Good morning Farmer Family …
We received a flood of data this week, especially starting Thursday morning.
Notably we got that day, January WASDE report, the annual USDA Crop Production, Quarterly Grain Stocks, Winter Wheat Seedings, and Cotton Ginnings reports.
We also received, consumer prices, CPI and Core CPI in the United State for December.
The weekly jobless claims in the USA also came, and still many others data.
Core CPI inflation is still 5.7%, but broad CPI slowed to 6.5%.
That encouraged the idea, that next Fed rate hike would be only 25 basis points.
As a result, the US dollar index dropped to the lowest reading since June.
However, core CPI for services, heavily dependent on labor, kept rising.
(Read more below).
With a weaker dollar, ag commodities were looking for evidence that the weaker dollar was actually stimulating US export sales.
However operators found disappointed figures in Thursday’s weekly export sales report from USDA.
On Wedsneday, EIA showed ethanol production rebounded by 99k bpd increase from last week, but remained relatively disappointing for the week ending January 6, with a daily average production of 943,000 barrels.
It was also the third consecutive week that the daily average failed to meet the 1-million-barrel benchmark.
Ethanol stocks were down an additional 644k barrels, or 3% to 23.8 million.
Thus, weekly gains were mostly from tighter USDA ending stocks projections released on Thursday.
On Thursday, indeed, the corn market rallied posting 2.29% gains for the day.
Soybean prices were 1.71% higher.
Soymeal prices closed the session with 1.41% gains.
Bean oil prices closed with triple digit gains, rising 1.84% by the close.
Wheat prices also found moderate gains.
Kansas City Hard Red Winter wheat was 1.55% higher, posting double digit gains.
Minneapolis spring wheat followed with 1.45% gains.
Chicago SRW wheat prices closed, were only 0.37% higher on the day.
Notably, in WASDE report USDA had Brazil’s corn production 1 million tonnes (Mt) lower from Dec, which was expected, but Argentina’s 3Mt cut was bigger than expected.
USDA now pegs cut Brazil’s 2022-23 corn production at 125Mt, and Argentina’s at 52Mt.
However, it was a cut to US corn production, due lower harvested area, to surprise the market more.
US soybeans were also a surprise with lower harvested area and a lower national average yield which was below the range of pre-report estimates.
Notably, U.S. corn production totaled 13.730 billion bushels in the 2022/23 marketing year.
That was down 200 million bushels from a month earlier.
The production shortfall stemmed from a reduction in harvested acres, which fell to 79.2 million from the December forecast of 80.8 million.
The U.S. soybean harvest came in at 4.276 billion bushels, down from the December estimate of 4.346 billion, with average yield per harvested acre dropping to 49.5 bushels from 50.2.
USDA also lowered its harvested soybean acreage figure by 300,000 to 86.3 million.
U.S. winter wheat plantings totaled 36.950 million acres, a jump of 11% from the previous year and well above trade forecasts that ranged from 33.38 million to 36.20 million.
Thus, corn and soybean prices sharply rallied.
Wheat, in contrast, struggled to gain much momentum due the much bigger than anticipated US area planted.
USDA left its wheat production and export figures unchanged from December, although they increased domestic consumption.
Globally, USDA increased production in Ukraine and the EU, while unexpectedly leaving Russian and Australian production unchanged, leading to a small increase in global production and ending stock estimates.
Notably, the report left Australia’s 2022-23 wheat crop, at 36.6Mt, and Argentina’s at 12.5Mt.
The Ukraine estimate was lifted 500,000t to 21Mt, while the EU figure added 400,000t to take it to 134.7Mt.
USDA’s estimates for China’s 2022-23 wheat and corn imports are unchanged at 9.5Mt and18Mt respectively, and Russian wheat exports at 43Mt are also steady.
In this context, wheat prices mostly gained on spillover support from rising corn and soy, while traders are now closely watching how drought in the Plains farm belt could restricting production.
As for average cash prices, for this month, USDA maintained their average corn cash price at $6.70.
The updated cash price for wheat is still $9.10/bu.
Cash price for bean oil was also unchanged at 68 c/lb.
Meantime, the USDA increased its cash average prices for soybean at $14.20/bu (+20c), for meal at $425/ton (+$15).
Globally, world ending stocks estimates, were considered slightly bullish for corn, slightly bearish for soybeans and neutral for wheat.
However, Weekly FAS Export Sales data continued showing a weak demand for US products.
The weekly report, indeed, had corn bookings at 255,687 MT for the week that ended 1/05.
That was was 20% lower wk/wk.
Old crop sales tumbled 62% below the prior four-week average, and total sales were below the entire range of trade guesses.
Accumulated export commitments were 21.996 MMT (866 mbu) as of 1/05.
Corn export inspections were also disappointing, sliding 53% below the prior five-year average.
As for soybean, the report showed 717,415 MT of soybeans were sold for export through the week that ended 1/05.
That was near even with both last week and the same week last year.
However, old crop sales were 41% below the prior four-week average.
Total sales were toward the lower end of trade estimates.
Accumulated soy commitments were at 44.403 MMT (1.632 bbu) as of 1/05.
Soybean export shipments eased 7% below the prior four-week average.
As for wheat, the report showed 90,803 MT of wheat was sold for the week that ended 1/05.
That was an increase from the week prior’s MY low, but was still down 66% from the same week last year.
Accumulated commitments were 15 MMT, which is 6.7% behind last year’s pace – compared to the WASDE expected full year lag of 3.1%.
Wheat export shipments trended 15% below the prior four-week average.
In this context, on Thursday corn basis bids were steady to mixed, after trending 2 to 5 cents higher at two interior river terminals while spilling 3 to 5 cents lower at two other Midwestern locations.
Soybean basis bids were steady at most Midwestern locations, but did track 6 cents higher at an Illinois river terminal while tumbling 30 cents lower at a Nebraska processor.
Commodity funds were net buyers of CBOT wheat, corn, soybean, soyoil and soymeal futures contracts.
On Friday, after incurring in modest overnight losses, grain and oilseed prices closed mixed, but mostly higher.
Notably, corn prices improved around 0.75%.
Soybeans were up 0.5%.
Meal lost 1.04%.
Bean oil fell 0.3%.
Winter wheat gains were variable with Kansas City HRW contracts saw the most upside, as the March contract rose 1.05%.
Chicago SRW contracts were also firm, picking up 0.13%.
In contrast, Minneapolis spring wheat prices faded lower, but still unchanged by the close.
Soybean prices climbed for a third straight day and corn scaled to a 1-1/2 week top, after bullish USDA crop data the prior day and concerns about poor South American weather.
Ahead of the next monthly report from the National Oilseed Processors Association (NOPA), out next Tuesday, analysts expect the group to show a December crush totaling 182.907 million bushels.
That would be 2.1% above November’s total but the smallest December crush in three years, if realized.
Soyoil stocks are estimated at 1.725 billion pounds through December 31, which would be a decline of 15.1% from year-ago volumes.
Wheat prices, meantime, were mixed as traders weighed the USDA’s larger-than-expected winter wheat plantings estimate in Thursday’s reports against tighter supplies and poor crop conditions in the U.S. Plains farm belt.
For the week, corn prices were up 3.21%.
Soybeans managed to pull out a 2.36% gain, despite product weakness.
Soy Meal, indeed, was down 0.27% since prior Friday, and bean oil 0.17% lower.
The wheat complex pulled out some gains, with Kansas City the leader again for the week, as was up by 1.41%.
Minneapolis spring wheat was up 1.16% since prior Friday.
Chicago SRW was dragged higher by the other wheats, closing up 0.04%.
Going inside the numbers, corn prices closed the week $0.210 higher at $6.75/bu.
Soybean was $0.352 stronger at 15.28/bu.
Soymeal fell $1.3/smt, closing at $476.3 smt.
Soy oil fell $0.110, to close at $63.06.
CBOT soft red winter (SRW) prices lifted $0.003 for the week to close at $7.44/bu.
KCBT hard red winter (HRW) prices gained $0.118, ending at $8.44/bu.
MGE hard red spring (HRS) prices rose $0.105 to close at $9.12/bu.
In this context, corn basis bids faded 2 to 10 cents lower at three Midwestern locations while holding steady elsewhere across the central U.S..
Soybean basis bids were steady to soft after dropping 2 to 7 cents lower across three Midwestern locations.
As for wheat, basis levels for U.S. wheat softened almost across the board as many traders look to position themselves for increased wheat exports following the typical seasonal response to increased overseas corn and soybean demand from October to December.
Gulf HRS basis decreased as farmer selling improved.
Gulf HRW held steady, supported by concern about Southern Plains drought stress, even as planted acres increased.
PNW HRS also remained flat, with farmers in the Northern Tier still reluctant to sell.
PNW HRW softened slightly; however, limited exportable supplies should continue supporting basis levels.
PNW soft white wheat and Gulf SRW decreased in response to competition with other origins.
Meantime, as at January 12, 2023, FOB prices saw US wheat No 2 Hard Red Winter (HRW) valued at $377/mt (down $1/t from prior week).
US wheat No 2 Soft Red Winter (SRW) was valued at $328/mt (down $2/t from prior week).
Northern Durum offers from the Great Lakes, for April 2023 delivery were quoted at $11.85/bu ($435.00/MT).
Past week were not available.
As for corn, US corn 3YC (Gulf) was at $309/mt (up $3/mt from prior week).
As for soybean, US soybean 2Y (Gulf) quoted at $615/mt (up $21 from prior week).
USDA’s weekly report showed ethanol prices averaged $2.04 to $2.3/gal regionally.
That was mostly 1-8 cents lower for the week.
Corn oil was priced from 67 to 70c/lb, mostly 1-2 cents weaker.
DDGS were within $15/ton of last week quotes, as ranged between $226.75 – $316.67/ton for the week.
DDGS prices to the Export Point averaged between $260 to $380/ton, slightly down from prior week.
USDA saw B100 prices 20 cents lower through the week in MN, averaging $5.70/gal.
After the sessions close, the Weekly Commitment of Traders report showed spec funds reducing their net long by 46,852 contracts in the week ending Jan 10.
That put them net long 149,605 contracts as of Tuesday night.
As for soybean, the report showed money managers shrinking their net long position by 10,419 contracts in soybean futures and options in the week ending 1/10.
They took that net long to 131,704 contracts.
As for wheat, data showed managed money spec traders expanded their net short position in Chicago wheat futures and options by another 10,419 contracts in the week ending January 10.
That took the net short position to 63,134 contracts.
In KC wheat, they got more bearish, net short 8,023 contracts by Tuesday night.
In energy markets, oil prices settled more than a dollar a barrel higher on Friday, notching their biggest weekly gains since October.
Brent crude futures, indeed, settled at $85.28 a barrel, up by $1.25, or 1.5%.
West Texas Intermediate (WTI) crude futures rose for the seventh-straight session to settle at $79.86 a barrel, up by $1.47, or 1.9%.
Brent gained 8.6% for the week, while WTI rose by 8.4%, recouping most of the previous week’s losses.
The dollar index had hit it lowest level since June 6 earlier in the session, following data on Thursday that showed cooling U.S. inflation, firming up expectations the Federal Reserve will slow the pace of its interest rate hikes.
It posted the biggest weekly fall in the latest 2-1/2 years as decreased from last week’s 104.5 to 102.46.
A weaker greenback tends to boost demand for oil, making it cheaper for buyers holding other currencies.
Recent Chinese crude purchases and a pick-up in road traffic in the country are also fuelling hopes of a demand recovery.
Thus, next thing to watch is if this translates also into higher Chinese crude imports and if energy agencies (IEA, OPEC) will revise upwards their first quarter demand estimates.
The OPEC+ will meet in February to assess market conditions, and there is some concern that the group could cut oil output again to lift prices after recent declines.
In ocean freight markets, the Baltic Exchange’s main sea freight index on Friday fell to its lowest since June 2020 as demand across all vessel segments declined.
Cargo activity, indeed, is expected slow down dramatically during the Chinese New Year holidays.
The upcoming rainy season in Brazil is adding to market uncertainty.
The overall index, indeed, was down 30 points, or about 3.1%, at 946.
The index was down about 16.3% this week, its third consecutive weekly fall.
Notably, the capesize index lost 50 points, or about 3.7%, at 1,299. It was down about 14.1% for the week.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $418 at $10,770.
The panamax index dropped 15 points, or about 1.4%, to 1,069. The index posted its worst week since late-August 2022, down about 17.7%.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, fell by $139 to $9,618.
Among smaller vessels, the supramax index fell 29 points to 686.
In equity markets, the S&P 500 and Nasdaq finished at their highest levels in a month on Friday.
All three major indexes also registered strong gains for the week.
Notably, the Dow Jones Industrial Average rose 112.64 points, or 0.33%, to 34,302.61, the S&P 500 gained 15.92 points, or 0.40%, to 3,999.09 and the Nasdaq Composite added 78.05 points, or 0.71%, to 11,079.16.
The S&P 500 closed at its highest level since Dec. 13 and is up 4.2% so far in 2023 , while the Nasdaq closed at its highest level since Dec. 14.
For the week, the S&P 500 gained 2.7% and the Dow rose 2%.
The Nasdaq increased 4.8% in its biggest weekly percentage gain since Nov. 11.
U.S consumer prices fell for the first time in more than 2-1/2 years in December.
Gasoline prices tumbled 9.4% after dropping 2.0% in November.
Prices for used cars and trucks fell 2.5%, recording their sixth straight monthly decline.
New motor vehicles slipped 0.1%, falling for the first time since January 2021.
That has offered hope that inflation was now on a sustained downward trend.
Americans also got more relief at the supermarket last month, with the report from the Labor Department on Thursday showing food prices posting their smallest monthly increase since March 2021.
Food prices, indeed, climbed 0.3%, after rising 0.5% in the prior month.
The cost of food consumed at home increased 0.2%, also the least since March 2021.
Fruit and vegetable prices fell as did those for dairy products, but meat, poultry and fish cost more.
Egg prices surged 11.1% because of avian flu.
However, the labor market remains tight.
The unemployment rate back at a five-decade low of 3.5% in December, and 1.7 jobs for every unemployed person in November.
A separate report from the Labor Department showed initial claims for state unemployment benefits fell 1,000 to a seasonally adjusted 205,000 for the week ended Jan. 7.
Economists had forecast 215,000 claims for the latest week.
Claims have remained low despite high-profile layoffs in the technology industry as well as job cuts in interest rate-sensitive sectors like finance and housing.
Economists say companies are for now reluctant to send workers home after difficulties finding labor during the pandemic.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, dropped 63,000 to 1.634 million in the week ending Dec. 31, the claims data showed.
The government reported last week the economy created 223,000 jobs in December, more than double the 100,000 that the Fed wants to see to be confident inflation is cooling.
Rents remained very high and utilities were more expensive.
Notably, the cost of natural gas increased 3.0%, while electricity rose 1.0%.
In this context, the Consumer Price Index dipped 0.1% last month, the first decline since May 2020.
It was third straight month that the CPI came in below expectations and raised buying power for consumers as well as hopes the economy could avoid a dreaded recession this year.
Excluding the volatile food and energy components, the CPI climbed 0.3% last month after rising 0.2% in November.
In the 12 months through December, the so-called core CPI increased 5.7%.
In the 12 months through December, the CPI increased 6.5%.
That was the smallest rise since October 2021 and followed a 7.1% advance in November.
Cooling inflation could allow the Federal Reserve to further scale back the pace of its interest rate increases next month.
However, inflation remains well above the Fed’s 2% target.
Thus, even if the Fed delivers a downshift in pace, it will continue tightening past its next meeting.
Money market participants now see a 91.6% chance the Fed will hike the benchmark rate by 25 basis points in February.
Meantime, stocks on Wall Street rose also on Friday, with shares of JPMorgan Chase and other banks rising following their quarterly results, which kicked off the earnings season.
Also giving some support to the market Friday, the University of Michigan’s survey showed an improvement in U.S. consumer sentiment, with the one-year inflation outlook falling in January to the lowest level since the spring of 2021.
The Cboe Volatility index – Wall Street’s fear gauge – closed at a one-year low.
The dollar slipped against a basket of currencies.
U.S. Treasury yields fell.
In currency trading, the yen surged on Friday.
The yen was up 1.06% against the greenback at 127.92 yen.
The move added to a 2.4% gain on Thursday after the Yomiuri newspaper said BOJ officials would review the side effects of the central bank’s yield curve control, or YCC, policy at their meeting next week.
The euro was last down 0.2% against the dollar at $1.0828, easing off a fresh nine-month high earlier in the session.
Sterling rose 0.12% to $1.22275.
The dollar index, which measures the greenback against a basket of currencies, including the euro and yen, edged up 0.02% to 102.22 .
The dollar index had hit it lowest level since June 6 earlier in the session, following data on Thursday that showed cooling U.S. inflation, firming up expectations the Federal Reserve will slow the pace of its interest rate hikes.
As reminder, the U.S. stock market will be closed Monday for the Martin Luther King Jr. Day holiday.
Going back to analyzing the other agricultural markets …
From South America, in Brazil, CONAB on Thursday trimmed its forecast of the 2022/23 soybean crop, but still pegged it at a record 152.7 million tonnes.
According to Abiove, Brazil’s soybean crop is expected to reach 152.6 million tonnes in 2023, lowering its previous estimate of 153.5 million tonnes but still forecasting a record output.
That, indeed, would represent a 24 million-tonne rise from the previous year.
CONAB corn production is pegged at 125Mt, pretty much the same as USDA.
Meantime, Brazil’s ANEC (grain exporters’ association) expects 2023 soybean exports to exceed 90Mt, with maize shipments expected to exceed last year’s 43.2Mt, including potential exports to China of about 4Mt.
Abiove is seen a record of shipping in oilseed this year 92 million tonnes , a 16.6% jump over the previous season.
The industry group – which represents global firms like Cargill, Bunge, Archer-Daniels-Midland Co, Louis Dreyfus Co and Cofco – also said that soybean crushing in the country should total a record 52.5 million tonnes this season, up from 50.4 million in 2022.
Meantime, Anec confirmed “atypical” sales of Brazilian soybeans to Argentina after rumors about unusual cargos being booked at this time of the year.
AgRural, estimates Brazilian soy sales of 200,000 to 300,000 tonnes to Argentina for delivery in February and March.
The expectation that a drought will reduce Argentina’s domestic soy production in 2023, together with a possible renewal of Argentina’s so-called soy dollar program, could mean that it will import “much larger” volumes from Brazil this year.
In Argentina, the Rosario grain exchange on Wednesday sharply cut its forecast for the 2022/23 soybean harvest, to 37 million tonnes from a previous forecast of 49 million.
The exchange also slashed its 2022/23 corn harvest estimate to around 45 million tonnes, from 55 million previously.
According to the Buenos Aires Grain Exchange, 2022-23 soybean production outlook could be slashed by as much as 25pc to 35.5Mt vs USDA on 45.5Mt, which would represent a worst-case scenario, reflecting the potential impact of hot dry weather.
Maize output is seen as low as 37.8Mt against USDA’s 52Mt.
The exchange said some 500,000 hectares were left out of the current soybean campaign.
Until Wednesday, Argentine farmers had planted 89.1% of the 16.2 million hectares planned for cultivation, the grains weekly report showed.
The exchange also cut its estimate for the 2022/23 corn planting area to 7.1 million hectares, down from the 7.3 million hectares previously expected.
So far, producers have planted 83% of the area planned for corn, the exchange said.
On this wake, USDA forecast for Argentina a soybean crop of 45.5 million tonnes, 8.1% lower than its December outlook, and a corn crop of 52.0 million tonnes, down 5.5% from the December estimate.
Meantime, harvest of Argentine wheat for the 2022/23 campaign ended last week, with a final production of 12.4 million tonnes, well below the 22.4 million tonnes collected in the previous campaign, also due to the severe lack of water that affected the plants during the campaign.
In Europe, on Euronext, wheat once again gave up, mainly in a context of continued rise in the euro and competitiveness of Black Sea sources.
Conversely, the bases are strengthening on wheat delivered to Rouen thanks to an export activity which remains sustained in the Maghreb.
Next week the temperatures will drop again with probable new frosts.
However there are not particular fears for crops, though a sudden drop in temperatures could hit well-advanced crops sown.
Nearly all French winter wheat and barley were in good condition ahead of winter, according to farm office FranceAgriMer.
Regular rain has helped early growth by replenishing soil moisture after severe drought last year.
French farmers have increased the area planted with soft wheat, winter barley and rapeseed, according to the country’s farm ministry.
Also in Germany the warm conditions have left fields with no protective snow cover, raising worries that crops may suffer from a cold snap after appearing to come through last month’s wintry spell unscathed.
The warm weather means wheat is looking good, but if sudden and deep frosts occur we could have a problem.
Germany’s winter wheat sown area for the 2023 harvest has been reduced by around 1.9% on the year while winter rapeseed sowings are up by 7.6%, the German national statistics agency estimated last month.
In Poland, there were similar concerns, as crops are fully exposed to frosts.
Poland’s winter wheat area at just over 2.4 million hectares against 2.3 million hectares in the 2022 harvest.
The winter rapeseed area for the 2023 harvest is expected to be little changed from the 2022 harvest at about 1.05 million -1.08 million hectares.
From North Africa, Egypt relied more heavily on Russian wheat imports last year despite a sharp drop in its imports of the grain and moves to diversify the sources of its wheat purchases.
Though Egypt’s wheat imports from Russia fell by 6.7% in 2022, Russia’s share, including purchases by Egypt’s state grains authority and the private sector, rose to 57% from 50% in 2021.
That partly made up for a fall in shipments from Ukraine, which accounted for 8.9% of Egypt’s wheat imports, down from 28% in 2021.
Egypt’s total wheat imports fell 18.7% to around 9.5 million tonnes in 2022.
Notably, shipments from Romania were down 35% to 1.3 million tonnes and Ukraine 74% to around 845,587 tonnes.
In contrast, there was an uptick in shipments from France, which quadrupled to 1.26 million tonnes.
Economic fallout from the war in Ucraine triggered a foreign currency crunch in Egypt, leading to a slowdown in overall imports, a backlog of goods in ports, and a $3 billion financial support package from the IMF.
However, the private sector was able to diversify some of its purchases, with rare shipments from the United States, India, and Brazil making their way to ports.
From the Black Sea basin, Ukrainian farmers harvested almost 51 million tonnes of grain from 94% of the expected area as of Jan. 12, the agriculture ministry said.
The ministry’s statement said that farmers had harvested 10.9 million hectares of crops, with the grain yield averaging 4.7 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 23.5 million tonnes of corn, harvested from 85% of the expected area, with a yield of 6.57 tonnes per hectare.
The ministry said that 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.
From the Middle Kingdom, China’s soybean imports jumped 19% in December compared with a year ago, customs data showed on Friday.
Notably, China imported 10.56 million tonnes of soybeans in December.
That was the highest for a month since June 2021.
Overall imports for 2022, however, fell 5.6% from 2021 to 91.08 million tonnes, marking the second full-year decline, data from the General Administration of Customs showed.
Also, China may not see much more growth in soybean imports after that in the next future.
Slower livestock production growth, improved farming practices and wide adoption of low soymeal levels in feed formulas could reduce imports to 87 million tonnes by 2025, said Rabobank in a report this week, and 84 million tonnes in 2030.
On this wake, China’s agriculture ministry raised its outlook for both corn and soybean production on Thursday, bringing its forecast in line with the statistics bureau’s recently reported data on the size of last autumn’s crops.
Notably, corn production in the 2022/23 crop year that began in September is seen at 277.2 million tonnes, up 1.7% on the prior year, the ministry said in its monthly Chinese Agricultural Supply and Demand Estimates (CASDE) report.
Soybean output is up 23.7% at 20.3 million tonnes.
Meantime, China has approved the import of eight genetically modified (GMO) crops, including GMO alfalfa for the first time after a wait of more than a decade, the country’s agriculture ministry said on Friday.
Notably, Bayer’s glyphosate-resistant alfalfa or J101, was approved.
China has also approved a Corteva Agriscience glyphosate-resistant canola, DP73496, first developed by DuPont Pioneer and submitted for approval in July 2012.
China also approved the safety of three domestically developed GM products, including insect- and glyphosate-resistant corn from Yuan Longping High-tech Agriculture Ltd and Hangzhou Ruifeng’s insect-resistant soybean.
From South East Asia, palm oil production in the world’s largest producers, Indonesia and Malaysia, will remain squeezed this year.
The two Southeast Asian nations account for around 85% of the world’s exports, but output have been stagnant in recent years due to a pandemic-induced labour shortage, low fertiliser application and slow expansion of new estates.
Notably, the Malaysian Palm Oil Board (MPOB) pegged the nation’s 2023 production to rise marginally to 19 million tonnes, from 18.45 million tonnes in 2022.
The Indonesian Palm Oil Association (GAPKI), in contrast, forecast Indonesia’s output would dip to 50.82 million tonnes this year, from 51.33 million tonnes last year.
Indonesia’s move to increase the use of palm oil in biodiesel to a 35% blend will add between 2.5 million to 3 million tonnes of crude palm oil demand domestically.
Prices were expected to trade in a range of 4,000-4,200 ringgit per tonne this year.
Malaysia’s benchmark crude palm oil prices hit a record average of 4,910 ringgit ($1,123.57) a tonne in 2022.
The contract dropped to their lowest in nearly three weeks on Thursday at 3,908 ringgit ($896.95) a tonne.
($1 = 4.3570 ringgit).
From India, India’s palm oil imports in December surged 96% from a year earlier to a record high for the month.
Notably, India’s palm oil imports reached 1.1 million tonnes last month, the Solvent Extractors’ Association of India said in a statement.
However, the imports for December were 2.8% lower than November purchases of 1.14 million tonnes and compare with an all-time high of 1.26 million tonnes in September 2021.
In the December quarter, India’s palm oil imports were unusually high as Indonesia was aggressively selling.
Buyers, indeed, mostly placed orders in November, when palm oil was as high as $460 per tonne cheaper than rival soyoil and sunflower oil.
As a result, India’s palm oil imports for the December quarter jumped 17% from the September quarter to a record 3.13 million tonnes, according to SEA data.
Meantime, soyoil imports in December fell 36% from a year earlier to 252,525 tonnes, while those of sunflower oil dropped 25% to 194,009 tonnes, according to the SEA.
However, palm oil imports in January could moderate as palm oil’s discount to soyoil has come down to around $300 per tonne, the dealer said.
From Australia, liquidity continued to trickle out.
Feed wheat markets remained well bid across the export pathways, milling wheat continued to relax slightly, malt barley values came off the boil through VIC up country sites and canola was up a few bucks.
Clear skies are expected over the weekend which will enable to grind to continue for southern growers who will be racing to get as much done as they can before showers are forecast to return next week.
On the international trade scene, South Korea’s Major Feedmill Group (MFG) purchased about 130,000 tonnes of animal feed wheat in two private deals this week, without issuing an international tender.
One 65,000 tonne consignment expected to be sourced optionally from the United States or Australia was purchased at an estimated $343.00 a tonne c&f plus a $1.50 a tonne surcharge for additional port unloading.
It was bought from trading house CHS. If of U.S. origin, 65,000 tonnes must be supplied, or 55,000 tonnes if the feed wheat is of Australian origin.
Shipment was sought between April 15 and May 15 from both the United States and Australia.
Another 65,000 tonne consignment to be sourced optionally from the United States, Australia or Canada was purchased at $344.40 a tonne c&f including a surcharge for additional port unloading.
The seller was trading house Sucden, which launched a new grain trading division in early 2022.
Shipment from all three optional origins was sought between April 26 and May 15 for arrival in South Korea around May 30.
The MFG also purchased an estimated 68,000 tonnes of animal feed corn expected to be sourced from South America in an international tender on Tuesday.
The Taiwan Flour Millers’ Association purchased an estimated 45,200 tonnes of milling wheat to be sourced from the United States in a tender on Friday.
The purchase involved various wheat types for shipment from the U.S. Pacific Northwest coast between March 8 and March 22.
The purchase involved 27,600 tonnes of U.S. dark northern spring wheat of a minimum 14.5% protein content bought at $395.75 a tonne FOB U.S. Pacific Northwest coast.
It also involved 11,650 tonnes of hard red winter wheat of a minimum 12.5% protein content bought at $380.75 a tonne FOB and 5,950 tonnes of soft white wheat of a minimum 8.5% to maximum 10% protein bought at $321.75 a tonne FOB.
The purchase has an additional freight charge of $32.88 per tonne for ocean shipping from the U.S. Pacific Northwest coast to Taiwan.
Seller of all the grain was trading house Bunge Asia.
Turkish Grain Board/TMO has booked, 24 kmt of Crude Sunoil via Aves as belows:
6 kmt, C&F Tekirdag, 1218,80 USD/mt, 18 kmt, EXW Mersin/Iskenderun, 1228,80 USD/mt.
USDA’s January, 12 Reports Summary
NASS production estimates, were for a 1.6m acre reduction 79.2m harvested acres.
Yield was raised by a full bushel to 173.3 bpa.
Overall corn output was reported as 13.730 bbu, compared to 13.936 bbu expected and 13.930 in the Dec report.
The domestic balance sheet adjusted exports 150 mbu lower to 1.925 billion.
The other use categories netted a 35 mbu decrease, for an ending stocks cut of 15 mbu to 1.242 billion.
Globally, USDA sees corn output 1.156 BMT for 2023/23.
That was 1.14 MMT lower from their Dec estimate with a 3 MMT cut to Argentina, a 1 MMT cut to Brazil and an offsetting increase to China.
Global ending stocks were shown as 296.42 MMT for the 22/23 season.
That compares to 298.4 MMT last month and 306 MMT last year, and was in-line with estimates – though the average trade guess was for a 700k MT trim.
The Quarterly NASS Grain Stocks count showed 10.809 bbu of corn on hand on December 1st, with 6.748 bbu in farmer hands.
Implied Q1 demand was 4.298 bbu, compared to 4.667 bbu last season.
As for soybean, the “final” US soy production number for the 22/23 season is 4.276 bbu (-70 mbu), on 86.3m acres (-300k) and a 49.5 bpa average yield (-0.7 bpa).
The May trendline yield was for 51.5 bpa.
The domestic balance sheet saw the lighter supply pulled out of use with 55 mbu fewer exports.
Ultimately that left carryout at 210 mbu, compared to 220 last month, and 274 last year.
Global S&Ds were adjusted with a smaller Argentine crop, cut down by 4 MMT to 45.5 MMT, while Brazil was upped by 1 MMT to 153.
Total world output was seen at 388 MMT.
That compares to 391 MMT last month and 358 MMT last year.
Global carryout is expected to by 980k MT higher at 103.52 MMT.
The NASS Grain Stocks showed 3.022 bbu of soybeans for December 1.
That implies a Q1 usage of 1.458 bbu.
Last season’s Q1 demand was 1.528 bbu – last year was 1.571 bbu.
NASS had 1.477 bbu of the total still in farmer hands.
As for wheat, USDA has winter wheat planted area at 36.95m acres or 14.9 million hectares (mh), up from 34m acres last season and 34.5m expected.
The USDA Winter Wheat and Canola Seedings Report projects a 10% increase in the HRW area at 10.2 mh, a 20% increase for SRW at 3.2 mh, and a 3% increase in white wheat at 1.5 mh.
USDA’s monthly WASDE saw 29 mbu increase to the beginning stockpile, with no other supply adjustments.
Seed use was raised by 3 mbu, and feed and residual 30 mbu increased.
That set the carryout estimate 4 mbu lighter at 567 mbu.
The global picture saw limited changes, with no production adjustments to either Australia nor Argentina.
Ukraine was upped by 500k MT to 21 MMT. The global output is 781.31 MMT.
Exports were little changed as well, with a 500k MT boost to both EU and Ukraine.
Ending stocks were shown at 268.39 MMT from 267.33 MMT last month, but the world minus China is figured at 124.3 MMT of wheat carryout.
IGC’s Grain Market Report – Jan Update
The International Grains Council (IGC) on Thursday raised its forecast for 2022/23 global wheat production, driven largely by a larger-than-expected crop in Ukraine.
Notably, the IGC’s Grain Market Report pegged 2022-23 global wheat production at a record 796Mt versus the USDA ‘s 781Mt.
The forecast is 5Mt up on the November Grain Market Report, including upward revisions for Ukraine by 3.8Mt to 25.2Mt and Australia, up 3.4Mt to 38.5Mt.
In contrast, the outlook for Argentina is down 1Mt to 12Mt on disappointing harvest results.
The IGC said little change in planted area for wheat was anticipated for 2023/24 and a pullback in yields could limit production to 788 million tonnes, down 1%, year-on-year.
The council also cut its 2022/23 world corn (maize) crop forecast by five million tonnes to 1.161 billion tonnes.
The shift again reflected a major revision for Ukraine with production revised to 25.5 million tonnes from a previous forecast of 29.9 million.
Watching next week’s market, the market and government in the United State, will take Monday off for Martin Luther King Jr. Day.
The Export Inspections report will be released on Tuesday afternoon.
The weekly EIA report showing ethanol production and stocks will be pushed back to Thursday.
Weekly Export Sales will be delayed until Friday.
Later that day, NASS will release the monthly Cattle on Feed report.
It should be noted, given the huge amount of data published this week, some content usually included in our Grain & Prices Weekly Report, you will find next Monday in the usual Last Week Market Comment report.
That’s all, thank you.
We wish you a nice day and a good weekend.
Author: Sandro F. Puglisi
