Good morning Farmer Family …
US farm markets were mixed but mostly higher past Friday.
The corn market was back and forth, with Dec printing a 13 cent range for the day.
However, prices were only 0.04% down on the day.
Soybeans failed to follow suit, trending more then 0.2% lower by the close.
Meal prices led the way to the downside, closing 1.13% weaker.
Bean oil prices, in contrast, closed with 2.8% gains, on the day.
The wheat complex fared the best, trading double digits higher.
Particularly, SRW wheat prices ended with 1.75% gains.
KC wheat prices bounced 0.97% higher.
Spring wheats were also up by 1.08%.
For the week, corn prices closed down 1.1% from Friday to Friday.
Soybean prices held on to 2.6% gains for the week.
Meal was up 3.6% for the week, and soy oil rose 3%.
Wheat markets were mixed during the week.
Indeed, Chicago SRW December contracts were down 1.1%, tracking corn closely.
In contrast, KC wheat prices were 0.7% stronger Friday to Friday.
Minneapolis wheat prices fared still better gaining 1.2% on the week.
Past week was mostly dry in the High Plains states, while hot temperatures across North and South Dakota accelerated soil moisture depletion.
Kansas, Nebraska, and eastern Wyoming recorded temperatures near, to slightly below, normal.
Oklahoma recorded 90-day rain deficits of 3-7 inches, degrading conditions across the state.
Montana and Idaho, affected by short and long-term dryness and declining soil moisture, recorded an increase in drought conditions.
Most areas north of I-70 will see at least some measurable moisture until Tuesday, with some places set to gather as much as 1” or more, according to NOAA.
The agency’s new outlook predicts seasonally dry conditions for most of the Corn Belt between September 23 and September 29, with warmer-than-normal conditions likely for the Plains, Mid-South and Southeast during that time.
Meantime, corn basis bids were mostly steady to weak across the central U.S. after trending 3 to 35 cents lower at seven Midwestern locations on Friday.
An Illinois river terminal had bucked the overall trend after inching 2 cents higher.
Soybean basis bids fell 10 to 30 cents lower at three Midwestern processors and dropped 17 cents at an Ohio elevator while holding steady elsewhere across the central U.S..
As for wheat, basis was mixed in both the Gulf and Pacific Northwest (PNW) past week.
In the Gulf, HRS basis rallied while SRW and HRW basis was down slightly.
In the PNW, HRW basis was down while HRS basis was flat in the nearby.
Soft white prices were also flat.
Basis momentum was relieved by the last-minute agreement between U.S. railroads and union leaders.
A dollar’s rally past week has coupled with slow farmer engagement to make U.S. grains expensive, subsequently curbing export demand.
After four weeks of absence, USDA’s Foreign Agricultural Service (FAS) resumed their weekly commercial sales publications past week.
Particularly, USDA reported 583k MT of corn was sold during the week that ended 9/15.
That was within the range of estimates.
The 21/22 MY finished, with USDA’s weekly data showing 59.764 MMT for the season’s export.
The new crop’s export program has 463k MT shipped through 9/15.
New crop corn export sales commitments are 12.4 MMT (~488 million bushels) smaller than commitments at the same point a year ago and the lightest since 2019.
As for soybean, USDA reported soybean sales from the week that ended 9/8 were 842,989 MT.
That set the outstanding book as 24.858 MMT.
The weekly data suggested that 57.188 MMT of soybeans were shipped during the 21/22 season.
New crop has 422,510 MT shipped through the first week and day.
New crop commitments are about 2.5 MMT above year ago
As for wheat, net sales for delivery in 2022/23 were at 217,300 metric tons (MT), in line with trade expectations.
Year-to-date 2022/23 commercial sales total 10.2 million metric tons (MMT), a 1.4 MMT increase since USDA halted commercial sales reports on August 18.
USDA expects 2022/23 U.S. wheat exports to total 22.45 MMT.
Meantime, EIA reported ethanol production during the week that ended 9/9 averaged 963k barrels per day.
That was down from 989k bpd last week and was a 22wk low.
Ethanol stocks shrank 295k barrels to 22.843 million – a 12 wk low.
NOPA members reported 165.54 mbu of soybeans were processed during August.
That was down from 170.22 in July and was just below the average trade guess.
August ’21’s crush was 158.84 mbu from NOPA members.
The full season crush was 2.074 bbu from NOPA members and at least 2.194 bbu nationally (with non-NOPA members’ August crush yet confirmed by NASS).
Meantime, the weekly Commitment of Traders report showed on Friday managed money spec funds in corn added 14,164 contracts to their net long in the week ending September 13.
That left the managed money net long position at 240,643 contracts,, a little over 1.2 billion bushels.
Commercial corn traders added 5,271 contracts of new short hedges but weakened their net short 1.6k contracts to 154.9k.
As for soybean, the report showed soybean spec traders were net buyers during the week that ended 9/13.
That increased their net long 12,498 contracts (12.5%) to 112,127 contracts.
Commercial soybean hedgers increased their open interest 41,317 contracts (7%) during the week.
That extended their net short by 6.8k contracts to 140,469.
As for products, the CFTC reported meal specs as 87,714 contracts net long on 9/13, a 6,093 contract stronger net long via net new buying on top of short covering.
The funds were also closing bean oil shorts and adding bean oil longs through the week for an 11,288 contract stronger net long of 55,270 contracts – a 14-wk high.
As for wheat, CFTC data had SRW spec traders at 20,386 contracts net short on Tuesday evening.
That was 1,045 contracts less bearish than the previous week.
For KC wheat, the specs were 16,992 contracts net long, a build of 5,905 contracts in a week after extensive unwinding of their big long from 46,000+ back in May.
The funds were shown 151 contracts net short in MPLS wheat, an 887 contract weaker net short through the week.
On Friday, commodity funds were net sellers of CBOT corn, soybean and soymeal futures contracts, and net buyers of wheat and soyoil futures.
On this morning, wheat prices slipped in early Asian trading, pressured by Ukrainian supplies, and concerns that a global recession would dampen demand.
Particularly, the most-traded wheat contract on the Chicago Board of Trade (CBOT) was down 0.3% at $8.57-1/4 a bushel, as of 01:47 GMT.
Soybean and corn prices were firmer in choppy trading after fourstraight sessions of losses.
CBOT soybeans, indeed, edged up 0.5% to $14.55-3/4 a bushel, while CBOT corn gained 0.3% to $6.79 a bushel.
Analysts, however, said U.S. soybean prices may remain volatile amid stiff export competition from South America and fears of a global recession.
In energy markets, oil prices rose slightly last Friday as a spill at Iraq’s Basra terminal appeared likely to constrain crude supply.
Thus, Brent crude futures settled at $91.35 a barrel, up 51 cents, while U.S. West Texas Intermediate (WTI) crude futures settled at $85.11 a barrel, up 1 cent.
However, prices remained down on the week on fears that hefty interest rate increases will curb global economic growth and demand for fuel.
Both benchmarks, indeed, were down by nearly 2% on the week, hurt partly by the U.S. dollar’s strong run, which makes oil more expensive for buyers using other currencies.
In the third quarter so far, both Brent and WTI are down about 20%.
Investors are bracing for a large increase to U.S. interest rates, which could lead to a recession and reduce fuel demand.
The market also was rattled by the International Energy Agency’s outlook for almost zero growth in oil demand in the fourth quarter owing to a weaker demand outlook in China.
U.S. crude supply appeared headed for an increase, as energy firms past week added oil and natural gas rigs for the first time in three weeks.
On this morning, oil prices dipped.
Brent crude futures for November settlement fell 46 cents, or 0.5%, to $90.89 a barrel by 07:01 GMT.
U.S. West Texas Intermediate (WTI) crude futures for October delivery was at $84.46 a barrel, down 65 cents, or 0.8%.
The October WTI contract expires on Tuesday and the more active November contract as at $84.12, down 64 cents.
Both contracts climbed more than $1 earlier on Monday, but despite fears of dampening fuel demand, ongoing supply concerns capped price declines.
Oil prices, indeed, could be supported in the fourth quarter if OPEC+ members cut production.
In ocean freight markets, the Baltic Exchange’s main sea freight index, marked its best week in over seven months past week, largely driven by a 126% weekly gain in the capesize vessel segment.
The overall index, indeed, recorded its third weekly gain of about 28%, highest since mid-February.
However, the dry index snapped its seven-day long gaining streak, losing 59 points, or about 3.7%, on its worst day in over two weeks, to 1,553.
In detail, the capesize index posted a weekly gain of about 126%, its highest in over two years.
However, it snapped a five-day winning streak, losing 118 points, or about 7.2%, at 1,519 on Friday.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron-ore used in construction, fell $981 to $12,599.
The panamax index posted a 6.7% weekly gain, its second consecutive weekly gain.
However, it fell for the second consecutive session on Friday and was down 100 points, or about 4.8%, at 1,990.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, were down $900 at $17,913.
The supramax index rose for the fourth consecutive session by 22 points to 1,551 on Friday.
It has been mixed fortunes as stronger rates were seen in Asia at the beginning of the week.
However, as the week closed some participants said pressure eased a little as limited fresh enquiry entered the market.
Little period activity surfaced but a 63,500-dwt open Black Sea was heard to have been fixed for one year in the low $16,000s.
From the Atlantic, stronger cargo flow saw a 57,000-dwt covering a trip delivery US Gulf redelivery India in the mid $20,000s.
Elsewhere, a 55,000-dwt was heard to have been fixed for a trip from the Mediterranean to the US Gulf in the low $20,000s.
From Asia, a 58,000-dwt open Singapore fixed a trip via Indonesia redelivery Philippines at $20,000.
A 57,000-dwt also open Singapore fixed a trip via Indonesia redelivery China in the low $19,000s.
In equity markets, U.S. stocks ended in the red past Friday, falling to two-month lows.
The Dow Jones Industrial Average fell 139.4 points, or 0.45%, to 30,822.42, the S&P 500 lost 28.02 points, or 0.72%, to 3,873.33 and the Nasdaq Composite dropped 103.95 points, or 0.9%, to 11,448.40.
The Russell 2000 index of smaller companies took the heaviest losses, falling 1.5%.
All three major U.S. stock indexes slid to levels not touched since mid-July.
Both the S&P 500 and the Nasdaq suffered their worst weekly percentage plunges since June.
The S&P sank 4.8% for the week, while the Nasdaq Composite fell 5.48%.
The Dow Jones was firmer but shedded by 4.13% on the week nevertheless.
A deluge of mixed economic data, dominated by a hotter-than-expected inflation report (CPI), cemented an interest rate hike of at least 75 basis points at the conclusion of the Fed’s monetary policy meeting due this week.
Technology stocks, banks and energy firms had some of the biggest losses.
Adobe fell 3.1%, Bank of America dropped 1.1% and Chevron slid 2.6%.
FedEx sank 21.4% for its biggest single-day sell-off on record after warning investors that profits for its fiscal first-quarter will likely fall short of forecasts because of a dropoff in business.
The package delivery service is also shuttering storefronts and corporate offices and expects business conditions to further weaken.
Industrial giant General Electric also helped put traders in a selling mood after its chief financial officer said the company is still bogged down by supply chain problems that were raising costs.
GE shares fell 3.7%.
US treasury yields eased a bit Friday after a report showed expectations for inflation among U.S. households are falling to their lowest levels since last year.
Particularly, the yield on the 2-year Treasury, which tends to follow expectations for Fed action, fell to 3.85% from 3.92% shortly before the report’s release.
The 10-year yield fell to 3.45% from 3.49%.
On this morning, Asian shares fell after another week of sizable losses on Wall Street.
Japan’s markets were closed for a holiday.
Hong Kong’s Hang Seng lost 1.1% to 18,558.18 while the Shanghai Composite index shed 0.6% to 3,106.57.
Australia’s S&P/ASX 200 edged 0.1% lower, to 6,732.20.
In Seoul, the Kospi sank 1.2% to 2,355.31.
Japan’s central bank meets Wednesday and Thursday amid rising pressure to counter a sharp decline in the yen, which is trading near 145 to the dollar after sharp increases in the value of the greenback.
That has raised costs for businesses and consumers, who must pay more for imports of oil, gas and other necessities.
However the Bank of Japan has held firm so far in maintaining an ultralow benchmark rate of minus 0.1% in hopes of stimulating investment and spending.
In currency trading, expectations for a more aggressive Fed past week have helped the dollar add to its already strong gains for this year.
The U.S. Dollar Index, indeed, last Tuesday, rose nearly 1600 points to 109.81 it is just 98 points off the high.
That was the largest single day upswing in the dollar since Covid.
Then, the index declined 0.1% to 109.68 on Friday, but registered a 0.6% gain for the week.
It is up about 15% for the year so far.
The rising dollar pushed the offshore yuan past the critical threshold of 7 per dollar for the first time in more than two years, last Friday.
Sterling fell against the dollar to a new 37-year low of $1.1351 and was last down 0.5% at $1.1416, while the euro was up 0.1% at $1.0014.
The euro Friday moved slightly higher garnering support from hawkish comments from ECB President Lagarde and ECB Vice President Guindos, who both expressed support for additional ECB rate hikes, after August’s new car registrations in Eurozone rose +4.4% y/y, the first increase in 14 months.
The dollar, meantime, was 0.4% lower against the yen at 142.94, but was up 0.2% for the week in its fifth straight week of gains.
On this morning, the dollar strengthened to 143.35 Japanese yen.
The euro slipped to 99.77 cents.
In Canada, Manitoba Agriculture, Food and Rural Development reports that winter wheat harvest is 100pc completed (98pc last week, 100pc year ago), spring wheat 57pc (31pc, 90pc), barley 64pc (24pc, 96pc) and canola 11pc (1pc, 63pc).
It said many farmers were pleasantly surprised by slightly higher than expected spring wheat yields to date.
Canadian Western Red Spring wheat is mostly grading N1, with protein ranging between 13.5pc-14.8pc.
Canola, in contrast, has suffered flea beetle damage and early planting stress on the earliest sown crops reducing yields compared to late sown.
Statistics Canada’s latest model-based principal field crop estimates put 2022/23 all wheat production forecast up 100,000t, at 34.7m (22.3m previous year).
Forecast barley production increased by 100,000t, to 9.4Mt (7.0Mt), maize up by 100,000t, to 14.8Mt (14.0Mt).
Canola crop estimate was trimmed by 400,000t, to 19.1Mt (13.8Mt)
Meantime, producers’ deliveries of common wheat in week 6 of the shipping season, were at 1.051,4k mt.
That were stronger and up from 799.7k of a week erlier.
Deliveries of durum wheat also increased to 139.6k mt up from 116.4k mt a week earlier.
Canada exported 279.7k mt of common wheat in week 6 of the shipping season, up from 248.1k mt in the second week.
Durum wheat exports were at 54.5k mt vs 11k mt a week earlier.
Meantime, Commercial Stocks of common wheat stood at 1.699,9k mt, up from 44,5k mt a week earlier.
As for durum, commercial stocks were at 364,7k mt, up from only 1,4k mt a prior week.
From South America, Argentine wheat farmers are starting to abandon some lots of wheat due to prolonged drought, the major Buenos Aires grains exchange warned last Thursday.
The exchange, which estimates 2022/23 wheat planting area at 6.1 million hectares, said that in the last month the percentage of the area sown with wheat with regular or dry humidity went from 29% to 46%, while the percentage of lots in regular to bad conditions rose from 18% to 34%.
On this wake, Refinitiv Commodities Research cut its wheat production forecast by 200,000t, to 17.8Mt (22.1Mt previous year).
The consultancy also said that despite some much needed precipitation in a few eastern areas over the past fortnight, the total amount was far from sufficient to alleviate ongoing moisture stress.
Wheat planting was completed months ago with harvesting expected to start in late October and November.
In Europe, Stratégie Grains revised 2022/23 total wheat production forecast 800kt higher, at 131.0Mt (137.5Mt previous year), barley output seen 1.0Mt higher than previously, at 51.0Mt (51.8Mt).
Rains from mid-August arrived too late to improve the maize outlook, with early harvest results confirming very poor yields.
Including cuts for France, Romania, Germany and Hungary, forecast production down by 2.5Mt, to 52.9Mt (70.0Mt)
European grain trade association Coceral, on its part, reported that it is slicing its projection for EU corn production from 65.99 MMT in May down to 51.89 MMT.
If realized, this would be a 15-year low and 26% below 2021’s output of 70.21 MMT.
Meantime, crop ratings finally stabilized, according to farm office FranceAgriMer, which estimates that 43% of the crop is rated in good-to-excellent condition through September 12, but that’s far below year-ago results of 89%.
Harvest moved to 14% complete through last Monday versus 5% the week before.
On the other hand, FranceAgriMer lowered its forecast for French soft wheat exports outside of the European Union (EU) in 2022/23, as an increased competition from other origins could slow the quick pace the season started at.
The new projection forecasts 10.0 MMT of soft wheat shipments outside the EU compared to 10.3 MMT projected in July.
If realized, this would still be 14% above 2021/22 said FranceAgriMer.
Meantime, trade sources, according to AgriCensus, say that Russia’s huge wheat crop this season will make Northwest European wheat exports noncompetitive.
Thus, “for Northern Europe, the game is over,” one grain trader was quoted as saying even if more than 50% of German new crop grains were already sold out for the first two quarters of the year.
However, the Black Sea supplies could face still others challenges including quality issues and closure of the grain corridor if the deal is not renewed in November.
From the Black Sea basin, presidents Putin and Tayyip Erdogan agreed to assess the effectiveness of the implementation of the “grain deal” during their Friday meeting on the margins of the SCO summit.
Meantime, a total of 165 ships with 3.7 million tonnes of agricultural products on board have left Ukraine under the U.N.-brokered deal, the Ukrainian infrastructure ministry said on Sunday.
On Saturday, the third vessel charted by the United Nations World Food Program left Ukraine’s Chornomorsk Black Sea port with around 30,000 tonnes of wheat on board.
On the other hand, Ukrainian President Volodymyr Zelenskiy said on Friday he would only back the idea of reopening Russian ammonia exports through Ukraine if Moscow handed back prisoners of war, an idea the Kremlin quickly rejected.
In Russia, as of September 15, Russia harvested 132.3 mln tonnes of grains and pulses (99.4 mln tonnes year ago) from 38.6 mln ha (37.5 mln ha) with the average yield at 3.43 t/ha (2.65 t/ha), the Ministry of Agriculture informed.
Farmers reaped 96.4 mln tonnes of wheat from 25.8 mln ha with the yield at 3.74 t/ha, 23 mln tonnes of barley (7.4 mln ha, 3.12 t/ha), 780.8 thsd tonnes of corn (137.6 thsd ha, 5.67 t/ha).
Moreover, agrarians harvested 1.5 mln tonnes of sunflower seed (674.4 thsd ha, 2.2 t/ha), 2.8 mln tonnes of rapeseed (1.2 mln ha, 2.33 t/ha), 559.3 thsd tonnes of soybean (261.5 thsd ha, 2.14 t/ha).
Farmers harvested 8.6 mln tonnes of sugar beet from 196.1 thsd ha with yield at 43.89 t/ha.
Meantime, winter crops were planted throughout 7.4 mln ha (8.5 mln ha last year).
As of September 1, 2022, the stocks of grains in agricultural organizations of the Russian Federation totaled 43.1 mln tonnes, up by 10.5 mln tonnes (32%) compared to the figure on the same date in 2021, declared the Federal State Statistics Service (Rosstat).
In particular, wheat stocks amounted to 31.8 mln tonnes, up by 8.7 thsd tonnes (38%) compared with the same date in 2021, corn stocks – 552.8 thsd tonnes, down by 59.5 thsd tonnes (10%).
Sunflower seed stocks totaled 403.4 thsd tonnes, up by 194 thsd tonnes (93%).
In this context, the export duty on wheat from the Russian Federation will decrease once again, by 9.94% this time, according the Ministry of Agriculture.
Particularly, as of September 20, the export duty on wheat will decrease to 2,668.3 from 2,962.9 rubles per ton a week earlier.
The duty on barley, also will decrease to 2,353.9 rubles from 2,717.7 rubles per ton a week earlier.
Also for corn it will down to 3,696.5 rubles from 3,784.4 rubles a week earlier.
This new duty rates will be in effect through September 27, inclusive.
The duties were calculated based on indicative prices: $311.9 per ton for wheat ($316.8 a week earlier), $285.8 for barley ($292.5), $317.6 for corn ($317.6).
Meantime, Russian President Vladimir Putin called for the resolution of remaining problems for exports of Russian fertilisers and the removal of export restrictions on Belarusian fertilisers caused by Western sanctions.
Speaking at the summit of the Shanghai Cooperation Organisation in Uzbekistan, Putin said Europe had only “partially” removed sanctions that Moscow says block its ability to sell and send fertilisers around the world, as the bloc, “selfishly”, only lifted sanctions for its own members.
Also, Putin said Russia was ready to provide more than 300,000 tonnes of Russian fertilisers, to the developing countries for free.
But fertiliser are stuck in European ports and could be shipped if Europe agreed to further relax sanctions on Russian exports.
From the Middle Kingdom, China’s imports of major agriculture products in August, according to data released by the General Administration of Customs on Sunday.
Particularly, corn import was at 1.8 mln tonnes, that was down 44.4% from August a year erlier.
Year to date Chinese corn imports were at 16.93 mln tonnes, that represents a 20.9% year on year decline.
As for wheat, at 530.000t wheat imports were down 25.5% from the same period a year ago, and total imports of 6.25 mln tonnes were down 10.1%.
August barley imports were at 250.000t, down 63.8% from the same period a year ago.
Total barley imports at 4.05 mln ton were 43% weaker, compared a year ago.
As for sorghum with 670,000t, imports were down 17.7% from the same period a year ago, while with 8.01 mln tonnes, total imports were up 19.4% year to date.
With 140,000t, Chinese pork imports were down 50.0% from the same month a year ago, while total imports of 1.07 mln tonnes, were down 63.6% compared last year.
From Australia, the country exported 339,309 tonnes of canola in July, down 31 per cent from the 490,466t shipped in June, according to the latest export data from the Australian Bureau of Statistics (ABS).
The United Arab Emirates on 126,241t had the distinction of being the biggest market for July-shipped Australian canola, followed by Japan on 76,098t and Belgium on 62,278t.
July data includes 42,750t shipped to Mexico, not traditionally one of Australia’s canola markets.
Harvest of Australia’s 2022-23 canola crop is around six weeks away from starting, and is forecast by ABARES to produce 6.64Mt, down slightly on the record 2021-22 crop of 6.76Mt.
On the weather side, significant 24-hour rainfall totals have been received across NSW with areas in the Murrumbidgee, Central West and Northern NSW copping 25-50mm and in some areas 50-100mm.
Meantime, local markets found some life and were stronger on the boards through new crop.
Wheat was up $5-6/t over the day then things started to get heavy as the day came to a close with grower selling activity picking up.
Barley was also stronger on the boards whilst canola values were largely unchanged and have been relatively flat for the week.
On the international trade scene, Jordan’s state grains buyer purchased 60,000t feed barley at $316/t c&f, Apr shipment. Separately, seeks (21 Sep) a further 120,000t.
Saudi Arabia’s main state wheat-buying agency, the Saudi Grains Organization (SAGO), has purchased about 556,000 tonnes of wheat in an international tender.
The purchase was at an average price of $371.61 a tonne c&f, SAGO said on its website.
The wheat has 12.5% protein content and can be sourced from Europe, North America, South America and Australia, SAGO said.
The wheat was sought for arrival in periods from Nov. 10, 2022, to Feb. 25, 2023.
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought 97,373 tonnes of food-quality wheat from the United States and Canada in regular tenders that closed last Thursday.
Watching this week’s market, today we will have the weekly Export Inspections report released in the afternoon and the Crop Progress report overnight after the sessions close.
The FOMC meeting is dued on Tuesday and Wednesday.
On Wednesday the weekly EIA report will show us how ethanol stocks implied corn use.
On Thursday, we will see the weekly FAS Export Sales report, and a NASS Cold Storage report overnight.
Friday the USDA will feature the monthly Cattle on Feed report.
That’s all, thank you.
We wish you a good day and a good start to the week.
Author: Sandro F. Puglisi
