Good morning Farmer Family …
US farm markets closed mixed on Friday.
Corn price ended down 0.15% loss.
Soybean settled 0.54% lower.
Meal prices dropped by 1.59% and bean oil went home down by 1.87%.
The wheat in contrast rose in all three markets.
Chicago SRW indeed closed up 0.95%.
Kansas City HRW ended with 1.92% gains.
Minneapolis spring wheat ended the session 0.97% in the black.
Corn prices ended mostly lower on the Argentine weather outlook.
Soybean prices also declined for a third straight session, on forecasts for welcome rains in Argentina, hitting a one-week low on Friday.
Argentina is the world’s largest supplier of soymeal and soyoil, and better weather conditions, dragged down also products prices.
Also, Brazil is on track to produce a record soy crop, which may hasten a seasonal shift in export demand away from U.S. supplies.
Still, corn prices pared losses after the USDA reported sales of U.S. old-crop corn in the week to Jan. 12 at 1.1 million tonnes.
That was above a range of trade expectations and the biggest weekly tally since mid-November, though the accumulated commitments still were at 23.128 MMT.
That was down 46% from last year’s pace and was 47.3% of the USDA forecast.
USDA also had 87k MT of new crop bookings, leaving the total forward sale at 1.248 MMT – down 23% from last year’s pace.
Soybean export sales were also strong at 986,200 t, but within the expected range.
Soybean total commitments are now 45.39 MMT, or 5% larger than last year at this time.
They are 84% of USDA’s newly revised forecast, 7% faster than the average paces.
However, they need that buying pace to compete with Brazilian beans soon to come into the market.
As for whole bean exports, indeed, although USDA had 2.066 MMT shipped through the week that ended 1/12, the accumulated bean export was at 31.73 MMT so far, or 59% of USDA forecasts.
Separately, on Friday private exporters reported to the USDA having sold 220,000 metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year.
Wheat prices, on their part, also found some support in the Friday good export figures, at 508,100 t.
However, total wheat export commitments were 15.619 MMT as of January 12.
That is still 7% below year ago and 74% of the USDA export projection, lagging normal pace by 9%.
Actual shipments at 11.164 MMT are 53% of the projected full-year total, with a 4.6% lag yr/yr, and 6% back of the average pace.
USDA expects 2022/23 U.S. wheat exports of 21.09 MMT.
Also, a Farm Futures survey on Thursday found that increased US wheat plantings are expected to limit corn and soybean acreage this year as farmers seek to profit from high grain prices.
Notably, the survey compared with last year, showed corn acres at 90.5 million acres.
That was higher from 88.6 previusly forecasted, although 2023 USDA budget was 92.0 million acres.
Farm Futures puts 23-24 soybean acres up 1.5 at 88.9 million acres.
That was a significant increase over last year’s 87.45 million acres.
The 2023 USDA budget number is 87.0 million acres.
Farm Futures estimates for 23-24 planting show wheat area up 3.1 to 48.84 million acres, vs 22-23’s 45.7 million acres and the 2023 USDA Budget number of 47.5 million acres.
That was for all-wheat seedings a 6.8% increase compared to a year ago.
If realised, it would be the largest wheat crop sown in the US since 2016.
Winter wheat area is projected to expand 5pc to 34.9Mac.
Spring wheat plantings (including durum) are seen at 13.9Mac, up 11.9% from 2022.
Meantime, rain and snow hit the U.S. from southeast CO through KS , including concentrated HRW wheat areas.
The southern part of the Corn Belt and the mid-South received less than 0.20” of rainfall on Sunday.
Additional rain and snow are likely to result in 0.10” to 0.50” precipitation early this week in HRW wheat areas of OK and TX.
Rain and snow may affect the southeast part of the Corn Belt and mid-South on Tuesday-Wednesday, producing 0.40” to 0.90” rainfall.
A much colder period, followed by snow and rain is likely to affect the central parts of the country one or two weeks out.
However, the impact of low temperatures in December still remains to be judged.
In this context, although corn prices started off the week with a double digit rally, movement Wednesday and beyond capped the weekly gain at just 0.19%.
Soybeans gone back 1.39% from the prior Friday.
Soymeal was the leader of the complex in losses, down 2.65% week on week, and soy oil was down 1.73% for the week.
The wheat complex was mixed on the week, with Chicago feeling the weakest, down 0.3%.
Kansas City was up just 0.5% since the prior Friday.
MPLS spring wheat was just a 0.05% higher over the week.
Meantime, basis bids for corn and soybeans shipped by barge to the U.S. Gulf Coast were relatively steady on Friday, as traders anticipated slowing demand ahead of the Lunar New Year holiday.
Notably, CIF Gulf soybean barges loaded in January were bid on Thursday at 110 cents over Chicago Board of Trade March futures, steady from Thursday.
February soy barges slipped down 2 cents, bid at 98 cents over March futures.
FOB offers for February soybean shipments were steady at about 130 cents over March futures.
Corn barges loaded in January were bid at 75 cents over CBOT March futures, down 1 cent from Thursday.
February corn barges were bid at 82 cents over March futures, steady from the day prior.
FOB offers for February corn shipments were around 88 cents over March futures, steady from Thursday.
As for wheat, past week HRS basis decreased in both the Gulf and the PNW as exporters anticipate increased demand for U.S. spring wheat.
Likewise, Gulf HRW fell slightly, while PNW HRW remained steady in the nearby terms.
A flat HRW market with no carry and the domestic milling demand coninued to prop up HRW basis as the 2023/24 crop conditions remain uncertain.
SRW basis continued to slip to stay competitive with other origins.
SW prices remained relatively steady past week, following active buying from steady customers a week earlier.
In this context, commodity funds were net sellers for 500 lots of maize and 3,500 lots of soybeans on Friday.
Meanwhile they were net buyers for 3,000 lots of wheat.
After the sessions close, Friday’s Commitment of Traders report indicated spec funds adding back 42,532 contracts to their net long position in corn during the week ending Jan 17.
That put them net long 192,1387 contracts as of Tuesday night.
As for soybean, the report tallied money managers increasing their net long position by 36,594 contracts in soybean futures and options during the week ending 1/17.
They took that to the largest net long position since April at 168,298 contracts.
As for wheat, the report showed managed money spec traders adding another 1,955 contracts to their net short position in Chicago wheat futures and options in the week ending January 17.
That took the net short position to 65,089 contracts.
In KC wheat pared back 732 contracts from their new net short position to 7,291 contracts as of Tuesday.
For MPLS wheat managed money was 2,776 contracts net short, a 72 contract stronger net short via net new selling through the week.
On this morning, soybean prices slid for a fourth consecutive session, to their lowest in more than one week.
Corn also fell to a one-week low.
Meanwhile wheat slid after closing higher on Friday.
Notably, the most-active soybean contract on the Chicago Board of Trade gave up 0.7% to $14.96 a bushel as of 03:15 GMT, after hitting its lowest since Jan. 12 at $14.95 earlier in the session.
Corn fell 0.6% to $6.72 a bushel, the weakest since Jan. 17 and wheat dropped 0.7% to $7.36-1/4 a bushel.
Argentina’s central crop areas received some rain over the weekend. And weather forecasters expect more of the same through this week.
The moisture in those regions will arrest declines in crop conditions, stalling any further cuts to crop forecasts.
In energy markets, oil settled up about $1 a barrel on Friday and notched a second straight weekly gain.
Brent crude, indeed, settled at $87.63 a barrel, up $1.47, or 1.7%.
U.S. crude settled at $81.31 a barrel, gaining 98 cents, or 1.2%.
For the week, Brent logged a 2.8% increase and the U.S. benchmark saw a 1.8% rise.
China’s lifting of COVID-19 restrictions should bring global demand to a record high this year, the International Energy Agency (IEA) said on Wednesday, a day after OPEC also forecast a Chinese demand rebound.
Oil was also supported by hopes that the U.S. Federal Reserve will soon downshift to smaller interest rate hikes.
Also helping oil prices, Baker Hughes Co said the U.S. oil rig count fell 10 to 613, its lowest since November.
However, it should to note, oil rose despite U.S. inventory figures this week showing crude stockpiles rose by 8.4 million barrels in the week to Jan. 13 to about 448 million barrels, the highest since June 2021.
On this morning, meantime, oil prices drifted lower in early trade, thinned by the Lunar New Year holiday in east Asia, though held on to most of last week’s gains on the prospect of an economic recovery in top oil importer China this year.
Notably, Brent crude was down 11 cents, or 0.1%, to $87.52 at 07:31 GMT, while West Texas Intermediate (WTI) U.S. crude fell 8 cents, or 0.1%, to $81.56 a barrel.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, fell for the fourth straight week on Friday as rates for capesize vessels slumped.
The overall index, indeed, was down 38 points, or about 4.7%, at 763 in the end week session.
That was the lowest level in over two-and-a-half years.
The index lost about 19.3% during the week.
The capesize index lost 106 points, or about 11.9%, at 787.
It posted a weekly fall of 39.4%, the worst in about five months.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $875 at $6,529.
The panamax index was down 11 points at 1,060.
The index was down about 0.8% for the week, marking its fifth straight weekly fall.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, fell by $97 to $9,544.
Among smaller vessels, the supramax index fell 2 points to 652, its lowest since mid-June 2020.
In equity markets, the S&P 500 and Dow snapped a three-session losing streak and the Nasdaq rose more than 2% on Friday.
Stocks jumped on strength thanks Tech sector, and Fed Comments’ in Dovish.
Notably, positive corporate news Friday supported stocks, with Netflix rallying more than +8% after reporting a larger-than-expected increase in paid streaming customers.
Also, Alphabet rose more than +5% after saying it plans to cut around 12,000 jobs or more than 6% of its global workforce.
In addition, SVB Financial Services surged more than +15% after reporting better-than-expected Q4 net interest income,
Dovish Fed comments were bullish for stocks as many members are “currently favors a 25 bp interest rate increase at the FOMC’s next meeting at the end of this month.”
On the negative side for stocks, Goldman Sachs fell more than -2% after the Wall Street Journal reported that the Federal Reserve is investigating Goldman Sachs’ consumer business.
Also, Eli Lilly fell more than -1% after it failed to get early approval from the FDA for its Alzheimer’s treatment donanemab.
Another negative for stocks was higher global bond yields.
The US 10-year T-note yield Friday rose +8.5 bp to 3.477%.
Also, the 10-year German bund yield rose +11.2 bp at 2.177% after ECB President Lagarde said the ECB would stay the course in raising interest rates even as inflation has weakened.
Stocks were undercut by concern that higher interest rates are already starting to impact the economy and corporate profitability.
On this wake, Friday’s U.S. economic news showed that Dec existing home sales fell -1.5% m/m to a 12-year low of 4.02 million, a smaller decline than expectations of 3.95 million.
The yields, however, have dropped from 3.905% at year-end, and from a 15-year high of 4.338% on Oct. 21.
In this context, on Wall Street, the Dow Jones Industrial Average rose 330.93 points, or 1%, to 33,375.49, the S&P 500 gained 73.76 points, or 1.89%, to 3,972.61 and the Nasdaq Composite added 288.17 points, or 2.66%, to 11,140.43.
Small company stocks also notched solid gains.
The Russell 2000 index rose 1.7%, to finish at 1,867.34.
However, both the Dow and S&P 500 still posted losses for the week, along with other equity indexes.
Meantime, shares were higher in Asia on Monday, but most markets were closed for the Lunar New Year holiday, with markets in Shanghai shut for the whole week.
Notably, Tokyo’s Nikkei 225 index added 1.1% to 26,852.85 and the S&P/ASX 200 in Sydney edged 0.1% higher, to 7,456.90.
The gains followed a rally Friday for tech stocks that countered worries about the weakening U.S. economy.
In currency trading, the dollar shot up against the yen rising as high as 130.60 yen on Friday session and closed at last up 0.91% at 129.59.
The U.S. dollar had its biggest daily percentage gain against the yen in about two weeks as the Bank of Japan governor repeated the central bank will maintain its ultra-loose monetary policy.
BOJ Governor Haruhiko Kuroda, who addressed the World Economic Forum in Davos, Switzerland, indeed said the central bank will maintain its “extremely accommodative” monetary policy to achieve its 2% inflation target in a stable, sustainable manner.
The euro on Friday rose by +0.27% at $1.0856, after Friday’s economic news showed German Dec PPI rose more than expected, which is hawkish for ECB policy.
Also, Friday’s comments from ECB President Lagarde gave the euro a boost when she said the ECB should “stay the course” on raising interest rates, pushing back against a report earlier this week that said the ECB is considering a slower pace of interest rate hikes.
Fro the week, the U.S. Dollar Index decreased slightly from prior week’s 102.46 to 102.21.
Since its peak in late September, the dollar index has decreased steadily.
On this morning, the U.S. dollar slipped to 129.14 Japanese yen from 129.59 yen.
The euro rose to $1.0905 from $1.0868.
Going back to analyzing the other agricultural markets …
In Canada, the Grain Statistics weekly report, had producers’ deliveries of common wheat at 533,7k mt for week 24 of this shipping season.
That was up from 526,7k mt posted prior week.
Deliveries of durum wheat, were at 195,6k mt, up from 127,6k mt showed in prior week.
Meantime, Canada exported 499,0k mt of common wheat in week 24.
That was up from 477,3k mt of a week earlier.
Durum wheat exports, meantime, slightly declined from 174,0k mt to 167,3k mt.
Total Commercial Stocks of common wheat stood at 2.840,8k mt.
That was up from 2.818,2k mt posted in week 23.
Durum total commercial stocks, in contrast, were weaker from 717,8k mt a week earlier, at 693,2k mt.
Cumulative exports for common wheat were at 9.084,6k mt.
That is compared 5.483,3k mt a year ago.
Durum cumulative exports reached 2.283,3k mt vs 1.212,3 a year ago.
In this context, cash bids for Canadian durum wheat tumbled week over week.
Indeed, looking at the average regional price of C$471.6/mt as of Jan 19, that was C$22.63/mt weaker from the prior week.
From South America, rain has finally made it to the southern growing areas of Argentina with up to 2 inches reportedly falling in some areas but it will be rainfall forecast this week that may finally bring more widespread relief.
Broader coverage and cooler temperatures are on the cards.
According to the Buenos Aires Grains Exchange, most of Argentina’s agricultural zone, as well as that of neighbouring Uruguay, should see “moderate to very abundant” rains of 10-75 mm.
On Thursday the Buenos Aires grains exchange said corn planting advanced to 88.6% of an expected area of 7.1 hectares, while soybean planting advanced to 95.5% of the 16.2 hectare area.
Early this month the Exchange had said corn production would shrink to as low as 37.8 million tonnes in a worst case scenario.
With new weather conditions, the Buenos Aires grains exchange on Thursday pegged estimate for Argentina’s 2022/2023 corn harvest to 44.5 million tonnes.
In September, the exchange had forecast 50 million tonnes of corn this cycle.
Last week, Argentina’s Rosario Grains exchange also pegged its 2022/23 corn harvest estimate to around 45 million tonnes, down from 55 million previously.
Meantime, the Buenos Aires Stock Exchange is expecting Argentina’s wheat exports to fall over 60% to 5.9 MMT, which is an 8 year low.
In Brazil, Southern Brazil and Paraguay are likely to stay dry over this week.
The first echoes of soybean yields are confirming high figures.
Meantime, according to Refinitiv Commodities Research, good corn crop conditions in Central-West and Southeast Brazil are more than offsetting persistent dryness in the South.
As a result, 2022-23 maize production forecast raised by 1pc from before, to 127.5Mt (113.1Mt previous year).
In Europe, markets reacted to comments from Russian President Vladimir Putin on Tuesday, alluding to the potential need for restricted exports to achieve a stable food supply.
Meantime, data from Bulgaria agriculture ministry showed the country harvested lower quantities of wheat and maize last year compared to 2021, by 11.4% and 24.2% respectively, mainly due to lower average yield.
The average yield of wheat harvest dropped by 11.6% year-on-year, while the average yield of maize was 17.6% lower.
In 2022, the total area harvested for wheat was just 0.3% larger than in 2021, while the total area harvested for maize dropped by 8%.
In this context, Euronext wheat increased from a ten-month low of €282.25 ($305.89)/MT posted on Tuesday.
However, wheat prices once again gave up more ground during the week, mainly in a context of continued rise in the euro and competitiveness of Black Sea sources.
China’s reopening from strict pandemic restrictions is likely to add to global inflationary pressures as the world’s largest consumer of raw materials ramps up commodity consumption, European Central Bank (ECB) president, Christine Lagarde, said.
“There will be constraints, there will be more inflationary pressure coming out of that added demand in commodities and energy in particular,” Ms Lagarde told a World Economic Forum panel.
Thus, European policy remains oriented towards further rate hikes, implying a rise in the euro against the dollar, penalizing European export products.
As a result, March wheat on Paris-based Euronext, settled at 284.75 euros ($309.12 – $3.68 wow) a tonne on Friday, posting a €4/t weekly decline.
However, basis strengthened on wheat delivered to Rouen, as exports resumed to 150k mt after a two-week break.
In Germany, standard 12% protein wheat for March delivery in Hamburg was offered for sale at a premium of about 15-16 euros over Euronext March futures.
This week the temperatures will drop again with probable new frosts.
There would not be particular fears for crops.
However, this sudden drop in temperatures could hit well-advanced crops sown.
Rapeseed, meantime, continued to be penalized by the threat of lower biofuel rates in Germany, combined with imports up sharply compared to last year.
Meantime, French authorities said on Friday they had asked oilseed processor Saipol to tighten procedures on handling imports after genetically modified (GM) rapeseed, cultivation of which is banned in the European Union, was found growing wild last year.
The plants were found by anti-GM crop association Inf’OGM growing along a road linking a port terminal with a crushing facility operated by Saipol, a unit of oilseed group Avril, at Rouen in northern France, French health and safety agency ANSES said in a report.
Imports of GM rapeseed, also used to produce biodiesel fuel, mostly come from Canada and Australia to complement non-GM supply from Europe.
From North Africa, the Egyptian government plans to import 4.0 MMT of wheat in 2023 for the subsidized bread program, down 5 percent from 2022.
The government intends to purchase 5.0 MMT from local farmers at a local wheat procurement price that is 40% higher than last year, 1,250 Egyptian pounds per 150 kg (about $281.53/MT).
The Egyptian Supply and Internal Trade Ministry also announced that the government would start selling discounted bread to people not enrolled in the subsidy program to stop accelerating inflation, on top of the 70.0 million already receiving subsidized bread.
From Ukraine, as of 19 January, the country had exported just over 18Mt of grain under the Black Sea Grain Initiative, according to the Joint Coordination Center (JCC).
A total of 1,316 ships (652 inbound and 664 outbound) have been inspected by JCC.
From Russia, the country will export 55-60Mt of grain in 2022-23 and doesn’t plan to cut its export quota, according to the Agriculture Ministry.
This comes after President Putin recently had said the country must control grain exports to ensure reserves.
SovEcon estimated January Russian wheat exports at 3.7Mt, down from 4.3Mt in December 2022.
However, the decline in wheat sales had reflected higher export taxes, low business activity around the New Year and unfavourable weather conditions.
Thus, according the consultancy, total 2022-23 exports were still to reach 44.1Mt (USDA 43Mt).
Meantime, the Russian agriculture ministry on Friday cut the export tax both for wheat, corn and barley.
Particularly, as of Jan. 25, the export duty on wheat will decrease to 4,283.2 from 4,719.4 rubles per ton a week earlier.
Ditto for corn, lowered from 1,174.6 rubles of a week earlier, to 886.5 rubles per ton.
Also for barley, the duty will decrease to 3,083.7 rubles from 3,977.6 rubles per ton a week earlier.
This new duty rates will be in effect through Jan 31, inclusive.
The duties were calculated based on indicative prices: $309.5 per ton for wheat ($309.5 a week earlier), $267.9 for barley ($278.4), $221.9 for corn ($221.4).
From Australia, the country exported 829,745 tonnes of canola in November, more than 20 times the 39,964t shipped in October, according to the latest data from the Australian Bureau of Statistics.
The surge reflects the arrival of new-crop canola at shipping terminals, and the oilseed being in high demand from European biodiesel manufacturers.
The November 2022 figure is up 72pc on the November 2021 revised shipment figure of 482,654t.
For November 2022, Germany on 257,644t was the biggest market, followed by France on 185,570t and Belgium on 125,649t.
Canola appears to have taken precedence in new-crop shipping stems out of South Australia and Western Australia, with the wet and slow start to the New South Wales harvest delaying movement of canola to its terminals.
Australian canola exports are expected to continue at pace until the Northern Hemisphere new-crop arrives mid-year.
Thus, Australia’s 2022-23 (Oct-Sep) canola exports, could well total more than 6 million tonnes to reflect the national crop estimated by the Australian Oilseeds Federation at 7.6Mt, and based on domestic consumption being around 1Mt.
Meantime, local markets finished the week off lower on the boards in eastern Australia.
Liquidity continued to come to the market.
Harvest is coming to the finish line with growers in the Western Districts of Victoria finishing on wheat over the weekend.
However, it still feels like we could see this long tail of harvest go on until the end of January.
On the international trade scene, Philippines traders reportedly purchased around 110,000t feed wheat, from Australia in an international tender at an unspecified price for Apr-Jun shipment.
Watching this week’s market, today we get the Export Inspections in the afternoon.
On Wednesday EIA will release their weekly report showing ethanol production and stocks.
Wednesday afternoon will also show the monthly Cold Storage report from NASS.
Weekly Export Sales will be out on Thursday, with January Feeder cattle futures and options expiring that day as well.
Friday is expiration day for February serial grain options.
That’s all, thank you.
We wish you a nice day and a good start to the week.
Author: Sandro F. Puglisi
