Good morning Farmer Family and good start to the week …
US farm markets, were mixed but mostly higher on Friday.
The corn market ended the week with double digit new crop gains and a 0.47% gain in July contract.
Soybeans moved moderately higher too, up 1.10%, erasing some of the steep losses incurred during the week.
Meal prices ended the day 1.38% higher.
Soybean oil prices closed 3.01% stronger.
Wheat prices, meantime, continued to slide lower.
CBOT SRW went home 1.44% in the red.
Kansas City HRW ended the day 1.24% lower.
Minneapolis spring wheat prices closed 0.9% lower.
For the week, all grain and oilseed markets were down past week.
Concerns about a potential recession, due Fed’s rate increase, hurt ag commodities.
Volatility in crude oil prices did influence the biofuels.
Some analysts blamed the cooler long range weather forecast to giustify the sell off.
In this context, corn prices collapsed with the July contract down 4.37%, while the new crop Dec 7.8% lower for the week.
Soybeans joined the bear parade, as contracts fell 5.36% in nearby July and 7.37% for November.
Product values also headed lower, with meal down 1.26%, while soy oil dropped another 5.47%.
Malaysian palm oil again was a culprit.
Wheat prices, were the most hammered in the grain complex, in spite it head towards a harvest low.
Chicago SRW, indeed, was down 10.68% for the week.
Kansas City lumped a 10.18% drop.
Minneapolis HRS bulls held themselves together a shade better, but July was still down 8.44% for the week.
In energy markets, oil prices settled up by more than $3 a barrel on Friday, supported by tight supply.
Brent crude, indeed, settled up $3.07, or 2.8%, at $113.12 a barrel on Friday.
Meanwhile, U.S. West Texas Intermediate (WTI) crude settled up $3.35, or 3.2%, at $107.62.
However, both benckmarks notched their second weekly decline on concern that rising interest rates could push the world economy into recession.
For the week, indeed, Brent crude was substantially unchanged from the prior Friday, while WTI was down $0.37 a barrel, or 0.34%
Past week crude has gained support from the almost total shutdown of output in OPEC member Libya due to unrest.
Past Thursday, the Libyan oil minister said the National Oil Corporation chairman was withholding production data from him, raising doubts over figures issued last week.
OPEC+, meet on June 30 and are expected to stick to a plan to only slightly accelerate hikes in oil production in July and August.
U.S. energy firms past week added oil and natural gas rigs for a second week in a row in a record 23-month streak of increases, as high crude prices and prodding by the government prompted drillers to return to the wellpad.
The latest weekly U.S. oil inventory figures, which will give a snapshot of supply tightness in the top consumer, have been delayed to this week due to technical issues.
Meantime, oil prices edged down on Monday in a volatile session as investors stood on guard for any moves against Russian oil and gas exports that might come out of a meeting of leaders of the Group of Seven (G7) nations in Germany.
G7 leaders, who began their meeting on Sunday, are expected to discuss options for tackling rising energy prices and replacing Russian oil and gas imports, as well as further sanctions that do not exacerbate inflation.
Thus, Brent crude futures edged down 8 cents to $113.04 a barrel by 0632 GMT.
U.S. West Texas Intermediate crude was at $107.38 a barrel, down 24 cents, or 0.2%.
In freight markets, the Baltic Exchange’s main sea freight index fell on Friday and registered a weekly fall, pressured by a drop in rates across vessel segments.
The overall index, indeed, fell 23 points, or about 1%, to 2,331.
The index was down 9.6% for the week.
Particularly, the capesize index lost 23 points, or 1%, to 2,396.
The index shed nearly 19.8% past week, its worst drop since May 27.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, fell $186 to $19,875.
The panamax index fell 37 points, or 1.4%, to 2,695 points, notching a weekly decline of 5.8%.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000-70,000 tonnes, decreased by $338 to $24,254.
The supramax index edged down 17 points to 2,449.
In equity markets, stocks on global markets rallied on Friday and registered strong gains for the week as the slide in commodity prices eased worries about inflation and the rate hike outlook.
Thus, the S&P 500 gained 116.01 points, or 3.06%, to 3,911.74.
That was its biggest daily percentage gain since May 2020.
The Dow Jones Industrial Average rose 823.32 points, or 2.68%, to 31,500.68.
The Nasdaq Composite added 375.43 points, or 3.34%, to 11,607.62.
Smaller company stocks also rallied.
The Russell 2000 rose 3.2% to 1,765.74.
The pan-European STOXX 600 index rose 2.62% and MSCI’s gauge of stocks across the globe gained 2.63%.
For the week, the S&P 500 rose 6.4%, the Dow added 5.4% and the Nasdaq gained 7.5%.
The MSCI global index, meantime, rose 4.8% for the week, snapping three straight weeks of declines.
We’ve seen oil prices come down along with other commodity prices, past week.
That is reflecting expectations of a marked slowdown if not an out-and-out recession.
Also, the University of Michigan consumer sentiment survey’s reading on five-year inflation expectations was positive for stocks, as it eased to 3.1 from the preliminary 3.3% estimate in mid-June.
Meantime, Asian shares advanced Monday after Wall Street ended a rare winning week.
Optimism over China’s progress in controlling coronavirus outbreaks, as schools and businesses reopen, was also fueling buying, analysts said.
Thus, Hong Kong’s Hang Seng index led regional gains, surging 2.5% to 22,249.47, while the Nikkei 225 in Tokyo gained 1.5% to 26,886.36.
In South Korea, the Kospi climbed 1.8% to 2,408.17.
Australia’s S&P/ASX 200 added 1.9% to 6,704.30 while the Shanghai Composite index rose 0.8% to 3,377.90.
Markets seemed unfazed by the possibility that Russia may have defaulted on its foreign debt.
Russia faced a Sunday night deadline to meet a 30-day grace period on interest payments originally due May 27.
But it could take time to confirm a default.
In the currency trading, on Friday the U.S. dollar fell and posted its first weekly decline this month.
The dollar index , which measures the U.S. unit against six major currencies, fell 0.23% to 104.013.
The U.S. dollar’s slide boosted even commodity-focused currencies such as the Australian dollar and Norwegian crown.
The Aussie rose 0.8% to US$0.6946.
The euro on Friday rose by +0.0031 (+0.29%) to 1,0554, after comments from ECB President Lagarde, who told EU leaders at a summit in Brussels that conditions are in place for the Eurozone economy to continue to grow and that the ECB “will take” the required steps to tame undesirably high inflation.
The usd/jpy on Friday rose by +0.29 (+0.22%) to 135.23 as higher T-note yields weighed on the yen.
The yen also weakened as a sharp rally in stocks has reduced the safe-haven demand for the yen.
On this morning, the dollar slipped to 134.95 Japanese yen.
The euro edged higher, to $1.0560.
On the weather side, temperatures past week were above average for much of the central and eastern parts of the U.S. Soil moisture conditions quickly deteriorated across the Central and Southern Plains states due to the heat wave.
In North Dakota and northern Minnesota, below-normal temperatures have delayed crop development.
Montana, Wyoming, and Colorado weather conditions have allowed targeted improvements following active storms.
In the PNW, below-normal temperatures and persistent storm tracks have improved soil moisture but slowed crop development.
Meantime, most of the Midwest and Plains will see at least some measurable rainfall until Tuesday.
Northern Iowa and Minnesota are likely to gather the largest amounts during that time.
NOAA’s outlook anticipates seasonally wet weather returning to the Plains and western Corn Belt between July 1 and July 7, with abundant warmer-than-normal conditions likely across most of the central U.S.
Meantime, the day 10 of the Kansas Wheat Harvest Reports, brought to you by the Kansas Wheat Commission, Kansas Association of Wheat Growers and the Kansas Grain and Feed Association, reported harvest is stop-and-go, due to random sprinkles.
Despite the delay, results are better than expected with yields ranging from 40 to 65 bushels per acre.
The averaging protein, ranged from 11 to 14 percent, and test weights were averaging from 63 to 65 pounds per bushel.
On the demand side, on Friday, USDA reported old crop corn sales surged by 377% to 671,919 MT during the week that ended 6/16.
While exports shipments slipped 17% to 1.147 MMT, brough the season’s total to 50.216 MMT.
That is 80.7% of USDA’s forecast.
New crop sales were at 358,407 MT.
As for soybean, old crop export sales were marked at 29,348 MT.
That was a MY low.
USDA reported 494,055 MT were shipped during the week.
That was down 30% from last week but was double the same week last season.
The 51.2 MMT shipped MYTD makes up 87% of USDA’s forecast.
For new crop, the weekly report had 264,978 MT sold.
For the products, USDA reported soymeal bookings were a net 8,248 MT of cancelations for 21/22 delivery and a net 42,325 MT of new sales for 22/23 delivery.
Bean oil bookings were 1,376 MT during the week that ended 6/16.
MYTD exports for meal were 8.67 MMT through 6/16 and 602,772 MT for soybean oil.
As for wheat, data showed 477,776 MT of wheat was sold during the week of 6/16.
Japan and Mexico were the top buyers, each with about 163k MT.
That was up 57% from the week prior but was 10% lower yr/yr.
USDA reported 336,344 MT of wheat exports during the same week, setting the pace at 918,503 MT through the first 2+ weeks of data.
In this context, despite the lower inspections figure, corn basis along the river and barge rates remained firm and at or above five-year highs as commercial and export demand remains strong.
Soybean basis bids were steady to weak on Friday, after dropping 4 to 8 cents lower across four Midwestern locations.
Wheat basis past week was flat in the Gulf, except for HRW, which was down.
In the Pacific Northwest (PNW) basis was up for HRS and flat for HRW.
Dry weather is supporting the quick pace of HRW harvest.
Cooler temperatures and solid moisture benefit the HRS crop.
Soft white wheat (SWW) prices were significantly down, echoing the fall in CBOT futures past week.
Nearby soft white wheat is “old crop” explaining the significant difference month-over-month.
Cool weather in the PNW will delay SWW harvest slightly.
Meantime, Friday ‘s Commitment of Traders report indicated spec funds pared 12,921 contracts from their net long position in the week ending June 21.
That took their net long to 265,264 contracts by Tuesday.
Commercial corn traders closed 28.7k short hedges reducing their net short to 565,520 contracts.
As for soybean, the report showed the managed money spec funds reducing their net long by 8,733 contracts in the week ending June 14, putting them net long 154,413 and saving those who did it a ton of money on Wednesday and Thursday.
The commercial net position shrank by 10.5k contracts to 232,854 as 5k shorts were closed and 5k end user long hedges were added.
For the products, CFTC reported managed money as 85,909 contracts net long in meal and 50,886 contracts net long in bean oil.
Those were 7,924 contracts stronger and 12,110 weaker from last week respectively.
As for wheat, the report showed the managed money spec funds removing another 3,004 contracts from their CBOT net long in the week ending 6/21, taking it to 3,935 contracts.
The group was 26k contracts net long in mid-May.
Spec longs in KC trimmed 3,792 contracts from their position that week, bringing it down to 32,594 contracts as of Tuesday night.
Spring wheat spec traders were 12,439 contracts net long on 6/21.
That was down by 752 contracts wk/wk.
From South America, Argentine truck unions extended a widespread protest over fuel price hikes and diesel shortages on Friday, but the dismantling of some road blockades meant that truck traffic and operations in the country’s key Rosario grains ports returned to normal.
The protests, which started Wednesday, coincide with the peak period of the harvest cycle.
Traffic around the grains port terminals was eased after authorities from the Santa Fe province dismantled road blocks late on Thursday.
In Europe, markets remained very uncertain.
Harvests have started in France too, mainly in winter barley, with the key word, heterogeneity.
Soft and durum wheat harvest started earlier than last year and the five-year average.
However, heavy rains that persist in part of France are disrupting harvesting sites.
Meantime, FranceAgriMer displaied crop ratings as of June 20 were for wheat at 64% good to excellent against 65% the previous week and 79% last year.
For winter barley, rating was unchanged to 63% good to excellent against 75% last year.
For spring barley, 53% was in good to excellent against 54% the previous week and 84% last year.
For corn, 84% was in good/excellent compared to 87% the previous week and 89% last year.
Rapeseed prices on Friday rose following a week of losing around one-fifth of its value.
Rapeseed fell sharply over the week, in particular on rumors of seeing biofuel mandates revised downwards, mainly at the request of Germany and the United Kingdom.
The risk of food against fuel is opposed by the rise in fuel prices.
From North Africa, Egypt has contracted to buy 180,000 tonnes of wheat from India, less than previously agreed, the supply minister said on Sunday.
Aly Moselhy said in May that it had agreed to buy 500,000 tonnes of wheat from India.
But turned out the supplier has only 180,000 tonnes in the port.
Moselhy added that Egypt was also in talks with Russian suppliers for a wheat purchase agreement.
Separately, Egypt is looking at ways to obtain more flour from grain, raising the extraction percentage for flour used for subsidised bread to 87.5% from 82%, Moselhy said.
That could save around 500,000 tonnes of imported wheat, importing 5-5.5 million tonnes of wheat for the 2022/23 fiscal year, he added.
Another idea being tested was supplementing wheat flour with potatoes.
Current wheat reserves are sufficient for nearly 6 months after procurement of 3.9 million tonnes in the local harvest, according to Moselhy.
In Russia the Ministry of Agriculture, has set out its grain export taxes for June 29 – July 5, 2022.
It will increase for wheat to $146.1 per ton against $142.0 per ton past week.
The duty on corn also will increase to $88.7 from $86.5 a prior week.
For barley remains unchanged to $117.5, meantime.
The wheat rate is calculated based on the indicative price of $404 per ton, for barley — $352.5 per ton, for corn $311.8 per ton.
That, it’s compared with the prior week when indicative prices were at $399.4 per ton for wheat, $352.5 per ton for barley, $308.6 per ton for corn.
Russia may gradually switch state export taxes for grains and sunflower seeds to the rouble currency from the U.S. dollar, the Interfax news agency reported on Thursday.
“Government ministries are discussing modernisation of the grain and sunflower seeds’ tax mechanism to preserve profitability and investment attractiveness of the Russian farmers,” the source said, according to Interfax.
“It is a matter of giving a certain discount to the export duty, taking into account the risks of declining profitability of production. This will not affect the domestic prices, but will support exports,” the unidentified source added.
From Australia, local markets rounded out the week sluggish and remained all offer-side.
Grower bids on the boards were yet another $5-10/t lower on wheat, while canola continued lower as new season grower bids dropped and local site depot numbers were back to $780-800/t levels east coast.
Australia had a dry weekend for nearly all winter cropping regions, with another dry week forecast for this week.
The forecast has rain building from Friday onward with most of Queensland and NSW set to receive varying totals with the heavier falls expected in CQ and south east Qld and north east NSW.
Most of central and northern NSW is forecast to receive 5-15mm which will likely mean winter crops that don’t get in by the end of this week may not go in.
Port congestion has blown out again this week with wait times at Kwinana and Newcastle now at 30 and 31 days respectively, with delays also increasing at most other major ports.
On international trade scene, Saudi Arabia’s state grain buyer SAGO on Monday bought 495,000 tonnes of wheat in an international purchasing tender for shipment from November 2022 to January 2023.
SAGO said the average price for the wheat purchased was $441.93 per tonne.
The tender had sought hard milling wheat with 12.5% protein content and had closed on Friday.
Origins offered were the European Union, Black Sea region, North America, South America and Australia with the seller having the option of selecting the origin supplied, SAGO governor Ahmad Al-Fares added in a statement.
These purchases were made for shipment to three ports in dollars a tonne c&f with arrival period in 2022 in brackets for shipment to end December and 2023 for shipments in January:
Jeddah
– 65,000 tonnes from Cargill at $444.94 C&F (Nov. 10 to Nov. 25);
– 60,000 tonnes from Olam at $437.00 C&F (Dec. 10 to Dec. 25);
– 60,000 tonnes from Bunge at $444.10 C&F (Jan. 10 to Jan. 25).
Yanbu
– 60,000 tonnes from Olam at $440.00 C&F (Dec. 10 to Dec. 25);
– 60,000 tonnes from ADM Hellas at $443.36 C&F (Dec. 10 to Dec. 25);
– 65,000 tonnes from Cargill at $434.90 C&F (Jan. 10 to Jan. 25).
Dammam:
– 60,000 tonnes from ADM Hellas at $449.45 C&F (Nov. 10 to Nov. 25);
– 65,000 tonnes from Cargill at $442.05 C&F (Jan. 10 to Jan. 25).
Jordan’s state grain buyer has issued an international tender to buy 120,000 tonnes of milling wheat which can be sourced from optional origins.
The deadline for submission of price offers in the tender is June 28.
Shipment in new tender is sought in a series of possible combinations in 60,000 tonne consignments.
Possible shipment combinations are in the second half of September, full month of October and the first half of November.
Taiwan’s MFIG purchasing group has issued an international tender to buy up to 65,000 tonnes of animal feed corn which can be sourced from the United States, Brazil, Argentina or South Africa.
The deadline for submission of price offers in the tender is June 29.
Shipment is sought between Aug. 25 and Sept. 13 if the corn is sourced from the U.S. Gulf, Brazil or Argentina.
If sourced from the U.S. Pacific Northwest coast or South Africa, shipment is sought between Sept. 9 and Sept. 28.
Watching this week’s market, USDA will release the weekly Export Inspections report today in the afternoon and the Crop Progress report overnight after the sessions close.
On Wednesday, EIA will release their weekly ethanol production and stocks report.
NASS will also put out the quarterly Hogs & Pigs report that afternoon.
On Thursday, traders will start an active day reacting to the weekly Export Sales report.
Later that evening, NASS will release the quarterly Grain Stocks and the annual June Planted acreage reports.
Planted acreage report and quarterly Grain Stocks updates, is one of the agency’s most highly anticipated reports of the entire year.
Traditionally the price reaction on this report day can be dramatic; potentially leaving prices nearly limit up or limit down depending on the information received.
Thursday is also first notice day for July grain options and last trade day for June live cattle.
Finally on Friday, USDA will release the monthly consumption reports via the Grain Crushing, Fats & Oils, and Cotton Systems reports.
That’s all, thank you.
To all of you, we wish you a good start to the week and …
Good Harvest 2022!
Author: Sandro F. Puglisi
