March 15, 2024 - Newswires

Grain prices ended lower, with some risk off selling pressure tied to a rally in the U.S. dollar ...

Good morning, Farmer Family ...

US farm markets ended mostly lower on Thursday.

Corn prices tumbled 1.7% lower.

Soybeans eased 0.13%.

The rest of the soy complex was mixed as soymeal picked up 0.3%, while soyoil slid 0.37%.

Wheat prices faced double-digit losses, as Chicago SRW lost 2.2%, Kansas City HRW stumbled 2.17% lower, and Minneapolis spring wheat dropped 1.24%.

• Wheat was under selling pressure as China cancelled 1 million metric tons of Australian wheat, after cancellations of U.S. wheat earlier.
• The Weekly Export sales report had 83,804 MT of wheat sold during the week that ended 3/7.
• That was a MY low, after cancellations from China, though were still net positive.
• The season’s commitments at 18.502 MMT, were just 4% above last year’s pace.
• However, abundant supplies and a stronger dollar have contributed to the drop in prices.
• The lower wheat market also weighed on corn, which ignored strong weekly exports sales.
• The weekly FAS data indeed had 1.283 MMT of corn sold for the week that ended 3/7.
• Total corn commitments were 27% above last year’s pace at 40.511 MMT.
• Separately, the USDA confirmed via mandatory reporting system a 100k MT old crop corn sale to Mexico.
• However, the strong selling pressure pushed the corn market near new lows, though the fall was less extensive than on U.S. wheat markets.
• For soybean, the market tested gains at times during a choppy session, but ultimately followed other grains into the red.
• The USDA has started using global exporters' data to estimate China's soybean imports because a wide gap emerged between shipping figures from producing nations and Chinese customs data.
• Chinese customs data that USDA historically used to estimate imports had previously aligned with export data from producers like the U.S. and Brazil.
• However, the numbers began deviating in 2023, and the USDA this month increased its estimate for China's 2022-2023 imports by 3.6% from February to reflect exporters' data.
• China's General Administration of Customs last week revised soybean import volumes for January-February 2023 to 14.3 million tons, versus an initial published figure of 16.17 million tons.
• China is known to revise retrospective import figures, but such a big downward adjustment has been considered unusual.
• On this wake, the USDA this month also increased its estimates for China's soybean crush from 2020-2021 to 2022-2023, following a years-long review of in-country estimates and supply data.
• Meantime, the weekly Export Sales report showed only 375,980 MT of soybeans were booked during the week that ended 3/7.
• That marked the season’s commitments at 39.666 MMT, which is 20% behind last year’s pace.
• On the weather side, the National Weather Service’s Climate Prediction Center offered a 62% chance that La Niña weather conditions will develop over the summer months.
• El Niño peaked last December and will go down as one of the five strongest on record, according to the CPC.

In this context ...

• Corn basis bids were steady to slightly firm after trending 1 to 2 cents higher at two Midwestern locations.
• Soybean basis bids were mostly steady across the central U.S., but did trend 5 cents lower at an Indiana processor and 2 cents higher at an Illinois river terminal.
• Commodity funds were net buyers of CBOT soybean and soymeal contracts, and net sellers of corn, wheat and soyoil contracts.

This morning ...

Chicago wheat prices were largely flat, with the market on track for a third weekly decline. Corn firmed, while soybeans slid.

• Notably, the most-active wheat contract on the Chicago Board of Trade (CBOT) was unmoved at $5.32-1/4 a bushel, as of 0223 GMT, corn added 0.3%, and soybeans shed 0.1%.
• For the week, wheat was down 1%, having lost 6.5% in three weeks, corn was down 1.1%, while soybeans have added nearly 1%.

South America

Argentina

Argentina’s Rosario grains exchange bumped up its forecast for the country’s 2023/24 soy production by 500,000 metric tons on Wednesday, reflecting the positive impact from February’s ample rainfall.

• In its monthly grains report, the exchange forecast soy production this season at 50 million tons.
• For corn, the exchange held its 2023/24 crop forecast steady at 57 million tons, but warned of the impact of the corn stunt disease caused by Spiroplasma bacteria in late corn lots in the agricultural provinces of Cordoba and Santa Fe.
• According to the Buenos Aires Grains Exchange, the percentage of Argentine soybean plantings with optimal-to-excellent soil moisture grew to 77% in the last week, boosted by recent rains.
• The exchange estimated the 2023/24 harvest at 52.5 million metric tons.
• The grains exchange also said that the 2023/24 corn crop was seeing an increase in the presence of maize leafhoppers, an insect which carries the harmful spiroplasma disease.
• The exchange held its estimate for the corn harvest at 56.5 million tons, but said it was evaluating damages caused by the pest.

Europe

European grain markets were mixed again.

• Wheat prices edged lower, with May milling wheat closing 0.39% lower at 194.00 euros ($211.13) a metric ton.
• Corn however ignored wheat's weakness and continued to hold just below resistance at €180/t for June 2024 delivery.
• Rapeseed has seen some profit-taking after a strong rally at the start of the week.
• The wheat's downward spiral was propelled by Chinese exporters' cancellation and postponement of around one million metric tons of Australian wheat.
• Export demand slowed with no major new tenders in the market.
• Meantime, supporting prices, the euro/dollar fell below 1.09.
• Germany's 2024 wheat crop will fall 6.5% on the year, the country's association of farm cooperatives said in its first harvest estimate on Thursday.
• The association also forecast Germany's 2024 winter rapeseed crop will fall 6.9% from last year’s crop.
• Consultancy Strategie Grains has also made sharp cuts to its projections for the 2024 soft wheat and barley harvests in the European Union, mainly due to wet weather.
• The French consultancy now expects EU soft wheat output of 121.6 million metric tons in the 2024/25 season.
• For barley, Strategie Grains cut its forecast for the next EU harvest to 51.8 million tons.
• In maize, it raised its 2024/25 production outlook to 64.4 million.

UK

Britain's wheat imports slowed in January but are running well ahead of last season's pace, customs data showed on Thursday.

• Wheat imports for the month totalled 188,966 metric tons.
• Cumulative imports since the start of the 2023/24 season on July 1 totalled 1.25 million tons.
• France was the largest supplier in January, shipping 51,871 tons, while Canada has been Britain's largest supplier throughout the season so far, with shipments of 351,855 tons.
• Britain's wheat exports in January totalled 3,172 tons, bringing the total for the season to date to 165,711 tons.

Kazakhstan

On March 12, the Interdepartmental Commission on Foreign Trade Policy and Participation in International Economic Organizations, chaired by Deputy Prime Minister of Kazakhstan Serik Zhumangarin, adopted a number of decisions on issues of regulating foreign trade.

• Among these, the ban on the import of wheat by road, rail, and water transport has been extended for another 6 months.

Southeast Asia

Malaysia

Malaysian palm oil prices rose for a fourth consecutive session.

• The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange closed up 2.29%, hitting its highest closing level since March 3, 2023.
• Strength in rival edible oils and robust demand from key buyers, supported the market.
• Dalian’s most-active soyoil contract indeed rose 1.28%, while its palm oil contract added 3.54%.
• Soyoil prices on the Chicago Board of Trade were trading up 0.68%.
• Supporting prices, also crude oil which climbed in early trade as in the U.S. gasoline stocks hit a three-month low and crude stockpiles dropped unexpectedly.

Australia

Yesterday, fresh reports indicated that as much as 1 million tonnes (Mt) of Australian wheat had been cancelled or deferred by Chinese importers.

• While there are no doubt that this will have some impact to the Australian program, it's to remember, that the export pace from Australia to China has been impressive so far this season.
• WA and SA have shipped or stemmed a little over 80pc of their full marketing year exports to the end of March.
• If we look at what Australia have already shipped and what is sitting on the stem to end of March, that represent about 3Mt against a full marketing year target of 4.2Mt.
• That means any discretionary business would need to find the inventory in the Vic market – something not lost on the offer side.
• Meantime, according to Grains Australia, Australia has exported 222kmt of fabas and broad beans and just over 535kmt of lentils so far this marketing year.
• In this context, local barley markets have found a bid yesterday while the offer side was somewhat difficult to locate.
• As a result, ASX barley for March and May 2024 delivery closed unchanged at A$298.50/t, and A$295/t, respectively.
• On the other hand, ASX March 2024 wheat closed up A$1/t to $318/t, while ASX May 2024 wheat up A$1.50/t to $321.50/t.
• On the weather side, rainfall estimates for WA have backed off a little overnight, although the eight day forecast is still calling for 15-25mm in central cropping regions, mostly in the latter half of the week.
• With hot and dry conditions set to stick around according to the BOM, containment feeding has soaked up some of the length.

International grain and oilseed tenders & trade

• Japan booked 114.3k MT of wheat via a regular tender from U.S., Canada, and Australia.

International Grains Council - March 2024 Update

The International Grains Council (IGC) forecasted a record global grain crop in the 2024/25 season, reinforcing concerns about a global glut.

• The IGC, issuing its first full set of supply and demand projections for the 2024/25 season, saw global grains production rising to a record 2.332 billion metric tons.
• Global grains consumption was seen rising to 2.331 billion tonnes.
• Meanwhile stocks at the end of the season were seen at 601 million tons.
• Notably, the IGC saw global corn (maize) production rising to 1.233 billion metric tons in 2024/25, with larger crops in Brazil (121.5 million) and China (291 million), partially offset by a decline in the U.S. (382 million).
• Global wheat production in 2024/25 was forecast to rise to 799 million tons, with larger crops seen in Australia (30.1 million) and Argentina (18 million).
• The IGC also forecast that global soybean production would rise in 2024/25 to 413 million tons.

Outside markets ...

Energy markets

Oil prices rose, settling at four-month highs.

• Brent crude oil futures for May climbed 1.65%, closing at its highest since Nov. 6.
• U.S. West Texas Intermediate (WTI) crude for April rose 1.93%, hitting its highest since early November.
• Both benchmarks had chalked up gains close to 3% on Wednesday.
• The International Energy Agency predicted demand will rise by 1.3 million barrels per day in 2024, up 110,000 bpd from last month, but still lower than growth of 2.3 million bpd last year.
• The IEA also cut its 2024 supply forecast and now expects oil supply to rise by 800,000 bpd to 102.9 million bpd this year.
• On Wednesday, Ukrainian drone strikes on Russian refining facilities targeted four large oil refineries.
• Russia's energy ministry said Russia's seaborne fuel exports fell 1.5% from the previous month in February because of refinery downtime stemming from Ukrainian drone attacks and fires.
• Meanwhile in the U.S., crude and gasoline inventories plunged last week, government data showed on Wednesday.
• However, U.S. producer prices rose in February, partly because gasoline prices increased by more than forecasts for a 0.3% advance.
• And larger-than-expected increase in producer prices last month was seen as sign that the Federal Reserve unlikely will start cutting interest rates before June.

This morning, oil prices edged lower, but were on track to gain nearly 4% for the week.

• Brent crude oil futures indeed fell 0.4% by 0751 GMT, while the U.S. West Texas Intermediate (WTI) crude fell 0.4%.

Ocean freight markets

The Baltic Exchange’s dry bulk sea freight index in London declined, as a fall in capesize rates overshadowed gains in the panamax segment.

• The overall index lost 0.8%.
• The capesize index was down 3.5%, hitting its lowest level in a week.
• The panamax index gained 4.4%, to hit its highest level since Dec. 7.
• The supramax index was up 1%.

Equity markets

US stock indexes closed moderately lower.

• The Dow Jones Industrial Average declined 0.4%, the S&P 500 fell 0.3%, and the Nasdaq composite lost 0.3%.
• Weekly US initial unemployment claims fell by -1,000 to 209,000.
• Continuing claims rose +17,000 to 1.811 million.
• Thursday's reports suggested that stagflation could emerge since the PPI report was stronger than expected and the retail sales report was weaker than expected.
• The Feb US PPI figure indeed rose to +1.6% y/y.
• The Jan core final-demand PPI figure rose to +2.0% y/y.
• Meanwhile, Feb US retail sales rose to +0.6% m/m, and Jan was revised lower to -1.1% m/m.
• The Feb retail sales ex-autos rose to +0.3% m/m, and Jan was revised lower to -0.8% m/m.
• In this context, the 10-year T-note yield rose +9.8 bp to 4.288% and has risen sharply by a total of +26 bp from last Friday's 5-week low of 4.03%.

This morning, Asian markets retreated.

• Tokyo's Nikkei 225 declined 0.3%, the Kospi in South Korea sank 1.9%, Hong Kong's Hang Seng was down 1.7%, the Shanghai Composite index gained 0.3%, while the S&P/ASX 200 shed 0.9%.
• Hong Kong’s benchmark fell after reports said housing prices have continued to fall since February.
• Also, a mixed batch of data from the U.S. economy dashed hopes that easier interest rates are coming soon.

Currency trading

The dollar index rose.

• Thursday’s hawkish US PPI report supported expectations for a no imminent Fed rate cut within the next few months.
• The Feb US PPI figure was stronger than market expectations.
• The Jan core final-demand PPI figure also was slightly stronger than market expectations.
• Weekly US initial unemployment claims showed a stronger labor market than expectations.
• Continuing claims also showed a stronger labor market than expectations.
• Feb US retail sales figure was weaker than market expectations.
• The Feb retail sales ex-autos figure also was weaker than market expectations.
• Meantime, the dollar saw an additional support from a sharp rise in the 10-year T-note yield.
• The EUR/USD fell, mainly due to dollar strength.
• In addition, some ECB Governing Council members expects two interest rate cuts before the ECB’s August break and another two by the end of the year.
• The USD/JPY rose on dollar strength.
• However, the yen saw an uptick on a Jiji report.

This morning, the U.S. dollar fell to 148.19 Japanese yen from 148.32 yen. The euro slipped to $1.0880 from $1.0884.

Settlement prices for key commodity, index & currencies

• Chicago wheat May contract was down 12c/bu to 532.2c/bu;
• Kansas wheat May contract was down 12.6c/bu to 574.6c/bu;
• Minneapolis wheat May contract was down 8.2c/bu to 655.2c/bu;
• MATIF wheat May contract, was down €0.75/t to €194/t;
• ASX wheat May contract was up A$1.5/t to A$321.5/t;
• Black Sea wheat has not quoted since August 11, 2023;
• US DWI Cash (durum wheat index), was up 0.29c/bu to 751.91c/bu;
• 1CWAD (Canadian durum) avg spot prices was up C$3.64/t to $394.95/t;
• EDW (EU durum) May contract, was unchanged to €344/t;
• Chicago corn May was down 7.4c/bu to 433.6c/bu;
• MATIF corn Jun was up €1/t to €179.5/t;
• Chicago soybeans May down 1.4c/bu to 1195.2c/bu;
• Winnipeg canola May was down C$1.8/t to C$623.2/t;
• MATIF rapeseed May contract, was down €2.75/t to €437.5/t;
• Brent crude May was up US$1.39 to $85.42;
• WTI crude Apr was up US$1.54 per barrel to $81.26;
• BADI (Baltic Dry Index) was down 20 point to 2.350;
• Dow Jones was down 137.66 points to 38.905,66;
• S&P 500 was down 14.83 points to 5.150,48;
• NASDAQ Composite down 49.24 points to 16.128,53;
• US dollar index (Jun '24) was up 0.593 points to 102.992;
• AUD/USD weaker at US$0.6581;
• USD/CAD firmer at $1.3532;
• EUR/USD weaker at $1.0883;
• USD/RUB firmer at ₽91.5340.

That's all, thank you.

We wish you a nice day.

Author: Sandro F. Puglisi

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