Daily International Grain Market View

US farm markets skyrocketed again on Tuesday.

Corn prices got to levels not seen since 2013 on the board, with in-delivery March rallying 42.25 to $7.39 ?.?

The May contract went home with a limit gain, closing 5.07% higher.?

Soybeans faced a more complicated path, enduring a choppy session,?but climbed another 3.25% higher at the bell.

March contracts closed above the $17/bu mark.?

Soymeal prices ended the day 1.79% higher going home above $450/ton.?

Soy oil?prices ended the day on 5.09% gains – setting record prices above 76 cents/lb.?

Winter wheat prices ended the session at their allotted 50 cent limit gains.?

May SRW closed synthetically at $9.98 1/2 up 5.35% on the session.

March SRW got above $10!?

HRW prices also went home locked limit higher with May HRW settled at $10.20/bu, up 5.25%.

March contract also closed above the $10/bu mark.

It's the first time since March of ’08.?

HRS futures also rallied more than 50 cents, with May HRS up 6.01%, got to within 9 cents of the LoC high.

Thus, American farmers, who have to decide on their corn and soybean sowing intentions, will benefit from very high guaranteed prices, since they are calculated on the average of the prices of recent weeks.?

In this context, farmer sentiment is back on the rise, based on the latest readings from the Ag Economy Barometer from Purdue University / CME Group.?

However, the February score of 125 (anything over 100 is considered positive) is still well below readings from a year ago as farmers wrestle with rising input and fuel costs, as concerns about the spike in production costs and supply chain issues continue to outweigh on the impact of the commodity price rally that’s been underway this winter.

In energy market, oil prices surged to seven-year highs on this morning.

Trade disruptions, issues around trade finance and insurance are starting to get people's attention.

Exxon Mobil?said it would exit Russia oil and gas operations.?

U.S. traders at hubs in New York and the U.S. Gulf are shunning Russian crude.?

On this wake, state-run Indian refiner Bharat Petroleum Corp is seeking extra oil from Middle Eastern producers for April.

Consequentially, top oil exporter Saudi Arabia may sharply hike prices of crude for Asia in April.

A coordinated release of 60 million barrels of oil by International Energy Agency member countries agreed yesterday put a lid on market gains, but analysts said that would only provide temporary relief on the supply front.

Commercial oil stockpiles, indeed, are at their lowest since 2014, the IEA said.

The latest data from the American Petroleum Institute industry group showed U.S. crude inventories fell by 6.1 million barrels for the week ended Feb. 25.

The U.S. Energy Information Administration is due to release weekly data on this morning, with analysts polled by Reuters expecting a crude inventory build of 2.7 million barrels.

In this context, on this morning Brent crude futures gained $5.30, or 5%, to $110.23 a barrel at 04:19 GMT, a level last seen in July 2014.

U.S. West Texas Intermediate (WTI) crude futures were up $5.02, or 4.8%, to $108.41, after earlier hitting the highest since September 2013.

Yesterday?both benchmark surged 7.15% and 8.03% respectivily.

OPEC+, are due to meet on this morning, however, they are expected to stick to plans to add 400,000 barrels per day of supply each month.

In the freight market, the Baltic Exchange’s dry bulk sea freight index rose on Tuesday, snapping three sessions of declines, thanks to a pick up in rates across all vessel segments.

The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels, indeed, added 29 points, or 1.4%, to 2,069 points.

Particularly, the capesize index gained 73 points, or 4.5%, to 1,690 points.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, rose $605 to $14,019.

The panamax index was up two points, or 0.08%, at 2,601 points.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased $21 to $23,410.

Among smaller vessels, the supramax index added 15 points to 2,443 points.

However, the oil tanker market is one of the most impacted as freight rates on the Russian crude shipping route soared nine-fold in three days.?

Pre-invasion, rates were pegged at US$17,000/day; now you would expect to pay $110,000/day on the TD6 Black Sea-to-Med route.

In equities markets, U.S. stock indexes on Tuesday posted moderate losses, as better-than-expected U.S. economic data Tuesday was supportive of stocks.

The U.S. Feb ISM manufacturing index, indeed, rose +1.0 to 58.6, stronger than expectations of 58.0.??

Also, Jan construction spending rose +1.3% m/m, stronger than expectations of +0.1% m/m and the biggest increase in a year.

Meantime, Russia kept its stock market closed for a second day Tuesday, while there’s a growing risk that Russia’s stocks and bonds could be kicked out of major investment benchmarks as they become increasingly harder to trade.??

The off-shore ruble plunged to a new record low Tuesday of 121.32 rubles/USD.

Airplane manufacturer Boeing said it suspended major operations in Moscow and temporarily closed its office in Kyiv.

In a statement it said it also suspended supplying parts, maintenance and technical support services to Russian airlines.

Apple said Tuesday it has stopped selling its iPhone and other popular products there.?

BP and Shell are pulling out of investments in the Russian oil industry.

Also, President Joe Biden announced he was joining U.S. allies in closing the country's air space to Russian aircraft.

In this context, on Wall Street, the S&P 500 declined by 1.5% to 4,306.26, deepening a two-month-old skid.?

More than 70% of the stocks in the S&P 500 closed lower.?

JPMorgan Chase fell 3.8% and Bank of America slid 3.9%.

The Dow Jones Industrial Average lost 1.8% to 33,294.95.?

The Nasdaq composite slid 1.6% to 13,532.46.

Energy stocks rose, meantime, with Occidental Petroleum jumped 7%.

Investors shifted money into the safe haven of government bonds, pushing up their market price and narrowing the yield, or the difference between the current price and the payout at maturity.

Thus, the yield on the 10-year Treasury fell by an unusually wide margin, to 1.73% from Monday's 1.83%.

Consequentially, Asian stock markets slid on this morning, as President Vladimir Putin's invasion fed fears of global economic turmoil.?

Indeed, the Nikkei 225 in Tokyo lost 1.7% to 26,386.69 and the Shanghai Composite Index shed 0.4% to 3,474.45.?

The Hang Seng in Hong Kong sank 1.1% to 22,518.18.

In Seoul, the Kospi gained 0.5% to 2,712.97.

Sydney's S&P-ASX 200 added 0.1% to 7,106.40 after government data showed Australia's economy grew by 3.4% in the final three months of 2021 over the previous quarter and consumer spending was strong.

India's Sensex opened 1.6% lower at 55,330.77.?

New Zealand and Southeast Asian markets declined.

Economists say Asian economies are less exposed to the war than Europe but those that need imported oil will be hit by rising global prices, adding to inflation pressure and depressing business and consumer activity.

On the weather side, additional rain and snow is possible for parts of the Northern Plains and upper Midwest between today and Saturday, while areas farther south will remain completely dry, per the latest 72-hour cumulative precipitation map from NOAA.?

The agency’s 8-to-14-day outlook predicts seasonally cold weather for most areas west of the Mississippi River between March 8 and March 14, with wetter-than-normal conditions likely for most of the country.

Cropping regions on the US Plains desperately need a drink.

On the demand side, NASS reported 527 mbu of industrial corn use for January.?

Corn used for ethanol was a 4-year high for the month of January at 474.05 mbu.?

That was still down 0.8% from December’s ethanol use.?

NASS reported 1.929m tons of DDGS were produced in January.?

As for soybean NASS’s monthly soy crush data showed 194.3 mbu of beans were processed in January.?

That was within the expected range but above the average pre-report estimate of 193.7 mbu.?

That crush yielded 4.23m tons of soymeal and 2.28b lbs of soy oil.?

NASS reported soybean oil stocks at 2.5b lbs, just above the pre-report estimate.?

Meantime, private exporter reported to the USDA sale for 264k MT of new crop beans to China.?

In this context, corn basis bids were mostly steady to weak on Tuesday after falling 3 to 7 cents lower across five Midwestern locations.?

An Ohio elevator bucked the overall trend after rising 9 cents higher.

Soybean basis bids dipped a penny lower at an Ohio elevator and trended 2 cents higher at an Illinois river terminal while holding steady at other Midwestern locations.

The funds were net buyers again yesterday for 25,000 lots of corn, 20,000 lots of soybeans and 18,500 lots of wheat.

From South America, USDA attaché reduced its MY 2021/2022 soybean production estimate to 41 million metric tons (MMT), 4 MMT below the official USDA estimate.?

Despite rains in January which forestalled greater losses, high temperatures and dryness in December and early January caused considerable damage in key growing areas and depleted soil moisture reserves.?

Severe drought affecting the soybean crop in Paraguay will limit Argentine imports to 2.2 MMT, less than half of MY 2020/2021 imports.?

In addition to decreased supply from the prior two factors, slow farmer selling is expected to reduce the pace of Argentine soybean crushing in the first half of 2022 with USDA attaché projecting MY 2021/2022 crush at 39.4 MMT, matching the official USDA estimate.?

Total supply was reported at 54.188 MMT.?

That compares to the WAOB’s official 56.05 MMT and last years 53.09 MMT.

Soybean exports are reduced to 3 MMT, 700,000 MT below the official USDA estimate, but with a lighter than official domestic consumption figure, carryout was left at 6.188 MMT – compared to USDA’s 5.7.?

The attaché maintained its production estimate for sunflowerseed and raised its peanut estimate as these crops are grown in regions which have been less affected by drought and are naturally more drought resistant.

In Europe, for the first time, benchmark May wheat on Paris-based Euronext settled up 24.75 euros, or 7.8%, at 340.25 euros ($378.12) a tonne.

The less active March contract, which expires next week, hit an all-time record for Euronext at 352.25 euros, before settling 8.9% higher at 351.25 euros.

Also, wheat prices on Euronext for the 2022 harvest crossed the symbolic threshold of €300/t on the September deadline, closing yesterday evening at €306/t.?

Ditto for the 2022 rapeseed harvest, with the August deadline closing above the 700 €/t threshold at 708.50 €/t.

Corn prices also accelerated rapidly with the closure of Ukrainian ports for an indefinite period and the threat posed by the war on 2022 sowing.

The most active June futures ended up 5.7% at 307.50 euros a tonne.?

Spot March futures earlier set an all-time high for the market at 340.00 euros.

Buyers have been booking some wheat and maize from Romania, Bulgaria and France to replace Ukrainian supplies, pushing up physical premiums on top of the surge in futures, according to traders.

Meantime, per the latest data from the European Commission, EU corn imports during the 2021/22 marketing year are tracking slightly below last year’s pace after reaching 10,96 MMT through February 27.?

Worries abound over closures at Ukrainian ports – Ukraine has supplied more than half (54%) of EU corn imports so far this marketing year.

As for soybean, imports have reached 8.71 MMT through February 27. That’s moderately below last year’s pace so far.?

EU soymeal imports are also down moderately year-over-year, with 10.60 million metric tons since last July.

Rapeseed imports within the EU are posted on February 27 at 3.23 million tonnes against 4.45 last year.

Soft wheat exports have reached 17.89 million tonnes through February 27, which is slightly behind last year’s pace of 18.24 MMT.?

EU barley exports are also tracking slightly lower year-over-year, with 5.17 million tonnes against 5.32 last year.

From the Black Sea basin, Russian ships are already excluded from British waters and the European Union could follow suit.

The European Union has imposed sanctions on a number of major Russian companies, including the commercial seaport of Novorossiysk.

As stated in the document on the EU website, dated February 25, it is prohibited to directly or indirectly carry out transactions with these companies, provide them with investments or carry out transactions with their securities.

The group of companies, which includes the commercial seaport of Novorossiysk, is the largest Russian port operator in terms of cargo turnover.

The sanctions list includes the state holding "Russian Railways", the country's largest rail carrier.

Meantime, GASC reported that a loaded 60,000t vessel has left the Ukrainian port of Yuzhny, just east of Odessa, and is under way to Egypt.?

Meantime, Bulgarian farmers planted higher area under rapeseed in marketing year (MY) 2022/23 due to attractive and consistently increasing prices.?

Due to the mild winter, current prospects for the yields are favorable but under the risk of lower inputs’ application.?

Early FAS Sofia projection for the crop is at 350,000 metric tons (MT).?

Industry indicates that farmers also plan to expand area under sunflower due to favorable local and export demand, and lower production costs compared to corn.?

FAS Sofia currently forecasts sunflower area to grow to 860,000 hectares (HA).?

In MY 2021/22, both rapeseed crush and exports have grown as a result of better crop and good demand.?

Sunflower exports are at a record low to date at the expense of increased crush.?

As of early February, Bulgaria leads the EU in terms of exports of sunflower seeds, meal, and oil to third markets accounting for 43 percent, 21 percent, and 46 percent, respectively, of total EU exports of these products.

From Levant, Jordan's wheat reserves are enough to cover 15 months of consumption and its barley can cover 11 months, the state news agency Petra reported on Wednesday.

The kingdom's reserves of wheat bran is enough for 11 months of consumption, Petra cited Silos and Supply General Company Chairman Anwar Ajarmeh as saying.

From the Middle East, Yemen's wheat reserves are enough to cover four months of consumption, the Prime Minister's Office said on Twitter on Wednesday.

"Food security is a top priority for the government," Prime Minister Maeen Abdulmalik said.?

From Australia, ABARES raised their estimate of Australia’s 2021/22 wheat crop by an additional 5% to a record 36.3 MMT.?

ABARES’ estimate compares to the USDA official forecast of 34 MMT.?

But a private firm, IKON commodities, had estimated the crop at 39 MMT.?

On the weather side, seems the weather will not let up.?

More rain fell in the past 24 hours.?

Most of Victoria received falls of 10mm or more, limiting bunker site access and rain delays to vessels loading.

Consequentially, logistics arising from heavy rain in Queensland and northern NSW set the theme for trade this week.

Thus, domestic end users are scrambling to get grain delivered into mills and feedlots as road access is cut off.?

It affects the timing of local price bids which are not being set until later in the day.

Also, new crop pricing is hard to extract, despite the basis being very weak and the basis looking attractive.?

These factors make it a tough market to trade.

Meantime, local markets showed a little more strength yesterday.?

Wheat values in Victoria port zones and delivered homes were firmer $3-4/t, APW1 track values around $388-390/t.?

WA ASW1 FIS values now up around the $375/t.

Barley prompt delivery Geelong Melbourne region bids continued strong.?

Malting barley in Victoria was bid $5-6/t firmer.

Canola markets increased sharply, following the price drops which started the week.

On the international trade scene, Taiwan issued an international tender to purchase 66.000 t of animal feed corn to be sourced from the United States, South America or South Africa that closes on Thursday.?

The grain is for shipment in May and June.?

Grain buyers have the difficult decision of making purchases while prices are historically high or waiting to see what market moves lie ahead.

Tunisia's state grains agency has issued an international tender to purchase about 75,000 tonnes of durum wheat.

The grain can be sourced from optional origins.?

The deadline for submission of price offers in the tender is today, Wednesday, March 2.

The durum is sought in three consignments of 25,000 tonnes with shipment periods depending on the origin supplied.

Shipment is between April 1-20 if sourced from the Mediterranean region/south Europe, between March 25-April 15 if from West Europe or between March 20-April 10 if from the United States, Canada or South America.

Algeria’s state grains agency has also issued a tender to buy 50.000 t of durum closing on this morning.

Turkey's state grain board TMO has started making provisional purchases of wheat in an international tender on this morning with about 175,000 tonnes initially bought.

The tender seeks 435,000 tonnes and more purchases are expected later on Wednesday.

Both imports and wheat already in warehouses in Turkey could be offered in the tender for shipment/delivery between March 10-April 8.

Traders said the tender was dominated by offers of wheat already in warehouses inside Turkey.

Some export houses have been shipping Russian wheat into Turkey in advance of sales to escape repeated increases in Russia's export taxes.

Traders reported these provisional purchases:

- Iskenderun, 25,000 t offered by Kibar with 13.5% protein at $408.90 ex warehouse;

- Iskenderun, 25,000 t, by Aston with 12.5% protein at $410.80, ex warehouse;

- Iskenderun, 25,000 t by Aston with 13.5% protein at $414.80, ex warehouse;

- Mersin, 25,000 t, offered by Grain Star with 12.5% protein content at $442.80, ex warehouse;

- Mersin, 50,000 t, offered by Erser, with 13.5% protein, at $447.00, ex warehouse;

- Derince, 25,000 t by Erser with 13.5% protein content, at $470.00, ex warehouse.

In its last wheat purchase on Jan. 18, Turkey bought some 335,000 tonnes at the lowest price of $341.90 a tonne c&f.

The Korea Feed Association (KFA) has issued an international tender to purchase up to 204,000 tonnes of corn to be sourced from optional origins.

The tender, closes on Wednesday, March 2.

The KFA’s Incheon section, also called the Feed Buyers Group, seeks three consignments each of 50,000 to 68,000 tonnes.

On this morning, the most-active wheat contract on the Chicago Board of Trade was locked limit up at $10.59 a bushel at 10:15 GMT, its highest level since March 2008.

European wheat futures also surged, with the spot March contract on Paris-based Euronext climbing to a record high of 390 euros a tonne.

Corn prices also rose, with the most active CBOT contract up 2.65% at $7.45 a bushel after peaking at $7.47-3/4 - the highest level since December 2012.

The most active soybean contract on the CBOT was up a modest 0.1% at $16.91-3/4 a bushel.

That's all.

To all of you I wish you a good day.

Author: Sandro F. Puglisi??

"Make love... No war..."

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