Good morning, Farmer Family …
US farm markets surged on Thursday.
Corn prices soared 2.55%, flirting with two-month high.
Soybeans closed at a one-month high, up 2.88%.
Soymeal rallied 1.15%, and bean oil bouced 4.41%.
Wheat prices followed the rally in the corn market, as Chicago SRW closed up 4.96%, Kansas City HRW gained 3.44%, and MGE HRS rose 2.90%.
Rising concerns about persistent drought in the Corn Belt, and a weaker dollar, boosted prices of US origins higher, though the global demand remains sluggish.
Old crop corn export bookings indeed were 273,255 MT for the week that ended 6/8.
That was inline with estimates.
New crop bookings came in at 21k MT which was the low end of estimates.
USDA had old crop commitments at 38.612 MMT and new crop at 2.979 MMT as of 6/8.
As for soybean, the report showed old crop soybean bookings were 478k MT for the week that ended 6/8.
That was at the top end of estimates.
New crop sales were 48,544 MT for the week, which was below the lowest pre-report estimate.
USDA reported old crop commitments at 51.65 MMT, and new crop commitments at 3.2 MMT as of 6/8.
Soy meal’s export sales were shown at 225,865 MT for the week that ended 6/8, which included 208k MT for old crop and 18k for new crop.
Bean oil bookings were 2k MT for old crop and net cancelations of 122k MT for 23/24 delivery.
As for wheat, the report had 165k MT of old crop wheat sales, which was below the low end of pre-report estimates.
Of the sale, HRW accounted for 72k MT and SRW made up 57k MT.
Meantime, the U.S. Climate Prediction Center updated its three-month outlook yesterday and the results sent corn and soybean prices higher.
The National Drought Monitor indeed showed drought now covers:
• 57% of the U.S. corn crop;
• 51% of soybeans;
• 64% of sorghum;
• 50% of winter wheat.
Those numbers are up from last week, when 45% of corn and 39% of soybeans were covered in drought.
Despite dry weather over the past month or so in the Corn Belt, this outlook is likely the most significant drought news that the corn and soybean markets have seen so far this year.
The good news is that an above-average chance for moisture continues to settle over the Plains over the next few days.
But with persistent heat plaguing most of the Upper Midwest, Eastern Corn Belt, and Southern Plains during the peak summer months, crops across the Heartland could face significant struggles to reach yield potential without more moderate temperatures and an abundance of moisture.
The soy complex also gleaned strength from the NOPA’s monthly report.
Notabily, NOPA members processed 177.92 mbu of soybeans in May.
It marked the highest monthly crush volume for the month of May and marked the fifth consecutive time in 2023 that new monthly highs have been achieved for NOPA’s soy crush volume estimates.
That was 2.1 million above the trade average estimate, though within the full range of pre-report survey responses.
That was also a new record for the month and 8.5 mbu below the highest all time from Dec 2021.
Meanwhile, soy oil stocks were 1.872b lbs.
That pushed up soyoil prices a staggering 4.41% higher as domestic supplies tightened more than the trade was expecting.
On the other hand, rallying energy markets also provided a boost to corn and soybean markets.
A weaker dollar added to a trifecta of compounded market factors that kept the bulls running for corn and soybeans in yesterday’s trading session.
As for wheat, worries about Black Sea supply availability and persistent dryness in Spain and Northern Europe renewed supply availability concerns for the global wheat market.
Notably, Cargill’s ocean transportation business President, said that the original Black Sea Grains Initiative is no longer moving the grain volumes it was originally designed.
However, he also cautioned that “the grain market is not the same as it was a year ago”.
“Thanks the big crops in Brazil, indeed, some of the demand may switching out of the Black Sea into Brazil, especially for corn” he added.
Meantime, consultancy Strategie Grains lowered its monthly forecast for this year’s European Union wheat crop, citing dryness in Spain and northern Europe.
In this context, Russia shipped a rare wheat cargo to Spain.
As a result, commodity funds were net buyers of CBOT soybean, corn, wheat, soyoil and soymeal futures contracts.
On this morning, soybean prices extended gains, to hit their highest level in nearly six weeks.
Corn and wheat also rose.
Notably, the most-active soybean contract on the Chicago Board of Trade was up 0.65% at $14.37-1/4 a bushel, as of 03:34 GMT, after rising to $14.38-1/4 earlier in the day.
Wheat rose 0.53% to $6.65 a bushel, while corn was up 0.44% at $5.77 a bushel.
From Canada, Saskatchewan Agriculture’s weekly Crop Report as of June 12 shows crops faring well overall, despite drier conditions faced during the past week.
Provincial crop inspectors have rated the crop condition for all crops to range from fair to excellent overall.
Of the 14 crops monitored, the provincial condition ratings range from 64% good to excellent for chickpeas to 92% G/E for the soybean crop.
The largest crops show condition at 81% G/E for spring wheat, 72% G/E for durum, 82% for barley and 77% G/E for canola.
Favourable ratings remain while soil moisture deteriorated over the week.
An estimated 66% of the province is rated as having adequate topsoil moisture, down from 78% last week and the lowest percentage reported in three weeks.
The area rated short-to-very-short topsoil moisture has increased from 15% of the province last week to 32% this week, the highest percentage reported in three weeks.
The driest areas are mostly seen in the western half of the province.
An estimated 85% of the winter crops (69%), 76% of the spring cereals (50%), 76% of the oilseeds (41%) and 83% of the pulse crops (60%) are viewed as being at normal growth stages for this week, which compares to the 2022 estimate, found in brackets.
These are the most favourable ratings found for this week shown in at least nine years.
In Europe, prices rebounded, with both wheat and corn making only small gains, while rapeseed rose sharply, benefited from the firmness of the veg oils market, especially soy oil.
In southern Europe, harvests are getting under way thanks to ongoing dry weather.
However, such a weather is likely to penalise spring crops.
Stratégie Grain cut 1.3Mt from the EU wheat crop forecast given the dryness in Germany and Poland.
Notably, the consultancy now anticipates EU soft wheat production of 128.7 million tonnes in the 2023/24 season, down from 130.0 million forecast in May though nearly 3% above 2022/23 output.
They also lowered outlook for the EU barley harvest by 2 million tonnes to 47.9 million tonnes, putting the forecast more than 6% below last year’s production.
The consultancy reduced its maize 2023/24 production outlook to 61.2 million tonnes from 62.1 million in May, though that would be 17% above last year level.
On the same wake, latest data from the farm office FranceAgriMer showed the condition of French soft wheat has declined for the third week in a row.
Notably, an estimated 85% of soft wheat was rated in good or excellent condition in the week to June 12, compared with 88% the previous week.
The score, however, was well above the 65% registered a year earlier and remains near the highest for the time of year in FranceAgriMer records going back to 2011.
For winter barley, the score fell to 85% from 87% the previous week, while the spring barley rating dropped more sharply, to 83% from 89%.
For grain maize, the good/excellent score shed 2 percentage points to 86%.
However, FranceAgriMer also said on Thursday that winter crops such as wheat were maintaining good yield potential in the run-up to harvesting, while weather concern are centred on spring crops.
FranceAgriMer’s report showed that winter barley harvesting had not started as of Monday, though other observers have pointed to initial cuttings in recent days.
From Ukraine, Ukraine’s grain exports for the 2022/23 season stood at 47.5 million metric tons as of June 16, two weeks before the end of the marketing year, Agriculture Ministry data showed on Friday.
The volume in the current July-to-June season so far includes 16.3 million ton of wheat, 28.2 million ton of corn and about 2.7 million ton of barley.
The ministry said grain exports in June had reached 1.8 million tons.
From Russia, the Ministry of Agriculture plans to maintain the duty on sunflower seeds exports until full loading of internal processing capacities is ensured.
He also added that “in the near future” Russian oil processing capacity will reach about 30 mln tonnes.
In addition, “it is necessary to understand that in the current conditions, the cancellation of the duty on sunflower seeds can collapse the global prices for both oilseeds and, later, for oil. This cancels out all benefits for farmers,” the head of the Ministry of Agriculture noted.
It should be noted, that the customs duty on the export of sunflower seeds from the Russian Federation began to operate on July 1, 2021, until August 31, 2022, and amounted to 50%, but not less than 320 USD/t.
Then its effect was extended until August 31, 2023.
From the Middle Kingdom, the summer harvest of wheat is in full swing in most wheat producing areas across China.
Traditionally, the summer harvest spans from May to late June in China every year, with most of the work focused on reaping winter wheat.
From South East Asia, Malaysian palm oil prices rose on Thursday for a third consecutive session, lifted by concerns over hot weather cutting output of both the edible oil and rival US soybeans.
Notably, tThe benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange gained 68 ringgit, or 1.97%, to 3,520 ringgit ($761.25) a metric ton, its highest closing since May 29.
However, palm fundamentals remain weak.
India’s palm oil imports in May plunged 14% from a month ago to a 27-month low.
On this wake, exports of Malaysian palm oil products for June 1-15 fell about 16.5% from the same week in May.
In Indonesia, palm oil exports in April, including refined products, fell 1.93% annually to 2.13 million metric ton, data from the Indonesian Palm Oil Association showed on Thursday.
As a result, Indonesia plans to set its crude palm oil reference price at $723.45 per metric ton for the June 16-30 period, down from $811.68 currently.
From Australia, ABARES this month released its initial estimate for the canola crop now in the ground at 4.9 million tonnes (Mt), down 41 percent from the record 2022-23 crop of 8.3Mt.
Crop conditions for the major growing areas in Victoria, New South Wales and Western Australia are generally good to very good.
WA conditions were outlined in the Grain Industry Association of WA report released June 9, which pegs WA new-crop production at 1.8Mt, down from the record 4.3Mt produced in 2022-23.
Meantime, the country exported 354,998 tonnes of canola in April, down 46 percent from the 660,700t shipped in May, according to the latest data from the Australian Bureau of Statistics.
Germany on 166,600t was the largest-volume destination for April shipments, followed by Japan on 70,311t and the United Arab Emirates on 55,000t.
Meantime, local markets remained largely unchanged and continued to track sideways, liquidity slowed up on both current and new crop.
Minimal rain overnight, the 8-day forecast is calling for a top up of 15-50mm on most cropping areas except Qld, NNSW and central WA.
On the international scene, Iraq has bought 400,000 tonnes of wheat from Australia.
In outside markets …
Energy markets saw oil prices rebounding by 3%.
Brent futures indeed rose $2.47, or 3.4%, to settle at $75.67 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $2.35, or 3.4%, to settle at $70.62.
Those were the highest closes for Brent and WTI since June 8.
Data on Thursday showed China’s oil refinery throughput rose 15.4% in May from a year earlier, hitting its second highest total on record.
In spite weaker economic data from China, Chinese demand for oil is expected to keep climbing at an assured rate during the second half of the year.
The oil market also drew support from U.S. reports showing retail sales unexpectedly rose in May and higher-than-expected jobless claims last week cut the dollar.
A weaker dollar makes crude cheaper for holders of other currencies, which could boost oil demand.
In the United States, the gasoline crack spread , a measure of refining profit margins, to its highest since July 2022.
U.S. diesel futures , meanwhile, rose about 5% to their highest since late April.
On the supply side, analysts expect voluntary crude output cuts implemented in May by OPEC+, and by Saudi Arabia in July, supporting prices at a time of strong demand, with UBS expecting a supply deficit of around 1.5 million barrels per day (bpd) in June and more than 2 million bpd in July.
Meantime, in Iraq, a Turkish energy delegation will meet Iraqi oil officials in Baghdad on June 19 to discuss the resumption of Iraq’s northern oil exports.
On this morning, oil prices were set to snap a two-week losing streak.
Brent futures indeed rose 20 cents, or 0.3%, to $75.87 a barrel by 06:32 GMT, while U.S. West Texas Intermediate (WTI) crude was 16 cents, or 0.2% higher, at $70.78 a barrel.
In ocean freight markets, the Baltic Exchange’s main sea freight index rose for a tenth straight session on Thursday, supported by higher rates across vessel segments.
The overall index, indeed, was up 15 points, or 1.4%, at 1,094 – its highest since May 30.
Notably, the capesize index gained 19 points, or 1.2%, at 1,599.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes, such as iron ore and coal, increased $152 to $13,258.
The panamax index was up 21 points, or 1.8% at 1,184.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased $192 to $10,658.
Among smaller vessels, the supramax index rose 11 points to 740 points.
In equity markets, on Wall Street, US stock indexes rallied as weakness in the U.S. labor market knocked bond yields lower and bolstered hopes the Fed may end its rate hike campaign.
U.S. weekly initial unemployment claims, indeed, were unchanged at a 19-month high of 262,000, showing a weaker labor market than expectations of a decline to 245,000.
U.S. May retail sales unexpectedly rose +0.3% m/m, stronger than expectations of a -0.2% m/m decline.
The U.S. May import price index ex-petroleum fell -0.2% m/m, report than expectations of -0.1% m/m.
The U.S. Jun Philadelphia Fed business outlook survey fell -3.3 to -13.7, slightly stronger than expectations of -14.0.
The U.S. Jun Empire manufacturing survey general business conditions index rose +38.4 to 6.6, stronger than expectations of -15.1.
U.S. May manufacturing production unexpectedly rose +0.1% m/m, stronger than expectations of a -0.1% m/m decline.
In this context, market odds for the Fed to raise the fed funds target range by +25 bp at the July 25-26 FOMC meeting stand at 64%.
As a result, the 10-year T-note US yield fell -6.4 bp to 3.722%.
The S&P 500 rallied 1.2% to 4,425.84, it’s highest level since April 2022. The Dow gained 1.3% to 34,408.06 and the Nasdaq climbed 1.2% to 13,782.82.
On this morning, Asian shares logged moderate gains.
The Bank of Japan wrapped up a policy meeting by keeping its ultra-lax monetary stance unchanged, as expected.
Thus, Tokyo’s Nikkei 225 index edged 0.1% higher to 33,518.93.
In other Asian trading, Hong Kong’s Hang Seng index jumped 0.7% to 19,974.26 and the Shanghai Composite index was up 0.4% at 3,265.04.
In Seoul, the Kospi advanced 0.4% to 2,620.40.
Bangkok’s SET added 0.4% and India’s Sensex was up 0.4%.
In currency trading, the dollar index slumped 0.79% and posted a 1-month low, after the ECB raised interest rates by +25 bp.
Also, the ECB raised its 2023 inflation forecast to +5.4% from a prior forecast of +5.3%, and in this context, President Lagarde said another +25 bp rate hike by the ECB in July is “very likely.”
Meantime, the ECB also said it would halt reinvestment in its 3.2 trillion euro Asset Purchase Program from next month, which means the ECB will be draining liquidity as securities mature and its balance sheet declines.
Then, the ECB cut its 2023 Eurozone GDP forecast to +0.9% from +1.0%.
Meanwhile the Fed on Wednesday had paused its rate hikes.
As a result, the EUR/USD rose by +1.11% and posted a 1-month high.
EUR/USD also garnered support after the 10-year German bund yield climbed to a 2-1/2 week high, strengthening the euro’s interest rate differentials.
As for the USD/JPY, it rose by +0.12%, with the yen falling to a 7-1/2 month low against the dollar on expectations the BOJ at Friday’s policy meeting will maintain stimulus measures and record low-interest rates.
However, the yen was supported by better-than-expected Japanese economic news.
Apr core machine orders indeed rose +5.5% m/m, stronger than expectations of +3.0% m/m.
Also, the Apr tertiary industry index rose +1.2% m/m, stronger than expectations of +0.4% m/m.
Japanese trade data was better than expected after May exports unexpectedly rose +0.6% y/y, stronger than expectations of a -1.2% y/y decline.
Also, May imports fell -9.9% y/y, the biggest drop in 2-1/4 years but a smaller decline than expectations of -10.3% y/y.
On this morning, the dollar rose to 140.50 yen from 140.29 yen late Thursday.
The euro fell to $1.0944 from $1.0946.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
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