Daily International Grain Market View

Price changes were mostly muted on US farm markets, yesterday.

A relative rarity these past few weeks. 

Corn prices closed with narrowly mixed results and down 0.43% in the front months.

Soybeans trended 0.33% higher.

Soymeal gave back 0.93%.

Soy oil went home 1.13% higher. 

Chicago wheat prices traded in a 67 cent range for May, as May extended the rally early, pulled back through midday, and ultimately went home a penny in the red. 

KC wheat followed the pattern with May ranged a 50 cents during the session but at last closed only 0.29% higher. 

Gains in spring wheat were by 0.64%, with May HRS closing at $10.95 3/4. 

In energy markets, oil prices rose on this morning as a reported drop in U.S. crude inventories increased concerns about tight global supplies.

The latest data from the American Petroleum Institute industry group, indeed, showed crude stocks in the U.S., fell by 4.3 million barrels for the week ended March 18, counter to analysts' forecasts for an increase of 100,000 barrels. 

Thus, Brent crude futures climbed $1.77, or 1.53%, to $117.25 a barrel at 04:43 GMT, after falling 14 cents in the previous session.

U.S. West Texas Intermediate (WTI) crude futures rose $1.51, or 1.38%, to $110.78 a barrel, after losing 36 cents on Tuesday.

Prices dipped yesterday as the European Union seems unlikely to agree to a ban on Russian oil. 

However, the market remains on edge over the prospect of further sanctions on Russia.

U.S. President Joe Biden, indeed, is set to announce more sanctions on Russia when he meets with European leaders on Thursday in Brussels and at NATO summit.

In the freight market, the Baltic Exchange’s dry bulk sea freight index fell on Tuesday as a dip in capesize rates offset gains in the panamax and supramax segments.

The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels, indeed, slipped 43 points, or 1.7%, to 2,546 points.

Particularly, the capesize index dipped 295 points, or 12%, to 2,175.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $2,440 at $18,041.

The panamax index gained 160 points, or 5.4%, to 3,111 points.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased by $1,438 to $27,999.

The supramax index rose 34 points to 2,983 points.

In equity markets, U.S. stock indexes on Tuesday rallied to 5-week highs and settled higher.  

Optimism that the U.S. economy is strong enough to weather Fed rate hikes pushed stocks higher. 

Strength in bank stocks and technology stocks, indeed, led the overall market higher.  

Stocks gained despite an increase in the 10-year T-note yield to a 2-3/4 year high of 2.388%.

On this morning, the yield on the 10-year Treasury climbed to 2.41%. 

The yield, which influences interest rates on mortgages and other consumer loans, was at 2.14% late Friday.

Tuesday’s U.S. economic data was bullish after the Mar Richmond Fed manufacturing survey rose +12 to 13, stronger than expectations of 2.

In this context, the S&P 500 rose 1.1% to 4,511.61, with more than 70% of stocks in the benchmark index notching gains. 

The Dow Jones Industrial Average gained 0.7% to 34,807.46. 

The tech-heavy Nasdaq rose 2% to 14,108.82.

Smaller company stocks also bounced back. 

The Russell 2000 index added 1.1% to 2,088.34.

Meantime, Asian shares rose on this morning, following the rally on Wall Street, although investors remain concerned about the war in Ukraine and inflation.

Energy and commodity prices were already high as demand outpaced supply amid the global economic recovery, but the war in Ukraine has pushed oil, wheat and other prices even higher. 

Those higher costs and shipping problems make it more expensive for businesses to operate. 

Many of those costs have been passed on to consumers and higher prices for food, clothing and other goods could lead them to cut spending, resulting in slower economic growth.

However, Japan’s benchmark Nikkei 225 surged 3.0% in afternoon trading to 28,040.16. 

Telecoms and technology company SoftBank Group Corp gained 7.2% and Fast Retailing added 5.2%.

Australia’s S&P/ASX 200 added 0.5% to 7,377.90. 

South Korea’s Kospi gained 0.8% to 2,732.51. 

Hong Kong’s Hang Seng jumped 1.7% to 22,253.04, while the Shanghai Composite rose 0.3% to 3,271.17.

Chinese network equipment maker ZTE Corp.'s shares soared nearly 27% after the company said a U.S. judge has allowed a probation period to end after the company was nearly destroyed in a clash with Washington over its dealings with Iran and North Korea.

In currency trading, the U.S. dollar edged up to 121.11 Japanese yen from 120.81 yen. 

The euro cost $1.1041, up from $1.1033.

The dollar index gained 0.02%.

On the weather side, over the next several days, parts of the western Corn Belt will remain completely dry while parts of the eastern Corn Belt and Great Lakes region could gather another 1.5” or more additional rains, per the latest 72-hour cumulative precipitation map from NOAA. 

The agency’s new 8-to-14-day outlook predicts widespread seasonally wet weather for most of the U.S. between March 29 and April 4, with warmer-than-normal conditions building in the Southern Plains, Mid-South and Ohio River Valley.

On the supply side, IHS Markit foresees corn acres reaching 91.42m this season. 

That is down just 70k from their January estimate. 

For milo, IHS Markit estimates 6.6m acres, compared to 7.3m last year. 

As for soybean, IHS Markit estimates US soybean acres for 22/23 at 88.58 million. 

That is a 700.75k acre increase from their prior estimate and would be a 1.4m acre increase yr/yr. 

That would equate to 71.07 mbu more on a similar 51.5 bpa yield. 

Thus, the soy/corn ratio for new crop was back down to 2.236 – the most favorable to corn since December. 

At this time last year, the new crop soy corn ratio was 2.598.  

As for wheat, IHS Markit estimates the wheat area for all classes to be 47.467m acres, up from their Jan figure of 46.703 million. 

They have the 22/23 wheat crop at 1.962 bbu, which is lower than their prior 1.995 bbu forecast but still up from 1.646 this year.

On the demand side, private exporters reported to the USDA to have sold 240,000 metric tons of soybeans for delivery to unknown destinations during the 2021/2022 marketing year.

The U.S. state of Nebraska reported on Tuesday an outbreak of highly lethal bird flu in a flock of 570,000 chickens being raised for meat.

Millions of U.S. broiler chickens being raised for meat, egg-laying chickens and turkeys have been infected with bird flu since February or culled to prevent the spread of the disease.

In this context, corn basis bids jumped 15 cents higher at an Ohio elevator while holding steady elsewhere across the central U.S..

Soybean basis bids were steady to firm across the central U.S., after rising 2 to 10 cents higher at three Midwestern locations.

The funds were net buyers yesterday for 3,000 lots of soybeans but were neutral on corn and wheat.

From South America, Brazil’s AgRural had 98% of the 2nd crop planted as of 3/17. 

That is up from 90% last year, with 58% of the 1st crop out. 

Last year 47% of the 1st crop was harvested as of this time. 

Brazil’s AgRural also reported soy harvest at 69% complete. 

That is up from 64% last week and compares to 59% as of the same period last year. 

Meantime, the BAGE reduced Argentina bean production estimates by 1.1 to 42 MMT. 

Expected average yield was improved on lower acres. 

Argentina’s soy products’ taxes were raised to 33%, matching the raw bean rate. 

The Parana River, the main export path for Argentina is at its lowest level in 78 years following 6 months rain deficiency.

Meantime, producers have sold 18.8 million tonnes of corn for the 2021/22 season, the Argentina Ministry of Agriculture said on Tuesday.

According to the ministry, the country recorded 1.3 million tonnes of corn sold between March 9 and 16, two times the volume registered in the same period a year ago.

Peruvian wheat production in MY 2022/2023 is forecast at 220,000 MT. 

Wheat imports in MY 2022/2023 are forecast at 2.25 MMT. 

Corn production in MY 2022/2023 is forecast at 1.7 MMT. 

Peru’s corn imports in MY 2022/2023 are forecast at 4.1 MMT, an increase of three percent from the previous year. 

Demand growth, driven by poultry producers, continues to outpace local production capacity. 

In Europe, markets remained on the rise for all products combined.

Euronext, however, experienced another very choppy session.

Grain prices opened with modestly gains before ending the session with a more measured progression.

Rapeseed prices, on their part, tested the psychological threshold of €1,000/t on the last deadline for the 2021 harvest, i.e. May 2022.

Meantime, per the latest data from the European Commission, EU corn imports during the 2021/22 marketing year have reached 11.87 million tonnes through March 20, which is fractionally below last year’s pace.

For soybean, the European Union’s imported 9.86 million tonnes through March 20, which is a year-over-year reduction of 7.8% so far. 

EU soymeal imports are also trending slightly below last year’s pace, with 11.73 million metric tons.

Rapeseed imports stood at 3.81 million tonnes, well below last year at 5.01 million.

Meanwhile, the EU exported on March 20, 19.62 million tons of wheat against 20.04 last year to date. 

It has also exported 5.71 million tonnes of barley since the start of the campaign against 5.74 million last year. 

Meantime, France has authorised some farmers to kill their poultry by asphyxia to stop a rapid spread of bird flu that has made it difficult for veterinary services to cope with massive culling, French Agriculture Minister Julien Denormandie said on Tuesday.

The practice, allowed only because of a rebound in outbreaks in the western part of the country that hosts about 25% of the country's poultry flock, has come under fire from farm unions and animal welfare activists who say it is cruel and unacceptable.

In this tense context, some environmentalist activists stopped a train and destroyed almost €2 million worth of wheat in the mistaken belief that the cargo was imported, intensively farmed soya.

France culled about 4 million birds, over the past month in the Pays de la Loire region, a major poultry zone further up France's Atlantic coast.

In just a few weeks, the virus also led to the culling of nearly five million poultry in Vendee and neighbouring departments, Denormandie said.

A total of 975 outbreaks of highly pathogenic bird flu were found in poultry farms by March 22 since the first outbreak on a farm was discovered on Nov. 26 last year, farm ministry data shows.

Meantime, a European meeting on agriculture has discussed using emergency funds for the industry and allocating 50 million euros ($55 million) to support Italian businesses in the sector, Agriculture Minister Stefano Patuanelli said on Tuesday.

The minister added that Italy would itself allocate a further 100 million euros to co-finance the measure.

Patuanelli said he did not see a problem regarding the availability of raw materials in the light of the Rusiia - Ukraine war but added that there was a serious spike in costs that needed to be addressed.

From North Africa, Algeria and China have signed a shareholder agreement to invest $7 billion to produce 5.4 million tonnes of fertiliser per year in the Algerian region of Tebessa, Algeria's national oil company Sonatrach said on Tuesday.

Algeria expects the phosphate project to create 12,000 jobs during the construction phase, the statement added.

From Central Africa, Kenya 2022/23 corn production, is forecast at 3.2 million metric tons (MMT), largely unchanged from MY2021/22 due to high fertilizer prices and farmers switching to alternative crops such as sugarcane. 

Kenya MY2022/23 wheat consumption is expected to rise to 2.25 MMT from 2.2 MMT as tourism and restaurants bounce back from COVID-19 restrictions. 

From the Middle East, Lebanon is planning a tender to import 50,000 tonnes of wheat from India but the timing depends on the Lebanese central bank opening the necessary credit line, the economy minister said.

Lebanon bought the bulk of its wheat from Ukraine so far. 

There are a few purchases that are coming in the next week from Ukraine (around 26,000 tonnes). 

But after that, they are not sure what they can got from Ukraine.

On this wake the World Bank has warned that Lebanon is one of a number of developing countries that face near-term wheat supply shortages.

The Lebanese government has asked the central bank for a $26 million advance to launch the tender, economy minister said, adding that the tender would be launched very quickly once the credit line was opened.

Lebanon was still waiting to hear from the United States and Kazakhstan on specifications and prices.

USDA Attaché in Tel Aviv forecasts Israel’s wheat imports to reach 1.74 million metric tons (MMT) in market year (MY) 2022/23, a 2 percent increase from Post’s MY 2021/22 figure. 

In MY 2021/22, U.S. wheat accounted for 8.2 percent of the market, up 55 percent from the previous year. 

The attache forecasts Israel’s imports of corn in MY 2022/23 to reach 2 MMT, of which 180 thousand metric tons (TMT) are expected to be of U.S.-origin. 

Israel’s imports of grain and feed will likely remain stable with a slight annual increase of 2 percent to match annual population growth. 

Soaring grain prices were of high concern to the local feed industry and users. 

Some feed prices grew by 71.1 percent, driving the industry to source cheaper products. 

Long operational queues in the seaports led to weeks long delays in offloading vessels, additional price increases, and uncertainty in supply.

In the current wheat harvest season Oman is showing a positive trend as high quality increased wheat harvest is noticeable in several wilayats.

The Ministry of Agriculture, Fisheries and Water Resources has been encouraging farmers to go for cultivation of wheat and preserve it as much as possible. 

Wheat yield in Al Najd farms reaches about 1,500 tonnes, an increase of more than 1,000 tonnes over the last season. 

Wheat harvest has started in 35 farms covering an area of 1,547 'feddans'. 

The wheat crop production during the agricultural season 2020/2021 amounted to 2,649 tonnes, an increase of 19 per cent, while the total lands planted with wheat last season amounted to 2,449 acres, recording an increase of 19.6 per cent.

Iraq's state grains buyer has extended the deadline for the validity of price offers in a tender to buy a nominal 50,000 tonnes of hard milling wheat. 

From the Black Sea basin, there is a growing acceptance that Russia will find a way to export its wheat crop. 

Most major importers of Russian wheat, indeed, are either allies or are agnostic about the conflict. 

Meantime, according to the Minister of Agriculture in Ukraine, spring crop areas are estimated at 7 million hectares, a reduction of around half of what should have been sown. 

Thus the Minister only foresees 3.3 million hectares of maize against 5.4 million last year. 

Moreover, even when sown, the question of crop management including the application of fertilizers arises. 

This is also valid for winter crops such as wheat, the minister even anticipating that only 4 million hectares could be harvested out of the 6.5 million hectares sown in the fall. 

Meantime, UkrAgroConsult estimated 22/23 corn acres in Ukraine 29% below last year on a 100k HA dip to 3.9m HA. 

Ukraine’s UkrAgroConsult also forecasts a 48% reduction in sunflower area this season. 

That would leave 3.5m HA for the oilseed flower. 

Canola and soy area in Ukraine is also expected to dip by 10% yr/yr. 

UkrAgroConsult also reported exports can maintain a 300k-400k MT/month pace under current conditions. 

While that is well below their normal ~3 MMT/mo pace, it remains above 0. 

UkrAgroConsult figures a 3 week lag before exports could return to a normal pace if a ceasefire were signed today under current conditions and circumstances. 

Fertilizer and fuel shortages were also mentioned in the UAC report for new crop and spring sowing.

From South East Asia, Indonesia's agriculture minister, Syahrul Yasin Limpo, told a parliamentary hearing on Tuesday that corn production target was set at 23.21 million tonnes.

Next year's target is 26 million tonnes for corn.

India, likely will push between 10-12Mt onto the export market.

From Australia, whichever way you look at it, Australia’s next wheat crop is unlikely to rival the record tonnage produced in 2021-22.

According to ABARES Agricultural Commodities, indeed, in March quarter 2022 report, Australian growers are forecast to plant 12.4 million hectares (Mha) to wheat in coming months.

That is 5 per cent below the 13.039Mha planted in 2021-22, which produced a record crop ABARES has estimated at 37.3Mt, and others are putting at north of 39Mt.

That followed the previous record of 33.3Mt, grown over 12.885Mha in 2020-21.

However, three record wheat crops in a row look unlikely due high input costs; mostly dry conditions in Western Australia to date, and the possibility that wheat prices will retreat by the time Australia’s 2022-23 harvest rolls around.

Meantime, local markets pick up a bid. 

Eastern Australian wheat bids firmed yesterday amid interest for APW/ASW and SFW in Victorian port zones.

Barley bids continued firm. 

The delivered Darling Downs market now is around $355/t, wheat around $380/t and the spread between that and southern values is tight. 

Other trade markets were left displaying wide bid/offer spreads. 

Local canola bids continued to lag compared with offshore markets.

Shipping stem pressure in recent weeks, arising from the record-breaking March activity, appears to have caused deferral into April of about 0.5Mt of grain export. 

Waiting times are stepping up a little at most ports.

Meantime, scattered showers continued to pass over parts of SA and Vic yesterday. 

The forecast has built more moisture for WA and northern NSW. 

It will be great timing for WA farmers to receive a 15-25mm event.

On the international trade scene, Egypt's state grains buyer GASC said on Tuesday it had bought 80,000 tonnes of soyoil in an international tender for arrival May 5-25.

GASC got the following offers in the tender with payment at 180 days and or at sight:

ADM offered 30kt of soybean oil at $ 1856 or $1837; 

Viterra offered 30kt sunflower oil at $ 2388 or $2350;

Cargill offered 30kt soybean oil at $1815 or $1795; 

Posco offered 25kt of soybean oil at $1800 or $1788; 

Aston offered 25kt of soybean oil at $1817 or 1800; 5750 MT of sunflower oil at $2135; 11500 MT of sunflower oil at $2094.

Traders gave the following breakdown of the purchase in dollars per tonne for payment at sight:

From Cargill, SBO 30,000 at $1,788; from Posco SBO 25,000 at $1,788; from Aston, SBO 25,000 at $1,788.

Traders had earlier said the local tender was cancelled but GASC later made a purchase of 21,000 tonnes of local soyoil.

Bangladesh's state grains buyer has issued another international tender to purchase 50,000 tonnes of milling wheat.

The deadline for submission of price offers is April 4.

In its last wheat tender on March 16, Bangladesh received higher offers than before the fighting in Ukraine started.

Price offers in the latest wheat tender are again sought on CIF liner out terms. 

These terms include ship unloading costs for the seller.

Shipment is sought 40 days after the date of contract signing. The wheat can be sourced from any worldwide origins except Israel and is sought for shipment to two ports, Chattogram and Mongla.

Turkey's state grain board TMO on Tuesday issued two tenders seeking a total 500,000 tonnes of animal feed corn in a combination of imports and supplies already in Turkey.

Particularly, the TMO has issued an international tender to purchase and import a total of 325,000 tonnes of feed corn, with deadline for submission of price offers March 28.

The tender seeks shipment from optional origins to a series of Turkish ports between April 8 and May 5

Separately, Turkey had also issued a tender to buy 175,000 tonnes of feed corn using supplies already in warehouses in Turkey. 

On Monday, the TMO issued tenders to purchase a total 455,000 tonnes of milling wheat also in a combination of imports and supplies already inside Turkey.

That's all.

To all of you I wish you a good day.

Author: Sandro F. Puglisi  

Make love ... not war ...

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