US farm markets ended on a higher note, past week.
The first 18-state NASS winter wheat crop condition ratings, have seen rating 30% of U.S. winter wheat in good to excellent condition, of which the Hard Red Winter wheat states’ good-to-excellent, was rated around to 23pc.
The good-to-excellent rating for SRW were about circa 55pc, but the states of Texas and Oklahoma ratings were a shocking 13pc and 17pc respectively, the worst start to the year since 1996.
Consequentially, the wheat complex has moved quickly early past week, and both corn and soybeans were also motivated to follow the suit.
Meantime, traders took a look at the WASDE numbers on Friday.
They found nothing threatening for corn and no news, has meant good news, as generally a quiet WASDE hints at future price opportunities.
With lingering questions about U.S. acreage and Ukraine’s export potential, corn prices kept well firm.
In the meantime, a confirmed tightening in soybean stocks, pushed up oilseed markets.
Finally, the WASDE report also showed that wheat world ending stocks down 3.09 MMT to 278.42 MMT.
Showing more wheat US ending stocks by 25 mbu to 678 mbu, was useless, as operators noted larger US ending stoks, were done via cuts to feed & residual and exports.
Thus, the wheat complex skyroketed.
Well, lets move on our usually “Last Week Market Comment”.
Corn prices gained 1.45% on Friday and reversed the previous week’s losses, closing up 4.59% for the week.
Soybean soared 2.64% on Friday and was up more than $1.06 or 6.71% from prior week.
The products gave a helping hand with soy meal up $18.20/ton or 4.04% and soyoil $3.92 higher or 5.51% week on week.
On Friday soymeal was up 1.74% while soyoil jumped 2.88%.
Kansas wheat was the leader of the wheat complex, with May up 9.25% on the week.
In the endweek session it gained 3.36%.
Chicago was the next in line, rallying 6.81% for the week.
On Friday Chicago rallied 3.09%
MPLS, despite gained “only” 5.82% from prior week, was the only of the three to take out all of prior week’s losses.
On Friday MPLS rose 2.52%.
In energy markets, oil prices rose 2% last Friday.
Brent crude futures, indeed, settled up $2.20, or 2.19%, at $102.78 a barrel.
U.S. West Texas Intermediate (WTI) crude futures rose $2.23 to $98.26.
However, for the week, Brent dropped 1.5% while WTI slid 1%.
Member nations of the International Energy Agency (IEA) will release 60 million barrels over the next six months, with the United States matching that amount as part of its 180 million barrel release announced in March.
U.S. producers added 13 oil rigs in the week to April 8, data from oil services firm Baker Hughes showed, a third straight week of gains.
Some demand uncertainties added as Shanghai extended its lockdown to contend with fast-rising COVID-19 infections.
And that, has weighened on oil prices.
Further pressure came from the strengthening U.S. dollar, past week.
Russia, on its part, has found Asian buyers.
Russia’s production of oil and gas condensate, however, fell to 10.52 million barrels per day (bpd) for April 1-6 from a March average of 11.01 million bpd.
Western buyers, indeed, are shunning cargoes since the start of the conflict in Ukraine.
On Thursday, European Union countries approved a ban on Russian coal imports, adding the bloc will now discuss sanctions on oil.
Meantime, money managers cut their net long U.S. crude futures and options positions in the week to April 5 by 3,147 contracts to 266,727, the U.S. Commodity Futures Trading Commission (CFTC) said.
Meantime, oil prices slid more than $2 a barrel this morning.
Brent crude for June delivery, indeed, was down $2.12, or 2.1%, at $100.66 a barrel by 07:56 GMT.
U.S. West Texas Intermediate crude lost $2.21, or 2.3%, to $96.05.
In the freight markets, the Baltic Exchange’s dry bulk sea freight index fell for the 12th straight session on Friday as weakness in the supramax and panamax segments outweighed capesize gains.
The overall index, which factors in rates for capesize, panamax and supramax shipping vessels, indeed, fell 6 points, or about 0.3%, to 2,055 points, its lowest since Feb. 28.
The index fell 12.8% over the week.
The capesize index added 27 points, or 1.9%, to 1,444 points, but was down 22.5% for the week.
Average daily earnings for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, increased by $226 to $11,979.
The panamax index slipped 1 point to 2,777 points, down almost 10% on the week.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, fell $6 to $24,997.
The supramax index dropped 45 points to 2,502 points, down 9.18% from prior week.
On week 14, in contrast, there was a very sharp rise in freight rates in the Azov and Black Sea region.
The rate for a of 3K parcel of wheat from Azov to Marmara Sea ports is already $80 per ton, Sea Lines shipbrokers report.
The strong increase in rates began at the end of prior week.
It is primarily due to the shortage of spot tonnage and high activity in the grain market.
In addition, some insurance companies have begun to increase fees for military risks, which has affected freight rates.
In the Black Sea, the freight market is also recording a significant increase, although the rates are much lower than in the Sea of Azov.
Active shipments of Ukrainian wheat are underway from the ports of Romania and Bulgaria.
Most market players are inclined to believe that in the coming weeks a sharp drop in freight prices is unlikely and there is a chance of maintaining the trend of freight growth due to the unstable situation in the region.
According to Sea Lines, on week 14, freight rates for wheat parcels from Azov made $78 to the Black Sea, $80 to Marmara, $95to Mersin and $97 to Egypt.
Freight rates from Rostov AB (after bridge) are $1 above, from Rostov BB (before bridge) the same, from Yeisk and Taganrog $1 below, and from Temryuk $3 below those from the port of Azov.
In the Caspian, freight rates remain stable.
On week 14, freight rates for shipping corn by 3,000 dwt bulkers to Iran make $20 from Aktau, $25 from Makhachkala, and $30 from Astrakhan.
In equity markets, Wall Street closed its first losing week in the last four, last week, with an up-and-down Friday.
Big tech stocks once again led the market lower, and the S&P 500 fell 11.93 points, or 0.27%, to 4,488.28 after wobbling much of the day.
The Dow Jones Industrial Average rose 137.55, or 0.4%, to 34,721.12.
The weakness for tech stocks, meanwhile, dragged the Nasdaq composite down 186.30, or 1.34%, to 13,711.00.
For the week, the S&P fell 1.16%, the Dow lost 0.28% and the Nasdaq shed 3.86%, as the index was hit after Fed officials raised concerns about rapid rate hikes causing a slowdown.
Amazon, Nvidia and Tesla were among the heaviest weights on the S&P 500, on Friday, and each dropped at least 2%.
Much of the market’s focus has been on the bond market, where expectations for a more aggressive Fed have sent yields to their highest levels in three years.
The 10-year yield climbed to 2.71% from 2.65% late Thursday.
It was at just 1.51% at the start of the year.
It could be set to rise further as the Fed not only halts but reverses its program to buy trillions of dollars of bonds.
Also, transport stocks retreated Friday after Bank of America warned that demand in the sector might be falling.
Strength in crude prices Friday boosted energy stocks, and a 2% rally in Home Depot helped push the Dow Jones Industrials higher.
Meantime, Asian stock markets followed Wall Street lower this morning.
The Shanghai Composite Index indeed, lost 1.7% to 3,195.07 after inflation in China accelerated to 1.5% over a year ago in March from the previous month’s 0.9%.
The Nikkei 225 in Tokyo shed 0.8% to 26,764.91 and Hong Kong’s Hang Seng retreated 2.5% to 21,336.37.
The S&P-ASX 200 in Sydney advanced less than 0.1% to 7,480.20.
India’s Sensex opened down 0.6% at 59,090.46.
New Zealand and Singapore declined while Indonesia advanced.
In currency trade, the dollar on Friday rallied for the seventh consecutive session and posted a new 1-3/4 year high.
USD/JPY on Friday rose by +0.34 (+0.42%) to 123,92, climbing to a 1-1/2 week high as the yen weakened from rising T-note.
That is up from 122.54 of prior Friday.
Also, weak Japanese economic data weighed on the yen after Japan’s Mar consumer confidence unexpectedly fell -2.4 to a 14-month low of 32.8, weaker than expectations of an increase to 36.8.
EUR/USD on Friday rose by +0.0001 (+0.01%) to 1.0878 after fell to a 1-month low on dollar strength and weakening interest rate differentials for the euro.
The spread between the U.S. and German two-real real yields rose above 400 bp for the first time on expectations for the Fed to raise interest rates more aggressively than the ECB.
However, short-covering emerged Friday, and EUR/USD recovered its losses after Goldman Sachs said it saw the ECB raising interest rates as soon as July.
Goldman Sachs, indeed, predicts the ECB will raise interest rates in two 25 bp moves in September and December but may hike as soon as July.
Also, Friday’s Eurozone economic data was bullish for EUR/USD after Italy’s Feb retail sales rose +0.7% m/m, stronger than expectations of +0.4% m/m.
EUR/USD previus week closed at 1.1065.
Meantime, the dollar index on Friday closed at 99.753.
That was up 1.14% from 98.627 prior week.
On the weather side, above normal temperatures, below average precipitation, and high winds deteriorated drought conditions in Texas and Oklahoma past week.
Though long-term drought indicators remain, precipitation and cool temperatures helped ease shortterm drought conditions in Minnesota and some parts of North and South Dakota.
Weather across the Southern Plains remains variable, with precipitation and snowpack reducing drought conditions slightly in south-central Colorado and southwest Wyoming.
However, extreme drought expanded in southwest Kansas with less than 10% of normal precipitation.
In the western states, drought conditions worsened in Washington, Idaho, Montana, and California, including records set for the driest three-month period in the last 100 years.
Some additional moisture we can see on parts of the Midwest and Plains to start this week.
However, NOAA’s 8-to-14-day outlook predicts a return to seasonally dry conditions for much of the central U.S. between April 15 and April 21, with widespread seasonally cold weather for most of the U.S. during this time.
On the demand side, weekly export sales data showed sales picking back up a little to 782,400 MT past week.
New crop sales were tallied at 145,200 MT.
US old crop corn export commitments (shipped plus outstanding sales) were at 54.437 MMT, 18% below last year.
They were 86% of the full year WASDE forecast, slightly behind the average pace of 88%.
Accumulated exports were 53% of the updated WASDE full year projection, now 1% above normal.
As for soybean, the report tallied old crop bean bookings in the week that ended on 3/31 at 800,700 MT, with new crop at 298,500 MT.
US soybean exporters have either sold or shipped 56.143 MMT of the 21/22 crop.
That was 7% smaller than last year’s record buying pace.
Total export commitments were 97.5% of the USDA full year estimate, outpacing the 93% average for this date.
Shipments were 77.1% of that projection, matching than the average pace.
For products, USDA reported 66,226 MT of soymeal was sold for export during the week that ended 3/31.
Meal exports were reported at 237,761 MT for the week and 6.306 MMT for the year.
For bean oil, FAS data had 6,248 MT of old crop sales from the week of 3/31.
Soy oil shipments were 50,200 MT, which was a 56-week high.
Accumulated soy oil exports reached 497,460 MT.
As for wheat, the report showed old crop wheat sales slowing again to 156,300 MT for the week ending 3/31.
New crop sales were down vs. the previous week 223,000 MT.
Old crop wheat export commitments were 19.420 MMT.
That was 91% of USDA’s newly revised full year forecast.
They would normally be 100% by now.
Shipments were still 22% smaller than a year ago, at 16.011 MMT.
That was 75% of the USDA projection vs the average of 80%.
Meantime, Friday’s Commitment of Traders report tallied managed money spec funds at a net long 362,306 contracts as of 4/5.
That was up 7,702 contracts from the previous week.
Commercial corn hedgers were adding coverage, with 45,765 (3%) more hedges added through the week.
On net, they extended their net short by 6,599 contracts to 700,869 contracts.
As for soybean, the report showed money managers in soybean futures and options adding back 7,382 contracts to their net long in the week ending April 5.
That took the net position to long 163,655 contracts.
The commercials were closing short hedges, with a 6,907 contract weaker net short wk/wk.
The funds were 596 contracts more net long to 100,544 contracts in soymeal.
For soyoil, managed money was reported 76,750 contracts net long, or a 1,851 reduction wk/wk.
For wheat the report indicated spec traders in CBT wheat futures and options backing off their marginal net long position by 5,480 contracts as of April 5 to 13,959 contracts.
For KC wheat, they trimmed 281 contracts from their net long position in that week, taking it to 45,029 contracts.
Managed money firms were 18,255 contracts net long in spring wheat, as the week saw 3,909 new spec longs opened.
In this context, corn basis bids were steady to firm after rising 1 to 7 cents higher across five Midwestern locations on Friday.
Soybean basis bids were steady to firm after rising 1 to 9 cents higher at two interior river terminals and 6 cents higher at an Ohio elevator.
For wheat, basis past week was mixed in the Gulf and down in the Pacific Northwest (PNW).
Slow export demand weakened basis, though high interior freight costs continue to support basis levels.
Meantime, the funds were net buyers on Friday for 9,000 lots of corn, 15,000 lots of soybeans and 15,000 lots of wheat.
From South America, according to StoneX, future wheat acreage in Brazil should grow sharply by +20.2% to reach production of around 10 million tonnes.
A record if realized.
Meantime, CONAB reported Brazilian corn as 115.6 MMT, or a 3.26 MMT increase from last month’s forecast.
That rapresent a 2.9% increase.
First crop was upped by 451,000 MT on a 1.1 bpa yield boost.
2nd crop output was called 2.48 MMT higher, on a 1.01 bpa yield boost, to 88.53 MMT and 87.9 bpa respectively.
Meantime, corn export estimates in 2021/22 also improved 5.7% to 37 MMT.
Also, CONAB reported Brazilian soy output as 122.43 MMT, cutting it by another 2.4%.
That is down 3 MMT from March’s 125.5 MMT, and came on a 1.35 bpa yield cut to 44.62 bpa.
If realized, that would be a year-over-year reduction of 11.4%.
Last year’s yield was 52.4 bpa for soybeans.
Conab also lowered its estimates for 2021/22 soybean exports by 3.9% to 77 MMT.
Argentina’s 2021/22 soybean production could fall below the current estimate of 42 million tonnes due to the impact of new early frosts in farming areas over the last week, the Buenos Aires Grains Exchange (BdeC) said on Thursday.
The BdeC has already made cuts in its production forecast, but because of a drought and heat waves in important agricultural areas at the start of the year.
“New frosts seen during the last seven days are added to the frosts reported at the end of March,” the exchange said in its weekly report.
“The damage will be evaluated over the next few weeks and depending on the magnitude of the losses, they could affect our current estimate,” the BdeC added, noting that farmers have harvested 8.8% of the area planted with the oilseed.
The frosts, which happened only a few weeks before the end of the southern summer, also hit Argentina’s corn, however the Exchange did not warn of a possible changes in its harvest forecast, currently of 49 million tonnes.
Until Wednesday, producers had threshed 17% of corn area.
The grains exchange also said that the sunflower harvest would end in the next two weeks, with a final production of 3.3 million tonnes if suitable weather conditions were registered.
In Europe, markets continued to show their firmness.
FranceAgrimer on Friday posted a good to excellent wheat crop rating of 92%, unchanged from last week.
It is also unchanged in winter barley at 88%.
It is 92% spring barley.
In contrast, durum wheat conditions decreased from 87% prior’s week, to this past week 85%.
Meantime, some 4% of the expected grain corn area had been planted, below the 8% progress seen a year ago.
The rains of the past week are welcome, in a context where water reserves are displayed at a low level.
Low temperatures should not have significantly impacted yield potential, except locally.
Meantime, per the latest data from the European Commission, 2021/22 EU corn imports were slightly trailing last year’s pace after reaching 12.22 MMT, through April 3.
European Union soybean imports during the 2021/22 season reached 10.51 MMT through April 3.
That was a year-over-year decline of 6.5% so far.
EU rapeseed imports reached 3.94 MMT through April 3.
EU soymeal imports were also slightly trailing last year’s pace, with 12.32 million metric tons during the same period.
The European Commission reported that 2021/22 EU wheat exports were still slightly behind last year’s pace after reaching 20,08 MMT through April 3 vs. 20.93 MMT last year.
EU barley exports were also down slightly from a year ago, with 5.9 MMT.
Meantime, the European Commission also announced European exports at 40 Mt for the next season (against 33 Mt in 20/21), while corn imports are set to drop to 9 Mt (14 Mt this year) as a result of the absence of Ukraine.
The Commission forecast that cereal use in livestock feed would decline next season, with wheat consumption dropping to 37.6 million tonnes from 38.8 million expected this season and maize use falling to 62.6 million tonnes from 64.2 million.
The EU’s executive body also forecast larger EU grain production, saying a decision to let farmers use fallow land for crops would boost supply.
Usable production of soft wheat in 2022/23 was pegged at 131.3 million tonnes against 130.0 million in 2021/22, while usable maize output was seen rising to 74.0 million tonnes from 72.5 million.
In oilseeds, rapeseed usable production was pegged at 18.1 million tonnes next season against 17.0 million in 2021/22, with EU rapeseed imports seen falling to 4 million tonnes from 4.9 million.
Sunflower seed output was projected at 11.2 million tonnes versus 10.5 million this season.
Meantime, according to the FAO, the food price index posted a record 159.3 points against 141.4 in February, a new record, an increase of 13% in one month.
The index rose by +17% in cereals and by +23% in oils in one month.
From the Black Sea basin, export prices for Ukrainian corn have fallen due to large stocks and limited demand for the grain, analyst APK-Inform said on Saturday.
APK-Inform, indeed, said demand corn prices with April-May delivery stood at $240-$250 per tonne DAP on the Polish border, down by as much as $15 a tonne from a week earlier.
Demand prices for corn on the border with Slovakia also fell to $245-$260 per tonne, while the price for delivery to the Romanian port of Constanta stood at $300-$315 per tonne.
APK-Inform did not provide comparative figures.
Meantime, Ukrainian officials have said the country’s corn stocks totalled about 13 million tonnes at the end of March, with only 300,000 tonnes of the grain exported during the month.
In contrast, Russia’s wheat exports are picking up pace after an initial slowdown, with lower prices than many of its rivals helping secure sales.
Egypt, for example, saw a spike in Russian wheat imports in March, receiving 479,195 tonnes, a 24% increase from the same month last year.
New deals are being made by importers in Turkey, Syria, Iran, Lebanon and Libya.
Sovecon, one of the leading agriculture consultancies in Moscow, said high global prices and a period where the rouble was very weak had helped exports in the second half of March, despite there have been payment issues, with some Russian banks excluded from the SWIFT system and international banks unwilling to finance purchases of Russian wheat.
Meantime, the Russian Ag. Min has amended the export tax for wheat, barley and corn for the week of April 13-19, 2022.
Particularly, the export duty will be $101.4 on wheat, $75.4 on barley and $70.6 on corn.
Indicative prices will be $344.9 for wheat, $292.8 for barley and $285.9 for corn.
That is compared, with prior week (April 6-12) when the tax was $96.1 for wheat, $75.4 for barley and $65.8 for corn, while indicative price were $337.3 for wheat, $292.8 for barley and $279 for corn.
Kazakhstan plans to restrict wheat and wheat flour exports from April 15 until June 15, the Agriculture Ministry said on Monday.
Kazakhstan, which exports grains to neighbouring Central Asian nations and Afghanistan, said earlier this month it plans to limit wheat and wheat flour exports to 1 million tonnes and 300,000 tonnes respectively until mid-June.
The Central Asian country also ships some grains to China and to Black Sea ports.
From the Middle Kingdom, Chinese President Xi Jinping said the country needs to be independent in seeds to achieve food security, reiterating growing concerns about China’s reliance on imports of food.
Xi made the remarks on Sunday while visiting the Yazhou Bay Seed Laboratory in the southern island of Hainan, a major breeding base for the seed sector.
China has stepped up its focus on food security since the COVID-19 pandemic began in early 2020.
Last month, Xi told delegates to the annual parliament meeting that China must not rely on the international market for food.
In late 2020, the central leadership said the country’s seed industry was a weak link in the food chain, and needed to make better use of science and technology to achieve a turnaround.
Meantime, China past week has sold 533,449 tonnes of wheat, or 97.29% of total on offer, at an auction of state reserves, according to the National Food and Strategic Reserves Administration.
The average selling price was 2,857 yuan ($449.47) per tonne, the agency said in a statement.
China will sell 500,000 tonnes of imported soybeans from its state reserves on April 15, the National Grain Trade Center said in a notice on its website on Friday.
The sale, which follow an auction of the same amount of soybeans from reserves past week, is aimed at alleviating tight supply in the domestic market.
The 501,500 tons were planned to be auctioned on April 7, with 243,000 tons sold.
The trading rate was 48.45%, the highest at 5,060 y/t, the lowest at 4,710 y/t.
The average price was at 4,871 y/t.
The auction reserve price was at 4922 y/t.
China started releasing imported soybeans from reserves in mid-March, as imports of the oilseed declined after bad weather delayed exports from South America.
Prices of soymeal had rallied on tight supplies.
Soybean arrivals have increased in recent weeks, however, easing tightness and pushing down soymeal prices.
($1 = 6.3564 Chinese yuan renminbi).
From South East Asia, Malaysian palm oil prices gained on Friday, logging a weekly rise.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange closed up 93 ringgit, or 1.6%, at 5,920 ringgit ($1,402.84) a tonne, ending a two-day decline.
For the week, the contract has gained 6.36%.
Trading was cautious ahead of March supply-and-demand data from the Malaysian Palm Oil Board due on Monday, Varqa added.
The Malaysian Palm Oil Association on Thursday forecast a 19% monthly rise in March production to 1.35 million tonnes.
From Australia, according to the latest data from the Australian Bureau of Statistics, Australia exported 2,789,640 tonnes of wheat in February, up 5 per cent from the 2,660,888t shipped in January.
This is believed to be a new record for Australian monthly wheat exports, and exceeds by 6pc the 2,624,651t shipped in February 2021.
Containerised exports for February 2022 totalled 287,801t, with Vietnam on 82,046t, Pakistan on 52,736t and Taiwan on 45,010t the biggest markets.
In bulk, 2,501,839t was shipped, with Indonesia on 349,000t, China on 320,591t and The Philippines on 291,832t the biggest markets.
In bulk exports and based on initial February figures, Australia is ahead of where it was for the three months to February 28.
In Dec 2020-Feb 2021 period, 6.76 million tonnes (Mt) was shipped, while in the Dec 2020-Feb 2022 period, 6.94Mt has been shipped.
While March 2022 was expected to see 3Mt of boxed and bulk wheat shipped in total, torrential rain which impacted port operations in Brisbane, Newcastle, Port Kembla and Sydney are likely to see the March number come in at below February.
Meantime, wheat and barley markets last week displayed a bit of a standoff between bids and offers.
Buyers’ coverage levels seem comfortable.
However, large premiums of up to $45-50/t remain in the market for delivered grain, port equivalent, compared with prices of grain in the system if logistics fall over say a week out from delivery.
Logistics interruption, say a week out from delivery, can trigger the higher price being paid.
Meantime, another farm land sale record was set last week with cropping country in the Victorian Wimmera region trading for $14,700 an acre.
The continued run of good seasons, high commodities prices outlook and current low interest rates are driving high demand for land as neighbouring farms look to expand.
On the weather side, the Monday morning BOM 8-day forecast sees the rain prospect fizzle for Vic and SA.
The moisture that was forecast to arrive this week has been downgraded.
A large part of SA now is only predicted to receive falls of up to 10mm and similar for Vic.
On the international trade scene, Algeria’s state grains agency OAIC has issued an international tender to buy soft milling wheat for shipment to two ports only.
The tender sought a nominal 50,000 tonnes but the shipment to two ports generally indicates a small purchase is planned.
The deadline for submission of price offers in the tender is Tuesday, April 12, with offers having to remain valid until Wednesday, April 13.
The wheat is sought for shipment in several periods from the main supply regions including Europe: May 1-10, May 11-20, May 21-31, June 1-10, June 11-20 and June 21-30.
If sourced from South America or Australia, shipment is one month earlier.
The wheat should be unloaded in the two ports of Mostaganem and/or Tenes.
Watching this week market
It is expected to be pretty mild on the reports side of things this week.
It starts out with Export inspections data in the afternoon, with the Crop Progress report after the sessions close.
EIA will publish their weekly production and stocks report for ethanol on Wednesday.
Export Sales data will be released on Thursday morning.
It is also the expiration of April Lean Hog futures and options.
The markets will be closed on Friday in observance of Good Friday.
