Good morning Farmer Family …
US farm markets ended the first trading week of the year mostly red.
Though corn prices ended the Friday session with 0.19% gains, for the week, the contract get net losses of 3.61%.
The soy complex bounced back on Friday, with soybeans up 1.48%, meal prices 2.73% higher, and soybean oil posting 1.2% gains at the bell.
However, for the week soybeans retreated back below $15 mark, posting a 2.07% weekly drop, soybean oil was down by 1.4%, soymeal, in contrast, was up 1.4%.
As for wheat, the rally attempt failed into the weekend.
Chicago SRW indeed ended with 0.44% losses on Friday, leaving the contract with a net 6.12% loss for the week.
Kansas City HRW posted 0.92% losses on Friday, and a 6.31% weekly loss.
Spring wheat settled the last trade day of the week down by 0.8% giving back for the week 3.94%.
Going inside the numbers, corn prices closed the week $0.245 weaker at $6.54/bu.
Soybean prices finished $0.315 lower at 14.93/bu.
Soymeal rose $6.6/smt, closing at $477.6 smt.
Soy oil fell $0.900, to close at $63.17.
CBOT soft red winter (SRW) prices tumbled $0.485 for the week to close at $7.44/bu.
KCBT hard red winter (HRW) prices slumped $0.560, ending at $8.32/bu.
MGE hard red spring (HRS) prices were $0.370 weerker to close at $9.02/bu.
Some of the selling was structural, as funds sold last year’s winners.
Thus, the week started out with three days of hard selling across the grain complex in general, including the beans.
However, there also has been a lot of doubt about demand, not just for grains but global demand for commodities as a whole.
EIA data showed ethanol production collapsing in the week of 12/30 to 844,000 barrels per day, a drop of 119,000 bpd.
Ethanol stocks slipped 192,000 barrels to 24.444 million.
Monthly data from the Grain Crushing report showed 447.4 mbu of corn used for ethanol production in November, down 4.17% vs. 2021.
Crushers sent 189.46 mbu of soybeans through plants during November according to the USDA Fats & Oils report, a 0.59% drop from last year.
Grains traveling the US railways last week reached another 18,383 carloads, bringing 2022 cumulative totals to 1.157 million carloads.
That is a year-over-year decline of 4.2%.
Census data confirmed 2.427 MMT, or 95.55 mbu, of corn was exported during the month of November.
That was up 17% from October, but only about half of the same month last year.
MYTD shipments for the Q1 reached 280.9 mbu – 13.5% of the USDA full year forecast.
Census also had 728k MT of DDGS exports and 81.441m gallons of ethanol during November.
Monthly soy exports were 9.668 MMT (355.22 mbu) for soybeans, 1.136 MMT for soymeal, and 10,634 MT for soy oil during November.
The official Census data had the bean shipments 1.2% below October and 9.7% below Nov ’21.
For Q1’s total, soybean exports were 792.6 mbu or 38.8% of the USDA full-season forecast.
China was the destination for 71% of the total during the month of November.
As for wheat, monthly data from Census had wheat exports at 1.318 MMT for November.
That was down 4.8% from October and 7.6% form Nov ’21.
Total wheat exports were 11.371 MMT for the MY through November.
Meantime, the weekly export sales report showed that 319,242 MT of corn was sold during the week that ended 12/29.
That was up by 24% from the same week last year, but was a 59.2% drop from the week prior.
Corn commitments sit at 21.74 MMT as of 12/29 – a 47% lag from last year’s pace.
As for soybean, the report showed 720,997 MT that of soybean was sold .
Sales were 2% higher on the week, but were 2% under the same week last year.
The accumulated soybean commitments were at 43.829 MMT.
That means only a 5% lead over last year’s pace.
For the products, the FAS data showed 79,259 MT of soymeal was booked.
353 MT of soy oil was sold for the week that ended 12/29.
As for wheat, the report had 47,142 MT of wheat sales for the week that ended 12/29.
That was a MY low, but was only 3% less than the same holiday week last year.
Total wheat export commitments are now 15.053 MMT.
That’s 71% of the WASDE full year forecast but would typically be 81% by now.
Shipments were a MY low for the week, with just 81.5k MT exported.
Accumulated shipments were tallied at 10.662 MMT – trailing last year by 3.5%.
Unshipped sales on the books are 12% smaller than last year at this time.
Thus, these concerns about demand, and economic headwinds, including the impact of surging COVID-19 cases in China, indeed, continued to hang over agricultural markets along all the week.
However, soybean and soymeal prices rallied in the end week session mainly due an increasing concerns about drought hurting crops in Argentina.
Friday’s weather maps, indeed, taken out some of the rain that was forecasted previously for Argentina.
Thus, beans and meal led the way to the upside, being super-responsive to that, supporting also corn prices.
Also, soybeans appeared oversold following losses earlier the week.
Meantime, the US dollar which started the week strong, making export sales more difficult and expensive, seen a significant profit taking ahead of the weekend.
Separately, on Friday USDA announced a private corn export sale to Mexico, with 89.6k MT of old crop and 22.4k MT of new crop sold.
USDA also confirmed a private soybean sale with 132k MT of old crop sold to unknown.
Wheat prices, on their part, weakened and posted their biggest weekly decline in six months, as ample supplies from the Black Sea region, amid a record crop expected in Australia, weighed on prices also in the end week session.
In this context, corn basis bids held steady across the central U.S. on Friday.
Soybean basis bids trended 2 cents lower at an Indiana processor and 7 cents lower at an Illinois river terminal while holding steady elsewhere across the central U.S..
As for wheat, despite sluggish demand, soft white (SW) prices from the PNW and Gulf SRW basis dropped in competition with Australian and French soft wheat.
Gulf HRS basis increased as rail performance struggles to catch up after late December storms.
In spite of poor rail performance, PNW HRS eased slightly, positioning itself for potential demand in the coming weeks.
PNW HRW held steady, while Gulf HRW basis increased slightly, supported by the recent cold weather in the Southern Plains.
Commodity funds were net sellers for 2,000 lots of wheat and net buyers for 500 lots of corn and 6,000 lots of soybeans.
Meantime, as at January 5, 2023, FOB prices saw US wheat No 2 Hard Red Winter (HRW) valued at $378/mt (down $10/t from prior week).
US wheat No 2 Soft Red Winter (SRW) was valued at $330/mt (down $11/t from prior week).
Northern Durum offers from the Great Lakes, were not available.
As for corn, US corn 3YC (Gulf) was at $306/mt (down $14/mt from prior week).
As for soybean, US soybean 2Y (Gulf) quoted at $594/mt (down $19 from prior week).
USDA’s weekly report showed ethanol prices averaged $2.12 to $2.31/gal regionally.
That was mostly 1-4 cents lower for the week.
Corn oil was priced from 66 to 72c/lb, mostly 1-3 cents higher.
DDGS were within $20/ton of last week’s quotes from $222 – $305/ton for the week.
DDGS prices to the Export Point averaged between $262.5 to $380/ton, up from prior week.
USDA saw B100 prices 19 cents lower through the week in MN, averaging $5.90/gal.
After the sessions close, CFTC’s weekly data showed 29k new fund longs were opened in addition to 7.9k fund shorts being closed during the week that ended 1/03.
That lifted the managed money net long by 37k contracts to a 9-wk high 196,457 contract net long.
The commercials added 23.7k new short hedges for a net 31k contract stronger net short as of 1/03.
As for soybean, the report had managed money funds net buyers of 15.6k soybean contracts.
That expanded their net long to a 29-wk strong 142,994 contract net long as of 1/03.
Commercial soybean hedgers added 8.9k new short hedges for a 10.7k contract stronger net short of 173.8k contracts.
Spec traders were net buyers in meal, extending their net long 11.9k contracts through the week to 141,877.
The funds were 1,825 contracts less net long in soy oil, at 63,762 contracts as of 1/03, after some net new selling through the week.
As for wheat, the report showed managed money funds 52,715 contracts net short in CBOT wheat as of 1/03.
That was a 3,497 contract weaker net short after short covering through the week.
In KC wheat, the funds were 94 contracts less net long to 1,757 as of 1/03.
Spring wheat spec traders were 468 contracts less net short to 2,831 contracts.
On this morning, Chicago soybean prices gained more ground.
Wheat also edged higher.
Notably, the most-active soybean contract on the Chicago Board of Trade rose 0.2% to $14.94 a bushel, as of 03:02 GMT, wheat gained 0.2% at $7.45-1/4 a bushel and corn was unchanged at $6.54 a bushel.
Argentina forecast is still too dry, and stressful conditions continue to a high percentage of Argentina and southern Brazil crops.
A continued drier than normal trend over the next 2-3 weeks could cause significant production losses in Argentina.
Expectations of higher demand from China, due an easing COVID restrictions, also supported soybean prices.
For wheat, the availability of abundant low-priced supplies from Russia and Ukraine are giving stiff competition to other global exporters.
Reports of a record crop expected in Australia, also weighed on prices.
However, costs for hiring ships to transport commodities from the Black Sea have risen by more than a fifth since the start of the year, reflecting higher war risk insurance rates.
In energy markets, oil prices were little changed on Friday as the market balanced a weaker U.S. dollar and mixed U.S. jobs reports.
However, both crude benchmarks ended the first week of the year lower due to global recession concerns.
Brent futures, indeed, fell 12 cents, or 0.2%, to settle at $78.57 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 10 cents, or 0.1%, to settle at $73.77.
For the week, both Brent and WTI were down over 8%, their biggest weekly dives to start the year since 2016.
Both benchmarks had gained about 13% during the prior three weeks.
The economic outlook is clouded.
U.S. services industry activity in November contracted for the first time in more than 2-1/2 years, according to a report from the Institute for Supply Management (ISM).
But another report showed the U.S. economy added jobs at a solid clip in December, pushing the unemployment rate back to a pre-pandemic low of 3.5% as the labor market remains tight.
That U.S. jobs report caused the U.S. dollar to rally, making dollar-denominated commodities uncheaper for holders of other currencies.
Saudi Arabia, lowered prices for the Arab light crude it sells to Asia to its lowest since November 2021 amid the global pressures hitting oil.
More countries around the world are demanding visitors from China take COVID tests.
Euro zone inflation tumbled last month but underlying price pressures are still rising and economic growth indicators are surprisingly benign, suggesting that the European Central Bank will keep raising interest rates for months to come.
India’s government expects economic growth to slow in the financial year ending March, as pandemic-related distortions ease and pent-up demand for goods levels out going into 2023.
On this morning, oil prices climbed.
Brent crude futures, indeed, rose 90 cents, or 1.2%, to $79.47 a barrel at 0520 GMT, while U.S. West Texas Intermediate crude was up 90 cents, or 1.2%, at $74.67.
Hopes for less-aggressive U.S. interest rate rises are buoying financial markets and depressing the dollar.
A weaker greenback makes dollar-denominated commodities more affordable for investors holding other currencies.
The borders reopened in China, boosting the outlook for fuel demand growth and offsetting global recession concerns.
Some 2 billion trips are expected during the Lunar New Year season, nearly double last year’s movement and recovering to 70% of 2019 levels, Beijing says.
Over the last week, airlines have boosted their January international seat capacity to and from China by 9.5%.
Despite the gains in oil, concerns remain that the massive flow of Chinese travellers may cause another surge in COVID infections.
On this wake, last week, U.S. energy firms cut the number of operating oil and natural gas rigs by seven, the biggest weekly decline since September 2021, energy services firm Baker Hughes Co said on Friday.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index, was down for the sixth straight session on Friday, falling about 1.4% to a four-month low of 1,130 points, amid weaker demand across vessel segments on subdued shipping activity at the start of the year.
The panamax index, which tracks about 60,000 to 70,000 tonnes of coal and grains cargoes, declined about 2.5% to its lowest since September 2nd at 1,299 points; and the supramax index shed 32 points to 839 points.
Meanwhile, the capesize index, which tracks iron ore and coal cargos of 150,000 tonnes, rose 0.5% to 1,512 points.
The Baltic Dry Index lost 25.4% in the first week of January, its worst in more than a year.
The decline in the first week of the year appeared to be no surprise to the market due to the lackluster activity and seasonal headwinds since the holiday season.
The average rate of the Capesize 5 timecharter (5TC) routes had its sharpest fall on Tuesday, losing almost 30% from the last publishing.
Later in the week the market continued falling but at a slower pace and finally lifted $70 on Friday to close the week at $12,543.
Compared with the same period last year, the 5TC is about $7,000 or 35% lower in value.
Whilst the Atlantic remained quiet, the west Australia to Qingdao trade was priced below mid $7s throughout the week.
Demand and cargo enquiry next week will determine which direction the Capesize is taking before the fast approaching Lunar New Year.
As for Panamax, following the Christmas holidays the Panamax market began sedately across the board, followed by rates coming under pressure from the outset.
Downward pressure came from a lack of demand in both basins all week, forcing cheaper levels to be conceded by owners.
The Atlantic did witness some improved South America activity, but with excess tonnage count rates drifted throughout the week.
Following a weak end to 2022 higher ballaster count from Southeast Asia only compounded to the weaker market.
And, with Asia massively unsupported, the immediate outlook appeared very bearish – $8,000 was agreed on an 82,000-dwt delivery China for a NoPac round trip.
Consequently, Aps and ballast bonus deals were the norm ex EC South America to Far East, with varying rates depending on dates.
However, $16,500 + $650,00 was agreed a few times for index types/dates.
Period activity included a scrubber fitted 81,000-dwt delivery China fixed for five to eight months at $16,250.
As for Ultramax/Supramax, the first week back for many after the holidays gave little cheer to owners as both the Pacific and Atlantic regions suffered with limited fresh enquiry and an abundance of prompt tonnage.
The general feeling amongst many players that this trend could continue until after the Lunar New Year, but only time will tell.
In the Atlantic activity was seen from the US Gulf, a 57,000-dwt fixing a trip to the Mediterranean at $18,000.
Elsewhere, a 56,000-dwt was fixed from the Mediterranean to West Africa at $10,000.
Little action was seen from South America and rates remained under pressure.
Asia also saw downward pressure and again pressure focused on the readily available amount of open tonnage.
A 61,000-dwt fixing for a trip from Kwangyang to the Arabian Gulf at $8,000.
Meanwhile, a 53,000-dwt open CJK was heard fixed for an Indonesian round voyage at $3,000.
It remains to be seen how long it will take to absorb excess tonnage.
As for Handysize, sentiment remained negative, despite a return for many after the holiday season, with further losses in both basins.
East Coast South America has seen levels tumble due to a lack of enquiry with a 32,000-dwt fixing from Fazendinha to the Eastern Mediterranean at $11,000.
Meanwhile, a 38,000-dwt fixed Santos to Morocco at $15,250.
In the Mediterranean, a 36,000-dwt fixed basis delivery Canakkale to the Caribbean with an intended cargo of steels at $7,500 for the first 40 days and $10,000 for the balance.
An unnamed handysize vessel was linked with fixing a cargo of sulphur from the Baltic to Casablanca at $8,000, but further details had yet to emerge.
In Asia, activity was also limited. A 30,000-dwt fixing from South East Asia to China at $5,100 and a large handy was rumoured to have been placed on subjects from South Korea via Prince Rupert for a round voyage with wood pellets in the low $7,000s.
In equity markets, Wall Street’s main indexes all gained more than 2% on Friday after December payrolls expanded more than expected even as wage increases slowed and services activity contracted, easing worries about the Federal Reserve’s interest rate hiking path.
Notably, U.S. Dec nonfarm payrolls rose +223,000, stronger than expectations of +203,000.
Also, the Dec unemployment rate unexpectedly fell -0.1 to 3.5%, matching a 53-year low and showing a stronger labor market than expectations of 3.7%.
U.S. Dec average hourly earnings rose +0.3% m/m and +4.6% y/y, weaker than expectations of +0.4% m/m and +5.0% y/y. The +4.6% y/y gain was the smallest in 16 months.
The Dec ISM services index fell sharply by -6.9 points to a 2-1/2 year low of 49.6, and was weaker than expectations of 55.0.
U.S. Nov factory orders fell -1.8% m/m, weaker than expectations of -1.0% m/m and the biggest drop in 2-1/2 years.
That’s basically making people think the Fed is nearing the end of what’s been one of the most aggressive tightening cycles we’ve seen in decades.
Thus, the 10-year T-note yield was down to a 2-1/2 week low of 3.556%.
The yield on the two-year Treasury dropped to 4.28% from 4.48% just before the release of the data on the U.S. labor market.
U.S. stocks also garnered carry-over support Friday from a rally in European stocks to a 3-week high after economic news showed Eurozone Dec consumer prices rose less than expected and Eurozone Nov retail sales rose more than expected.
Also, a rally in China’s Shanghai Composite to a 3-week high gave equities a boost after China took additional steps to revive its ailing property market.
In this context, the Dow Jones Industrial Average rose 700.53 points, or 2.13%, to 33,630.61; the S&P 500 gained 86.98 points, or 2.28%, at 3,895.08; and the Nasdaq Composite added 264.05 points, or 2.56%, at 10,569.29.
The Russell 2000 also rose adding 39.61 points, or 2.3%, to close at 1,792.80.
Friday’s rally boosted the benchmark S&P and the Nasdaq enough to snap four weeks of declines.
For the holiday-shortened week indeed, the S&P rose 1.45% while the Nasdaq added 0.98% and the Dow advanced by 1.46%.
On this morning, shares have climbed in Asia following the rally on Wall Street.
Gains in technology shares boosted benchmarks in South Korea, Hong Kong and Taiwan.
Japan’s markets were closed for a holiday.
A Chinese financial news outlet cited a top central bank official as saying that China’s more than two-year crackdown on internet companies is nearly finished.
Caixin quoted Guo Shuqing, the Communist Party secretary of the People’s Bank of China as saying the government would support companies in the sector in creating more jobs and competing globally.
E-commerce giant Alibaba’s shares jumped 7.9% and technology and entertainment company Tencent’s climbed 2.6%.
In this context, Hong Kong’s Hang Seng index gained 1.6% to 21,328.41 while the Shanghai Composite index added 0.5% to 3,174.33.
In South Korea, the Kospi added 2.5% to 2,347.07 while Samsung Electronics, the country’s biggest company gained 2.5%.
Taiwan’s benchmark climbed 2.2% and Bangkok’s SET index added 0.9%.
In Australia, the S&P/ASX 200 advanced 0.6% to 7,154.70.
In currency trading, the dollar index on Friday fell by -1.10%, as T-note yields plunged and stocks rallied sharply, curbing liquidity demand for the dollar.
A softer dollar boosted the euro , which climbed 1.2% to $1.0644.
The yen also climbed against a weaker dollar, jumping 0.9% to 132.070 on the greenback.
On this morning, the U.S. dollar slipped to 131.81 Japanese yen.
The euro rose to $1.0676.
Going back to analyzing the other agricultural markets …
In Canada, the Grain Statistics Weekly report has not been published past week.
This week the report included weeks 21 and 22 of this shipping season.
Notabily, producers’ deliveries of common wheat in weeks 21&22, were at 506,5k mt.
In the week 20, they had been at 593,6k mt.
Deliveries of durum wheat, were 79,4k mt.
In the week 20, were at 127,8k mt.
Meantime, Canada exported 552,3k mt of common wheat in weeks 21&22 of the shipping season.
In week 20 had exported 517,0k mt.
Durum wheat exports in weeks 21&22, were at 97,4k mt.
In the week 20 exports were at 119.5k mt.
Total Commercial Stocks of common wheat stood at 2.686,6k mt in week 22.
Durum total commercial stocks were at 652,7k mt.
Cumulative exports for common wheat were at 8.108,0k mt.
Durum cumulative exports had reached 1.942,2k mt.
In this context, cash bids for Canadian durum wheat trended lower week over week.
Indeed, looking at the average regional price of C$495.83/mt as of Jan 6, that was C$3.56/mt weaker from the prior week.
Per latest data from European Commission, as at Jan 4, 2023, Durum wheat – FOB CA St Lawrence (CWAD) was offerd at C$617.39/t ($455/t unch).
(1USD=Cnd$1.3444 down from 1.3543 a week earlier).
From South America, Brazil’s Safras & Mercado slightly reduced its estimates for the country’s 2022/23 soybean production, which is now at 153.36.
That would still be a record-breaking effort, if realized.
Meantime, the protests this weekend could add tension to the markets with a risk of instability.
Late-season frost and drought continue to impact Argentina’s wheat crop, with recent estimates coming in at 12.4 MMT, a far cry below the Buenos Aires Grains Exchange’s initial assessment of 20.5 MMT.
As of Wednesday, Argentine farmers had harvested 91.4% of the 6.1 million hectares (15 million acres) they planted.
Meantime, as at Jan 5, 2022 – Argentina Wheat Grade 2 export price, (Up River) was at $373, down $7/t from prior week.
Argentina corn feed was down $8/t for the week, closing at $304.
Brazilian corn feed (Paranagua) was valued at $298, was down $15/t from prior week.
Argentina feed barley, was unchanged for the week to $350.
Argentina soybean was down $14 at $601.
Brazilian soybean was down $13, finishing the week at $585.
In Europe, Euronext wheat edged lower on Friday, curbed by a jump in the euro and competition from the Black Sea region.
March wheat on Paris-based Euronext, indeed, settled down 0.6% at 300.00 euros ($319.05) a tonne, posting a €9.25/t weekly decline, although holding above Thursday’s two-week low of 296.75 euros.
The market is looking for direction.
Russia and Australia have a huge amount of wheat, though they likely don’t have the capacity to export it all.
Russian wheat is still competitive in c&f terms despite the increase in insurance costs.
Russian and Ukraine cheap sales offers likely will intensify when more Russian dealers start to return on the market after the eastern Christmas holiday.
In Germany, standard 12% protein wheat for January delivery in Hamburg was offered for sale at a premium of about 14 euros over Euronext March futures, with buyers at around 12 euros over.
However, Euronext remained underpinned by a brisk export campaign in France.
On this wake, Senalia, operator of France’s largest grain export terminal, aims to load 4.6 million tonnes of cereals in the 2022/23 season to June 30, up nearly 14% from 2021/22, supported by Chinese demand and war disruption to Black Sea trade, it said on Friday.
Between July and December, Senalia loaded 2.4 million tonnes of cereals at Rouen port, up 11% compared with the same period last season.
After mostly shipping wheat in the first half of the season, Senalia expects barley to drive its activity for the rest of 2022/23, with increasingly competitive French barley prices winning sales from China.
On this wake, one vessel has just loaded around 40,000 tonnes of barley in Rouen for China, port data showed.
Meantime, March’s European Durum Wheat, on Friday settled at €477.5/t, up €0.25/t for the week.
March corn price, was down €5/t for the week, closing at 290.5 euros per ton.
Rapeseed closed at €577.75/t, down €6.5/t for the week.
UK wheat feed, Mar 23 contract, closed at £234.9, down £11.1/t week on week.
In this context, as of Jan 5, 2022, FOB prices in US dollar for French wheat with 11.5% protein and Feb delivery, were at $326/mt, down $11 from prior week.
German wheat, Deposilo Hamburg, was valued at $333.87/t.
Baltic wheat, delivery first Vilnius, was at $319/t.
Spanish durum wheat Sevilla (Depo Silo), was valued at $476.96/t.
French durum wheat – delivered La Pallice Spot – July 2022 basis, this week was valued at $489.62/mt, down $4.42 from prior week.
Italian durum wheat Bologna (Delivered to first customer), N.Q..
Corn, delivered Bordeaux Spot – July 2022 basis, was at $306.31 per tonne, down $11.59/t from past week.
Corn FOB Rhin Spot – July 2022 basis, was down $11.57 to $304.19/t.
Feed barley delivered Rouen was at 289.35$/t, down $7.07 per tonne.
Malting barley FOB Creil Spot – July 2022 basis was at $333.87 per tonne, down $4.44/t from prior week.
Rapessed FOB Moselle – 2022 harvest was at 617.92$/ton, down $6.07 compared to prior week.
Standard sunseed FOB Bordeaux – 2022 harvest was down 29.73$ from prior week at $620.04 per tonne.
(Eur/USD = 1.0644 vs last week 1.0740).
From the Black Sea basin, Ukrainian farms had harvested 49.5 million tonnes of grain from 93% of the expected area as of Jan. 6, the agriculture ministry said on Friday.
The ministry said in a statement farmers had harvested 10.7 million hectares of crops, with the grain yield averaging 4.64 tonnes per hectare.
It said farmers had completed the 2022 wheat and barley harvests, threshing 20.2 million and 5.8 million tonnes respectively.
The total volume also included 22.1 million tonnes of corn, harvested from 81% of the expected area with a yield of 6.48 tonnes per hectare.
The ministry said farmers also harvested 10.5 million tonnes of sunflower seeds from 99% of the planted area, and 9 million tonnes of sugar beet from 99% of the area.
Meantime, costs for hiring ships to transport commodities from the Black Sea have risen by more than a fifth since the start of the year, reflecting higher war risk insurance rates, industry sources said.
Since Jan. 1, when policies are renewed, reinsurers that provide financial protection for insurance companies have added exclusions for ships and planes for Belarus, Russia and Ukraine.
The exodus of reinsurers from the market has added to unease over the risk related to the war in Ukraine, including floating mines or vessels getting stuck in ports for long periods.
Since the introduction of exclusions this year, insurers who provide cover will not have the cushion of reinsurance in the event of big claims.
No vessels has lost their insurance provision to now, but analysts expects higher rates that would vary depending on specific circumstances, and that war risk premiums had so far risen by more than 20%.
From the Middle Kingdom, last year, China’s soybean production increased nearly 24% to 20,3 MMT, thanks in large part to an acreage uptick of more than 21%.
China is looking to increase its oilseed acreage this year by around 667,000 hectares, official news agency Xinhua said, citing the agriculture minister, as the world’s top soybean buyer looks to boost domestic output to reduce reliance on imports amid growing global food security concerns.
From South East Asia, farmers in India have planted 33.22Mha of wheat as of 6 Jan, up nearly 1pc from a year earlier, according to the Farm Ministry.
The area under winter-sown pulses also increased 1pc to 15.77Mha, while the planting of oilseeds rose to about 10.55Mha, up from 9.77Mha.
Sowing operations are continuing in some parts of the country.
Malaysian palm oil futures dropped for a third session in a row on Friday to post a weekly decline.
Notably, the benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange lost 0.93% to 4,052 ringgit ($920.70) per tonne, erasing its gains in the morning session.
The contract lost 2.92% for the week.
The initial optimism about lower December inventory evaporated after the market digested data outlooks, and market participants were looking for new leads to guide their positions.
Malaysia’s palm oil inventories at end-December are estimated to shrink 5.3% to 2.17 million tonnes from prior month, their lowest levels in four months as production and exports slowed.
However, that is still at 3 year highs.
Meanwhile, production declined 3% to 1.63 million tonnes, but exports also fell 1% to 1.5 million tonnes.
From Australia, with 80% of the crop in the bin, yields are better than expected for the already record-breaking 2022/23 Australian wheat crop.
According to some sources, the total harvest could reach 40.0 MMT or more, while USDA estimates hover at 36.6 MMT.
Despite the record production, USDA projects Australian exports even with 2021 at 27.5 MMT.
Logistics and export capacity, indeed, remain a barrier for wheat exports out of Australia.
Also, recent rains increased yield potential but lowered quality in some fields, which now may be used as animal feed, according to one Sydney-based trader.
Meantime, local markets continued to find demand at the end of last week in WA with ASW1 and BFED1 values unchanged.
SA markets also remained largely unchanged, although we did see barley bids firm towards the back end with BAR1 and BAR2 up around $5-10/t.
Eastern Australian wheat and barley values ticked along while we still saw good premiums in the market for prompt delivery back into export pathway.
After a dry weekend, the next four days are also forecast to be clear which should help the southern harvest progress rapidly.
Widespread showers are forecast to build by the end of this week with the heaviest totals (5-25mm) forecast for southeast Vic.
Most other areas are forecast to receive less than 5mm.
On the international trade scene, Egypt’s General Authority for Supply Commodities announced a tender note on Friday for the purchase of wheat within the framework of the Food Security and Resilience Support Program funded by the World Bank under Loan No. EG -9399 with At Sight financing.
The tender is for the quantity of 30,000, 40,000 or 50,000, 55,000, or 60,000 tons +/- 5% on seller’s option from the last crop for supply C&F.
Shipment will be during the period from Feb. 10 to 25 from all origins announced in the booklet of terms and specifications of GASC.
The deadline for offers is Jan. 10, GASC said.
The Taiwan Flour Millers’ Association has issued an international tender to purchase 45,200 tonnes of grade 1 milling wheat to be sourced from the United States.
The deadline for submission of price offers in the tender is Jan. 13.
The tender seeks a range of different wheat types in one consignment for shipment from the U.S. Pacific Northwest coast between March 8 and March 22.
Wheat types sought include dark northern spring, hard red winter and white wheat.
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 Wednesday, Jan. 11.
Price offers are being sought for one consignment of yellow corn at a premium over the Chicago July 2023 corn contract.
Shipment is sought between March 20 and April 8 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 April 4 and April 23.
Turkey’s state grain board TMO has issued an international tender to purchase an estimated 565,000 tonnes of milling wheat.
The deadline for submission of price offers in the tender is Jan. 12.
Wheat shipment is sought in two periods in 2023, Feb. 1 and Feb. 15 and also March 1 and March 31.
Red milling wheat is sought in a series of consignments to different Turkish ports.
Wheat already in warehouses in Turkey can also be offered in the tender.
The TMO reserves the right to buy up to 5% more or less than the tender volume at its own discretion.
Watching this week’s market, the second full week of 2023 starts with the Export Inspections report in the afternoon.
The weekly EIA report showing weekly ethanol production and stocks will be released on Wednesday.
Thursday will be busy, starting out with the weekly Export Sales in the afternoon.
Later that day, the annual USDA Crop Production, quarterly Grain Stocks, Winter Wheat Seedings, and Cotton Ginnings reports will all be released.
On Friday, January futures expire for soybeans, meal, and bean oil.
FAO Food Price – Jan Update
The surge in the cost of most food commodities last year, sent the U.N. food agency’s average price index to the highest level on record.
The FAO food price index, indeed, averaged 143.7 points in 2022, up 14.3% from 2021, and the highest since records started in 1990, the agency said on Friday.
The index had already gained 28% in 2021 from the previous year as the world economy recovered from the impact of the pandemic.
In December the benchmark index fell for the ninth consecutive month to 132.4 points, compared with a revised 135.00 points for November.
The November figure was previously given as 135.7 points.
The decline in the index in December was driven by a drop in the international price of vegetable oils, together with some declines in cereal and meat prices, but mitigated by slight increases in those of sugar and dairy, the FAO said.
Still over the whole of 2022, four of the FAO’s five food sub-indexes – cereals, meat, dairy and vegetable oils – had reached record highs, while the fifth one, sugar, was at a 10-year high.
The FAO Cereal Price Index index rose 17.9% in 2022 due to factors including significant market disruptions, higher energy and input costs, adverse weather and continued strong global food demand, the FAO said.
That’s all, thank you.
We wish you a nice day and a good start to the week.
Author: Sandro F. Puglisi
