Good morning Farmer Family and good start to the week …

US farm markets were mixed but mostly higher past Friday.

Soybeans rounded out the week with the rally, pushing August another 1.72% higher on the day and posting their biggest weekly rise in 22 years, as the contract was 14.12% higher (or $2.025/bu) for the week.

Meantime, Nov contract gained 11.61% ($1.52/bu) during the week. 

Meal prices were mixed, although the Aug deadline still closed 1.14% higher for the session, pushing up the contract 14.8%, or with $63.80/ton gains in a 7 day period.

Soy oil helped to push things more higher, with another 4.19% gain during the end week session, and posting so for the week a 13.7% gains. 

Corn, on its part, made its biggest weekly gain in nearly five months past week, in spite prices moved higher by only 0.2% on Friday.

On the week, indeed, Sep contract was up 9.22% or 52 cents per bushel, and Dec contract was up a total of 55 ¾ cents, a 9.88% move.

Despite rains and below-normal temperatures across parts of the U.S. Midwest during past week, forecasts are pointing to hot and dry weather in the first decade August, raising concerns for soybean crops during their crucial pod development.

That is a problem, also for late-planted corn still to pollinating.

Most of the Midwest and Plains will see at least some measurable moisture until Tuesday, with some areas of the Mid-South set to gather another 1” to 2” during this time. 

However, the agency’s outlook predicts a return to seasonally dry weather for the Central Plains and western Corn Belt between August 5 and August 11, with hotter-than-normal conditions prevalent across the entire central U.S.

In this context, soybean meal, on its part, set life-of-contract highs in nearly every contract month.

Crushers, indeed, weighed tight old-crop supplies against ample demand.

Also, past week we saw the first flash sale in nine days, after that U.S. exporters reported to the USDA the sale of 132,000 tonnes of soybeans for delivery to unknown destinations during the 2022/2023 marketing year.

As for wheat, the wheat complex too, finished the week higher after two weeks of decline.

Kansas City HRW was up 6.6% for the week. 

Chicago SRW was up 6.4%. 

Spring wheat gained 4% for the week.  

However, wheat prices slided lower on Friday, with some contracts down more then 2%, as US spring wheat had excellent yield projections from the annual Wheat Quality Tour, and safety corridor from the Black Sea to ship Ukrainian grains was just ready.

Particularly, the WQT tour, which surveyed HRS fields past week, estimated yields at 49.1 bushels per acre (bpa) (3.3 MT/ha), the highest since 2015 and well over the 5-year average of 39.4 bpa (2.6 MT/ha).

Ukraine, on its part, was ready to start shipping grain from two Black Sea ports under the U.N.-brokered agreement, although no date has been set for the first shipment, Ukrainian Infrastructure Minister Oleksandr Kubrakov said.

Thus, on Friday spring wheat was the leader to the downside, as closed 2.37% lower. 

Kansas City HRW was down 1.71%. 

SRW contracts were down 1.13% on the day. 

On Friday, commodity funds were net buyers of CBOT soybeans, soyoil, corn and soymeal futures contracts, and net sellers of CBOT wheat futures contracts.

Meantime, corn basis bids were largely steady across the central U.S. on Friday with one major exception after tumbling 20 cents lower at an Illinois processor.

Also soybean basis bids were steady to weak after falling 10 to 15 cents lower at two interior river terminals and dropping 10 cents at an Indiana processor.

As for wheat, basis past week was mixed in both the Gulf and Pacific Northwest (PNW). 

In the Gulf, HRS basis was flat while HRW basis moved down 5 cents and SRW basis up 5 cents. 

In the PNW, HRW basis was unchanged while HRS basis was down slightly.

Soft white prices were slightly up. 

Strong export sales have left many buyers covered, reducing nearby demand on logistics and keeping basis relatively quiet week-over-week.

On Friday, CFTC Commitment of Traders report, showed specs in corn futures and options trading trimmed 4,515 contracts from their net long position as of 7/26, taking the total position to net long to 120,788 contracts. 

Commercials cut 17,861 contracts from their net short position to -358,075, the smallest since autumn 2020.  

As for soybean, the report showed spec funds with 87,676 contracts net long, down another 156 contracts from the previous week, masking the big rally for the rest of the week.

As for wheat, data showed the managed money spec funds were getting more bearish in CBOT wheat, as they added 3,575 contracts to their net short, bringing it to 10,391 contracts.  

They were 11,041 contracts net long in KC wheat after reducing the position by 827 contracts.

On this morning, as of 03:13 GMT, Chicago soybean futures fell 1.1% after six straight sessions of gains. 

Corn also lost ground, easing by 0.9%. 

Wheat slid 0.3%, down for a second consecutive session.

In energy markets, oil prices settled up more than $2 a barrel past Friday as attention turned to this week’s OPEC+ meeting.

Expectations that the producer group will imminently boost supply are dimming.

Two sources said a modest increase for September would be discussed at the Aug. 3 meeting, but the prevalent sentiment is for an output steady.

Thus, Brent crude futures contract for September, which expire on Friday, jumped more than $3 a barrel during the session and then pared gains to settle at $110.01 a barrel, up $2.87, or 2.7%. 

The more active October contract was up $2.14, or 2.1%, at $103.97.

U.S. West Texas Intermediate (WTI) crude futures settled at $98.62 a barrel, rising $2.20, or 2.3%, after jumping more than $5 a barrel.

However, both contracts logged their second monthly losses, with Brent down about 4% for July and WTI nearly 7% lower.

Oil pared some gains after the release of data from oil services firm Baker Hughes, which showed that U.S. drillers added crude rigs for a record 23 months in a row, indicating more supply ahead.

In July, the oil rig count rose 11, while the gas count was unchanged after rising for 10 straight months.

Meantime, the group’s new secretary general, Haitham al-Ghais, reiterated on Sunday that Russia’s membership in OPEC+ is vital for the success of the agreement, Kuwait’s Alrai newspaper reported.

On this morning, oil prices dropped, as weak manufacturing data from China and Japan for July weighed on the outlook for demand.

Brent crude futures, indeed, were down 82 cents, or 0.8%, at $103.15 a barrel at 06:08 GMT. 

U.S. West Texas Intermediate crude was at $97.44 a barrel, down $1.18, or 1.2%.

In freight markets, the Baltic Exchange’s main sea freight index logged its worst month since January last Friday as rates across its component vessel segments saw double-digit monthly declines.

The overall index, which factors in rates for capesize, panamax and supramax shipping vessels, indeed, shed 50 points, or 2.6%, to 1,895 points, its lowest in over five months.

The main index dropped for the third straight month, down 15.4% for July.

Particularly, the capesize index lost 109 points, or nearly 5%, to a fresh three-week low of 2,081 points.

It had its worst month since January, while sliding 22.8% for the week.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down by $907 at $17,255.

The panamax index was down 14 points, or 0.7%, at a one-week low of 2,051 points.

It was down 17.5% on the month, its fourth consecutive monthly decline.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased by $118 to $18,463.

The supramax index lost 32 points to 1,971 points, falling 14.5% on the month.

In equity markets, US stocks rallied for the third consecutive session past Friday, with the S&P 500 and Dow Jones Industrials posting 7-week highs and the Nasdaq 100 posting a 2-1/2 month high.

The Dow Jones Industrial Average rose 315.5 points, or 0.97%, to 32,845.13; the S&P 500 gained 57.86 points, or 1.42%, to 4,130.29 and the Nasdaq Composite added 228.10 points, or 1.88%, to 12,390.69.

All three major indexes gained for the month and for the week. 

Particularly, the S&P 500 gained about 9.1% for July in its biggest monthly percentage gain since November 2020.

The index is still down 13.3% for the year.

The Nasdaq jumped about 12.3% in July in its biggest monthly gain since April 2020.

The Dow Jones Industrial Average notched a 6.7% gain for the month.

Smaller company stocks also gained ground. 

The Russell 2000 rose 12.20 points, or 0.7%, to 1,885.23 on Friday. 

It ended July with a 10.4% gain.

Stocks rallied after better-than-expected quarterly earnings results from the big tech companies of Amazon.com and Apple boosted market sentiment.  

Amazon.com rose +10.4% after reporting stronger than expected Q2 net sales and forecasting better-than-expected Q3 net sales.  

Apple rose +3.3% after reporting better-than-expected Q3 revenue.  

Most S&P 500 sectors ended higher, with energy rising 4.5%, the most of any S&P sector. 

Chevron Corp rose 8.9% and Exxon Mobil shares jumped 4.6% after the companies reported record quarterly revenues. 

Stocks have also rallied past week on investor speculation that the Federal Reserve may not need to be as aggressive with interest rate hikes as some had feared.

Positive comments Friday from Atlanta Fed President Bostic, indeed, gave stocks a boost when he said the U.S. economy was “a ways” from entering a recession.

Q2 earnings season has been supportive thus far for equities, with 75% of the S&P 500 companies reporting earnings beating expectations.  

That has bolstered speculation that corporate America can withstand rising inflation, aggressive Fed tightening, and slowing growth. 

On the negative side for stocks was the more than -8% plunge in Intel after it reported weaker-than-expected Q2 adjusted EPS and cut guidance on its full-year earnings. 

Also, Friday’s U.S. economic data raised inflation concerns.  

The U.S. June core PCE deflator rose +0.6% m/m and +4.8% y/y, stronger than expectations of +0.5% m/m and +4.7% y/y.

The U.S. Q2 employment cost index eased to +1.3% from +1.4% in Q1, still stronger than expectations of +1.2%.

U.S. June personal spending rose +1.1% m/m, slightly stronger than expectations of +1.0% m/m. 

U.S. personal income rose +0.6% m/m, stronger than expectations of +0.5% m/m.

The U.S. July MNI Chicago PMI fell -3.9 to a nearly 2-year low of 52.1, weaker than expectations of 55.0.

The University of Michigan U.S. July consumer sentiment was revised upward by 0.4 to 51.5, stronger than expectations of no change at 51.1.

On this morning, on the wake of Wall Street, shares were mostly higher in Asia, though the latest manufacturing surveys showed weakening factory activity in the region’s biggest economies, China and Japan.

COVID-19 lockdowns snuffed out a brief recovery seen in June for factory activity in China. 

The Caixin/Markit manufacturing purchasing managers’ index eased to 50.4 in July from 51.7 in the previous month, well below analysts’ expectations, data showed on Monday. 

A similar survey of purchasing managers, the au Jibun Bank Japan Manufacturing PMI, slipped to 52.1 in July from 52.7 in June, the slowest growth in the sector in 10 months, as costs of energy and labor rose. 

In this context, Tokyo’s Nikkei 225 index gained 0.7% to 27,993.35 while the Shanghai Composite index edged 0.2% higher, to 3,259.96. 

In Sydney, the S&P/ASX 200 rose 0.7% to 6,993.00. 

The Kospi in Seoul ended nearly unchanged at 2,452.25 and Hong Kong’s Hang Seng edged 0.1% higher to 20,179.94.

Past Friday was a mixed day in the bond market

The two-year Treasury yield, which tends to move with expectations for the Fed, rose to 2.89% from 2.87% late Thursday. 

The 10-year yield, which influences mortgage rates, fell to 2.62% from 2.67%.

In currency trading, the dollar index last Friday fell by -0.5% to 105.707 and dropped to a 3-1/2 week low, as strength in stocks Friday curbed liquidity demand for the dollar.  

The dollar initially moved higher as T-note yields rose temporarily on inflation concerns after the U.S. Q2 employment cost index and the June core PCE deflator rose more than expected.  

However, T-note yields on Friday gave up early gains and turned lower, which weighed on the dollar.

As we said, the 10-year T-note yield, indeed, fell to a 3-1/2 month low of 2.616%.

Thus, EUR/USD past Friday rose by +0.17% to 1.0226, recovering from early losses and posted moderate gains. 

The euro also found support Friday on comments from ECB Vice President Guindos, who said the ECB was “watching” the exchange rate of the euro.  

EUR/USD also rose, after Eurozone Q2 GDP rose +0.7% q/q and +4.0% y/y, stronger than expectations of +0.2% q/q and +3.4% y/y.

EUR/USD on Friday initially moved lower on concern record inflation pressures in the Eurozone will force the ECB to aggressively tighten monetary policy that pushes the economy into recession after Eurozone July CPI rose a record +8.9% y/y, stronger than expectations of +8.7% y/y.  

Eurozone July core CPI also rose a record +4.0% y/y, stronger than expectations of +3.9% y/y. 

USD/JPY past Friday fell by -0.68% to 133.21 and posted a 6-week low, as a decline in the US 10-year T-note yield supported gains in the yen.  

Also, strength in Japanese industrial activity was bullish for the yen after Friday’s data showed Japan June industrial production rose a record +8.9% m/m, stronger than expectations of +4.2% m/m.. 

Meantime, the Japan July consumer confidence index fell -1.9 to a 1-1/2 year low of 30.2, weaker than expectations of 31.5. 

Japanese Jun retail sales unexpectedly fell -1.4% m/m, weaker than expectations of +0.2% m/m and the biggest decline in 14 months.

From Canada, Canadian key crops exports doubled through the week.

Particularly, Canadian weekly exports for common wheat were for week 51 jumped at 394,6k mt up 137% from prior week, for a year-to-date total of 11.098 MMT, compared to 19.37 MMT last year.

As for durum, durum exports for week 51 were at 60,7k mt, up 51.37% from a week earlier, for a year-to-date total of 2.55 MMT, compared to 6 MMT last year-to-date.

From South America, Argentina’s government is looking at creating a separate peso-U.S. dollar exchange rate for the country’s agricultural sector in a bid to incentivize farmer sales. 

Local media reported that sales are lagging behind last year’s levels. 

A total of 20.4 million mt of the newly harvested soybean crop have been sold as of July 13, which is around 48% of the production for the season, and it is nearly five percentage points behind the farmer sales done at same time last year.

The Buenos Aires Grain Exchange reported that the moisture condition of Argentine wheat has improved since prior week thanks to past week’srains across an area that accounts for 40pc of plantings. 

An estimated 35pc of plants have a poor/dry moisture condition versus 44pc prior week.

The rain, however, could delay the final stage of corn harvesting for the 2021/2022 season, which has advanced to about 74% of the area destined for commercial corn production.

Corn output for the cycle is seen at 49 million tonnes. 

According to the USDA attaché, Argentina wheat exports for marketing year (MY) 2022-2023 are forecast at 12.35 million tons, 1.15 million tons lower than USDA’s official number as a result of lower production. 

Barley exports in MY 2022-2023 are forecast at 3.7 million tons, the same as in MY 2021-2022. 

Corn exports in MY 2022-2023 are forecast at 38.8 million tons, 2.2 million tons lower than USDA as Post forecasts a lower production at 53 million tons. 

Sorghum exports for MY 2022-2023 are forecast at 1.65 million tons, 850,000 tons lower than USDA as China’s demand has recently cooled down. 

AgRural reported Brazilian 2nd corn crop harvest as 62% complete. 

That compares to 53% prior week and the 39% last season. 

They figure the output at 87.3 MMT for the 2nd crop

Conab’s last figure was 88.4 MMT. 

IMEA reported Mato Grosso’s safrinha harvest reached 94% on Friday, up 9 points for the week and running 12 ahead of LY and 21 ahead of the 5-year average. 

Meantime, Brazil shipped approximately 950 K MT of corn the third week of July, 60% more than the 597 K shipped in the same period in 2021. 

Brazil’s soybean exports the 3rd week of July plunged nearly 1 MMT from a week earlier to 1.2 MMT from a week earlier and the total was 300 K less than in the year ago week. 

Soybean meal shipments jumped 262 K/85% to 572 and topped the 429 K exported in the same week in 2021.

Safras and Mercado estimated the 22/23 Brazilian soy export at 91.5 MMT, compared to old crop’s 77.2 MMT projection. 

That does come via a 18% production boost yr/yr with their 22/23 output figured at 154.53 MMT. 

The Brazilian government confirmed that China has opened its market to soybean meal produced in the South American country, adding that shipments would begin after the removal of some bureaucratic hurdles.

In Europe, MARS, the European Union’s (E.U.) crop monitoring service, past Monday, cut yield forecasts for E.U. grains. 

MARS adjusted its forecast for average E.U. soft wheat to 5.74 MT/ha, down from 5.76 MT/ha and 4.9% below last year.

Forecasts for corn crops were down on prior month at 7.25 t/ha, now down nearly 8% on June estimates. 

The situation is similar in sunflower where the estimated yield is 2.18 t/ha against 2.37 t/ha prior month.

MARS reduced yield forecasts due to hot and dry weather across the continent but especially in large parts of Spain, southern France, central and northern Italy, central Germany, northern Romania, eastern Hungary, and western and southern Ukraine.

Also, past week Agritel reduced soft wheat production in France at 33.4 MMT, down 5.6% compared to last year.

Per latest data from farm office FranceAgriMer showed on Friday, France’s corn crop condition deteriorated sharply for a second consecutive week, as an estimated 68% of the grain maize crop was in good or excellent condition in the week to July 25, down from 75% the previous week, 83% in the week to July 11 and 84% in the week to July 4.

Past week’s rating compares to a year-earlier score of 90%.

More dry and hot weather is forecast in the coming weeks in key European maize growing regions, including France, and is expected to cause further damage to crops already stressed by a dry spring and sweltering temperatures earlier this month.

The condition of spring barley, which was 92% harvested by July 25, further deteriorated to 48% from 50% a week earlier.

In soft wheat, French farmers had harvested 95% of this year’s crop by Monday, compared with 84% a week earlier.

An estimated 63% of soft wheat was in good or excellent condition, unchanged from the previous week.

The winter barley and durum harvests were both over, well ahead of last year.

Meantime, Hungary has harvested 3.9 million tonnes of autumn wheat and 1.4 million tonnes of barley.

The harvest season ended earlier than usual due to this year’s heat and drought.

The total amount of wheat harvested in Hungary was about 25% less than the average yield in the past five years. 

This year’s barley yields also lagged behind the 1.7 million tonnes harvested in 2021.

Hungary harvested 450,000 tonnes of rapeseed, also well below about 722,000 tonnes last year.

The damage to the grains crop comes at a time when the country is struggling with food inflation running at 22% in annul terms in June.

From Ukraine, the grain community past week has been “sceptical about the prospects for shipments”, Ukragroconsult analysts said. 

Still, “the first caravan of ships, blocked in Ukrainian ports for five months, has been formed”.

Ukraine since last Friday, indeed, is ready to start shipping grain from two Black Sea ports under the U.N.-brokered agreement although no date has been set for the first shipment, according to the Ukrainian Infrastructure Minister Oleksandr Kubrakov.

In the southern port of Odesa 17 vessels were already loaded with grain, while another was loaded.

The first ship to leave Ukraine’s Odesa port, will carry more than 26,000 tonnes of corn and undergo an inspection in Istanbul before continuing to Lebanon’s Tripoli, a U.N.-led monitoring centre said on Monday.

The Sierra Leone-flagged ship Razoni is expected to arrive at the inspection in Turkish waters on Aug. 2, the Istanbul-based Joint Coordination Centre (JCC) said, adding it had requested all parties to inform militaries to ensure its safe passage.

The JCC – including United Nations, Russian, Ukrainian and Turkish officials – had verified the port readiness at Odesa, as well as the vehicle’s capability to depart ahead of the authorisation, it said. 

Also, it is being reported, that a 27,000 metric tonnes vessel was reportedly able to complete loading at the port of Chornomorsk, likely with maize, and could set sail shortly.

Ukraine’s president visited a Ukrainian port Friday and said the country is ready to start exporting grain.

Shipments were expected to begin past week, but none of the vessels loaded and carrying 580,000 MT of grain eachone have sailed yet. 

It seems vessels are having a hard time recruiting crews to

sail the vessels. 

Meantime, Lloyd’s of London insurer Ascot and broker Marsh launched some marine cargo and war insurance for grain and food products moving from Ukrainian Black Sea ports, although these insurance premiums are adding to the overall cost of shipping. 

On the other hand, Ukrainian farmers have threshed 11.8 million tonnes of grain of the 2022 grain harvest so far, Ukrainian grain traders union UGA said past Thursday.

The union said in a statement that the volume included 8 million tonnes of wheat with an average yield of 3.52 tonnes per hectare and 3.5 million tonnes of barley with a yield of 3.26 tonnes per hectare.

UGA said farmers also harvested 1.7 million tonnes of rapeseed with the yield of 2.52 tonnes per hectare. 

Meantime, a Russian attack pounded the southern Ukrainian port city of Mykolaiv on Sunday, killing Oleksiy Vadatursky, founder and owner of agriculture company Nibulon, and his wife.

Nibulon specializes in the production and export of wheat, barley and corn, and has its own fleet and shipyard.

From Russia, the Chairman of the Union of Grain Exporters of Russia, Eduard Zernin, estimates wheat export potential in the 2022-2023 agricultural year at 40.3 million tonnes (Mt), compared to 30.7Mt last year.

SovEcon raised their wheat shipment outlook for Russia by 300k MT to a record 42.9 MMT for 22/23. 

Their production estimate was up another 1.7 MMT to 90.9 MMT.

The country, in the week ended July 24, had exported 540,000 tonnes of grain, compared with 500,000 tonnes the previous week, according to the port data. 

Past Friday Russia has set out its grain export taxes for the period Aug 3 – 9.

Particularly, for wheat will decrease to 4,626.8 roubles/tonne, from 4,951.7 roubles/tonne of a week earlier.

For barley, will move down to 2,945 roubles/tonne, from 3,002.6 roubles/tonne the prior week.

For corn, the tax will move up to 3,311.4 roubles/tonne, from 2,923.4 roubles/tonne the previus period.

As for indicative price, for wheat will be 371.9 $/tonne, for barley 311.2 $/tonne, and for corn 320.2 $/tonne.

That is compared with 388.2 $/tonne for wheat, 321.0 $/tonne for barley, and 319.0 $/tonne for corn of a week earlier.

Consumer prices in Russia declined 0.08% in the week to July 22 after sliding 0.17% a week earlier, data showed past Wednesday.

That, vindicated the central bank’s decision to cut interest rates more sharply than expected.

The rouble’s strengthening and a drop in consumer demand have helped Russia rein in inflation, which soared to 20-year highs in annual terms.

The economy ministry said annual consumer inflation slowed to 15.30% as of July 22, down from 15.39% a week earlier.

The ministry said food products have continued to make a key contribution into slower inflation.

So far this year, consumer prices have risen 11.32% compared with a 4.51% increase in the same period of 2021, data from the Federal Statistics Service Rosstat showed.

The central bank, which targets annual inflation at 4%, slashed its key interest rate by 1.5 percentage points to 8% last week in a bigger-than-expected cut and said it would study the need for more cuts as inflation slows if economic contraction continues for longer than previously thought.

From the Middle Kingdom, China’s securities regulator has approved trading of soybean and soyoil options on the Dalian Commodity Exchange, it said on Friday.

From Australia, local markets remained quiet leading into the weekend as the Australian Grains Conference wrapped up.

Rainfall is forecast for all winter cropping regions in the coming 8 days with the highest totals expected in southern WA, and in NSW particularly in the southeast, and in south eastern Victoria.

On the international trade scene, South Korean flour mills bought around 40,000 tonnes of milling wheat to be sourced from Canada in an international tender on Friday. 

The Western Red Spring (CWRS) was all bought on a FOB basis in the low US$380s per tonne for shipment between October and November.

Meantime, on this morning, 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 Aug. 3.

Price offers are being sought for one consignment of yellow corn at a premium over the Chicago December 2022 corn contract.

Shipment is sought between Oct. 1 and Oct. 20 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 Oct. 16 and Nov. 4.

Watching this week’s market, in the afternoon we will have the weekly Export Inspections report. 

Overnight, after the sessions close, we will have the weekly Crop Progress report, along with the monthly Grain Crushing, Fats & Oils, and Cotton Systems report. 

The weekly EIA ethanol numbers will be out on Wednesday. 

Thursday will have the weekly Export Sales report from USDA, as well as the monthly export data from Census. 

Friday marks the last trading day for August Live Cattle options.

That’s all, thank you.

To all of you, we wish you a good day and … Good Harvest 2022!

Author: Sandro F. Puglisi

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