Good morning Farmer Family …
US farm markets took a beating on Friday.
Corn prices eroded 1.55% lower.
Soybean losses were relatively minimal, down 0.34%, with soyoil slumped 1.5% lower, while soymeal firmed 0.81% higher.
Wheat prices suffered a sharp decline, as Chicago wheat closed 4.06% lower; Kansas City HRW ended the week’s last trade day 2.32% in the red; Minneapolis spring wheat prices ended the day with 2.48% losses.
For the week, corn prices tumbled 4.09%.
Soybeans thanks early week strength, were up 0.11% since the prior Friday.
Meal helped the soybean complex, up 1.22%, while bean oil was down 0.65% for the week.
The wheat markets collapsed, after spent much of the week heading lower.
Chicago SRW was the leader, down 7.48% for the week.
Kansas City was down 7.13%, and Minneapolis spring wheat was 4.82% lower.
Export concerns and lingering sentiment that U.S. grains are priced more higher compared to some key overseas markets, led to a robust sell off.
On Friday, USDA’s FAS, indeed, reported a 20% drop in weekly corn bookings.
Notably, the delaied Weekly Export Sales report had 823k MT of sales.
Thus, the old crop book sat at 28.7 MMT, which is down 40% yr/yr and includes 14.36 MMT of shipments and 14.28 MMT of outstanding sales.
For new crop corn, there were 1.563 MMT on the books as of 2/16.
As for soybean, the report showed 544,915 MT were sold for export during the week that ended 2/16.
That was a 20% increase from prior week’s volume, but down 18% from the prior four-week average.
That was also toward the lower end of trade estimates.
As of 2/16, there were 48.578 MMT on the books for old crop soybeans, a 29% lead over last year and including 40.8 MMT of exported bens but 7.73 MMT of unshipped sales.
New crop soybean commitments were shown at 1.174 MMT as of 2/16.
Soymeal sales were 65,574 MT for the week that ended 2/16, which was below estimates.
Accumulated meal commitments were 7.553 MMT as of 2/16.
Soybean oil bookings for the week were shown as 755 MT of net cancelations.
Soy oil commitments were 50,863 MT as of 2/16.
As for wheat, USDA reported 338,828 MT of wheat was sold for export during the week that ended 2/16.
That was up from 209k MT prior week.
Old crop wheat commitments, however, were still 16.85 MMT, trailing last year’s 17.98 MMT pace.
New crop wheat were at 413,461 MT on the books as of 2/16.
On Thursday, USDA’s Ag Outlook Forum released their initial estimate for the 2023/24 balance sheet.
Corn acreage was estimated at 91 million acres, which would be up from last year pace, and a corn crop at 15.085 bbu.
Their projected cash average price for next year was $5.60.
As for soybean, the USDA projected new crop soybean acreage at 87.5 million acres, slightly below trade estimates.
Trend yields were pegged at 52 bpa before weather considerations leaving a 4.5 bbu crop – a 5% increase yr/yr.
Their projected cash average price for next year was $12.90/bu.
As for wheat, the USDA showed US wheat production at 1.887 bbu, and a projected wheat acreage at 49.5 million acres.
Trend yields were pegged at an average yield of 49.2 bushels per acre, up 6% from last year’s drought-affected average of 46.5 bushels.
USDA proiected a 50-cent drop in average price for the year.
On Wedsneday, weekly EIA data showed 1.029m barrels of ethanol was produced daily through the week that ended 2/17.
That was a 10-wk high, and was up 15k barrels/day from the past week.
That also marks the sixth consecutive week that production has stayed above the 1-million-barrel-per-day benchmark.
However, ethanol stocks firmed another 1%, up by 249k barrels to 25.588 million, the largest stock total since last April.
On the weather side, a storm system brought precipitation to Colorado, northern and eastern Kansas, southern and eastern Nebraska, and southeast South Dakota.
A Pacific weather system, indeed, starting Feb. 22 brought snow and rain across the Southern Plains and northern states.
Recent cold temperatures in the northern growing regions should not hurt the planted HRW, as the snow will provide a protective cover.
Also, plenty of wet weather is on its way to the central U.S. over the next several days, with a large portion of the Corn Belt likely to see 1” or more fall until Tuesday.
The agency’s new 8-to-14-day outlook predicts more seasonally wet weather for the Midwest and Plains between March 3 and March 9, with warmer-than-normal conditions likely for most areas east of the Mississippi River.
In this context, corn prices set a six-week low on Friday, while wheat hit its lowest level in more than four weeks.
Soybean prices also eased, with the most active contract hitting its lowest price since Feb. 15.
Soybean market had gapped higher out of the long weekend on reports of scattered frost damage in Argentina.
But now the United States must also facing competition of cheaper supplies coming from Brazil.
Thus, soybean prices followed other grains lower, though additional cuts to Argentina’s production estimates kept prices from falling further.
Meantime, corn basis bids climbed 10 cents higher at a Nebraska processor, while holding steady elsewhere across the central U.S..
Soybean basis bids were mostly steady across the central U.S., but did pick up a penny at an Illinois river terminal while sliding 2 cents lower at an Iowa river terminal.
As for wheat, HRW and HRS basis was down in the Gulf, drawn down by the drop in futures and lacking demand to provide support.
Meanwhile, the HRW basis was up in the PNW, while HRS remained steady, strengthened by anticipated demand from steady customers in the coming days.
SW prices dropped in response to the futures slump, while SRW basis remained steady.
After the sessions close, the CFTC resumed weekly Commitment of Traders reporting sistem.
Data were delayed three weeks due to a ransomware attack on a exchange server that prevented some firms from adequately reporting positions.
Thus, the CFTC released Commitment of Traders data as of the 1/31 settlement.
Notably, large speculators raised their net long position in CBOT corn futures in the week ended Jan. 31.
The Commodity Futures Trading Commission’s weekly commitments of traders report also showed that noncommercial traders, a category that includes hedge funds, trimmed their net short position in CBOT wheat and raised their net long position in soybeans.
On this morning, Chicago wheat eased.
Soybeans lost ground, while corn ticked higher.
Notably, the most-active wheat contract on the Chicago Board of Trade lost 0.1% at $7.21 a bushel, as of 03:20 GMT, after dropping to its lowest since Jan. 23 at $7.17 bushel on Friday.
Soybeans fell 0.2% to $15.16-1/2 a bushel, while corn gained 0.3% at $6.51 a bushel.
Improved U.S. weather conditions and expectations of an extension of the Black Sea grain deal kept a lid on prices.
In energy markets, oil edged higher in volatile trade on Friday, and was flat on the week.
Brent crude futures, indeed, settled at $83.16 a barrel, up 95 cents, or 1.2%.
West Texas Intermediate U.S. crude futures (WTI) settled at $76.32 a barrel, rising 93 cents, or 1.2%.
The market appeared to be well supplied with U.S. inventories at their highest since May 2021, according to data from the U.S. Energy Information Administration.
Also, an indicator of future supply, U.S. oil rigs fell seven to 600 this week, but the total count was still up 103 rigs, or 15.8%, over this time last year, energy services firm Baker Hughes Co said.
Indications that Russian crude and refined products are accumulating on tankers floating at sea also hinted at increasing supplies.
The prospect of further interest rate hikes supported the dollar index, up about 2.5% for the month.
And a firm dollar makes commodities priced in the greenback more expensive for holders of other currencies, curbing demand.
However, oil prices were supported by the prospect of lower Russian exports.
Both benchmarks rose about 2% Thursday session, on Russia’s plans to cut oil exports from its western ports by up to 25% in March, which exceeded its announced production cuts of 500,000 barrels per day.
On this morning, oil prices fell, with West Texas Intermediate U.S. crude futures (WTI) trading at $75.98 a barrel, 34 cents, or 0.5% lower, while Brent crude futures were down 48 cents, or 0.6%, at $82.68 a barrel at 07:33 GMT.
The dollar hovered near a seven-week peak on Monday and fears of recession risks offset gains arising from Russia’s plans to deepen oil supply cuts.
Meantime, Russia halted supplies of oil to Poland via the Druzhba pipeline, the chief executive of Polish refiner PKN Orlen said on Saturday, a day after Poland delivered its first Leopard tanks to Ukraine.
Separately, investors are bracing for China’s manufacturing surveys this week for a clear direction on oil demand.
China is holding its annual parliamentary meeting from this weekend and will see new economic policy targets and policies.
In ocean freight markets, the Baltic Exchange’s main sea freight index snapped its seven-week long losing streak and posted its second-biggest weekly jump ever on Friday, as rates for all vessel segments rebounded.
The overall index, indeed, was up 67 points, or about 8.2%, at 883, an over one-month high.
The main index rose about 64% for the week, the biggest gain since mid-June 2020.
Notably, the capesize index gained 63 points, or about 11%, to 636.
It was up about 135% for the week, also the biggest jump since the week ended June 19, 2020.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, gained $517 to $5,271.
The panamax index was up 102 points, or about 8.7%, at 1,271, a seven-week high.
The index saw its first weekly gain in eight sessions, up nearly 57% — the most since the week ended June 6, 2009.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, were up $919 at $11,439.
Among smaller vessels, the supramax index rose 56 points to 996.
It was up about 43% for the week, posting its biggest weekly rise on record.
In equity markets, Wall Street’s main indexes posted their biggest weekly drop of 2023 after sharp losses on Friday.
Indeed, the S&P 500 Index closed down -1.05% on Friday, the Dow Jones Industrials Index closed down -1.02%, and the Nasdaq 100 Index closed down -1.73%.
Notably, the Dow Jones Industrial Average fell 336.99 points, to 32,816.92, the S&P 500 lost 42.28 points, to 3,970.04 and the Nasdaq Composite dropped 195.46 points, to 11,394.94.
That has meant, the Dow Jones fell 3% for the week, its biggest weekly decline since September.
It was also the Dow’s fourth straight weekly decline, its longest losing streak for nearly 10 months.
The S&P 500, and Nasdaq Composite were also down 2.7% and 3.3%, respectively.
The S&P 500 fell to a 5-week low, the Dow Jones Industrials dropped to a 2-month low, and the Nasdaq 100 sliding to a 4-week low.
Stocks retreated as stronger-than-expected U.S. economic reports bolstered the case for the Fed to keep raising interest rates.
U.S. Jan personal spending rose +1.8% m/m, stronger than expectations of +1.4% m/m and the biggest increase in 1-3/4 years.
Jan personal income rose +0.6% m/m, weaker than expectations of +1.0% m/m.
U.S. Jan core PCE deflator rose +0.6% m/m and +4.7% y/y, stronger than expectations of +0.4% m/m and +4.3% y/y.
U.S. Jan new home sales rose +7.2% m/m to a 10-month high of 670,000, stronger than expectations of 620,000.
The University of Michigan U.S. Feb consumer sentiment index was revised upward by +0.6 points to a 13-month high of 67.0.
As a result, the market now fully expects the Fed to raise interest rates by +25 bp at the March, May, and June FOMC meetings.
Hawkish Fed comments Friday helped push the 10-year T-note yield to a 3-1/2 month high of 3.975% and weighed on stocks.
Some negative corporate news Friday also weighed on stocks. Autodesk closed down more than -12%.
Also, Live Nation Entertainment closed down more than -10%.
Adobe closed down more than -7%.
Megacap stocks including Tesla Inc, Amazon.com Inc and Nvidia Corp slid between 1.6% and 2.6% as Treasury yields rose.
The yield on two-year Treasury notes , which are highly sensitive to Fed policy, climbed to 4.826% – its highest in nearly four months.
On this morning, shares fell in Asia.
Notably, Tokyo’s Nikkei 225 index edged 0.1% lower to 27,423.96 and the Kospi in Seoul gave up 0.9% to 2,402.64.
In Hong Kong, the Hang Seng lost 0.3% to 19946.63 while the Shanghai Composite index was down 0.3% at 3,258.03.
Australia’s S&P/ASX 200 shed 1.1% to 7,224.80.
Bangkok was 0.2% lower while the Sensex in Mumbai dropped 0.6%.
In currency trading, the dollar held a seven-week peak on Friday.
Hotter-than-expected economic data has helped the greenback to strengthen against many of its major peers past week, sending the dollar index up 0.6% at 105.20 to a seven-week high and posting its largest weekly gain since late September.
The euro, meantime, posted its biggest weekly loss against the dollar since late September.
Notably, the euro was last down 0.39% against the greenback at $1.0549, after falling to a seven-week low of $1.0536 earlier in the session.
Against the yen, the dollar hit a two-month high and was last up 1.3% at 136.41 yen.
The U.S. currency also rose to its strongest level in seven weeks versus the Swiss franc following the data.
The dollar last traded at 0.9406 francs, up 0.7%.
Sterling softened 0.60% against the dollar at $1.1951.
On this morning, the dollar rose to 136.31 Japanese yen from 136.41 yen.
The euro slipped to $1.0548 from $1.0549.
Going back to analyzing the other agricultural markets …
In Canada, according to the February Canadian Outlook for Principal Field Crops, Agriculture and Agri-Food Canada foresees a 4% increase in the 2023/23 non-durum wheat area to 8.2 million hectares.
Due to strong competition from other crops, meantime, durum area is expected to decrease by 6% to 2.3 million hectares.
For the 2022/23 crop year, export volumes are up 70% from last year, and the export forecast was increased to 19.3 MMT.
MY 2022/23 ending stocks were revised to 4.0 MMT, up 29% from the prior year, though 11% below the five-year average.
Meantime, the Grain Statistics weekly report, had producers’ deliveries of common wheat at 566,7k mt for week 29 of this shipping season.
That was weaker from 590,8k mt posted prior week.
Deliveries of durum wheat, were at 130,3k mt, the same quantity showed in prior week.
Meantime, Canada exported 312,0k mt of common wheat in week 29.
That was down from 364,6k mt of a week earlier.
Durum wheat exports, were also weaker moving down from 166,2k mt to 105,6k mt.
Total Commercial Stocks of common wheat stood at 3.063,6k mt.
That was up from 2.958,9k mt posted in week 28.
Total durum commercial stocks, were also higher moving from 638,4k mt a week earlier, to 652,9k mt.
Cumulative exports for common wheat were at 10.955,0k mt.
That is compared 6.585,3k mt a year ago.
Durum cumulative exports reached 3.064,7k mt vs 1.423,9 a year ago.
In this context, cash bids for Canadian durum wheat rose week over week.
Notably, looking at the average regional price of C$458.99/mt as of Feb 24, that was C$3.43/mt firmer from the prior week.
Going back to analyzing the other agricultural markets …
In Canada, according to the February Canadian Outlook for Principal Field Crops, Agriculture and Agri-Food Canada foresees a 4% increase in the 2023/23 non-durum wheat area to 8.2 million hectares.
Due to strong competition from other crops, meantime, durum area is expected to decrease by 6% to 2.3 million hectares.
For the 2022/23 crop year, export volumes are up 70% from last year, and the export forecast was increased to 19.3 MMT.
MY 2022/23 ending stocks were revised to 4.0 MMT, up 29% from the prior year, though 11% below the five-year average.
Meantime, the Grain Statistics weekly report, had producers’ deliveries of common wheat at 566,7k mt for week 29 of this shipping season.
That was weaker from 590,8k mt posted prior week.
Deliveries of durum wheat, were at 130,3k mt, the same quantity showed in prior week.
Meantime, Canada exported 312,0k mt of common wheat in week 29.
That was down from 364,6k mt of a week earlier.
Durum wheat exports, were also weaker moving down from 166,2k mt to 105,6k mt.
Total Commercial Stocks of common wheat stood at 3.063,6k mt.
That was up from 2.958,9k mt posted in week 28.
Total durum commercial stocks, were also higher moving from 638,4k mt a week earlier, to 652,9k mt.
Cumulative exports for common wheat were at 10.955,0k mt.
That is compared 6.585,3k mt a year ago.
Durum cumulative exports reached 3.064,7k mt vs 1.423,9 a year ago.
In this context, cash bids for Canadian durum wheat rose week over week.
Notably, looking at the average regional price of C$458.99/mt as of Feb 24, that was C$3.43/mt firmer from the prior week.
From South America, adverse weather continues to impact crops there.
More than half of the second corn crop in Brazil’s Parana and Mato Grosso do Sul states will be planted outside the ideal climate window, according to estimates by agribusiness consultancy AgRural on Thursday.
This raises the prospect of the crop being hit by frosts, as the case was in the 2020/2021 cycle, when both states suffered severe losses.
Meantime, Brazil grain exporters’ association, ANEC, estimated Feb soybean exports at 8.3Mt (9.4Mt previous forecast), soymeal at 1.4Mt (1.9Mt), maize at 2.0Mt (2.1Mt) and wheat at 670,400t (489,600t).
Corn and soybean production estimates in Argentina have been lowered again as a result of harsh dry and hot conditions, the Buenos Aires Grains Exchange (BAGE) said in its weekly report.
Reports for the week ending 23 Feb soybean crop conditions rated 40pc fair/excellent (44pc previous week, 86pc previous year).
Thus, soybean production was lowered to 33.5Mt, down 4.5Mt from the previous estimate, following early frosts on the western edge of the agricultural area, lack of rain, and the heat registered during the beginning of February.
Corn output was also lowered to 41Mt from the previous estimate of 44.5Mt, with initial yields from the early stages of harvest falling below expectations and rated maize crops 49pc fair/excellent (55pc previous week, 74pc previous year).
In Europe, past week, Germany’s standard 12% protein wheat for March delivery in Hamburg was offered for sale at a premium of about 7 euros over the Euronext May contract, with little purchase interest.
Euronext wheat fell to a one-month low under pressure from export competition from Russia and expectations the shipping corridor from Ukraine will continue.
Notably, May wheat, the most active contract on Paris-based Euronext, settled down 1.3% at 280.00 euros ($295.60) a tonne.
It earlier fell to 278 euros, slightly under a previous one-month low of 279 euros on Wednesday, but again found chart support around that level.
Over the week, the contract was down nearly 4%.
The fall in the euro against the dollar, did very little to support prices, due different fundamental factors.
Data from farm office FranceAgriMer showed that the condition of soft wheat improved for a second week last week, indicating a record dry spell has not yet strained crops in the European Union’s biggest wheat-producing country.
An estimated 95% of soft wheat was indeed rated as good or excellent compared with 93% the previous week and 92% two weeks earlier, according to the office’s cereal report.
The score was also above the 93% registered a year earlier.
For winter barley, 94% of the crop was rated good or excellent, while durum wheat scored 92%.
Farmers made more swift progress in sowing spring barley, with 80% of the expected area drilled by Feb. 20, compared with 58% a week earlier and an average 24% over the previous five years, FranceAgriMer’s data showed.
French crops have adequate moisture for winter, despite a record dry spell that has raised concerns for spring, while in Germany and Poland regular rain and mild weather were keeping crops in good condition.
Meantime, also due export competition from Black Sea regions, the European Commission has revised down its export estimates both for wheat and barley.
Notably, the Commission now see soft wheat exports -2 Mt compared to last month, now counting on an exported volume of 32 Mt for the 2022/2023 campaign.
Barley export volumes, despite the expected shipments, have also been revised downwards by -0.5 Mt to 9 Mt.
The exchanges between China and Russia about the Russian-Ukrainian conflict seem to be reassuring, as do the discussions between Vladimir Putin and Tayyip Erdogan.
Thus, operators are very focused on the signals in favor of maintaining the export corridor from Ukraine.
As for corn, in contrast, imports are still forecast at 23 Mt, ie still record levels.
In rapeseed too, the European Commission is also counting on rising in imports, from +0.50 Mt to 5.6 Mt, over the current season.
From the Black Sea basin, after one year of war in Ukraine, traders largely expect an extension of the Black Sea grain deal that facilitated the flow of Ukrainian crops to world buyers.
Struck last year, the agreement has increased competition for suppliers of wheat and corn of course.
Meantime, past week the UN overwhelmingly voted in a resolution for Russia to immediately and unconditionally withdraw from Ukraine, with 141 countries in favour, seven against and 32 abstentions, including China.
Dialogue between China and Russia about the Russian-Ukrainian conflict, however, seem to be reassuring.
Russian President Vladimir Putin spoke to Turkish counterpart Tayyip Erdogan about the deal on Friday.
Ukrainian President Volodymyr Zelenskiy on Friday welcomed some elements of a Chinese proposal for a ceasefire but said only the country where a war is being fought should be the initiator of a peace plan.
From Russia, SovEcon has lowered its monthly estimate of Russian wheat exports by 0.3 MMT to 3.4 MMT due to the weather conditions.
The exports were slowed by the current Black Sea storms.
By mid-February, Russian weekly wheat exports decreased to 0.7 MMT from 0.9 MMT at the beginning of the month, mainly due to unfavorable weather conditions in the significant Russian port of Novorossiysk.
A storm warning was issued again in Novorossiysk on February 20 due to bad weather.
As of February 22, weather conditions affected outstanding wheat sales by Russian traders, reducing them to 2.3 MMT from a record-high of 2.9 MMT two weeks earlier.
However, the number remains high for this time of year.
The volume of exports in February still exceeds the five-year average for February of 2.5 MMT and aligns with SovEcon’s yearly wheat export forecast of 44.1 MMT.
In this context, the Russian agriculture ministry revised the export tax for wheat, corn and barley.
Particularly, as of Mar 1, the export duty on wheat will increase to 5,275.2 from 5,177.2 rubles per ton a week earlier.
Ditto for corn, rised from 2,199.7 rubles of a week earlier, to 2264.6 rubles per ton.
Also for barley, the duty will be higher for this period, increasing to 3,872.3 rubles from 3,717.0 rubles per ton a week earlier.
This new duty rates will be in effect through Mar 7, inclusive.
The duties were calculated based on indicative prices: $303.2 per ton for wheat ($304.8 a week earlier), $261.1 for barley ($261.1), $230.2 for corn ($231.6).
The slower exports may temporarily alleviate pressure on the global wheat markets and curbing export duty.
Nevertheless, the relief will not last long as exports are expected to remain high in H1 2023 amid a record-high wheat crop of 104.4 MMT and a even more weaker ruble.
From Australia, local markets rounded out the week softer in oilseeds and unchanged in cereals.
Whippy offshore futures prices caused some erratic movements locally in Australian canola track values.
From a top price close to $765/t track east coast, by the end of the week it was $740/t.
The delivered market felt some pressure last week with reports of rail efficiency improving, resulting in the delivered market squeezing the track-to-delivered spread.
There is nothing on the forecast for the next four days which will progress of the sorghum harvest.
The 8-day forecast is also looking relatively dry with less than 5mm expected across the entire cropping belt.
On the international trade scene, Iraq’s state grains buyer is believed to have purchased about 250,000 tonnes of wheat expected to be sourced from Australia in an international tender restricted to a limited number of participants this week.
The wheat was believed to have been bought at an estimated $428 a tonne c&f free out with trading houses Viterra an The Andersons believed to be the sellers.
The tender sought wheat sourced only from the United States, Australia and Canada.
Several South Korean corn importers made a series of large corn purchases from optional origins in a series of international tenders and private deals on Friday.
Traders were speculating about these moves earlier this week, when South Korea cancelled a tender supposedly to wait and see if UDSA’s planting estimates would lower corn prices (and it did).
TMO has booked 48 kmt of crude sunoil as belows:
Aves, 2 x 18 kmt, EX-Antrepo Mersin-Iskenderun, at 1.178,60 & 1.178,80 USD/mt;
Aston, 2 x 6 kmt, at 1159 USD/mt C&F Tekirdag Port.
Jordan’s state grains buyer reportedly seeks 120,000t of milling wheat from optional origins for Aug shipment.
They also seeks 120,000t of feed barley, also from optional origins, for Jun-July shipment.
Watching this week’s market, Monday starts with weekly Export Inspections data in the afternoon.
Tuesday will mark the expiration of the February Live Cattle futures.
As the calendar flips to March, the weekly EIA ethanol production and stocks report will be out on Wednesday in the afternoon.
Monthly domestic use data vis the Grain Crushings, Fats & Oils, and Cotton Systems reports will be released by NASS on Wednesday overnight.
On Thursday afternoon we will see the release of the weekly Export Sales report.
That’s all, thank you.
We wish you a nice day and a good start to the week.
Author: Sandro F. Puglisi
