Corn, soybeans and wheat all grabbed noticeable gains in Friday’s session, but posted weekly losses ...
Good morning, Farmer Family ...
US farm markets rose on Friday.
Corn prices improved 1.58%.
The rest of the soy complex also was in the green as soymeal trended 1.69% higher, while soyoil gained 0.59%.
Wheat prices also moved higher, with Chicago SRW jumping 2.52%, Kansas City HRW rising 0.74%, and Minneapolis spring wheat adding 1.29%.
- Corn and soybean prices rose, as heightened geopolitical tensions spurred a round of bargain buying after the benchmark contracts in both markets fell to their lowest levels in more than six weeks.
- Reports of Israeli missile strikes in Iran fueled fears of an escalating conflict in the Middle East.
- That pushed wheat prices up 4% early in the session, as traders had feared that expanding violence in the region could impact shipments in the region and from Russia.
- However, Tehran played down the incident and indicated it had no plans for retaliation.
- Meantime, corn drew strength from an announcement by the EPA that it would widen the summertime sales period for gasoline containing higher blends of corn-based ethanol.
- However, that no indicate an additional demand in ethanol, but is only an effort to reduce potential supply disruptions amid ongoing conflicts in Ukraine and the Middle East.
- Also, according to the latest data from the Environmental Protection Agency, the U.S. generated 1.19 billion ethanol blending credits in March.
- That was slightly lower than February’s volume of 1.21 billion.
- Supporting prices, meantime, the USDA confirmed private sales of 216,500 metric tons of corn to Mexico, including 23,000 tons for delivery in the 2023/24 marketing year that began Sept. 1, 2023, and the remaining 193,500 tons for delivery in 2024/25.
- Soybeans captured double-digit gains, with the soybean meal market rallying over concerns about a lower crop in Argentina and rains which are delaying the harvest and hurting quality.
- The USDA also confirmed private sales of 121,500 metric tons of U.S. soybeans to undisclosed destinations including 13,500 tons for delivery in the 2023/24 marketing year that began on Sept. 1, 2023, and the rest for 2024/25 delivery.
- However, rallies in soybeans were capped in part by supplies of cooking oil coming into the United States from overseas and depressing the soyoil market.
- CBOT July soyoil contract indeed hit a contract low in early moves before bouncing.
- Meantime, according to the latest data from the Environmental Protection Agency the U.S. generated 648 million biodiesel blending credits last month.
- That was down moderately from February’s total of 743 million.
- Wheat prices also ended higher on escalating tensions in the Middle East.
- Meantime, traders continued to monitor expanding dryness in portions of the southern Plains winter wheat belt, with the USDA indicating 24% of the U.S. winter wheat crop was located in a drought area as of April 16, up from 18% the previous week.
- In spite mostly dry weather is expected across the U.S. Midwest, space technology company Maxar said.
- That will favor both corn and soybean planting.
- The weather will be turning cooler, with some rain chances for dry HRW areas.
- As a result, traders squared their positions ahead of the weekend and after recent declines.
- A flat dollar was also supportive for grain markets.
- In other news, the USDA said that cow-to-cow transmission is a factor in the spread of bird flu in dairy herds, but it still does not know exactly how the virus is being moved around.
- Farmers and veterinarians have been waiting for confirmation on how the virus is transmitted to better control its spread.
- Meantime, dairy herds in eight states tested positive over the past month, along with one dairy worker in Texas.
- Corn basis bids were steady across most Midwestern locations, but did climb 7 cents higher at a Nebraska elevator.
- Soybean basis bids held steady across the central U.S..
- For wheat, basis values ended the week steady or lower. HRW basis values continue to trend below PNW levels, Gulf HRW basis has remained strong relative to PNW values, highlighting the variability between supply in the PNW and the Gulf.
- Commodity funds were net buyers in CBOT corn, soybean, soymeal, soyoil, and wheat contracts.
- Despite losses for much of the week, May corn contract rounded things out with a loss of just 0.46%.
- Soybeans got a decent rally to close out the week, but it wasn’t enough to erase early week losses, as May remained down 2%.
- Soymeal was down just 0.2% over the week, while bean oil continued their collapse, falling another 3.29%.
- The wheat market was mixed again, as Minneapolis spring wheat rose 0.66%, while Kansas City was back down 1.4%, and Chicago lost 1.03%.
After the sessions close ...
- The CFTC report showed showed that in the week of April 16, large speculators increased their net short position in corn futures. The report also showed that noncommercial traders, a category that includes hedge funds, increased their net short position in CBOT wheat and soybeans. Money managers’ net short position in CBOT soybean oil futures and options surged to 53,295 contracts from 4,128 a week earlier, the largest weekly net selling in records back to 2006.
Chicago wheat firmed, hovering close to a two-week high hit in the previous session and rising for a third consecutive session as short-covering and geopolitical tensions underpinned prices. Corn and soybeans ticked lower, meantime.
- Notably, the most-active wheat contract on the Chicago Board of Trade (CBOT) was up 0.1%, as of 0328 GMT, corn lost 0.3%, and soybeans gave up 0.4%.
- The U.S. House of Representatives on Saturday, with broad bipartisan support, passed a $95 billion legislative package providing security assistance to Ukraine, Israel and Taiwan, over bitter objections from Republican hardliners.
- Over the weekend, Odesa Oblast was hit several times by drones and missiles. According to Ukrainian officials, on Friday, the Port of Pivdennyi was attacked, damaging storage facilities for agricultural products destined for export to Asia and Africa. Saturday’s attacks targeted what local authorities described as a “transport-logistics facility at the port’s infrastructure.” On Sunday, the region was attacked by drones, damaging a farming enterprise.
- Meantime, funds are holding large short positions in Chicago grain and oilseed futures, leaving the market prone to short-covering.
- The week kicks off with the Export Inspections report, in the afternoon.
- The weekly Crop Progress report will arrive overnight after the sessions close.
- On Wednesday we will get updated EIA ethanol stocks and production data, as well as the NASS Cold Storage report.
- Export Sales data will be out on Thursday.
Agriculture and Agri-Food Canada made a small amount of changes in its April supply and disposition report released on Apr. 19.
- Of the changes made, nearly all were slight adjustments to its pulse and special crop numbers.
- Among the grains and oilseeds, the lone alteration came with corn’s domestic use number for 2023/24.
- AAFC tacked on 300,000 tonnes, raising it to 15.953 million.
- Otherwise, for the section the department carried over the data from its March report.
- Despite lackluster canola exports so far in 2023/24, AAFC maintained its projection for seven million tonnes.
- Of the pulses, dry pea ending stocks for 2024/25 were cut from 240,000 tonnes in March to 190,000, while those from 2023/24 were reduced from 210,000 tonnes to 175,000.
- The carryover for mustard was also revised, with 2024/25 projected to be 105,000 tonnes, bumped up by 5,000.
Meantime, per latest data from the Canadian Grain Commission ...
- Common wheat deliveries into the handling system during the week ending April 14, 2024, were at 533,5k mt, with durum at 58,8k mt as well.
- Canadian wheat exports for shipping weeks 37 came in at 514,6k mt, for a total of 15.282,9k mt YTD.
- Durum wheat exports were at 115,7k mt, for a total of 2.556,8k mt YTD.
- Commercial stocks stood at 2.277,5k mt for common wheat, and at 477.4k mt for durum.
- Western Canadian bids for Canadian Prairie Red Spring (CPRS) and Canadian Western Red Spring prices were higher again, and durum wheat also trended higher.
- Notably, during the week ending April 19, CWRS wheat prices were up C$2.38 to C$3.65 per tonne.
- Average prices were between C$303.51/tonne in southeast Saskatchewan to C$324.58 in southern Alberta.
- CPRS prices ranged from -C$0.83 to C$1.27/tonne.
- The lowest average bid for CPRS was C$ 273.52 in southeast Saskatchewan, while the highest average bid was C$296.2 in northern Alberta.
- The average prices for Canada Western Amber Durum (CWAD) were up C$2.95 to C$3.25 per tonne with bids between C$393.67 in northwest Saskatchewan to C$402.77 in west Manitoba.
Per latest report from the Buenos Aires Grain Exchange (BAGE), for the week ending 17 April, crop progress showed soybeans in excellent to normal conditions down 1% form a week earlier to 77%.
- Soybean harvest was 13.9% complete, as continuing rains slowed progress.
- Soybean production is expected at 51.0 MMT, which if realized would be YoY increase of 30 MMT.
- Corn crop in excellent to normal conditions were unchanged compared a week earlier, to 64%.
- 17.2% of corn crop has been harvested.
- Although concerns continued over areas affected by leafhopper, production estimate remained unch at 49.5 MMT which if realized would be a YoY increase of 15.5 MMT.
- Meantime, Argentina grains exports should value just shy of $30 billion this year, boosted by higher output than 2023, though tempered by lower global prices and leafhopper plague that has dented corn production.
- The $29.3 billion in exports seen for this year, however, is below the recent five-year average, the major Rosario grains exchange said in a report on Friday.
- Corn production in particular could lost an estimated $1.3 billion off for the expected 2023/24 corn crop.
- The exchange currently estimates a corn crop of 50.5 million metric tons.
- It also forecasts 50 million metric tons for the 2023/24 soybean crop.
- Meantime, the Argentine Rural Confederation demanded the immediate removal of a 12% tax on wheat exports.
European grain markets ended mixed.
- Wheat prices rose, and corn as well, while rapeseed eased.
- Benchmark May milling wheat settled 0.4% higher at 206.50 euros per metric ton.
- That was the highest closing price since March 25.
- The contract traded as high as 207.75 euros during the session.
- The June 2024 corn contract returned to the €200/t mark after closing up €4.50/t at €201.75/t.
- That was the highest closing price for three and a half months.
- Meanwhile rapeseed, although penalized by the excessively wet and cold weather, continued to consolidate at around €450/t, amid ongoing corrections in crude oil and palm oil prices.
- Wheat and corn prices ended only slightly higher as concerns eased about an escalation of tensions in the Middle East.
- The corn market has been supported by a slower pace of imports into the European Union in recent weeks.
- Meanwhile the continued weakness of the euro/dollar exchange rate at around 1.0650 supported European grains.
- On the supply front, traders were looking for any impact from recent weather on crops.
- Warm weather over the weekend benefited crops, but cold temperatures and a lack of sunshine in the past week halted crop development.
- FranceAgriMer indeed reported that as at 15 April 2024-25 French common wheat crop condition was rated 64pc good/excellent and durum condition was rated 70pc.
- That was unchanged from the previous week.
- Ditto for winter barley condition that was rated 67pc good/excellent.
- Meanwhile spring barley was rated at 63pc, up from 60pc a week earlier.
- Planting of 2024-25 spring barley was seen 98pc complete and maize 12pc.
- In the news, also were reports that a vessel operated by Russian grain trader RIF loaded with wheat for Egypt's GASC had obtained a phytosanitary certificate after staying idle an a port for more than a month.?
According to the Ministry of Agrarian Policy, as of April 18, Ukraine planted 2.053 mln ha of spring grains and pulses, or 36.7% of the planned area (5.601 mln ha).
- The area included 748,700 hectares of corn, 741,500 hectares of spring barley, 204,700 hectares of spring wheat, 136,600 hectares of oats and 157,000 hectares of peas have been sown.
- Farmers also sowed almost 1.4 million hectares of sunflower, 116,300 hectares of soybeans and 223,700 hectares of sugar beet.
- Meantime, according to the State Customs Service, as of April 19, Ukraine exported 39.059 mln tonnes of grains and pulses since the beginning of 2023/24 MY, including 4.199 mln tonnes shipped in April.
- In general, since the beginning of the current season, has been exported wheat for 15.106 mln tonnes, barley for 2.139 mln tonnes, corn for 21.515 mln tonnes.
- The total export of Ukrainian flour since the beginning of the season as of April 19 is estimated at 84.2 thsd tonnes, including 79.5 thsd tonnes of wheat flour.
SovEcon’s projection for their Russian production total was down 1 MMT from the March estimate at 93 MMT.
- Russia's government said on Saturday it has introduced an additional quota of 5 million tons for exports of wheat, meslin, rye, barley and corn outside the Moscow-led Eurasian Economic Union until June 30 to support local producers.
- The main export quota of 24 million tons had been set for Feb. 15 until June 30.
- Meantime, Russia’s Ag Ministry announced they will raising the Russian wheat export tax by 166,4 ru/MT or 6.4% to 3,443 ruble/MT, during the week Apr 24 - May 2.
- Barley export tax will be lowered by 10.9 ru/MT to 440.7 ruble/MT, meantime.
- Corn export tax will be zero ruble/MT, unchanged from a week earlier.
- In other news, Russian President Vladimir Putin has ordered his government to present proposals to facilitate grain trading with other countries including India and China, according to documents published by the Kremlin on Saturday.
China's soybean imports from the United States fell by half in March from a year earlier and corn exports also plummeted, according to the General Administration of Customs.
- Notably, China imported 2.18 million metric tons of soybeans from the U.S in March.
- For the January-March period, China's soybean shipments from the U.S. fell 50% from a year earlier to 7.14 million tons.
- Corn imports from U.S plummeted 78% to 109,685 tons.
- Buyers indeed favored more competitive supplies from Brazil.
- Its soybean imports from Brazil rose 81% to 3.02 million tons.
- That was more than half of the total imports during the month.
- Total soybean arrivals in March, however, tumbled to a four-year low of 5.54 million tons, according to customs data.
- For the January-March period, total shipments from Brazil were 9.99 million tons.
- That was up 155% from a year ago, bringing Brazil's total market share during the first quarter to 54%, compared to U.S' at 38%.
- Corn imports from the South American nation jumped by 72% to 1.18 million tons last month, nearly all of the total arrivals of 1.71 million tons in March.
Indian wheat stocks held in government warehouses dropped to their lowest level in 16 years, according to data compiled by the state-run Food Corporation of India.
- Wheat reserves in state stores totalled 7.5 million metric tons at the start of April.
- That was down from 8.35 million tons a year ago.
- Over the past decade, wheat stocks on April 1 averaged 16.7 million tons.
- “The stocks came down as we sold a record 10 million tons last year to stabilise prices,” a senior government official said.
- Despite the tight supply, New Delhi has resisted calls to encourage imports by cutting or removing the current 40% tax, or by buying directly from top suppliers such as Russia.
- The government indeed has buffer and strategic reserve norms that mandate holding wheat stocks at or above 7.46 million tons on April 1.
Malaysian palm oil prices reversed early gains to log its sharpest weekly fall in over a year.
- The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange indeed settled down 1.41%, after rising as much as 1.4% during early trade.
- That was a sixth consecutive session of losses, for a 8.3% weekly slumping.
- Traders assessed concerns over escalating tensions in the Middle East and slowing palm oil demand.
- Tehran played down the incident with Israeli and indicated it had no plans for retaliation.
- Meanwhile, in related oils, Dalian’s most-active soyoil contract fell 0.6%, while its palm oil contract was down 0.97%.
Aussie local markets were firm, probably more driven by Australian dollar moves than anything else.
- Australian export pace for the major grains has been impressive so far this season, and there are only small amounts to do to hit their full year targets.
- Indeed, in spite that, markets have been understandably thin into the close of last week with offshore markets and rainfall outlooks keeping sellers quiet.
- For the new season, Anzac Day seems to no longer be the planting deadline as used in the past.
- Many producers, indeed, choose to focus on getting seed in the ground prior to May, regardless of the conditions.
- In fact, while Queensland keeps getting rainfall, WA/SA has little to no moisture forecast for the next 15 days.
- Clear skies and no forecast rain is helping put the crop in the ground unhindered. ?
International grain and oilseed tenders & trade
Oil prices settled slightly higher.
- Brent futures settled up 0.21%, while the front month U.S. West Texas Intermediate (WTI) crude contract for May ended 0.5% higher, and the more active June contract closed 0.15% higher.
- However, both benchmarks posted a weekly decline.
- Prices had spiked more than $3 a barrel earlier in the session after explosions were heard in the Iranian city of Isfahan in what sources described as an Israeli attack.
- But Iran played down the incident and said it did not plan to retaliate, underlying that an escalation of hostilities in the Middle East might be avoided.
- As oil's risk premium has gradually unwound, prices have fallen around 3% since the week started, and both benchmarks posted their biggest weekly loss since February.
- Meanwhile, U.S. lawmakers have added sanctions on Iran's oil exports to a pending Ukraine aid package.
- On the other hand, the International Monetary Fund expects OPEC+ to begin increasing oil output from July.
- U.S. energy firms this week added oil and natural gas rigs for the first time in five weeks, energy services firm Baker Hughes said.
- The oil and gas rig count rose by 2 to 619 in the week to April 19.
- After the sessions close, the CFTC report showed money managers cut their net long U.S. crude futures and options positions in the week to April 16.
This morning, oil prices fell by more than 1%.
- Brent futures fell 1.4% by 0655 GMT.
- The front-month U.S. West Texas Intermediate (WTI) crude contract for May , which expires on Monday, fell 1.2%, while the more active June contract dropped 1.5%.
- On Saturday, the U.S. House of Representatives passed an aid package for Ukraine and Israel containing measures that would let the federal government expand sanctions against Iran and its oil production.
- But markets shrugged off the news as the impact of the measures, if passed, would depend on how they are interpreted and implemented.
- Senate consideration of the bill is set to begin on Tuesday.
The Baltic Exchange’s dry bulk sea freight index in London rose and posted its best week in over seven weeks, steered by firmer rates across vessel types.
- The overall index gained about 1%, and was up about 11% for the week.
- The capesize index edged down 0.21%, but registered a weekly rise of over 11%.
- The panamax index was up 2.1%, and up for a second straight week, moving another 11.85% higher.
- The supramax index was up 2.1%, and recorded a weekly rise of 9.6%.
US stock indexes settled mixed.
- The Dow Jones Industrials Index closed up 0.56%, the S&P 500 Index closed down 0.88%, and the Nasdaq composite sank 2.05%.
- The S&P 500 fell to a 1-3/4 month low and the Nasdaq composite dropped to a 2-3/4 month low.
- A sell-off in the “Magnificent Seven” megacap technology stocks weighed on the overall market.
- Investors indeed have liquidated long positions ahead of this week’s slew of megacap earnings reports.
- Negative corporate news and escalating geopolitical risks, also undercut stocks.
- As a result, Super Micro Computer closed down more than -23%, Nvidia slumped 10%, Netflix closed down more than -9%, Jabil closed down more than -8%.
- Meantime, the 10-year T-note yield fell -1.4 bp to 4.619%.
- For the week, the S&P 500 fell 3.05%, the Nasdaq declined 5.52%, and the Dow climbed 0.01%.
- The S&P suffered its biggest weekly decline since March 2023 and the Nasdaq its largest since the week of Oct. 31, 2022.
- The S&P and Nasdaq have fallen for six straight sessions, the longest streak of declines for each since October 2022, with the S&P now down 5.46% from its closing record on March 28.
- In Europe, the Euro Stoxx 50 fell to a 7-week low and closed down -0.37%.
- German Mar PPI rose +0.2% m/m and fell -2.9% y/y.
- European government bond yields were mixed, with the 10-year German bund yield rising to a 4-1/2 month high of 2.523% and finishing up +0.3 bp at 2.500%.
- Meanwhile the 10-year UK gilt yield fell -4.2 bp to 4.230%.
- In China, the Shanghai Composite closed down -0.29%.
- In Japan, the Nikkei Stock Index fell to a 2-1/4 month low and closed down -2.66%.
- Japan's Mar national CPI eased to +2.7% y/y from +2.8% y/y in Feb.
- Mar national CPI ex-fresh food and energy eased to +2.9% y/y from +3.2% y/y in Feb.
This morning, shares in Asia were mostly higher.
- Hong Kong's Hang Seng led the region, gaining 1.79%, though the Shanghai Composite index shed 0.52%.
- Tokyo's Nikkei 225 added 1%, the Kospi in South Korea jumped 1.33%, Australia's S&P/ASX 200 surged 1.08%.
- The People's Bank of China kept its 1-year and 5-year loan prime rates unchanged.
The dollar index ended flat.
- The dollar initially spiked higher after US officials said Israel launched a retaliatory air strike against Iran.
- The dollar was also supported as Fed rate-cut expectations have dropped sharply due to recent strength in US economic news and hawkish Fed comments.
- Liquidity demand for the dollar increased after the S&P 500 tumbled to a 1-3/4 month low.
- However, the dollar fell back from its best levels on signs the damage was minimal, and an Iranian military official downplayed the attack.
- Lower T-note yields also weighed on the dollar.
- As a result, the dollar gave up most of early advance and finished little changed.
- Meantime, the EUR/USD rose
- German Mar PPI was stronger than expectations.
- Also, a jump in the 10-year German bund yield to a 4-1/2 month high strengthened the euro’s interest rate differentials.
- However, gains in the euro were limited after ECB President Lagarde said the disinflation process in the Eurozone has continued and growth prospects remain subpar by historical standards.
- On the other hand, the USD/JPY fell, with the yen moving slightly higher, due to increased safe-haven demand from escalating tensions between Israel and Iran and the fall in the Nikkei Stock Index to a 2-1/4 month low.
- Gains in the yen were limited on weaker-than-expected Japan Mar national CPI report.
This morning, the U.S. dollar rose to 154.69 yen from 154.59 yen, trading at levels not seen since 1990. The euro cost 1.0665 dollar, up from 1.0652 Friday's close. ?
Settlement Prices for Key Commodity, Index & Currencies
- Chicago wheat May contract was up 13.4c/bu to 550.2c/bu;
- Kansas wheat May contract was up 4.2c/bu to 581.4c/bu;
- Minneapolis wheat May contract was up 8.2c/bu to 647c/bu;
- MATIF wheat May contract was up €0.75/t to €206.5/t;
- ASX wheat May contract was up A$6.5/t to A$336.5/t;
- US DWI Cash (durum wheat index), was up 4.12c/bu to 761.62c/bu;
- 1CWAD (Canadian durum) avg spot prices was down C$0.24/t to C$397.31/t;
- EDW (EU durum) May was unchanged to €336/t;
- Chicago corn May was up 6.6c/bu to 433.4c/bu;
- MATIF corn Jun was up €4.5/t to €201.75/t;
- Chicago soybeans May up 16.2c/bu to 1150.4c/bu;
- Winnipeg canola May was up C$1.1/t to C$609.8/t;
- MATIF rapeseed May was down €1.5/t to €449/t;
- Brent crude Jun was up US$0.18 to $87.29;
- WTI crude Jun was up US$0.12 per barrel to $82.22;
- BADI (Baltic Dry Index) was up 18 points to 1.919;
- Dow Jones was up 211.02 points to 37.986,40;
- S&P 500 was down 43.89 points to 4.967,23;
- NASDAQ Composite down 319.49 points to 15.282,01;
- US dollar index (Jun '24) was up 0.002 points to 105.984;
- AUD/USD weaker at US$0.6414;
- USD/CAD weaker at $1.3747;
- EUR/USD firmer at $1.0652;
- USD/RUB weaker at ?93.0022.
Author: Sandro F. Puglisi
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