Daily International Grain Market View

US farm markets, were mostly down yesterday.

Corn prices, after China sales cancellation, stumbled in losses of around 0.92%.

Soybean prices after reached the highest levels in nearly eight months, triggered a round of technical selling and profit-taking, pushing prices 0.06% lower.

Soymeal closed 0.46% higher.

Soyoil were 0.35% in the red.

The wheat complex continued to slide.

Chicago gave back another 0.43%.

HRW futures were mixed at the close as old crop ended fractionally lower (-0.06%) and new crop was fractionally higher.

Spring wheat futures were down 0.8% on the day.

In energy market, oil prices climbed on Friday, extending sharp gains in the previous session as frigid weather swept across large swathes of the United States, threatening to further disrupt oil supplies.

Particularly, a massive winter storm swept across the central and Northeast United States, making travel treacherous if not impossible, knocking out power to thousands and closing schools in several states.

Thus, Brent crude rose 34 cents, or 0.4%, to $91.45 a barrel by 02:06 GMT, after rising $1.16 on Thursday.

U.S. West Texas Intermediate crude rose 46 cents, or 0.5%, to $90.73 a barrel, having gained $2.01 cents the previous day to settle above $90 for the first time since Oct. 6, 2014.

Both benchmarks are headed for their seventh straight weekly gain.

Brent futures up by 17% and WTI by 20% so far this year.

In the freight market, the Baltic Exchange’s dry bulk sea freight index rose on Thursday, buoyed by an uptick in rates across vessel segments.

The overall index, which factors in rates for capesize, panamax and supramax vessels, indeed rose 6 points, or 0.4%, to 1,425.

Particularly, the capesize index gained 11 points, or 0.9%, to 1,291.

Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, rose by $94 to $10,710.

The panamax index edged 6 points higher to 1,771, ending a seven-session losing streak.

Average daily earnings for panamaxes, which ferry 60,000-70,000 tonne coal or grain cargoes, increased by $54 to $15,939.

The supramax index registered its first gain since Dec. 13, rising by 1 point to 1,571.

Sea freight is showing signs of trying to find a bottom.?

US to Japan rates as an example were quoted at USD$62.50/t, down 11 per cent from the beginning of the year.?

While this is somewhat linked to the Chinese New Year, over the next 10 days there are 52 bulk grain vessels due to load from the US, down 20pc for the same period last year.

In equities markets, U.S. stock indexes on Thursday settled sharply lower.?

A slump in technology stocks led the overall market lower, with Meta Platforms plunging more than -26% to a 1-1/2 year low after it reported its first decline ever in active users and forecasted weaker-than-expected Q1 revenue.?

Meta, indeed, sank after forecasting revenue well below analysts’ expectations for the current quarter following privacy changes by Apple and increased competition from TikTok.

Meta also reported a rare decline in profit due to a sharp increase in expenses as it invests in transforming itself into a virtual reality-based company.

The 26.4% wipeout in Meta Platforms , as Facebook’s owner is now known, erased more than $230 billion in market value, easily the biggest one-day loss in history for a U.S. company.

Because Meta is valued so highly, a big swing in its stock price can also sink or lift broader market indexes.

Meantime, the stocks of other social media companies including Twitter and Snap also fell.

Particularly, Twitter fell by 5.6%.

Snapchat's parent company Snap sank 23.6% and Pinterest lost 10.3%.

Meantime, Snap soared 54% and Pinterest vaulted 28% in after-market trading after each reported better-than-expected results.

Amazon.com jumped 18% in after-hours trading after reporting strong fourth-quarter results despite supply chain snags.

Thursday’s U.S. economic data was better than expected and bullish for stocks consequentially.?

Particularly, U.S. weekly initial unemployment claims fell -23,000 to 238,000, showing a stronger labor market than expectations of a decline to 245,000.

Also, Q4 nonfarm productivity rose +6.6% q/q, stronger than expectations of +3.9% q/q.?

In addition, Q4 unit labor costs rose +0.3% q/q, below expectations of +1.0% q/q.?

Finally, the Jan ISM services index fell -2.4 to 59.9, stronger than expectations of a decline to 59.5.

In this context, Bond yields rose sharply yesterday.

Indeed, the yield on the 10-year Treasury note, which is used as a benchmark to set interest rates on mortgages and many other kinds of loans, rose to 1.84% from 1.76% late Wednesday.

Meanwhile, the S&P 500 fell 2.4%, its biggest drop in nearly a year, to 4,477.44.

The tech-focused Nasdaq composite gave up 3.7%, its biggest loss since September 2020, closing at 13,878.82.

The Dow Jones Industrial Average, which does not include Meta Platforms, fell 1.5% to 35,111.16.

Small company stocks also fell. The Russell 2000 index lost 38.48 points, or 1.9%, to 1,991.03.

Thursday’s retreat in New York ended a four-day winning streak for the market.

However, Wall Street's major indexes are still on track for weekly gains, helped by strong earnings reports from companies like Apple, Exxon, UPS and Google’s parent Alphabet.

In Europe also, stock markets fell yesterday.

To note, Spotify which slumped 16.8% after the leading music-streaming service gave investors a weak forecast for a closely watched measure of its earnings.

The company has come under pressure after Neil Young pulled his music from its platform to protest the spreading of COVID-19 misinformation by Spotify's star podcaster, Joe Rogan.

Other musicians have followed.

The head of the ECB said record inflation could linger for “longer than expected” and appeared to open the door ever so slightly for a rate increase this year.

These hawkish comments from ECB President Lagarde weighed on stocks when she said risks to the inflation outlook are "tilted to the upside," and the ECB is getting "much closer to target" in inflation.

Meantime, the ECB also reiterated that it would withdraw pandemic stimulus only gradually.

As immediate consequence, the rebound of the euro which goes back above 1.1450 against the dollar.

The ECB at Thursday’s meeting, however, maintained its deposit facility rate at -0.5% and kept the main refinancing rate unchanged at 0%.?

Meantime, the Bank of England raised interest rates for the second time in three months on Thursday, moving more quickly to tame inflation than the Fed and the European Central Bank.

Particularly, the BOE Thursday voted 5-4 to raise its benchmark rate by 25 bp to 0.50%, with four dissenters wanting to raise it by 50 bp to 0.75%.

Meantime, Asian markets were little affected on this morning.

Trading has been muted this week, with Chinese markets closed and coronavirus cases still surging in Asia, especially in Japan and Hong Kong.

Investors are watching for the latest update on the recovering U.S. jobs market.

The Labor Department will release its monthly report for January on this morning.

Thus, Hong Kong's Hang Seng rose 607 points to 24,391.85.

The Nikkei 225 in Tokyo edged less than 0.1% higher, to 27,269.22.

South Korea's Kospi advanced 0.8% to 2,728.00.

In Sydney, the S&P/ASX 200 declined 0.1% to 7,068.30.

On the weather side, once Winter Storm Landon moves on its way, not a lot of additional rain or snow is expected for the Midwest and Plains between today and Monday, per the latest 72-hour cumulative precipitation map from NOAA.

The agency’s 8-to-14-day outlook predicts seasonally cool weather for the eastern half of the USA between February 10 and February 16, with some wetter-than-normal conditions creeping into parts of the Northern Plains and upper Midwest.

On the demand side, export sales data confirmed 1.175 MMT of corn was sold during the week that ended 1/27.?

That was at the high end of estimates.?

USDA reported corn exports were 1.166 MMT during the same week, which was down 19% from the prior week by 17% above the same week last year.?

That brough the accumulated shipment program to 19.566 MMT, or 2.3% below last year’s pace.?

Accumulated commitments trail 2020/21 by 20% with 45.123 MMT (1.776 bbu).?

As for soybean, USDA’s weekly Export Sales report showed 1.095 MMT of soybeans were booked during the week that ended 1/27, though 459k MT were previously announced.?

That was up 6% wk/wk, and 43% form the same week last year, as well as being at the top end of the range of expectations.?

New crop business was reported at 881,816 MT for the same week. That was a MY high for forward sales and was 39% above the same week last year.?

China was the top destination for the week’s 1.39 MMT shipped.?

Also, USDA’s weekly report showed 605,485 MT of meal was sold for export during the week that ended 1/27.?

That was the largest weekly sale since 1/16 of 2020, and above the expected range, led by Colombia and the Philippines.?

USDA’s FAS data had soymeal shipments at 280,237 MT from the same week, which brought the MY total to 4.217 MMT.?

That outpaces 20/21 by 4% - while the Jan WASDE forecasts a 1.6% yr/yr increase.?

Weekly soyoil bookings were reported at 4,149 MT.

That was a 3-week low, down 78% yr/yr, and at the low end of pre-report estimates.??

As for wheat, export sales were a 5-week low of 57,459 MT. That was the 3rd week of the season with less than 100k MT sold.?

Outstanding sales sit at 4.82 MMT, which is the lightest book for week 35 since 2015/16.?

New crop forward sales were reported at 103,500 MT – led by Philippines, Mexico, and unknown.?

USDA’s weekly report had 383,560 MT of wheat shipped during the week of 1/27.?

Accumulated shipments reached 12.443 MMT.?

Meantime, USDA announced a large export sale cancelation this morning as Chinese soybean buyers removed 380k MT of committed old crop from their books. .

Going into the Feb WASDE report out next February 9, traders estimates expect USDA to reduce domestic corn carryout by 41.8 mbu to 1.498 billion.?

Global corn stocks are estimated at 299.5 MMT on average, which would be down by 3.6 MMT vs. the January report.?

As for soybean, analysts surveyed are estimating the U.S. soybean carryout at 315.7 mbu on average.?

That would be a 34.3 mbu drop from the Jan figure if realized.?

As for wheat, the trade average guess ahead of USDA’s monthly WASDE report is to see USDA raise wheat ending stocks by 5.8 mbu to 633.8 mbu.?

Global wheat stocks are expected to be 300k MT higher to 2280.3 MMT on average.

In this context, corn basis bids were steady to lightly mixed on Thursday after firming 3 cents at an Illinois river terminal and sliding 1 to 2 cents lower at three other Midwestern locations.

Soybean basis bids improved 2 to 5 cents at two interior river terminals and fell 5 cents at an Illinois processor while holding steady elsewhere across the central U.S..

From South America, soybean weather is the main driver of sentiment at the moment, and today sees a wetter outlook.?

Northern Brazil is very wet, which will impact harvest pace but is positive for safrinha corn production.?

Southern Brazil is set to record near-normal rainfall but reports are mixed for Argentina , from half of normal to normal.

In Argentina, the Buenos Aires Grains Exchange is looking forward to rain over the next several days, but said a heat wave will follow.?

The group also lowered its 2021/22 soybean production estimates by 4.5%, falling to 42 MMT against 46.5 posted by the USDA last month.

In Europe, grain prices once again lost ground on Euronext yesterday.?

Wheat prices extended losses to reach a near four-month low as a jump in the euro added to export concerns.

A sharp rise in the euro against the dollar, after comments by the European Central Bank’s president fuelled expectations of faster monetary policy tightening, pressured Euronext by making European grain more expensive for export.

Meantime, in the French ports, a slowdown in activity has been observed in recent days despite Chinese demand still present.?

The Ukrainian crisis is causing less and less concern as the days go by.?

The fear of a Russian invasion is weakening and trade flows in the Black Sea have, on the contrary, accelerated significantly in recent weeks.

Meantime, this week’s price fall had made French wheat more competitive for Morocco and could generate fresh sales after a run of shipments in January.

In Germany, the Euronext slide was making farmers less willing to sell, which is making it difficult to meet continued demand from flour mills and other consumers in the domestic market.

“Meanwhile, premiums in Germany’s export ports remain at high levels which is also making it difficult to win new export business.”

For exemple, standard 12% protein wheat for February onwards delivery in Hamburg was offered for sale at about 13 euros over Euronext March.

Iran remained the focus of export hopes for German wheat.

Another ship is set to load about 60,000 tonnes of German wheat for the Gulf in coming days, with traders suspecting Iran to be the destination following three shipments of about the same size in January.

Meantime, rapeseed prices were down sharply yesterday at midday, in the wake of other oils, but should again find support this morning in yesterday's firmness in oil and canola.

From South Africa, the South African Grain Information System (Sagis) has reported yesterday that more than 2.06 million tonnes of wheat has already been delivered to commercial silos by week 18 of the 2021/22 production season.

In its weekly producer deliveries released on Wednesday, the information service’s data showed that this amount of wheat equated to more than 93 percent of the revised estimate of 2.21 million tonnes.

Last week, the Crop Estimates Committee (CEC) released its sixth production forecast for 2021/22 winter crops.?

There were notable changes from the previous update of the end of December 2021, with wheat production forecast up by 3 percent to 2.21 million tonnes, which is the largest expected wheat crop produced since 2002, when it was 2.43 million tonnes.

However, South Africa would remain an importer of wheat netherless.

“The import requirements for the 2021/22 marketing year, which started in October, was 1.53 million tonnes. This is up by 1 percent from the 2020/21 marketing year because of a marginal increase in domestic consumption”.

In 2020, South Africa's wheat imports were valued at $493 million (R7 571), which equated to 8 percent of the overall agricultural import value of $5.9 billion that year.

In the first half of 2021, wheat had not moved from its second place as a valuable imported agricultural into South Africa.?

Over the past decade, imports accounted for an average of 53 percent of South Africa's annual wheat consumption of 3.2 million tonnes.?

From the Black Sea basin, in Russia a lot of snow has covered winter crop.?

In 2021, Russia harvested wheat crop with the record high quality parameters, informed Elena Astashenkova from Federal Centre of Quality and Safety Assurance for Grain.

The total crop included 87% of food wheat.?

47% of the overall crop is 3-grade wheat.

Besides, they informed that 1-grade wheat was detected in Voronezh oblast (2 thsd tonnes) and Altai Territory (5 thsd tonnes).?

Additionally certain regions harvested some volumes if 2-grade wheat.?

These grader of wheat are not typical for Russia.

Meantime, according to preliminary estimation of the Ministry of Agrarian Policy and Food of Ukraine, in 2021/22 MY, the total production of grains exceeded 83.8 mln tonnes, including 32.1 mln tonnes of wheat, 40 mln tonnes of corn.

According to the State Customs Service, Ukraine exported 17 mln tonnes of wheat, including 11 mln tonnes of food and 5.6 mln tonnes of feed wheat, in July-January 2021/22 MY.?

The export in February-June is forecasted at 8.2 mln tonnes of wheat, including 2 mln tonnes of food and 6.2 mln tonnes of feed wheat.

Meantime, Black Sea wheat yesterday was down US$1.25/t.

On the other hand, Ukraine signed Free Trade Zone agreement with Turkey.

50k t of sunseeds could be exported in turkey at zero duty.?

From the Middle Kingdom, China’s overall feed production is projected to rise through the end of calendar year 2022.?

Corn production in MY 2021/22 is adjusted to 272.6 million metric tons (MMT), up 11.9 MMT from last year owing to higher planting area despite slightly lower yields.?

At the same time, corn and sorghum imports are expected to remain at near record levels despite China’s tariff rate quotas (TRQ) remaining unchanged.?

Particularly, USDA attachè lowered their forecast for Chinese corn imports to 20 MMT flat.?

That is 6 MMT under the USDA official Jan estimate.?

Current Export Sales data from the USDA shows China holds 12.44 MMT of U.S. corn commitments (shipped + contracted) on the books for 21/22 export.?

As of January 27, 3.47 MMT of those commitments had been shipped.?

Corn prices have softened leading some feed mills to return to more corn in their rations with less wheat and rice, southern feed mills report difficulty sourcing adequate volumes of sufficient quality corn and continue to mix alternative grains.

Meantime, USDA attaché estimates sorghum imports?higher in MY 2021/22 due to price advantages and China’s recent buying spree.?

The Lunar New Year week in China ends this weekend and the next week could be eventful again.

Chinese New Year celebrations have in fact reduced the presence of the Middle Kingdom internationally.?

From Thailand, USDA attaché forecasts that in MY2021/22 corn imports will decline 17 percent from MY2020/21 due to a shrinking demand for swine feed caused by the African Swine Fever outbreak.?

USDA attaché also revised down MY2021/22 wheat imports to 2.9 million metric tons due to a prolonged COVID-19 outbreak and a slow economic recovery.

From Bangladesh, USDA attaché forecasts MY 2021/2022 wheat imports at 7.4 million metric tons.

Meantime, he note that wheat and wheat flour prices are trending up on increasing demand from households, restaurants, and the bakery industry.?

From India, India's wheat harvest is expected to rise to 110 million mt in the crop year 2021-22 (July-June), from 108 million mt a year ago, as higher yields offset a drop in the planting area during the current crop season, according to a S&P Global Platts survey of 11 analysts and traders.

Trade estimates for the country's 2020-21 wheat output were slightly lower than the government's projection of 109.5 million mt wheat harvest during the year.

Wheat was sown across 34.24 million hectares as of Jan. 28, down 3.5% on the year, according to India's agriculture ministry.

However, winter rains in India between Jan. 1 and Feb. 3 were 115% above average at 40.2 mm, according to India's Meteorological Department.?

In central and northwest India -- the key wheat growing regions -- showers were higher than the average by 177% and 122%, respectively.

Showers during the ripening stage typically lift the crop's yields, increasing the overall output, an agricultural scientist with Indian Council of Agricultural Research told Platts.

Meantime, India's wheat exports from the crop produced in crop year 2021-22 are likely to fall in the marketing year 2022-23 (April-March), following a surge in MY 2021-22.

India exported 4.1 million mt of wheat during April-November, nearly six-fold higher on the year, according to the data from Agricultural and Processed Food Products Export Development Authority.

The US Department of Agriculture expects India to ship around 5.25 million mt during MY 2021-22.

From Australia, a clear run of weather for the next eight to 10 days is good for the sorghum harvest, and also helps the execution program for end users and exporters gaining access to sites around the country.

Meantime, local wheat values slipped a fraction yesterday through the trade markets while grower bids remained largely unchanged.?

The ASW1 flow in Western Australia continued to trade while it struggled to find a bid on the east Coast with most domestic end users getting their fill of SFW1 at A$30/t under ASW1.

Barley remains well supported in the market with a solid export program on the stem.?

We continue to see prices in South Australia port zones elevated, with barley bid $300-$310 port zone range.?

Malt premiums also remain strong at $30-40/t above feed along the east coast

Canola continued to strike a bid yesterday, with buyers stepping back in as we saw values lift $5-$10/t along the east coast.?

The SA and WA canola markets were also firmer by $10/t.

On the international trade scene, the Korea Feed Association (KFA) has issued an international tender to purchase up to 138,000 tonnes of corn to be sourced from optional origins.

The deadline for submission of price offers in the tender from the KFA's Busan section is also Friday, Feb 4.

The KFA is seeking the yellow corn in two consignments of 50,000 to 69,000 tonnes with the seller free to decide the volume offered in this range.

The first consignment is sought for arrival in South Korea around May 20.

Shipment is sought between April 16-May 5 if the corn is sourced from the U.S. Pacific Northwest coast, between March 27-April 15 if from the U.S. Gulf or Black Sea region/east Europe, between March 22-April 10 if from South America and between April 1-20 if from South Africa.

The second consignment is sought for arrival around May 25.

Shipment is sought between April 21-May 10 if the corn is sourced from the U.S. Pacific Northwest coast, between April 1-20 if from the U.S. Gulf or Black Sea region/east Europe, between March 27-April 15 if from South America and between April 6-25 if from South Africa.

The tender is a sign Asian grain importers are resuming activities after the Lunar New Year holidays.

Author: Sandro F. Puglisi

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