deadline for offers from June 1 to June 6.

GASC did not give a reason for the cancellation.

Pendiong tenders:

Saudi Arabia’s General Food Security Authority (GFSA) purchased 624.000 t of hard milling wheat for delivery in September and October 2023, at an average price of US$261.76/t CFR, in an international tender to buy 480,000 tonnes.  

In energy markets, oil prices rose over 2% after the U.S. Congress passed a debt ceiling deal that averted a government default.

Also, jobs data fueled hopes for a possible pause in Federal Reserve interest rate hikes.

In the U.S., energy firms past week slashed the number of oil rigs operating by the most since September 2021, reducing the overall count for a fifth week in a row, energy services firm Baker Hughes Co said in a closely followed report.

U.S. drillers have been cutting back on drilling for months due to an 11% drop in U.S. crude prices and a 51% drop in natural gas futures since the start of the year.

Then the focus remained on June 4 OPEC+ meeting.

On the demand side, manufacturing data out of China, painted a mixed picture.

In this context, Brent futures rose $1.85, or 2.5%, to settle at $76.13 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $1.64, or 2.3%, to settle at $71.74.

The closes were the highest since May 26 for WTI and May 29 for Brent.

However, for the week, both contracts were down about 1%, in their first weekly losses in three weeks.

On this morning, oil prices were up $1 a barrel, after Saudi Arabia pledged to cut production by another 1 million barrels per day from July, counteracting the macroeconomic headwinds that have depressed markets.

Notably, Brent crude futures were at $77.15 a barrel, up $1.02, or 1.3%, at 06:45 GMT.

U.S. West Texas Intermediate crude climbed $1.02, or 1.4%, to $72.76 a barrel.

Consultancy Rystad Energy said the additional cut by Saudi is likely to deepen the market deficit to more than 3 million bpd in July, which could push prices higher in the coming weeks.

Many of the OPEC+ reductions will have little real impact, however, as the lower targets for Russia, Nigeria and Angola bring them into line with their actual production levels.

Also, the United Arab Emirates (UAE) was allowed to raise output targets by 200,000 bpd to 3.22 million bpd.

In ocean freight markets, the Baltic exchange’s main sea freight index extended losses for the 16th straight session on Friday and were on track for its biggest weekly decline since early January.

The overall index, indeed, fell 18 points, or 1.9%, to its lowest in more than three months at 919.

The main index was down 21.6% for the week – its lowest since the week ending Jan. 6.

Notably, the capesize index lost 28 points or 2.5% to 1,116.

The index slumped over 33% for the week, posting its biggest weekly percentage fall since Feb. 17.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, decreased $233 to $9,254.

The panamax index was unchanged from 1,030 points from the previous session- its lowest since Feb. 22.

It was down for the eighth straight week.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $1 to $9,269.

Among smaller vessels, the supramax index lost 28 points, or about 3.3%, at 819, to hit its lowest since late February.

It was down 13.4% for the week.

Analysts have pointed that lower coal imports to Europe and slow economic recovery in China were the main factors weighing on the Baltic index.

In equity markets, US stock indexes moved higher the entire day.

US Senate late Thursday night passed legislation to suspend the debt ceiling. 

Then stocks maintained their gains despite a larger-than-expected increase in U.S. May nonfarm payrolls as wage pressures unexpectedly eased. 

Notably, U.S. May nonfarm payrolls rose +339,000, stronger than expectations of +195,000 and the largest increase in 4 months. 

Also, Apr was revised higher to +294,000 from the initially reported +253,000. 

However, the May unemployment rate rose +0.3 to 3.7%, above expectations of 3.5%.

Also, U.S. May average hourly earnings eased to +4.3% y/y from +4.4% in Apr, more dovish than expectations of no change at 4.4%.

The data brought relief to investors who mostly expect the Fed to pause hiking rates at its policy meeting on June 13-14.

It would be the first halt since the Fed started its aggressive anti-inflation policy tightening more than a year ago.

But some pointed to the much hotter-than-expected jobs data as a sign the Fed still has not yet tamed inflation.

Thus, market expectations for a +25 bp rate hike at the June 13-14 FOMC meeting only rose slightly to 28% Friday from 24% Thursday.

Fed funds futures indeed showed a 71.3% probability that the Fed will hold rates steady in two weeks, down from 79.6% on Thursday, according to CME Group’s FedWatch Tool.

Meantime, the 10-year T-note yield rose +9.6 bp at 3.691%. 

In this context, the Dow Jones Industrial Average rose 701.19 points, or 2.12%, to 33,762.76, the S&P 500 gained 61.35 points, or 1.45%, to 4,282.37 and the Nasdaq Composite added 139.78 points, or 1.07%, to 13,240.77.

For the week, the S&P 500 rose 1.82%, the Dow added 2.02% and the Nasdaq gained 2.04%.

On this morning, Asian stocks followed Wall Street higher.

Tokyo’s benchmark gained almost 2%. Shanghai, Hong Kong and Seoul also rose.

Notably, the Nikkei 225 in Tokyo advanced 1.9% to 32,106.94 and the Shanghai Composite Index added less than 0.1% to 3,232.77.

The Hang Seng in Hong Kong gained 0.3% to 19.011.82.

The Kospi in Seoul was 0.6% higher at 2,615.35 and the S&P ASX 200 in Sydney jumped 1% to 7,214.90.

India’s Sensex opened up 0.5% at 62,860.24. Singapore gained while Jakarta declined.

Markets in New Zealand and Thailand were closed for holidays.

Markets now await data on key consumer prices a day before the Fed’s rate decision in two weeks.

In currency trading, the dollar index rose by +0.42%, with the dollar recovering from a 1-week low, as T-note yields jumped on the larger-than-expected increase in U.S. May nonfarm payrolls.

The dollar Friday initially fell to a 1-week low after the Senate Thursday night passed the bill lifting the debt limit, which sparked a rally in stocks that curbed the liquidity demand for the dollar.

Thus, the EUR/USD fell by -0.46%, with the euro fell back from a 1-week high and posted moderate losses. 

The EUR/USD initially climbed to a 1-week high on hawkish comments from ECB Governing Council members Vasle and Makhlouf, who said more ECB rate hikes are needed to tame inflation.

Meantime, data showed French Apr manufacturing production rose +0.7% m/m, stronger than expectations of +0.1% m/m.

As for the USD/JPY, it rose by +0.83%, with the yen under pressure on dovish comments from BOJ Governor Ueda as he signaled the BOJ would maintain stimulus measures. 

The yen was also weighed down Friday by higher US T-note yields. 

In addition, a rally in global equity markets has reduced the safe-haven demand for the yen.

On this morning, the dollar rose to 140.05 yen from Friday’s 139.94 yen.

The euro fell to $1.0697 from $1.0712.

Watching this week’s market …

USDA’s Export Inspections and Crop Progress reports will be published on Monday per normal.

Monday is also first notice day for June live cattle futures.

Fast forward to Wednesday and Census will release April trade data, with EIA putting out their weekly production and stocks report including ethanol.

Export Sales will resume their Thursday afternoon release.

Finally on Friday, we round things out with the monthly Crop Production and WASDE reports for June.

 That’s all, thank you.

We wish you a nice day and a good start to the week.

Author: Sandro F. Puglisi

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