Good morning, Farmer Family …
US farm markets were mixed, but mostly lower on Tuesday.
Corn prices, indeed, saw Jul rising 0.55%, while Sep settled with a penny loss.
Soybeans were mostly higher, as July closed up another 0.73%, and Sep was in the red just by 4 cents.
Soymeal ended with 0.6% to 0.86% losses, and soy oil closed off the lows limiting the session losses to just -0.1%.
Wheat prices were mostly lower, as Chicago SRW rose by +1.13%, meanwhile, Kansas City HRW fell by -0.71%, and MGEX HRS dropped by -0.53%.
Corn and soybean prices steadied, after the market rallied sharply at the end of last week on weather concerns.
The Biden administration plans to increase the amount of biofuels that oil refiners must blend into the nation’s fuel mix over the next three years, but the plan includes lower mandates for corn-based ethanol than it had initially proposed.
Meanwhile, poor export demand for U.S. supplies weighed on grain markets, especially in Kansas City hard red winter wheat and MGEX spring wheat contracts.
The weekly Export Inspections report indeed had 877,310t of corn shipments for the week that ended 6/15.
That was down from 1,17 MMT last week and from 1,19 MMT during the same week last year.
The accumulated total reached 31,98 MMT as of 6/15, trailing last year’s pace by 30.8%.
As for soybean, the report showed 185,184t of soybeans were shipped during the week that ended 6/15.
That was up from 147,572t last week but less than half the 429,644t from the same week last year.
USDA had the season’s total export at 49,03 MMt compared to 50,96 MMT last year.
As for wheat, the report showed 237,820 MT of US wheat was shipped during the week that ended 6/15.
That was down from 247,958t last week and down from 348,309t the same week last year.
The season’s total wheat shipments reached 556k MT compared to 987k last year.
In this context, corn basis bids were mostly steady to soft across the central U.S. after eroding 3 to 13 cents lower at five Midwestern locations.
An Iowa processor bucked the overall trend after trending 6 cents higher.
Soybean basis bids took a beating across half a dozen Midwestern processors, after dropping between 5 and 35 cents at those locations.
Bids also eroded 10 cents lower at an Ohio river terminal and eased a penny lower at an Ohio elevator.
Commodity funds were net buyers of CBOT wheat and soybean futures contracts.
In the meantime, funds were net sellers of CBOT corn, soymeal and soyoil futures.
Thus, prices were hard-pressed to push even higher, as some profit-takers entering the fray.
However, weather forecast uncertainty continued.
While the Northern and Central Plains should see some decent rains fall later this week, with some fields likely to gather another 1” or more between Wednesday and Saturday, most of Missouri, Illinois, Iowa and Wisconsin won’t receive any measurable moisture during this time.
Further out, NOAA’s new 8-to-14-day outlook predicts some seasonally wet conditions returning to the eastern Corn Belt between June 27 and July 3, but warmer-than-normal temperatures for the central U.S.
Meantime, after the sessions close, the USDA cut its corn, soy and spring wheat crop ratings more than expected.
Notably, they rated corn at 55% as good-to-excellent, down 6 percentage points from a week earlier.
Good-to-excellent ratings for soybeans stood at 54% as of June 18, 5 percentage points less than a week earlier.
Spring wheat condition were at 51% as good-to-excellent.
That was down 9% point from a week earlier
The report had corn emergence at 96%, remaining 2% points ahead of average.
As for soybean, NASS reported emergence at 92% as of 6/18, up from 86% last week and from the 5-yr average of 81%.
The spring wheat crop was 98% emerged and 10% headed as of 6/18, matching the 5-yr average pace.
Meantime, the winter wheat harvests were estimated to have been completed at 15% nationally, against 20% on average to date.
In this context, the updated US corn production outlook from cmdtyView had corn output 13 mbu smaller to 14.975 billion.
The cmdtyView Corn Yield was 0.16 lower than their previous estimates at 177.76 bpa.
As for soybean, the updated cmdtyView Bean Yield was 0.05 bpa lighter to 50.59, reducing projected output by 4 mbu to 4.376 billion.
Crop consultant Michael Cordonnier also cut his US corn yield by 1 bu/ac to 177 bu/ac.
He now projects the corn crop at 14.77 billion bushels (USDA 15.27 billion bu).
Dr Cordonnier trimmed his soybean yield by 0.5 bu/ac to 51 bu/ac, lowering his production forecast to 4.44 billion bushels (USDA 4.51 billion bu).
As a result, on this morning, Chicago corn prices rose.
Soybean and wheat prices were also headed for gains.
Notably, corn prices were up 3.2% at $6.16-3/4 a bushel, as of 11:15 GMT.
The most-active soybean contract on the Chicago Board of Trade was up 1.2% at $13.58-3/4 a bu, while wheat gained 2.3% to $7.12 a bu, near the two-month high 7.13-3/4 hit earlier in the session.
From South America, recent rains in Brazil will help later-developing safrinha corn.
As a result, Dr Cordonnier raised his Brazilian corn crop estimate by 1Mt to 130Mt.
He cut, in contrast, his Argentine soybean crop estimate a further 1Mt to 21Mt, noting double-crop soybean yields were especially disappointing.
In Europe, grain prices eased slightly, both in future and physical markets.
Prices reported from Algerian import tender, has put attention back on cheaper Russian supplies.
The showers in France during the weekend have secured the crop.
Also, according to Maxar Technologies – weather desk, rain this week should notably improve soil moisture for crops in dry areas of northern Europe, including France, Germany and Poland.
Thus, wheat prices edged 0.8% lower at 239.00 euros ($260.65) per metric ton.
The contract had struck a six-week high on Friday.
However, some yield losses were expected in northern Europe, including parts of Germany.
A lot of rain is forecast this week in Germany but looks like being too late in the driest northern and eastern areas.
Germany’s 2023 wheat crop of all types indeed will fall 2.9% on the year to 21.87 million metric tons, the country’s association of farm cooperatives said in its latest harvest estimate on Wednesday.
That was down from its May forecast of a German 2023 wheat crop of 22.31 million metric tons.
The association forecasted Germany’s 2023 winter rapeseed crop will fall 3.1% to 4.14 million metric tons, compared 4.28 million metric tons a month earlier.
Germany’s winter barley crop, will fall 1.4% on the year to 9.09 million metric tons, the association said.
The spring barley crop, will fall 11.6% after a reduction in sowings to 1.74 million metric tons.
The grain maize, or corn, crop will fall 2.5% to 3.73 million metric tons, it estimated.
Also, we should to note last week a rebound in nitrogen fertilizer prices, a rebound to be put in parallel with the rebound also in gas prices.
Meantime, wheat exports to June 18 by the EU were displayed at 30.37 million tonnes against 27.25 last year to date.
Those of barley were displayed at 6.28 million tonnes against 6.94 last year.
Corn imports have reached 25,3 MMT, which is a year-over-year increase of 57% so far.
Rapeseed imports rose sharply to 7.24 million tonnes from 5.26 million.
Soybean imports have reached 12.52 million metric tons, against 14.17 million a year earlier.
That is a year-over-year decrease of 11.6% so far.
Soymeal imports over the same period totalled 15.38 million tons, against 16.06 million the prior season, while palm oil imports stood at 3.86 million tons versus 4.83 million a year ago.
From the Black Sea basin, United Nations Secretary-General Antonio Guterres called for an acceleration of Black Sea grain shipments.
In a statement the Secretary-General’s office reported he had called on the parties to accelerate operations and urged them to do their utmost to ensure the continuation of the agreement he described as vital.
The agreement is up for renewal on 17 July.
The statement said 1.3 million tonnes (Mt) of foodstuffs were shipped via the corridor in May versus a peak of 4.2Mt shipped in October.
However, the Kremlin on Wednesday, restated its position that there are “no grounds” to extend the Black Sea grain deal, saying that the Turkish- and United Nations-brokered accord was not being properly implemented.
On a call with reporters, Kremlin spokesman Dmitry Peskov said the U.N. had been forced to acknowledge that “unfortunately, they are not managing to exert the necessary influence on the countries of the collective West in order to fulfil this Russian part of the agreement” referring to a list of Russian demands.
From the Middle Kingdom, China has nearly completed this year’s harvest, state media reported on Wednesday.
China was expected to produce 137 million metric tons of winter wheat this year.
But heavy rain and wind hit large swathes of the crop in central Henan province in early May, triggering widespread early germination in the grain and other quality issues.
About 20 million metric tons, or 15% of the total, is unfit for human consumption and can only be used by animal feed makers or alcohol producers.
Beijing has urged local reserves to buy up some of the damaged grain, but purchases have been slow so far.
Thus, sprouted wheat is selling for between 2,300 yuan and 2,400 yuan ($320-$334) per ton in northern China, compared to about 2,820 yuan per ton for quality wheat in Zhengzhou, the capital of Henan province.
The discounted wheat is also much cheaper than corn, which is selling for about 2,700 yuan per ton in Dalian city in northern China.
In this context, China is now poised to overtake Egypt and Turkey as the biggest buyer of wheat in the year through June, according to Bloomberg.
Purchases, indeed, exceeded 12 million tons in the first 11 months of the marketing year, which runs through June.
More than half of those cargoes were supplied by Australia.
Wheat imports accelerated above 1 million tons a month, from October, before peaking at a record of 1.68 million tons in April.
The US Department of Agriculture is forecasting another 12 million tons of Chinese imports in 2023-2024.
Meanwhile, the seeding process after harvesting was a bit delayed in southern China, but normal in northern China.
($1 = 7.1881 Chinese yuan renminbi).
From South East Asia, after instituting an export ban to stabilize prices in 2022, India has sufficient stocks and will allow wheat and rice exports to limited destinations.
Upon request for the grain, India will allow exports for 23/24’s crop to Indonesia, Senegal and Gambia.
India also approved Nepal’s request, effective immediately.
From Australia, local markets picked up again slightly yesterday, with current crop feed barley in WA firmer by a few bucks, current crop wheat also found a bid, while current crop canola markets continued to trade and firm across the country.
Moisture continues to build into the forecast this week with northern NSW picking up a little more on the forecast for tomorrow and Friday which would be very welcome if it eventuates.
The Australian shipping stem is showing 4.09Mt of total grain on the lineups for June, up from 3.96Mt last week.
Wheat is at 2.93Mt up from 2.83Mt, barley is at 467kt down slightly from 480kt, canola is unchanged at 406kt and sorghum is at 289kt up from 243kt.
On the international trade scene, Japan’s Ministry of Agriculture, Forestry and Fisheries is seeking to buy a total of 92,529 metric tonnes of food-quality wheat from the United States, Canada and Australia in a regular tender that will close on Thursday.
Taiwan’s MFIG purchasing group bought about 65,000 metric tons of animal feed corn to expected to be sourced from Brazil in an international tender on Wednesday.
It was believed to have been sold by trading house Viterra.
The yellow corn was purchased at an estimated premium of 82.79 U.S. cents a bushel c&f over the Chicago December 2023 corn contract.
Brazilian corn dominated the tender, with nine other trading houses also offering the full 65,000 metric tons with other premiums offered in a range of between 83.50 to 133.41 U.S. cents a bushel c&f over the Chicago December contract.
No offers of corn from the United States or South Africa were reported.
One offer of 65,000 tonnes of Argentine corn was reported at 87.00 cents a bushel c&f over Chicago December.
Because of concerns about poor quality, Argentine corn would only be accepted if it was the lowest price offered and at least 4 cents per bushel below the second cheapest offer from other origins.
Shipment in the tender was sought between Sept. 4 and Sept. 23 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 was sought between Sept. 19 and Oct. 8.
Algeria ended up buying around 630,000t milling wheat largely expected to be sourced from Russia.
It bought around 300,000t at about US$261.50/t c&f.
Traders also reported other purchases at higher prices in a range up to $264.50/t.
In outside markets …
Energy markets saw oil prices easing in choppy trading session.
Forecasts for slower oil demand growth in China, and the disappointment with the size of cuts in China’s key lending rates, weighed on the market.
Adding to the bearish market sentiment, traders noted crude supplies from Iran and Russia have increased in recent weeks, with Iran’s crude exports and oil output hitting new highs this year despite U.S. sanctions.
Russia is also set to increase seaborne diesel and gasoil exports this month, outweighing cuts by the OPEC+.
Thus, Brent futures for August delivery fell 71 cents, or 0.93%, to settle at $75.90 a barrel.
U.S. West Texas Intermediate (WTI) crude for July delivery fell $1.28, or 1.8%, to settle at $70.50 on its last day as the U.S. front-month.
The more active WTI contract for August delivery, which will soon be the U.S. front-month, was down about 1.03% at $71.19 a barrel.
The crude price decline was led by near 3% losses in U.S. gasoline and diesel futures.
The price drop, however, was limited by expectations that oil demand will grow in China in the second half of the year, if Beijing introduces new stimulus measures to bolster economic expansion.
Also, India’s booming aviation sector could also contribute to overall demand growth.
On this morning, oil prices rebounded, recovering after two straight sessions of losses.
The congressional testimony by Powell later on Wednesday is expected to provide clues on future rate moves in the USA.
Also, a possible drawdown in U.S. crude stocks supported prices as well, as analysts estimated that crude stockpiles fell by about 400,000 barrels on average in the week to June 16.
Official U.S. oil inventory data from the American Petroleum Institute industry group will be released later on Wednesday and the Energy Information Administration on Thursday.
Thus, Brent futures firmed 23 cents to $76.13 a barrel and U.S. West Texas Intermediate (WTI) crude futures inched up 26 cents to $71.45 a barrel as of 06:11 GMT.
In ocean freight markets, the Baltic Exchange’s main sea freight index, edged higher on Tuesday, buoyed by gains in the capesize vessel segment.
The overall index, indeed, gained 13 points, or 1.2%, to 1,078.
Notably, the capesize index rose 48 points, or 3.2%, to 1,540.
Average daily earnings for capesize vessels, which typically transport 150,000-tonne cargoes carrying commodities such as iron ore and coal, increased by $394 to $12,769.
The panamax index eased 19 points, or about 1.6% to 1,174.
Average daily earnings for panamax vessels, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, slipped by $165 to $10,568.
Among smaller vessels, the supramax index rose 8 points to 759.
In equity markets, U.S. stocks fell back.
Investors were disappointed from China’s State Council didn’t mention specific economic support measures and that the Chinese central bank cut lending rates less than expected.
Also, U.S. housing news was stronger-than-expected and hawkish for Fed policy.
Notably, U.S. May housing starts unexpectedly surged +21.7% m/m to a 13-month high of 1.631 million, stronger than expectations of a decline to 1.400 million.
May building permits, a proxy for future construction, rose +5.2% m/m to a 7-month high of 1.491 million, stronger than expectations of 1.425 million.
The U.S. Jun NAHB housing market index, released on Monday’s holiday, rose +5 to an 11-month high of 55, stronger than expectations of 51.
As a result, market odds for the Fed to raise the fed funds target range by +25 bp at the July 25-26 FOMC meeting rose to 74% Tuesday from 69% last Friday, though the 10-year US T-note yield fell -3.6 bp to 3.725%.
Thus, came back worries about the global economy.
That dragged prices for crude oil lower, and the stocks of companies that pull it from the ground.
Energy stocks indeed fell 2.3%.
In this context, the S&P 500 fell 0.5% to 4,388.71.
The Dow Jones Industrial Average dropped 0.7% to 34,053.87, and the Nasdaq composite lost 0.2%, to 13,667.29.
On this morning, shares were mostly lower in Asia.
Tokyo’s Nikkei 225 edged 0.1% higher to 33,427.14, while the Hang Seng in Hong Kong sank 1.5% to 19,607.08.
The Shanghai Composite index gave up 0.5% to 3,240.36 and the Kospi in Seoul slipped 0.4% to 2,594.19.
In Australia, the S&P/ASX 200 shed 0.2% to 7,345.30.
This week has few potentially market-moving events, among these, the Bank of England will meet on interest-rate policy Thursday.
In currency trading, the dollar index rose by +0.28%, with the dollar recovering from early losses, as Tuesday’s better-than-expected U.S. housing news was bullish for the dollar.
Also, the weakness in stocks boosted the liquidity demand for the dollar.
Notably, the EUR/USD fell by -0.04%.
Weaker-than-expected German May PPI report knocked bund yields lower and undercut the euro’s interest rate differentials.
German May PPI indeed eased to +1.0% y/y from +4.1% y/y in Apr, better than expectations of +1.7% y/y and smallest increase in nearly 2-1/2 years.
Eurozone Apr construction output fell -0.4% m/m, the second straight monthly decline.
As for the USD/JPY, it fell by -0.42%, with the yen recovering from a 7-1/4 month low against the dollar, after both Finance Minister and Economy Minister warned that officials were watching out for any excessive or speculative moves in the forex market.
Also, Tuesday’s upward revision to +0.7% m/m from the initially reported -0.4% m/m, of Japan’s Apr industrial production was bullish for the yen.
On this morning, the dollar rose to 141.70 Japanese yen from 141.34 yen.
The euro slipped to $1.0916 from $1.0922.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
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