Daily International Grain Market View

Good afternoon Farmer Family ...

It was a risk off day yesterday which produced substantially losses on US farm markets, as the crop markets tumbled with the start of the new month.

Corn prices after dropped below the $6 mark, recovered a bit, but still down 1.50% on the day.

Soybeans faired the worse with 3.71% losses at the bell. 

Soymeal prices closed 2.87% weaker.

Soy oil prices ended with 3.62% losses on the day. 

Wheat prices also faded, but the board stayed relatively firm. 

At the bell front month SRW contracts were 0.93% lower. 

Kansas City wheat price sheded 0.91%. 

Spring wheats closed with 0.94% losses. 

The broad weakness in commodities including crude oil, due to recession fears, weighed on grain market.

Soybean and corn have followed crude oil down, due to soyoil's use in biodiesel and corn's role as the main feedstock for ethanol. 

Soybean prices also tumbled on profit-taking after the benchmark November contract surged nearly 12% last week, and on political tension between the United States and China, over Taiwan. 

Also, the first grains ship left a Ukrainian port using a newly agreed safe shipping channel, raising hopes that Ukraine's sea-borne exports can resume on a large scale after being blocked by war. 

Meantime, June’s corn grind was reported as 441.95 mbu for ethanol. 

That was down less than 1% from the month prior, but up from 4.34 mbu in June of ’21. 

The report had 1.919m tons of DDGS produced during June, which was up from 1.89m last month. 

As for soybean, the June soy crush was confirmed as 174.06 mbu. 

That was on par with the trade’s guess at just 540k bushels light. 

May’s crush was 180.887 mbu and June ’21 was 161.73 mbu. 

Soybean oil stocks at the end of the month were 1.912b lbs according to the monthly USDA report. 

USDA’s weekly Export Inspections report showed 856,938 MT of corn was shipped during the week that ended 7/28. 

That was up from 754k MT last week but under the 1.47 MMT from the same week last year. 

China was the top destination with nearly half of the total. 

USDA also added 42k MT to past reports for a season total of 51.926 MMT. 

That compares with 63 MMT during the same week last year. 

As for soybean, export inspections were at 552,083 MT. 

That was up from 392k MT last week and was 3x the same week from last year. 

The MYTD accumulated export reached 53.56 MMT. 

That is down from the 58 MMT shipped during the same period in last season. 

As for wheat, the report showed 256,601 MT of wheat was shipped during the week that ended 7/28. 

That was a 219k MT drop from last week and was 148k MT below the same week last year. 

Most (42%) of the week’s shipment was HRS spring wheat.

Despite traders continued to monitor crop weather closely during the day, commodity funds settled new positions and were net sellers of CBOT soybean, soymeal, soyoil, corn and wheat futures contracts.  

Meanwhile, corn basis bids were steady to weak across the central U.S. after falling 5 to 10 cents lower at five Midwestern locations.

Soybean basis bids were steady to weak after tumbling 9 to 45 cents lower across eight Midwestern locations.

After the sessions close, the U.S. Department of Agriculture's weekly condition ratings improved for soybeans and spring wheat while were held steady for corn, in contrast to trade expectations for downgrades in all three crops. 

Particularly, Corn quality ratings held steady last week, with 61% of the crop rated in good-to-excellent condition through July 31. 

Another 25% of the crop is rated fair (unchanged from last week), with the remaining 14% rated poor or very poor (unchanged from last week).

Physiologically, 80% of the crop is now silking, up from 62% a week ago. 

That’s still behind 2021’s pace of 89% and the prior five-year average of 85%. 

And 26% has reached dough stage, versus the prior five-year average of 31%.

Soybean conditions firmed a point to 60% rated in good-to-excellent condition. 

Another 29% is rated fair (down a point from last week), with the remaining 11% rated poor or very poor (unchanged from a week ago).

The percentage of soybeans blooming moved from 64% a week ago to 79% through Sunday. 

That is slightly below the prior five-year average of 80%. 

And 44% is now setting pods, versus the prior five-year average of 51%.

Spring wheat quality ratings improved two points, with 70% of the crop now in good-to-excellent condition. 

Another 23% is rated fair (down a point from last week), with the remaining 7% rated poor or very poor (unchanged from last week). 

Nearly all (97%) of this year’s crop is now headed, which is just under the prior five-year average of 99%.

The winter wheat harvest didn’t make a lot of headway, moving from 77% a week ago to 82% through July 31. 

It was behind 2021’s pace of 90% and the prior five-year average of 85%.

Meantime, the Eastern Corn Belt is set to get a substantial drink over the next several days, with large parts of Illinois, Indiana and Michigan likely to see another 1” to 1.5” or more rainfall between today and Friday. 

The agency’s 8-to-14-day outlook, however, predicts a return to seasonally dry weather for the central U.S. between August 8 and August 14, with widespread hotter-than-normal conditions also likely during this time.

Thus, on this morning, Chicago wheat prices fell 1.5% as of 03:25 GMT.

Corn gave up another 1.1%.

Soybean prices lost 0.5%, with prices dropping to their lowest in almost one week.

In energy markets, oil prices edged lower on this morning.

Brent crude futures, indeed, dropped 24 cents, or 0.2%, to $99.82 a barrel by 06:34 GMT, while WTI crude futures eased 10 cents, or 0.1%, to $93.78 a barrel.

The slide came after Brent futures slumped on Monday to a session low of $99.09 a barrel, their lowest since July 15. 

The U.S. crude benchmark dropped to as low as $92.42 a barrel, its weakest since July 14.

Investors absorbed a bleak outlook for fuel demand with data pointing to a global manufacturing downturn just as major crude producers will meet tomorrow to determine whether to increase supply or not.

Meanwhile the United States on Monday imposed sanctions on Chinese and other firms it said helped to sell tens of millions of dollars' in Iranian oil and petrochemical products to East Asia as it seeks to raise pressure on Tehran to curb its nuclear programme. 

Also casting a cloud over the market is the possibility of a visit to Taiwan by U.S. Speaker of the House Nancy Pelosi, despite Beijing's warnings against it. 

The visit would mark the first time a high-profile U.S. official has been on the island in over 25 years, which could escalate tensions between the U.S. and China.

In freight markets, the Baltic Exchange’s main sea freight index extended losses on Monday to hit its lowest since February, weighed down by slowing demand for iron ore and coal shipments from China.

The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels, indeed, shed 23 points, or 1.2% to 1,872 points.

The index touched its lowest level since Feb. 9.

Particularly, the capesize index lost 19 points, or 0.9%, at 2,062 points.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $155 to $17,100.

The panamax index was down seven points, or 0.3%, at 2,044 points.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $71 to $18,392.

Among smaller vessels, the supramax index fell 43 points to 1,928 points, while the handysize index shed 19 points to 1,154 points.

In equity markets, yesterday U.S. stock indexes were undercut by U.S.-China tensions, weak Chinese PMI data, and hawkish Fed comments.  

U.S.-Chinese tensions regarding Taiwan remain high after China’s Foreign Ministry spokesman Monday said that China’s military “won’t sit idly by” if House Speaker Nancy Pelosi visits Taiwan.

China’s July manufacturing PMI, reported on Saturday, fell -1.2 points to 49.0, which was weaker than expectations for a slight +0.1 point increase to 50.3.  

China’s July non-manufacturing PMI fell by -0.9 points to 53.8, which was slightly weaker than expectations for a -0.8 point decline to 53.9.  

TheUS yield on the 10-year Treasury, which influences mortgage rates, fell to 2.60% from 2.65% late Friday.

Monday’s July U.S. ISM manufacturing index fell -0.2 to a 2-year low of 52.8.

That, however, was stronger than expectations of a -1.0 point decline to 52.0.  

The July prices-paid sub-index fell sharply by -18.5 points to 60.0, much weaker than expectations of a decline to 74.3.  

The July new orders sub-index fell by -1.2 points to 48.0, but the July ISM employment sub-index rose by +2.6 points to 49.9.

In this context, the S&P 500 gave up an early gain to end down 0.3% at 4,118.63. 

The Dow Jones Industrial Average dipped 0.1% to 32,798.40 and the Nasdaq fell 0.2% to 12,368.98. 

Smaller company stocks also gave back some of their recent gains, nudging the Russell 2000 0.1% lower to 1,883.31.

August’s subdued opening follows a solid rally for stocks last month: July was the best month for the S&P 500 index since November 2020. 

Wall Street will get several updates on the job market, which has remained strong. 

The Labor Department will release its June survey on job openings and labor turnover on Tuesday and its closely-watched monthly employment report for July on Friday.

Meantime, global shares were mostly lower Tuesday as an expected visit by U.S. House Speaker Nancy Pelosi to Taiwan prompted threats from Beijing.

European shares mostly declined in early trading.

France's CAC 40 slipped 0.5% in early trading to 6,406.15, while Germany's DAX lost 0.7% to 13,388.26. 

Britain's FTSE 100 was little changed, inching up less than 0.1% to 7,416.42. 

In Asian trading, Japan's benchmark Nikkei 225 declined 1.4% to 27,594.73. 

South Korea's Kospi slipped 0.5% to 2,439.62. 

Hong Kong's Hang Seng dropped 2.4% to 19,689.21, while the Shanghai Composite dove 2.3% to 3,186.27.

Australia’s S&P/ASX 200 edged 0.1% higher to 6,998.10.

The Reserve Bank of Australia on Tuesday boosted its benchmark interest rate for a fourth consecutive month to a six-year high of 1.85%. 

It was the third consecutive hike of half a percentage point. 

The cash rate is now at its highest point since May 2016 when the bank cut the rate from to 1.75% from 2%.

In currency trading, the U.S. dollar edged down to 130.89 Japanese yen from 131.71 yen. 

The euro cost $1.0235, down from $1.0259.

From South America, Argentine exports of grain, oilseeds, and their derivatives hit $3.16 billion in July, the South American country's CIARA-CEC chamber of oilseed crushers and export companies said on Monday.

This was down 17% from the previous month and 10% lower than in July 2021, as a result of weather conditions and roadblocks by truckers.

Total exports year-to-date, however, have reached $22.31 billion, a 10% rise from the previous year and the highest on record.

Particularly cumulative old-crop wheat sales stood at 21.04Mt as of July 20, including 17.65Mt sold for export. 

Total new-crop wheat sales had reached almost 5.11Mt by July 20, up from 4.34Mt at the same time last year, with virtually the entire volume destined for export channels.

Brazilian soybean exports reached 7,52 MMT in July, which was a year-over-year reduction of 13.3%. 

Brazilian corn exports more than doubled year-ago results, meantime, with a July tally of 4,13 MMT.

According to Agrural, Brazil’s safrinha corn harvest is 73% complete.

Meantime, Brazilian Agriculture Minister Marcos Montes said on Monday Chinese authorizations for Brazilian soymeal exporters may be granted in the space of two months.

In Europe, the first session of the month recorded a net decline on Euronext.

A net decline in grain and oilseed prices was also observed on the various physical markets, in spite the recent estimate by the European Commission marked a decline in 2022/23 grain and oilseed productions.

European wheat production, indeed, was cut by 1.1 Mt to 123.9 Mt.

Corn production was pegged now at 65.8 Mt against 72.7 Mt last year.

That is a 8% drop, or 5.9 million tonnes.

European sunflower production is also announced lower at 10.5 Mt.

Strategie Grains also reduced their expected sunflower seed crop for the EU by 520k MT to 10.35 MMT citing the drought. 

Soybeans were reduced 200k MT to 2.98 MMT, though that is still up 2.9% yr/yr. 

Rapeseed in contrast was upped by 140k MT to 18.47 MMT – now 8.8% above last year's output. 

Traders in the grain market, are closely monitoring resumption of grain shipments from the Black Sea region.

The authorities and operators welcame the reopening of the port of Odessa with a first corn boat which follows the process decided on July 22 of the corridor. 

Consequentially, the European Commission has already reduced its wheat export target by 2 Mt to 36 Mt, for the current season.

The Commission also revised down by 1 million tonnes to 29 million tonnes its estimate of EU soft wheat exports in the 2021/22 season that ended in June to reflect trade data.

In contrast, expected EU corn imports in the 2022/23 season were increased by 1.5 million tonnes to 16.5 million tonnes.

Importers will, however, be attentive to the pace of the coming weeks and months in a context of strong demand over the near period. 

In Europe, export activity has been indeed very buoyant since the season started.

Meantime, Germany's 2022 winter wheat harvest will increase about 1% on the year to an estimated 21.38 million tonnes, the DBV association of German farmers said on Tuesday.

Nationally, German winter wheat harvest yields were up some 4% on the year to an estimated 7.64 tonnes a hectare.

Germany's harvest of winter rapeseed, will rise about 13% on the year to an estimated 3.96 million tonnes. 

Rapeseed oil content is also satisfactory.

The winter barley crop, will increase about 3% on the year to 9.16 million tonnes.

But the crop of silage maize is believed to have suffered from the recent heat-wave.

From the Black Sea basin, in Russia wheat export prices rose slightly past week following growth in wheat prices in Chicago and uncertainty around the deal aimed at resumption of massive exports from Ukraine. 

Particularly, according to the IKAR, Russian prices for wheat with 12.5% protein content and for supply from Black Sea ports rose by $3 to $358 a tonne free on board (FOB) at the end of last week.

In contrast, price for domestic 3rd class wheat, European part of Russia, excluded delivery according to Sovecon was at 13,000 rbls/t ($208.5), down 25 rbls from prior week.

Price for sunflower seeds was at 25,425 rbls/t -175 rbls (Sovecon). Price for domestic sunflower oil was at 72,675 rbls/t -500 rbls (Sovecon);

Price for domestic soybeans was at 34,150 rbls/t -250 rbls (Sovecon); Export price for sunflower oil was at $1,330/t -$50 (Sovecon);

Export price for sunflower oil was at $1,270/t +$20 (IKAR);

Price for white sugar, Russia's south, was at 1,121.3/t +$41.3 (IKAR) 

($1 = 62.3500 roubles).

Russian harvesting data, as of July 27, had a total production 38.8 MMT, of which wheat 33.0 MMT and barley 4.3 MMT.

The average yield for all grains were at 4.23 tonnes/hectare.

Particularly, wheat yield was at 4.37 tonnes/hectare, while barley at 4.14 tonnes/hectare.

Total harvested area, was 9.2 mln hectares, of which 7.6 mln hectares wheat and 1.0 mln hectares barley.

Meantime, Russia exported 650,000 tonnes of grain last week, compared with 540,000 tonnes the previous week, according to port data. 

Sovecon estimates that the country exported around 2,3 MMT of wheat in July, more than doubling its efforts from June and posting the biggest results since February. 

From Ukraine, the first ship with the Ukrainian grain left the Black Sea port of Odesa on Monday. 

It will anchor off the coast of Istanbul this afternoon to be inspected by the Joint Coordination Centre before sailing on to Tripoli Lebanon, the final destination of its cargo.

Dates and timings for further shipments are still being worked out and will likely be finalised only once the first shipment goes through inspection in Istanbul, according to the JCC. 

It is hoped that around 580,000t could follow in the coming weeks, mainly corn, some sunflower meal, wheat and beans.

Vessels that were blocked in Ukrainian terminals will be the first to leave, but the resumption of trade with new export deals and new vessels is uncertain. 

As for prices, according to APK-Inform, the prices of barley were slightly volatile last week in Ukraine.

Particularly, the bid prices of barley in the Danube ports (CPT-port) and the port of Giurgiuleşti for delivery in August-September remained steady at 130-155 USD/t and 190-200 EUR/t correspondingly. 

The bid prices of barley for delivery to Romanian cities increased to 220-260 EUR/t. 

Prices decreased to 280-295 EUR/t CIF Constanta.

Wheat prices increased slightly in Ukrainian ports of the Danube last week for the first time since late June.

Particularly, the bid prices of 2-grade, 3-grade and feed wheat totaled 170-195, 160-193 and 130-150 USD/t in the ports of Reni and Izmail that was up slightly compared to the previous week.  

From Kazakhstan, this year the country will harvest approximately 16 mln tonnes of wheat that will allow to export 9 mln tonnes, head of Kazakh Grain Union Nurlan Ospanov said on August 2.

With exports unlikely to increase as competitor Russia expects a bumper crop, such volumes could put pressure on domestic prices, the union said. 

“We see wheat stocks at 1.1 mln tonnes as of September 1. Planted area is seen at 12.8 mln ha. We expect the yield to be at 1.25 t/ha and the crop at 16 mln tonnes. Production after post-harvesting treatment should be 14.4 mln tonnes. Import from Russia can reach 13 mln tonnes. Thus, we will have 16.8 mln tonnes of wheat supply that is very high level” Nurlan Ospanov added.

From Australia, Monday’s canola new crop bids firmed A$15/t. 

Wheat, in a similar pattern to last week, saw values relatively flat and unchanged. 

Barley bid and offer spreads remained wide.

Port congestion has improved marginally this week but in Kwinana wait times still are 31 days and in Newcastle 23 days.

On international trade scene, Taiwan’s MFG is on the market for 65k MT of corn to be sourced from the United States, South America or South Africa. 

Offers must be submitted by August 3, and the grain is for shipment between October 1 and November 4, depending on origin.

Tunisia's state grains agency has issued an international tender to purchase an estimated 100,000 tonnes of soft wheat and 50,000 tonnes of animal feed barley.

It is believed the deadline for submission of price offers is Aug. 3.

The grain can be sourced from optional origins. 

However, the Black Sea region is not listed as a possible origin because of continued uncertainty over exports from Ukraine.

The wheat is sought in four 25,000 tonne consignments for shipment between Aug. 25 and Oct. 5.

The barley is sought in two 25,000 tonne consignments for shipment between Aug. 25 and Sept. 20.

Japan's Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy 122,103 tonnes of food-quality wheat from the United States, Canada and Australia in regular tenders that will close on Thursday.

Also of note, Algeria is back to buying milling wheat for September-October loading.

That's all, thank you.

To all of you, I wish you a good day and ... Good Harvest 2022!

Author: Sandro F. Puglisi  

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