Grain Market View - Daily Update

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US farm markets fell sharply on Monday.

Notably, corn prices fell 1.81% to an eight-month low. 

Soybeans spilled 1.23% lower. 

The rest of the soy complex also trended lower, with soymeal down 1.39%, and soyoil posting 1.57% losses.

Wheat losses were variable, as CBOT SRW lost 2.76%, KC HRW dropped 0.92%, and MGE HRS eased 0.5%. 

Private exporters reported to the USDA the cancelation of sales of 327,000 metric tons of corn for delivery to China during the 2022/2023 marketing year.

That churned up some fresh export concerns, and drove the sell off. 

Rising geopolitical tensions, with President Biden planning an executive order to limit American businesses' investment in parts of China’s economy, could be linked to this reaction, some source said.

Also, a new bill has been introduced that would prohibit purchases of U.S. land by anyone associated with China, if it were to pass. 

Meantime a tepid round of export inspection data, brought the bears racing back onto the scene.

Weekly Export Inspections data, indeed, showed 913,813 MT of corn was shipped during the week that ended 4/20.

That was a drop from 1.24 MMT last week and was down 752k MT from the same week last year.

The full season’s corn export total was marked at 22.36 MMT as of 4/20, which is still 36% behind last year’s pace. 

As for soybean, the report showed 374,960 MT of soybean was shipped.

That was down 29% from last week and 38% from the same week last year.

The weekly data had 47.047 MMT of soybean exports for the season through 4/20, which is 0.9% ahead of last year’s pace. 

As for wheat, the report showed 363,826 MT of wheat exports for the week that ended 4/20.

That was up from 252k MT last week and from 290k MT during the same week last year.

However, the weekly data had the season’s total shipment still at 17.866 MMT, or 2.8% behind last year’s pace. 

Internationally, export prices of Russian wheat continued to decline last week on low demand, despite uncertainty continue over whether the Black Sea grain deal will be extended.

On this wake, the head of the Russian Grain Union said on Monday the Black Sea grain deal to facilitate Ukrainian agricultural exports had not yielded anything positive for Russia or only helped facilitate supplies to the global market.

A union of Argentine transporters started an indefinite strike on Monday, threatening to hit shipments at the Rosario agro-port hub by forcing exporters to rely on dwindling grain reserves at the terminals, according to local bodies.

However, in the afternoon, the country's government and the union signed a memorandum of understanding with the commitment to lift any measure of force in place, within the framework of a "table for dialogue and social peace," the transportation ministry said in a statement.

In this context, corn basis bids were steady to firm across the central U.S., after climbing as much as 25 cents higher at an Iowa processor and eroding as much as 10 cents lower at an Iowa river terminal.

Soybean basis bids were mostly steady across the central U.S., but did inch a penny higher at an Ohio elevator while spilling 10 cents lower at an Iowa river terminal.

Commodity funds were net sellers for 6,000 lots of corn, 4,000 lots of soybeans and 5,000 lots of wheat.

They also were net sellers of CBOT soymeal and soyoil futures contracts.

After the sessions close, the USDA in its Weekly Crop Progress report, showed winter wheat was 18% headed as of 4/23.

That was 4% points ahead of average.

Winter wheat conditions slipped 1 point from last week, as the USDA rated it only 26% as good to excellent, but matched the average expectation among 11 analysts.

The U.S. spring wheat crop was 5% planted, the government said, lagging both the average analyst estimate of 7% and the five-year average of 12%.

USDA’s NASS also reported that 14% of the 23/24 corn crop was planted as of 4/23.

That was up from 8% last week, with significant advancements in KY, NC, and TN.

Nebraska was shown 10% planted compared to their 7% average pace, while IA matches the 5-yr average pace at 10% planted.

Missouri was shown 58% planted compared to the 5-yr average pace of 18%.

National emergence reached 3%, compared to 2% on average. 

As for soybean, the report had 9% of soybeans planted as of 4/23. 

That was up from 4% last week and compares to the 5-yr average pace of 4%. Illinois advanced from 4% to 15% through the week and is running 9% points ahead of average. 

Meantime, the Southern Plains will see ample rains fall between today and Friday, with some areas set to gather 2” or more during this time, per the latest 72-hour cumulative precipitation map from NOAA.

Most of the central U.S. will get at least some measurable moisture during this time.

Further out, NOAA’s new 8-to-14-day outlook predicts a return to seasonally dry weather for most of the Corn Belt between May 1 and May 7, with prevalent colder-than-normal conditions also likely next week.

As a result, Chicago wheat lost more ground on this morning, with prices dropping to their lowest in almost two years on forecasts of much-needed rains in U.S. winter grain regions.

Corn edged lower, while soybeans eased.

Notably, the most-active wheat contract on the Chicago Board of Trade (CBOT) slid 0.6% to $6.53-1/4 a bushel, as of 04:35 GMT, after hitting its lowest since July 2021 at $6.53 a bushel.

Corn fell half a cent to $6.07-1/4 a bushel and soybeans also slid half of a cent to $14.35-1/2 a bushel.

Operators will closely watch the StatCan report on sowing estimates in Canada scheduled for tomorrow.

In energy markets, oil prices settled higher, reversing losses as investors grew optimistic that holiday travel in China would boost fuel demand in the world's largest oil importer.

Notably, Brent crude settled up $1.07, or 1.3%, at $82.73 a barrel while U.S. West Texas Intermediate crude settled up 89 cents, or 1.1%, at $78.76.

Chinese customs data on Friday showed record volumes of imports in March.

Bookings in China for trips abroad during the upcoming May Day holiday point to a continued recovery in travel to Asian countries, but the numbers remain far off pre-COVID-19 levels.

Supply tightness owing to additional supply cuts planned by the OPEC+ producer group from May could also lift prices.

Iraq's northern oil exports also showed few concrete signs of an imminent restart after a month of standstill, as aspects of an agreement between Baghdad and the Kurdistan Regional Government (KRG) have yet to be resolved.

In addition, expectations for a slowdown in U.S. gross domestic product growth in the first quarter prompted a pullback in the U.S. dollar index yesterday, supporting gains in oil prices.

A weaker U.S. dollar, indeed, can help global demand for oil by making it cheaper for holders of foreign currencies in other countries.

However, refining margins in Asia have weakened on record production from top refiners China and India, curbing the region's appetite for Middle East supplies loading in June..

Also, investors remain wary about central banks in the United States, Britain and the European Union potentially raising interest rates to curb inflation, which could slow economic growth and dent energy demand.

As a result, oil prices were steady on this morning, with Brent crude rising 4 cents to $82.77 a barrel at 03:45 GMT, while U.S. West Texas Intermediate crude gained 6 cents to $78.82 a barrel.

Meantime, investors are awaiting industry data on U.S. oil stockpiles due this afternoon. 

Analysts expected the data to show U.S. crude inventories fell by about 1.7 million barrels in the week to April 21.

U.S. government data on inventories is due on Wednesday.

In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, edged up on Monday, aided by higher rates for capesize and supramax vessel segments.

The overall index, indeed, gained 13 points, or 0.9%, to 1,517 – its highest in nearly two weeks.

Notably, the capesize index was up 31 points, or 1.6%, at 1,993.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes carrying commodities such as iron ore and coal, increased $256 to $16,526.

The panamax index slipped 5 points, or 0.3%, to 1,687.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, lost $39 to $15,186.

Among smaller vessels, the supramax index climbed a near one-month peak, adding 11 points to 1,212.

In equity markets, US stock indexes drifted sideways and settled mixed.  

Global bond yields were mixed, with the 10-year German bund yield rose +2.7 bp to 2.508%, the 10-year UK gilt yield rose +2.3 bp to 3.781%, while the US 10-year T-note yield fell -5.7 bp to 3.513%.

Lower T-note yields were supportive for stocks.  

Also, strength in energy stocks boosted the overall market. 

On the positive side, also First Republic Bank closed up more than +12%.  

Also, recently beaten-down managed healthcare stocks rose on bargain hunting.  

In addition, Zoom Video Communications closed up more than +2%.

On the negative side, Carrier Global closed down more than -7%.  

Also, Fox Corp closed down more than -2%.  

In addition, U.S.-listed Chinese stocks retreated on rising geopolitical tensions, with President Biden planning an executive order to limit American businesses' investment in parts of China’s economy.

This week's earnings from mega-cap technology stocks Amazon.com, Microsoft, and Meta Platforms will be parsed for insights into the effect of higher borrowing costs and a struggling economy. 

Microsoft is due to report earnings Tuesday and Amazon on Thursday. 

Meantime, Microsoft fell 1.4% and Amazon dipped 0.7%.

The U.S. Apr Dallas Fed manufacturing activity index unexpectedly fell -7.7 to a 9-month low of -23.4, weaker than expectations of an increase to -12.0.

As a result, on Wall Street, the S&P 500 advanced to 4,137.04. 

The Dow Jones Industrial Average rose 0.2% to 33,875.40 while the Nasdaq composite slipped 0.3%, to 12,037.20.

Wall Street is waiting for the first estimate of how quickly the U.S. economy grew in the first three months of the year. 

Economists expect growth to slow to 1.9% at an annual rate, down from 2.6% in the final quarter of 2022.

On this morning, Asian stocks were mixed.

Shanghai and Hong Kong declined while Tokyo advanced.

Notably, the Shanghai Composite Index lost 0.6% to 3,256.82 while the Nikkei 225 in Tokyo advanced 0.4% to 28,706.04. 

The Hang Seng in Hong Kong sank 1.6% to 19,643.00.

The Kospi in Seoul tumbled 1.6% to 2,482.50 after South Korea reported unexpectedly strong economic growth in the first quarter, avoiding a technical recession. 

Korean economic activity expanded by 0.3% over the previous three-month period, rebounding from a 0.4% contraction.

Singapore and Bangkok declined. 

New Zealand and Australian markets were closed for a holiday.

In currency trading, the dollar index fell by -0.47% and posted a 1-week low, under pressure from weaker T-note yields, and weaker-than-expected Dallas Fed report. 

In addition, hawkish ECB comments Monday boosted EUR/USD to a 1-week high and undercut the dollar. 

On this morning, the dollar rose to 134.37 yen from Monday's 134.27 yen. 

The euro gained to $1.1055 from $1.1046.

Going back to analyzing the other agricultural markets …

From Canada, Agriculture and Agri-Food Canada released its April Outlook for Principal Field Crops on Friday. 

AAFC is currently affected by the Public Service Alliance of Canada strike, with the delivery of several federal services within AAFC expected to be affected.

There were few changes in this month's report but there was some export demand signals noted along with some changes made in estimated market prices. 

The following are a few of the largest month-over-month changes reported.

The April report saw the government increase its forecast for wheat exports (excluding durum) by 100,000 metric tons (mt) to 19.6 million metric tons (mmt). 

This is the eighth consecutive monthly increase, after being estimated at 18 mmt in August or the first month of the 2022-23 crop year. 

This in turn leads to a 100,000-mt drop in the estimate for ending stocks to 4.3 mmt, which remains 637,000 mt higher than the estimated carry-out for 2021-22.

It is interesting to note that the Canadian Grain Commission's week 36 statistics, the last report made available due to the PSAC strike, showed Canada's wheat exports through licensed facilities over 350,000 mt higher than the steady pace needed to reach the previous month's forecast. 

AAFC's estimate pointed to the potential for slowing demand during the balance of the crop year, while the Public Service Alliance of Canada (PSAC) strike will act to further to erode Canada's export potential. 

In other changes, AAFC lowered its forecast price for wheat (excluding durum) by $5/mt this month or to $415/mt.

It is interesting to note that AAFC's all-wheat export forecast of 24.4 mmt remains below the USDA's 25 mmt forecast, although the gap is seen narrowing.

Another change made is a 200,000-mt lower revision in Canada's canola export forecast to 8.4 mmt, while ending stocks were revised higher by the same amount to 1 mmt. 

There has long been concern about Canada's lack of competitiveness with Australia, while lower futures trade may have acted to slow producer selling. 

As with wheat, week 36 data shows cumulative exports through licensed facilities over 400,000 mt ahead of the steady pace needed to reach the higher March export forecast of 8.6 mmt, while the government clearly has reason to believe that the balance of the crop year will see export volumes under pressure. 

AAFC estimated the average track Vancouver price for 2022-23 at $850/mt, down $40/mt from the previous month's estimate while down $225/mt from the previous crop year.

AAFC revised higher its forecast for corn exports by 100,000 mt to 1.850 mmt, which is also up roughly 100,000 mt from the previous year's volume shipped. 

AAFC lowered the expected return by $5/mt this month to $315/mt.

All forecasts may be viewed as jeopardized by the current government worker strike, with the CGC's weighing and inspection staff on strike and the potential to back up grain. 

While that is of great concern, PSAC is also considering moving picket lines to strategic locations, which includes the ports, which may further complicate movement through the handling system.

Meantime, according to Mercantile Consulting, "Canadian wheat exports in week 37 were 321.8k mt for a season total of 8.1 million mt.

There were no exports from Thunder Bay, and just 22.6k mt exported from the Bay and Lakes.

There was not a whole lot new in the durum market.

Most of the old crop trade is done and users will be increasingly turning to new crop.

Durum exports in week 37 were 69.8k mt for a season total of 3.8 million mt.

This means that Canada has approximately 1.0 million mt of exportable surplus remaining to export in the last 15 weeks of the marketing year.

Farmers have already delivered 563.2k mt of this into the elevator system.

There was nothing exported from Thunder Bay where durum stocks grew only slightly to 108.0k mt."

On the other hand, operators are expecting the StatCan report on sowing estimates in Canada scheduled for tomorrow.

Analysts are looking for StatsCan to report 3.7m acres of 23/24 corn area ahead of Wednesday’s report. 

That would be up 80k acres from last season if realized. 

The full range of estimates is from 3.4 to 3.8m acres. 

As for canola, analysts are looking for a 21.8m acre canola crop. 

That would be up 400k acres from 22/23 if realized. 

The full range of estimates is from 20.5 to 22.5 million. 

The average trade estimate for soybean area is 5.3m acres, even with last year. 

As for wheat, analysts are looking for a 1m acre increase for wheat to 26.3m on average. 

The full range is for between 25.5m acres to 27 million, compared to 25.4m last season. 

Spring wheat specifically is expected to increase 900k acres on average to 18.9 million. 

From South America, Brazilian farmers have harvested 92% of the soybean area planted for 2022/23 through last Thursday, agribusiness consultancy AgRural said on Monday, up six percentage points from the previous week.

At the same time last year, 91% of the Brazilian soy fields had been reaped, AgRural said in a statement, noting fieldwork has been completed in all center-western and southeastern states.

In Europe, Euronext wheat ended slightly firmer on Monday in a choppy session, after reaching its lowest level since 2021.

Notably, September wheat settled 0.1% up at 243.75 euros ($268.88) a tonne.

It earlier eased to 241.50 euros, the weakest second-month price since September 2021, to extend a steep fall from Friday.

Traders assessed mixed signs regarding supply from the Black Sea region.

Renewed warnings from Russia that it could pull out of a the agreement maintained a risk to Black Sea trade, though large Russian supplies were capping prices.

There were signs Russia is trying to step up shipments to clear stocks, after a draft regulation proposed unused export quotas be reallocated to firms that have filled theirs.

There is talk Russian exporters offered wheat for sale in past days in export markets at between $265 to $270 a tonne FOB.

Moves to maintain Ukrainian exports via the European Union after opposition from eastern EU countries also were tempering Black Sea supply concerns.

The slight recovery on Euronext was led by May wheat, which ended 1% higher at 245.00 euros after earlier setting the lowest level for a front-month contract since September 2021 at 240.50 euros.

Rainfall in the past month has benefited cropland in much of the EU, with the exception of Spain and northern Italy, plagued by a water deficit.

Notably, according to the European organization MARS, the average yield of winter wheat is estimated at 5.96 t/ha for the EU, which would be 3% higher than last year and the 5-year average. 

Average rapeseed yields would be up by 7% compared to the 5-year average at 3.31 t/ha. 

In barley, the organization is posting an estimate of average yields for all varieties combined at 4.92 t/ha, down slightly from last year.

Meantime, traders were monitoring cold weather forecast this week in central Europe, though possible frosts were not expected to be severe enough to damage crops.

From Levant, as expected 130% import duty was announced in Turkey for maize,wheat and barley. 

As of now, there is a 15-day ship discharge queue at Turkish ports, many importers hope to finish import by the end of this week and to hope profit of 100-150 usd/mt with the changing market conditions.

From Ukraine, Ukraine's grain exports for the 2022/23 season were at 40.7 million tonnes as of April 24, Agriculture Ministry data showed on Monday.

The volume so far in the current July-to-June season included about 13.9 million tonnes of wheat, 24 million tonnes of corn and 2.4 million tonnes of barley.

The ministry said grain exports during April were almost 2.8 million tonnes as of April 24.

According to APK-Inform, Ukraine's wheat exports are likely to fall 37% to 8.8 million tonnes in the 2023/24 July-June season due to an expected drop in the harvest and ending stocks.

In its first forecast for the 2023/24 season, the consultancy said Ukraine's overall grain harvest could fall by 13% to 45.6 million tonnes, including 16.2 million tonnes of wheat, 5.2 million tonnes of barley and 22.9 million tonnes of corn.

From Russia, weather conditions remain favourable for the new crop.

In this context, SovEcon consultancy raised its 2023 wheat harvest forecast to 86.8 million tonnes from 85.3 million tonnes previously.

However, IKAR reduced its wheat forecast to 84 million tonnes from 86 million, and the grain harvest to 129.5 million tonnes from 131.5 million, mainly because of problems with the state of crops in the northeast of the European part of Russia's Black Earth region, as well as in the Volga region.

Last week, the Russian Ministry of Agriculture updated its 2023 harvest forecast to 123 million tonnes of grain, including 78 million tonnes of wheat.

Meantime, Russia exported 1.11 million tonnes of grains during the week ended April 21, of which 1.0 million tonnes were wheat.

That was compared with 1.16 million tonnes of grain and 950,000 tonnes of wheat the previous week.

On this wake, SovEcon downgraded wheat export estimates for April by 0.1 million tonnes to 4.2 million tonnes, though Russia exported 2.4 million tonnes in April 2022, and the average for the month being 2.7 million tonnes.

SovEcon noted growing problems with new export sales.

Large traders’ outstanding wheat export sales fell again, to 1.6 million tonnes from 1.9 million tonnes a week ago and 2.3 million tonnes two weeks earlier.

This is the lowest volume since November 2022.

As a result, export prices of Russian wheat continued to decline last week.

Notably, according to the IKAR, prices for Russian wheat with 12.5% protein content, delivered free on board (FOB) from Black Sea ports, were at $265 a tonne, down $6 from last week.

As for other products, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 11,250 rbls/t, -125 rbls/t (Sovecon).

Price for sunflower seeds was at 22,575 rbls/t, +650 rbls/t (Sovecon).

Price for domestic sunflower oil was at 74,350 rbls/t (Sovecon).

Price for domestic soybeans was at 30,650 rbls/t, +175 rbls/t (Sovecon).

Export price for sunflower oil was at $870/t, +$20/t (IKAR).

Price for white sugar, Russia's south was at $710.61/t, +$10.32 (IKAR).

The future of the Black Sea grain deal could be affected by Turkish elections on May 14 or by a potential Ukrainian counter-offensive, SovEcon said.

Russia has said it will not extend it beyond May 18 unless barriers to its own food and fertiliser exports are addressed, although Russia has no plans to halt wheat exports.

However, Group of Seven (G7) agriculture ministers on Sunday said, "we strongly support the extension, full implementation and expansion of the Black Sea Grain Initiative".

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We wish you a nice day.

Author: Sandro F. Puglisi