Good morning Farmer Family …
A broad range of stocks and commodities trended higher last Friday and grain prices joined to the party, raking in double-digit gains on US farm markets.
Corn prices indeed, went home with 2.47% gains.
Soybeans firmed 1.89% higher.
Soymeal ended with 1.39% gains.
Bean oil prices were also firm, closing 2.52% higher.
Wheat contracts made most inroads, as Chicago SRW prices climbed 4.89%, Kansas City HRW rose 4.06%, and Minneapolis spring wheat prices gained 3.26%.
For the week, corn prices ended a net 2.9% higher.
Soybean prices, inspite the Friday rally, were unable to fully erase earlier weakness, as were down by 0.58% for the week.
Meal was down the most for the complex, closing 2.17% weaker wk/wk.
Bean oil lost 1.85% for the week.
Wheat markets skyroketed, meantime.
Friday’s rally in Dec SRW wheat, put the contract a net 7.21% higher on the week.
KC wheat prices had a net 5.87% stronger Friday to Friday, and MPLS gained 4.2% through the week.
Corn, soybean and wheat rallied on Friday, lifted by technical buying and short covering along with spillover support from higher equities and energy markets.
Wheat and corn drew additional support from a weaker dollar and concerns about continued grain shipments from Ukraine amid Russian criticism of the U.N.-brokered export corridor deal.
Grain traders took positions ahead of the today’s WASDE report.
The USDA is expected to lower its U.S. harvest forecasts, particularly for corn.
In the latest USDA report, corn yield was estimated at 175.4 bushels/acre and soybean yield at 51.9 bushels/acre.
The report should also confirm a marked upward revision of wheat production in Russia.
Traders are monitoring the food inflation implications a partial rice export ban by India.
The country banned exports of broken rice and imposed a 20% duty on exports of various grades of rice last Thursday.
USDA’s Export Reporting System (ERS) remained down past week.
The Foreign Agricultural Service, which publishes the weekly report, plans to resume publication on September 15.
USDA announced that it will release four weeks’ worth of export sales data next Thursday.
The agency says the weeks of August 18 and August 25 will be combined into a single reports, and additional separate reports will be issued for the reporting periods ending September 1 and September.
Monthly Census data showed July corn exports at 4.58 MMT (180.4 mbu).
That was a 16.57% drop from June and down 16.26% from July 2021.
As for soybean, Census data indicated that 2.32 MMT (85.36 mbu) of soybeans were shipped in July.
That was more than double 2021 and 2.29% larger than the previous month.
As for wheat, Census trade data showed 1.52 MMT (55.7 mbu) of wheat was exported in July.
That was a 4.8% drop from June and the lowest July number since 1971 (down 26.1% from the same month in 2021).
Ethanol shipments were more than double last year and a 5.7% increase over June.
Weekly Ethanol data from EIA showed production dropping 19,000 barrels per day in the week of 9/2 to 989,000 bpd.
Stocks dropped again in that week, down 395,000 barrels to 23.138 million barrels.
Friday’s CFTC Commitment of Traders report showed light new buying and light short covering from the spec funds in corn through the week of 9/6.
That left the managed money net position 5,012 contracts more net long in corn to 226,479 contracts.
Commercial corn hedgers lifted long hedges for a 6,552 contract stronger net short of 456,538 contracts as of 9/6.
As for soybean, managed money soybean traders were closing more longs than shorts through the week of 9/6.
The 7,242 contract lighter OI left the specs 2,172 contracts less net long to 99,629 contracts.
Commercial bean traders lightened their net short by 5.7k contracts to 133.6k via net new buying and closing short hedges.
In soymeal managed money firms were rotating existing longs to new shorts for a net 12,005 contract swing.
They were still 81,621 contracts net long as of 9/6.
The funds were also closing longs and adding new shorts in BO, for a 5.2k contract lighter net long of 44k contracts.
As for wheat, CFTC data had SRW spec traders at 21,431 contracts net short as of the 9/6 settle.
That was a 816 contract weaker net short through the week on reduced OI.
For KC wheat, the specs were 11,087 contracts net long after long liquidation.
Managed money firms were reducing their net short in spring wheat through the week, taking it to 1,038 contracts as of the 9/6 close.
On this morning, Chicago grain futures dipped in Asian trading after France’s transport minister said he would sign an agreement with Romania to help increase Ukrainian grain exports to developing countries.
Losses, however, were capped ahead WASDE and Crop Production reports, scheduled for release at 12 p.m. EDT (1600 GMT).
Thus, the most-active corn contract on the Chicago Board of Trade was down 0.8% at $6.79-1/4 a bushel, as of 03:08 GMT.
Wheat fell 1.4% to $8.57 a bushel, while soybeans lost 0.6% to $14.04-1/4 a bushel.
In energy markets, oil prices rose about 4% last Friday.
Brent crude, indeed, rose $3.69, or 4.1%, to settle at $92.84 a barrel.
U.S. West Texas Intermediate (WTI) crude rose $3.25, or 3.9% to settle at $86.79 a barrel.
However, despite Friday’s bounce, both crude benchmarks reported a weekly drop, with Brent down about 0.2% on the week, while WTI posted a weekly decline of 0.1%.
On this morning, oil prices fell with the global fuel demand outlook overshadowed by COVID-19 restrictions in China and the potential for further interest rate hikes in the United States and Europe.
Thus, Brent crude futures dropped $1.01, or 1.1%, to $91.83 a barrel by 06:30 GMT.
U.S. West Texas Intermediate crude was down $1.13 at $85.66 a barrel, or 1.3%.
In ocean freight markets, the Baltic Exchange’s main sea freight index rose past Friday and recorded its best week in about four months as panamax rates marked their biggest weekly gain in more than eight years.
The overall index, indeed, was up 35 points, or about 3%, at 1,213.
The index recorded a weekly gain of about 11.7%, its highest since mid-May.
Particularly, the capesize index snapped its three-day falling streak, gaining 20 points, or about 3%, to 672.
It posted a weekly loss of 8.3% and has declined for seven out of the last eight weeks.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron-ore used in construction, rose $167 to $5,574.
The panamax index was up for the seventh consecutive session, gaining 108 points, or about 6.2%, to 1,865, an over three-week high.
It posted a 46.7% weekly gain, its best since early July, 2014.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, were up $971 at $16,786.
The supramax index, which has not seen a single session of gains in over two weeks, lost 2 points to 1,475.
In equity markets, Wall Street added to its weekly gains last Friday with a broad rally that broke the market’s three-week losing streak.
The S&P 500 closed 1.5% higher, its third straight increase, and ended with a 3.7% gain for the week.
Big gains for technology companies pushed the Nasdaq composite to a 2.1% gain, while the Dow Jones Industrial Average rose 1.2%.
Both indexes also notched their first weekly gain in four weeks as the Dow advanced 2.7% for the week, and the Nasdaq gained 4.1%.
Particularly, the S&P 500 rose 61.18 points to 4,067.36.
The Dow added 377.19 points to 32,151.71, while the Nasdaq rose 250.18 points to 12,112.31.
Smaller company stocks also notched solid gains.
The Russell 2000 index rosed 35.94 points on Friday, or 1.9%, to 1,882.85.
On this morning, shares climbed both in Europe and Asia after last week’s strong close on Wall Street.
Many Asian markets were closed for holidays.
Investors are watching for U.S. inflation figures and Chinese economic data this week.
The U.S. Labor Department will release its report on consumer prices for August on Tuesday and a report on wholesale prices on Wednesday.
On Thursday, Wall Street will get an update on retail sales for August.
Meantime, Germany’s DAX climbed 1.3% to 13,2595 while the CAC 40 in Paris gained 1% to 6,273.58.
Britain’s FTSE 100 was up 1.1% at 7,430.66.
Tokyo’s Nikkei 225 gained 1.2% to 28,542.11 and the S&P/ASX 200 in Sydney was up 1% at 6,964.50.
Taiwan’s benchmark gained 1.5% while the Sensex in India added 0.6%.
Markets in Shanghai, Hong Kong and Seoul were closed for holidays.
In currency trading, the dollar index on Friday fell -by 0.67% to a 1-1/2 week low and posted moderate losses.
The EUR/USD rose by +0.49%, climbing to a 3-week high.
The USD/JPY fell by -0.99% rebounding moderately from Wednesday’s 24-year low against the dollar.
On this morning, the dollar rose to 142.92 Japanese yen from $142.26 yen.
The euro climbed to $1.0171 from $1.0093.
The dollar was valued at 60.70 against the rouble.
From Canada, Statistics Canada reported that total Canadian wheat stocks declined to 3.7 MMT, down 38% compared to a year ago.
Canadian durum stocks also fell sharply to 565,000 MT, a 31% drop year-over-year.
Meantime, Saskatchewan reported spring wheat harvest was 42% finished as of 9/8, compared to the 40% average pace.
Winter cereals are very close to being completed with 96 per cent of winter wheat and 84 per cent of fall rye harvested.
Ninety-one per cent of lentils and field peas, 70 per cent of durum, 52 per cent of barley, 40 per cent of spring wheat and 22 per cent of the canola crop has now been combined.
The current estimated averages of crop yields are 43 bushels per acre for hard red spring wheat, 30 bushels per acre for durum, 34 bushels per acre for canola, 34 bushels per acre for field peas and 1,174 pounds per acre for lentils.
Producer’s deliveries of common wheat were at 799.7k mt, strong and up from 320.4k a week erlier.
Deliveries of durum wheat also increased to 116.4k mt up from 104.9k mt a week earlier.
Meantime, Canada exported 248.1k mt of common wheat in week 5 of the shipping season, down from 265.6k mt in the second week.
Durum wheat exports were at 11k mt vs 24.6k mt a week earlier.
From South America, Brazil’s CONAB trimmed their 21/22 corn crop by 1.2 MMT to 113.3 MMT in their Sep report.
CONAB sees Brazilian soybean output as 125.55 MMT for 21/22, which was up slightly from their August figure.
Argentine farmers sold a total of 3.6 million tonnes of soybeans last week since the new exchange rate, dubbed the “soy dollar”, came into effect on Monday.
That has helped the central bank build up reserves, though the government still wants more.
Frosts recorded in the last two weeks in Argentina have caused some damage to the South American country’s 2022/23 wheat crop, the Buenos Aires grains exchange said on Thursday.
In Europe, we had another turbulent session last Friday.
The ECB expects prices to rise by +8.1% this year and +5.5% in 2023 and +2.3% in 2024.
Consequentially, the 10-year German bund yield climbed to a 2-1/2 month high of 1.730% after the ECB raised its main refinancing rate by +75 bp to 1.25% and said it “expects to raise rates further.”
To this must be added the fears relating to the supply of energy this winter.
AGPB, a French wheat growing group, said that fertilizer shortages could affect farmers’ ability to grow wheat next year.
AGPB warned that reduced Russian gas exports to the E.U. could negatively affect farmers’ ability to access fertilizer supplies.
The farm group also said production costs were €100.00 higher than last year when compared to the current metric ton cost French wheat.
The recent rains are welcome in France for the emergence of rapeseed even if they remain disparate.
French maize crop conditions however fell for a ninth consecutive week last week, according to FranceAgriMer which estimated 43pc of French grain maize crops were in good or excellent condition compared with 45pc the previous week.
Meantime, France reported corn harvest reached 5% complete as of 9/5.
From the Black Sea basin, Russian President Vladimir Putin complained past week that Ukraine is obfuscating its responsibility to export wheat to countries with significant food deficits and is delivering grain to the European Union (E.U).
Turkey, called it a “brazen deception.”
The United States, meanwhile, on Friday said it was working with the United Nations to address Russia’s complaints that sanctions were hindering its food and fertiliser shipments.
Britain on Sunday dismissed as untrue Russian President Vladimir Putin’s assertion.
Uncertainty over the Ukrainian grain export deal underpinned markets.
Leaders of Russia and Turkey plan to meet next week to discuss the deal.
Russian wheat export prices, indeed, rose last week joining to global benchmarks up.
Particularly, Russian prices for wheat with 12.5% protein content and for supply from Black Sea ports rose by $2 to $312 a tonne free on board (FOB) at the end of last week, IKAR said in a note.
Domestic wheat prices in roubles also rose last week amid demand from traders seeking to secure more grain for approaching vessels.
Particularly, price for domestic 3rd class wheat, European part of Russia, excluded delivery was valued at 12,250 rbls/t ($201.81) +275 rbls (Sovecon).
Price for sunflower seeds was at 24,850 rbls/t -825 rbls (Sovecon).
Price for domestic sunflower oil was at 72,500 rbls/t -175 rbls (Sovecon).
Price for domestic soybeans was at 31,900 rbls/t -2,350 rbls (Sovecon).
Export price for sunflower oil was at $1,270/t -$90 oil (Sovecon).
Export price for sunflower oil was at $1,110/t -$80 oil (IKAR).
Price for white sugar, Russia’s south was at $805.9/t -$32.4 (IKAR).
($1 = 60.7000 roubles)
Meantime, the White House, said they do not believe the deal is in danger of losing Russian support.
Russian foreign minister Sergei Lavrov called for the removal of “logistic sanctions that prevent the free access of Russian grain and fertilizers to world markets.”
Turkish President Tayyip Erdogan, when he meets Russian President Vladimir Putin this week, will urge Moscow to send goods though the Black Sea corridor, seeking to keep Russia engaged in the arrangement, broadcaster Haberturk said on Friday.
Unofficial sources are quoting the Russian Ministry of Agriculture, saying that, as of 8 September, the wheat harvest stood between 87Mt and 92Mt.
Harvesting data provided by Sovecon as of Sept 8 had all grains at 126.5 million tonnes, of which 92.7 million tonnes of wheat and 22.2 million tonnes of barley.
IKAR raised their forecast for Russia’s crop 2 MMT to 97 MMT.
Russia exported 640,000 tonnes of grain last week, down from 760,000 tonnes the previous week.
Sovecon, however, expects Russian grain exports to grow to 4.95 million tonnes in September, up from 4.20 million in August.
President Vladimir Putin said on Friday that Russia would export 30 million tonnes of grain by the end of the year, and was ready to increase this volume to 50 million tonnes.
On the weather side, beneficial rains are expected to arrive in Russia’s southern, central and Volga regions this week.
Russian farmers have already sown winter grain for the 2023 crop on 4.8 million hectares.
That compares with 5.4 million hectares around the same date in 2021.
Meantime, the Russian government has renewed a temporary ban on rapeseed exports until February 28, 2023 which, amid a record rapeseed crop in the country, will lead to an increase in rapeseed processing and rapeseed oil exports (potentially up 30pc), according to local Russian media.
In Ukraine, according to the Ukrainian Minister of Agriculture, his country should harvest around 50 million tonnes of grain against 86 million last year.
The Ministry reports the wheat harvest is 99pc finished at 19.2 million tonnes (Mt) from 4.7mha at a yield of 4.10t/ha.
6.7mha was estimated to have been planted crop, leaving 2.0mha in Russian-occupied territories unaccounted for.
Also, were harvested 5.5 million tonnes of barley .
Ukraine’s grain exports are down 48.6% year-on-year in the 2022/23 season so far at 5.291 million tonnes, the agriculture ministry said on Friday.
The ministry data showed that exports so far in the July 2022 to June 2023 season included 3.17 million tonnes of corn, 1.65 million tonnes of wheat and 447,000 tonnes of barley.
The volumes include 993,000 tonnes of grain exported so far in September versus 1.67 million tonnes exported in the same period of last year.
Meantime, France’s transport minister, Clement Beaune, said on Sunday the deal to be signed on Monday with Romania, which has been one of the alternative routes used to export Ukrainian grain, would cover shipments by land, sea and river.
From the Middle Kingdom, China’s soybean imports fell 24.5% in August from a year earlier, customs data showed last Wednesday.
Industrial animal feed production fell almost 7% in July versus a year ago, according to the China Feed Industry Association.
From January to August, China brought in 61.33 million tonnes of the oilseed, down 8.6% from the same period a year ago, the customs data showed.
On this wake, USDA’s Ag Attache reduced their forecast for Chinese soybean imports, with 21/22 needs lowered to 92 MMT and 22/23 reduced to 96.5 MMT.
From Sout East Asia, devastating floods in Pakistan have destroyed as much as 65% of the country’s domestic food crops and damaged agricultural land.
Making matters worse, the planting season, including for wheat, is quickly approaching, and the wet ground may be impossible to plant reported Al Jazeera.
Pakistan’s wheat imports have grown exponentially over the last decade despite domestic production.
On this wake, the USDA projects that wheat imports will be 118% more than the 5-year average in 2022/23.
From India, traders are monitoring the food inflation implications after a partial rice export ban by India.
The country banned exports of broken rice and imposed a 20% duty on exports of various grades of rice past Thursday.
Some rice loadings have stopped at Indian ports and nearly one million tonnes of grain were trapped there, as buyers refuse to pay the government’s new export levy on top of the agreed contract price, five exporters reported past Friday.
From Australia, the country exported 2,589,743 tonnes of wheat in July, down 4 per cent from the June figure of 2,710,537t, according to the latest data from the Australian Bureau of Statistics (ABS).
In containerised exports, Taiwan on 41,793t followed by Vietnam on 39,948t and Thailand on 27,586t were the biggest markets.
In the bulk market, China was the destination for 687,468t, once again making it Australia’s biggest bulk market by far.
Next on bulk volume was Indonesia on 373,416t followed by The Philippines on 303,817t.
A contraction in bulk destinations was seen in July compared with June, down from 30 homes to 18.
By contrast, volumes to the three biggest bulk destinations increased, China by 4pc, Indonesia 48pc and The Philippines 37pc.
This reflects their building up of stocks ahead of Northern Hemisphere new crop, and concerns around the Black Sea export corridor being slower than normal to get wheat out to Asian markets.
Meantime, wheat trade markets were a touch softer last Friday.
Barley was bid down $2-3/t and canola new crop was also bid a touch softer.
Grower bids also peeled back $10-15/t.
On the weather side, good rainfall for much of the grain belt over the last week has kept crops on track for another near record year for WA, according to the Grain Industry of Western Australia (GIWA) September Crop Report released on Friday.
Total grain production for the state will almost certainly exceed 20Mt and potentially nudge last year’s total of just under 24Mt.
Frost and possibly a blast of heat are the only obstacles on the horizon.
On the international trade scene, Bangladesh cancelled its wheat tender no. 3.
Watching this week’s market, the week starts out normal with the weekly Export Inspections report released in the afternoon.
Then, we will have the Crop Production, Cotton Ginnings, and WASDE reports from USDA.
We will also see the release of the NASS Crop Progress report.
On Wednesday the weekly EIA report will release ethanol stocks and production data with Sep contracts expiring at the close.
On Thursday, we will finally get a look at the last 4 weeks of Export Sales data.
That’s all, thank you.
We wish you a good day and a good start to the week.
Author: Sandro F. Puglisi
