April 3, 2024 - Newswires

Grains sold off on risk aversion ...

Good morning, Farmer Family ...

US farm markets ended lower on Tuesday.

Corn prices sank 2.07% lower.

Soybeans stumbled 0.99% lower.

The rest of the soy complex was mixed as soymeal faded 1.53%, while soyoil rose 0.75%.

Wheat prices faced variable cuts, as Chicago SRW tumbling 2.11%, Kansas City HRW falling 2.13%, and Minneapolis spring wheat dropping 1.14%.

• Weather in the U.S., with some recent rains in dry areas and more in the forecast, seemed to be a bearish factor for the grain complex.
• Wheat fell in response to winter wheat ratings being well above a year ago, as now are at 56% good to excellent in the first report of the 2024 season.
• 4% of the winter wheat crop was headed as of 3/31.
• The spring wheat planting was 1% finished nationally, with WA at 10% and ID at 8% planted.
• NASS in its first national Crop Progress report of the 24/25 season also showed corn planting has begun in IL, KS, KY, MO, TN, and TX.
• Nationally 2% of the crop was planted as of 3/31, in line with long term averages, and Texas was 57% planted.
• US soybean crush for February was slightly disappointing at 194 million bushels when USDA released the official Fats & Oils totals on Monday afternoon.
• Grains, however, all ended lower, consolidating, as funds sold off.
• Also, some technical selling, spilling over from the outside markets, weighed on prices.
• The dollar was higher early in the session with concerns about interest rates staying higher for longer.
• That fear was renewed by crude oil hitting contract highs on the escalation of the conflict between Israel and Iran.
• The stock indices were also lower on that same news and that spilled over into the grain markets.
• Plus, there has been a pickup in farmer selling.

In this context ...

• Corn basis bids were steady to firm after improving 2 to 7 cents across four Midwestern locations.
• Soybean basis bids were steady to firm after tracking 3 to 5 cents higher across four Midwestern locations.
• Commodity funds were net sellers of Chicago wheat, soybeans and corn contracts.

This morning ...

On the Chicago Board of Trade (CBOT) corn prices slightly rose, while wheat and soybeans were little changed.

• Notably, the most-active wheat contract on the Chicago Board of Trade (CBOT) was down 0.05% by 0501 CT, while CBOT soybeans fell 0.23% and corn climbed 0.12%.

South America

Brazil

The USDA’s attaché in Brazil has lowered its 2023/24 corn production forecast to 122 MMT, 2 MMT below the estimate in March’s WASDE.

• It also cut 2023-24 exports to 45Mt, 7Mt less than the USDA official number.
• For 2024-25, it projected Brazil’s corn production to rise to 129Mt and exports to rebound to 51Mt.
• Financial services company StoneX saw 2023-24 maize production steady at 124.2Mt (112.8Mt), with safrinha at 96.1Mt (87.4Mt) and primary at 25.9Mt (23.4Mt).
• Exports at 45.0Mt (32.0Mt), domestic use at 84.0Mt (84.1Mt).
• Conversly, StoneX cut its 2023-24 Brazil soybean production forecast by 0.7Mt, to 150.8Mt (Conab 146.9Mt).
• Domestic use is seen at 57.5Mt (55.9m), exports at 93.0Mt (92.3Mt).
• Safras and Mercado listed Brazil’s 2nd crop corn was 99.6% planted as of 3/28.

Europe

European grain markets fell after the long Easter weekend.

• The first session of April was marked by profit-taking.
• Wheat prices on Paris Matif Exchange fell by 0.86%, while corn eased 0.26% following wheat lower.
• Per the latest data from the European Commission, EU corn imports during the 2023/24 marketing year were noticeably below last year’s pace after reaching 13.5 MMT through March 27.
• Soybean imports have reached 9.11 MMT, fractionally below last year’s pace so far.
• EU soymeal imports were also slightly down year-over-year after reaching 10.87 million metric tons over the same period.
• On the export side, European Union soft wheat exports have reached 23.01 million metric tons by March 27.
• That was down compared with 23.86 million a year earlier.
• EU barley exports also were below last year’s pace, with 4.19 MMT over the same period.
• The euro/dollar rose, in spite it remains at its lowest level since mid-February.
• However, with crude oil trading above $85 in New York, its highest level since the end of October, market operators are concern about interest rates staying higher for longer.
• Conversely, from this situation is benefiting rapeseed, which rebounded sharply.
• Rapeseed indeed closed up €7.75/t at €445.75/t, after hitting the €450/t barrier during the session.
• the oilseed also benefited from the support of palm oil, which remains firm in Kuala Lumpur.
• Meanwhile, in the field, incessant rain hampered the good flowering of winter rapeseed crops.

UK

The UK has experienced the second wettest August through February since 1837, since records began.

• Conditions have been poorer than usual in most parts of England.
• The weather in Scotland has reduced winter cropping, though by less than Central England.
• However, fieldwork is now making headway with spring drilling and crop treatments.
• Meantime, the 2024 harvest will comprise a lower than usual winter area, with considerably lower winter crop yields.
• On this wake, according to the AHDB by The Andersons Centre, as of March 26, 2024, the national condition of wheat is considerably poorer than usual, with just 34% of the GB winter wheat crop rated as in a good or excellent condition.
• At the end of March 2023, 90% of the crop was rated good or excellent.
• Winter barley established better, with a 38% of GB winter barley rated as in a good or excellent condition.
• A year ago 92% was rated good or excellent.
• Winter oats have fared better than most winter crops but still only 37% of the GB crop is rated as good or excellent, and much lower than at the end of March 2023 (83%).
• Ditto for winter oilseed rape (OSR) established better than most winter wheat.
• However, after sitting in water for long, many plants died and there are some very bare patches in the Midlands particularly.
• Overall, only 31% of the GB winter oilseed rape crop is rated as in good or excellent condition.
• This is well below the 70% rated good-excellent at the end of March 2023.
• Meantime, the spring planted area is likely to be higher than normal, but it is too early to say with confidence on areas or yield potential.
• There is always considerable variation in yield and quality but expect this to be amplified this year.
• Against this backdrop, ADHB has increased its wheat import estimate for 2023/24 by 0.25 MMT to 2.0 MMT, the highest level since 2020/21.
• Slightly higher maize imports are also projected to meet slightly higher demand.
• Meanwhile, lower imports but higher exports further squeeze oat stocks.

Ukraine

Ukrainian Economy Minister Yulia Svyrydenko wrote on X, that Ukraine's overall exports by sea hit 11.8 million tons in March.

• Ukraine's agricultural maritime exports fell to around 6.11 million metric tons in March., agriculture ministry data showed on Tuesday.
• The ministry data also showed that Ukraine's overall food exports decreased to 6.99 million tons in March.
• Ukrainian grain traders union UGA said in a statement that 5.02 million tons of food cargo were delivered from the Odesa ports hub while 1.07 million tons left Ukraine from the Danube river ports in March.
• UGA also said the volume of farm goods exported by railways decreased to 652,000 tons in March 2024, while exports by trucks also fell to 137,000 tons.
• The UCAB Ukrainian farm business association in a statement linked the expected decline to Russian forces shelling southern Ukraine, which interrupted operations at seaports, and to Polish protesters blocking land exports.
• Meantime, the Ukrainian government has approved a resolution allowing the opening of a new checkpoint on the border with Romania, Ukrainian Prime Minister Denys Shmyhal said.
• A total of 9 new border checkpoints are planned to be established on Ukraine's western border and 13 more are to be modernized.
• The official reminded that one of the government's priorities is to strengthen the Ukrainian economy. This, in particular, includes expanding logistics, export potential, and business support programs.

Russia

According to the Ministry of Agriculture, so far most of the 2024 crops are in good condition, which gives hope for a good harvest.

• At the moment, 94% of crops are in good condition.
• Another achievement of the last 5 years was the increase in cultivated area from 80 million hectares to 85 million hectares.
• The condition of winter crops for the most part does not cause great concern; a significant part of the crops went through the winter well.
• In this context, the deputy minister said this opens up good opportunities to increase production and take a worthy place in the world market.
• On this wake, the general director of the Institute for Agricultural Market Studies, Dmitry Rylko, said this year the grain harvest in Russia could reach 147 million tons.
• The Russian Grain Union predicts the total grain harvest at 145 million tons, of which about 93 million tons are wheat.
• For some crops, however, the harvest is expected to be smaller than last year, due to a decrease in the areas that will be sown.
• This is the case of barley and spring wheat, which at the moment are sowing, and only about 3% of all areas are sown.
• On the export side, according to the Russian Grain Union, Russia in March exported 5.7 mln tonnes of grain crops.
• That was down 14.6% from the same period last year.
• Notably, the director of the analytical department, Elena Tyurina, said wheat shipments last month decreased to 4.517 mln tonnes (-15.7%).
• At the same time, barley exports increased almost 1.9 times to 612 thsd tonnes.
• Meanwhile corn exports decreased by 42% to 574 thsd tonnes.
• In total, since the beginning of the season (July 1), 51.4 mln tonnes of major grains have been exported, including 42.2 mln tonnes of wheat.
• On the other hand, SovEcon reported that as of March 1, on farm wheat stocks in Russia’s south (a key export region) were at 5.6 MMT.
• That was up 12pc from last year.
• That is a more significant increase than in other regions.
• National on-farm wheat stocks (excluding small farms) are estimated at 17.5Mt, marginally higher than last year.

China

Chinese customs have asked some traders to limit deliveries of foreign corn into bonded areas, in a move aimed at easing domestic oversupply and supporting prices for farmers before the planting season, Bloomberg reported.

• Meanwhile, China's veg oil stocks at ports in March fall 31% on month to 1.56 mil mt.
• Palm oil stocks were at 458 kmt.
• Soy oil stocks were at 713 kmt.

Southeast Asia

India

The USDA Foreign Agricultural Service (FAS) post in India has forecast that India may import 2 million tonnes (Mt) of wheat in 2024-25 despite record production.

• It reflects steady domestic demand, a decline in government stockpiles and relatively weak global prices.
• On this wake, India has asked global and domestic trade houses to avoid buying new-season wheat from local farmers to help the government-backed Food Corporation of India (FCI) procure large quantities to shore up its depleting reserves.
• Notably, the government has asked private traders to stay away from wholesale markets where farmers usually sell their produce to FCI at least in April.
• Except for processors and small traders, everyone is likely to follow the government's lead.
• The government has also asked the top wheat-growing states to ensure that private traders do not get in the way of FCI's plans to buy at least 30 million metric tons this year.
• New Delhi has already asked traders, major retailers and food processors to declare wheat stocks every Friday from April to prevent hoarding and price spikes.
• FCI recently started buying new wheat from farmers at a state-set 2,275 rupees ($27.29) per 100 kg against open market rates of around 2,500 rupees.

($1 = 83.35 rupees)

Malaysia

Malaysian palm oil prices rose for the third consecutive session.

• Notably, the benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange gained 0.96%.
• The soyoil contract on the Dalian Commodity Exchange gained 0.51%, while the palm oil contract was up 0.56%.
• Strength in Chicago soyoil and West Texas Intermediate (WTI) crude oil and a weaker ringgit also supported the contract.
• India’s palm oil imports hit a ten-month low in March at 481,000 tons, as the top vegetable oil buyer increased sunflower oil imports amid lower prices traders said.
• However, exports of Malaysian palm oil products for March were seen rising between 11.77% and 29.2%, cargo surveyors said.

Australia

Up to half the southern Queensland sorghum crop could be downgraded due to rain damage, and the situation will worsen if further rain falls in coming days.

• Rain coupled with overcast conditions over four consecutive days last week have caused some shelling out of grain, which has impacted yields, with sprouting affecting quality and test weights.
• Meantime, recent rain over much of eastern Australia has buoyed prospects for a timely planting of faba beans, field peas, and lentils from later this month, with chickpeas to follow in the second half of May and into June.
• Prices for chickpeas, faba beans and lentils have moved little since late February, with current-crop pulses trading in modest amounts as grower attention turns to the planting of the winter crop.
• Notably, prices for faba beans delivered bulk port have risen A$5-$10/t in the past month to around $580, a level sufficient to attract sales from growers.
• Exporters are paying around $850/t for Hallmark-type lentils, and bulk activity is coming out of SA ports.
• Meanwhile, trading of chickpeas has shifted to new crop as the trade builds a position on hopes that India will remove its tariff after its election concludes in June.
• As a result, while in late February prompt chickpeas delivered to the Darling Downs of southern Queensland were trading at $840-$850/t, the new-crop market is now trading at close to $900/t.
• As for other crops, the WA wheat market is holding at similar levels to pre-Easter, with APW1 in the Kwinana port zone at A$380/t FIS.
• The other port zones are currently bid around $7-10/t under Kwinana.
• Feed barley buying interest remains strong and bids have improved further to $344/t FIS for Kwinana, while Maxi1 malt barley is at $350/t.
• Canola values have eased slightly to around $685/t FIS for Kwinana, Albany and Esperance.
• New season canola is at $705/t FIS and new season wheat bids are $365/t FIS Kwinana.
• On the demand side, line ups data this week showed March ended the month with 3.21 MMT of total grain on the stem.
• That was down from 3.47 MMT last week.
• Some vessels were rolled over to this month.
• April is currently showing 3.11 MMT of total grain on the stem, including 1.78 MMT wheat, 612kt barley and 718kt canola.

International grain and oilseed tenders & trade

• Japan issued a regular tender to purchase 114k MT of food-quality wheat from the United States, Canada and Australia that closes on Thursday. Of the total, 51% is expected to be sourced from the U.S. The grain is for shipment in late June.
• Taiwan purchased 65k MT of animal feed corn from Argentina in an international tender that closed yesterday. The grain is for shipment starting in early June.

Outside markets ...

Energy markets

Oil prices settled higher.

• Brent futures for June delivery settled up 1.7% at $88.92 after touching a peak of $89.08.
• U.S. West Texas Intermediate (WTI) crude futures for May settled up 1.7%, to $85.15 after touching a peak of $85.46, also the highest since October.
• A Ukrainian drone struck one of Russia's biggest refineries.
• Russia's Astrakhan gas processing plant, controlled by energy giant Gazprom, indeed also halted production of petroleum products after a repair-related stoppage on March 30.
• However, gasoline and diesel fuel stocks in Russia remain at a high level, Moscow said.
• In the Middle East, Iran has vowed to take revenge on Israel for an airstrike that killed two top generals and five military advisers at the Iranian embassy compound in Damascus.
• On the other hand, according to the American Petroleum Institute figures U.S. crude oil inventories fell by 2.3 million barrels last week.
• The demand outlook perked up as March data showed an expansion in Chinese manufacturing activity for the first time in six months and in the U.S. for the first time in a year and a half.
• Meantime, markets are also looking ahead to Wednesday's ministerial panel meeting of OPEC+.

This morning, oil prices extended gains.

• Brent crude futures for June rose 0.19%, at 0650 GMT, while U.S. West Texas Intermediate crude futures for May climbed 0.08%.
• Adding to the supply worries, Mexico's state energy company Pemex requested its trading unit to cancel up to 436,000 barrels per day of crude exports this month as it gets ready to process domestic oil at the new Dos Bocas refinery, according to Reuters.

Ocean freight markets

The Baltic Exchange’s dry bulk sea freight index in London fell for a ninth straight session, to a near six-week low, as rates fell across vessel segments.

• The overall index fell 5.9%.
• The capesize index lost 9.2%, its lowest level in nearly two months.
• The panamax index fell 3.4%, hitting it lowest level in four weeks.
• The supramax index shed 2.1%.

Equity markets

US stock indexes fell, with the S&P 500, Dow Jones Industrials, and Nasdaq falling to 1-1/2 week lows.

• The Dow Jones Industrial Average lost 1%, the Nasdaq composite fell 1%, the S&P 500 fell 0.7%, and the small stocks in the Russell 2000 index tumbled 1.8%.
• The 10-year T-note yield rose +5.4 bp to 4.363%, as on Monday the US Mar ISM manufacturing index expanded by the most in 1-1/2 years.
• Meantime, on Tuesday, US factory orders and job openings reports were stronger than expected.
• Notably, US Feb JOLTS job openings rose +8,000 to 8.756 million.
• US Feb factory orders rose +1.4% m/m.
• In Europe, the Euro Stoxx 50 fell back from a 23-year high and closed down -0.81%.
• The Eurozone Mar S&P manufacturing PMI was revised upward by +0.4 to 46.1.
• ECB Feb 1-year inflation expectations eased to 3.1%.
• Feb 3-year inflation expectations were unchanged at 2.5% from Jan.
• German Mar CPI (EU harmonized) rose +0.6% m/m and +2.3% y/y.
• In China, the Shanghai Composite closed down -0.08%.
• In Japan, the Nikkei Stock Index closed up +0.09%.

This morning, Asian shares mostly declined.

• Japan's benchmark Nikkei 225 slid 0.97%, Sydney's S&P/ASX 200 slipped 1.34%, South Korea's Kospi dropped 1.68%, Hong Kong's Hang Seng lost 1.26%, while the Shanghai Composite fell 0.18%.
• Analysts said worries were growing that anxieties that rattled Wall Street might spread to Asia, despite recent relatively positive economic signs from China.

Currency trading

The dollar index fell, with the dollar falling back from a 4-1/2 month high.

• The dollar had some support from Tuesday’s better-than-expected US factory orders and job openings reports.
• Also, higher bond yields were bullish for the dollar after the 10-year T-note yield rose to a 4-month high.
• However, the strength in the euro sparked a long liquidation in the dollar.
• The EUR/USD indeed rose, with the euro rebounding from a 1-1/2 month low.
• The Eurozone Mar S&P manufacturing PMI was revised upward.
• ECB Feb 1-year inflation expectations eased, but at the lowest pace in 2 years.
• Feb 3-year inflation expectations remained unchanged, and stronger than expectations of a decline.
• The upside in the euro was limited by weaker-than-expected German Mar CPI report.
• The dollar extended its losses after San Francisco and Cleveland Fed Presidents expressed their support for three Fed rate cuts this year.
• The USD/JPY fell, as the yen recovered from early losses, on speculation that Japanese authorities may be close to intervening in currency markets to support the yen.

This morning, the U.S. dollar rose to 151.61 Japanese yen from 151.54 yen. The euro cost $1.0775, up from $1.0776.

Settlement Prices for Key Commodity, Index & Currencies

• Chicago wheat May contract was down 11.6c/bu to 545.2c/bu;
• Kansas wheat May contract was down 12.2c/bu to 563.2c/bu;
• Minneapolis wheat May contract was down 7.2c/bu to 627.4c/bu;
• MATIF wheat May contract was down €1.75/t €201.75/t;
• ASX wheat May contract was unchanged to A$325/t;
• Black Sea wheat has not quoted since August 11, 2023;
• US DWI Cash (durum wheat index), was down 1.67c/bu to 751.61c/bu;
• 1CWAD (Canadian durum) avg spot prices was not available. The only available values were: NW SASK at C$393.43 (+C$0.20/t); SW SASK at C$397.24 (+C$0.39/t); and SE SASK at C$400.40/t (+C$0.18/t).
• EDW (EU durum) May was unchanged to €340.5/t;
• Chicago corn May was down 9c/bu to 426.4c/bu;
• MATIF corn Jun was down €0.5/t €192.75/t;
• Chicago soybeans May down 11.6c/bu to 1174c/bu;
• Winnipeg canola May was up C$1.1/t to C$635.3/t;
• MATIF rapeseed May was up €7.75/t to €445.75/t;
• Brent crude Jun was up US$1.50 to $88.92;
• WTI crude May was up US$1.44 per barrel to $85.15;
• BADI (Baltic Dry Index) was down 107 points to 1.714;
• Dow Jones was down 396.61 points to 39.170,24;
• S&P 500 was down 37.96 points to 5.205,81;
• NASDAQ Composite down 156.38 points to 16.240,45;
• US dollar index (Jun '24) was down 0.202 points to 104.562;
• AUD/USD firmer at US$0.6518;
• USD/CAD weaker at $1.3567;
• EUR/USD firmer at $1.0769;
• USD/RUB firmer at ?92.4638.

That's all, thank you.

We wish you a nice day.

Author: Sandro F. Puglisi

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