Daily International Grain Market View

There were severe downward moves on Wedsneday resulting from macro markets copping a proper shellacking and commodities participants taking risk off.

US farm markets have suffered still more significant losses, as new estimates of a bumper Russian wheat crop in 2022 and hopes that Ukrainian exports will pick up the pace, weighed on sentiment investors.

During Grain Conference in Geneva, indeed, Russian consultancy IKAR said Russia wheat crop is expected to reach 85 million tonnes this season.

Meantime, the U.N. is reportedly trying to facilitate talks with Russia, Ukraine, Turkey, the EU and US on restoring grain exports out of Ukraine.

Thus, corn prices closed the midweek session with July contract dropped 2.4%.

Soybeans joined the risk off party, and were down 0.91%.?

Product values?were mixed, as soybean meal was up 0.53% and bean oil was 3.52% lower in the July contract.

The wheat complex fell apart across the complex on Wednesday.?

The winter wheats led the way to the downside, with CBOT?3.66% lower and Kansas City down 3.16% in the front months.?

MPLS was 2.92% weaker at the close.?

In energy markets, oil prices rose on Thursday, recovering from early losses, on hopes that planned easing of restrictions in Shanghai from June 1, could lead to a rebound in oil demand.

Shanghai plan to gradually resume inter-district public transport from May 22.

Meantime, lingering concerns over tight global supplies outweighed fears of slower economic growth.

U.S. crude inventories fell last week, an unexpected drawdown, as refiners ramped up output in response to tight product inventories and near-record exports that have forced U.S. diesel and gasoline prices to record levels.

Capacity use on both the East Coast and Gulf Coast was above 95%, putting those refineries close to their highest possible running rates.

In this context, Brent crude futures for July were up $1.53, or 1.4%, at $110.64 a barrel at 04:47 GMT, after falling by more than $1 earlier in the session.

U.S. West Texas Intermediate (WTI) crude futures for June rose 93 cents, or 0.8%, to $110.52 a barrel, recovering from an early loss of more than $2. WTI for July was up $1.57, or 1.5%, at $108.50 a barrel.

Both benchmark prices fell about 2.5% on Wednesday with the slump in Wall Street souring sentiment in early trade as it underlined concerns over weakening consumption and fuel demand, analysts said.

The European Commission unveiled on Wednesday a 210 billion euro ($220 billion) plan for Europe to end its reliance on Russian fossil fuels by 2027, and to use the pivot away from Moscow to quicken its transition to green energy.

In freight markets, the Baltic Exchange’s main sea freight index rose to a five-month peak on Wednesday, due to stronger rates across all vessel segments.

The overall index, indeed, was up 94 points, or 3%, at 3,189 points, the highest since Dec. 13

Particularly, the capesize index gained 214 points, or 5.4%, at 4,164 points, also at its five-month high.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $1,777 to $34,531.

The panamax index gained 73 points, or 2.2%, at 3,327 points.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased $649 to $29,939.

The supramax index rose 13 points to 2,758 points.

In equity markets, U.S. stock indexes Wednesday plunged and settled sharply lower.??

US Federal Reserve president, Jerome Powell, anticipated the FED will continue to raise interest rates until there is “clear and convincing” evidence that inflation, which is currently at 40-year records in that country, begins to fall in a sustained manner.?

“We have to get inflation to 2 percent. We have to restore our price stability. It will be challenging to do that and we have to slow growth to do it,” he said.?

The prospects of lower corporate earnings due to rising prices and slower economic growth undercut stock prices.?

A -25% plunge in Target Corporation, after reporting earnings that fell far short of analysts’ forecasts, led retailer stocks lower.

Inflation, especially for shipping costs, dragged its operating margin for the first quarter to 5.3%.?

It had been expecting 8% or higher.

Target warned that its costs for freight this year would be $1 billion higher than it estimated just three months ago.?

The report comes a day after Walmart said its profit took a hit from higher costs.?

The nation's largest retailer fell 6.8%, adding to its losses from Tuesday.

Other big retailers also racked up hefty losses.?

Dollar Tree fell 14.4% and Dollar General slid 11.1%.?

Best Buy fell 10.5% and Amazon fell 7.2%.

High-valuation technology stocks also sank.??

Apple lost 5.6%, its biggest decline since September 2020.

U.S. Apr housing starts fell -0.2% m/m to 1.724 million, weaker than expectations of 1.756 million.??

Apr building permits, a proxy for future construction, fell -3.2% m/m to a 5-month low of 1.819 million, still above expectations of 1.814 million.

In addition, continue concerns that China will maintain lockdowns that undercut global growth prospects after it reported its first increase in Covid infections in the last five days.

Such factors led the United Nations to cut its forecast for global economic growth this year from 4% to 3.1%.

In this context, the Dow Jones Industrial Average sank 1,164.52 points, or 3.57% to 31,490.07.

The S&P 500 had its biggest drop in nearly two years, shedding 4.04% or 165.17 points to 3,923.68.?

That was its steepest decline since June 2020.?

The Nasdaq slid -5.06% or 566.37 points to 11,418.15.

Smaller company stocks also fell sharply.?

The Russell 2000 fell 65.45 points, or 3.6%, to 1,774.85.

Bond yields fell as investors shifted money into lower-risk investments.?

The yield on the 10-year Treasury fell to 2.88% from 2.97% late Tuesday.

Meantime, shares dropped sharply in Asia on Thursday on the wake of broad retreat on Wall Street.

Shares fell in all regional markets except Indonesia's.?

Japan recorded a trade deficit in April as imports ballooned 28% as energy prices soared amid the war in Ukraine and the yen weakened against the dollar.

Japan’s exports grew to 8.076 trillion yen ($63 billion) last month, up 12.5% from the previous year, according to Ministry of Finance data released Thursday.?

Imports totaled 8.915 trillion yen ($70 billion) in April, up from 6.953 trillion yen in April 2021, and the highest since comparable numbers began to be taken in 1979.

In this context, the Nikkei 225 in Tokyo lost 1.9% to 26,395.81 and the Hang Seng in Hong Kong dropped 2.5% to 20,119.96.?

In South Korea, the Kospi shed 1.3% to 2,592.32, while Australia's S&P/ASX 200 gave up 1.7% to 7,062.90.

The Shanghai Composite index edged 0.1% lower to 3.083.20.

In currency trading, the dollar rose to 128.46 Japanese yen from 128.20 yen late Wednesday.?

Bank of Japan has stuck to its low interest rate policy and the gap between those benchmark rates of the world's largest and third-largest economies has pushed the dollar's value up against the Japanese yen.

The euro strengthened to $1.0487 from $1.0464.

The dollar index on Wednesday rose by +0.458 (+0.44%) recovering from a 1-1/2 week low.?

In other news, the World Bank will make $30 billion available to help stem a food security crisis threatened by Russia's war in Ukraine, which has cut off most grain exports from the two countries, the U.S. Treasury said in a report on food security plans from international financial institutions on Wednesday.

The total will include $12 billion in new projects and $18 billion funds from existing food and nutrition-related projects that have been approved but have not yet been disbursed, the Treasury report said.

On the weather side, widespread rains are possible across much of the Midwest and Plains between today and Sunday, but few areas are likely to gather much more than 0.5” during this time, per the latest 72-hour cumulative precipitation map from NOAA.?

The agency’s 8-to-14-day outlook predicts more seasonally wet weather for parts of the Northern Plains, upper Midwest and eastern Corn Belt between May 25 and May 31, with warmer-than-normal conditions likely for the southern half of the U.S. as the month winds to a close.

On the demand side, EIA data from Wednesday morning showed weekly ethanol production at 991,000 barrels per day, unch from the week before.?

Stocks were drawn down by 349,000 barrels on the week to 23.791 million barrels.?

High gasoline prices could also encourage more blending of corn-based ethanol, and higher use of edible oils to make fuel, but in the meanwhile, near record high prices of vegetable oils and concerns over global food crisis would push government to limit the use of such biofuel.

Ahead today’s Export Sales report, analysts are expecting corn sales between 150,000-450,000 MT in old crop for the week that ended on 5/12, and 500,000-900,000 MT for new crop.

As for soybean, the trade is estimating old crop bean export bookings at 150,00-500,000 MT.?

New crop sales are expected at 50,000-600,000 MT.?

Soy meal is seen at 100,000-400,000 MT, with bean oil at 0-20,000 MT.

As for wheat is expected net reductions of 50,000 MT to 150,000 MT in sales for old crop.?

New crop bookings are expected to be in a range of 50,00-250,000 MT.

Meantime, private exporters reported to the USDA having sold 229,200 metric tons of soybeans received during the reporting period for delivery to unknown destinations.??

Of the total, 10,200 metric tons is for delivery during the 2021/2022 marketing year and 219,000 metric tons is for delivery during the?2022/2023 marketing year.

In this context, corn basis bids rose 2 to 4 cents higher at two interior river terminals while holding steady elsewhere across the central U.S. on Wednesday.

Soybean basis bids trended 3 cents higher at an Ohio elevator and also firmed 3 cents at two interior river terminals while holding steady at most other locations across the central U.S..?

An Iowa processor bucked the overall trend after dropping 5 cents.

The funds were net sellers yesterday for 20,500 lots of corn, 8,000 lots of soybeans and 15,000 lots of wheat.

From South America, Brazil’s Anec now estimates that the country’s corn exports will reach 1.26 mmt in May (140k YoY), which is moderately higher than its prior projection made a week ago.?

Brazil’s Anec estimates that the country’s soybean exports will reach 11.5 mmt in May (16.4mmt YoY), which is moderately above its prior forecast made a week ago.?

Anec also expects to see soymeal exports reach 2.009 million metric tons this month.

Anec also estimates that Brazilian wheat exports will reach 104,720 tons in May versus 103,719 tons forecasted in previous week.

Meantime, Agribusiness consultancy Agroconsult cut its forecast of Brazil's second corn crop to 87.6 million tonnes in the 2021/2022 cycle, down from a previous 92.2 million-tonne forecast.

In Europe, Euronext recorded heavy losses on Wednesday, with in particular rapeseed prices falling by more than €40/t and wheat contracts down by more than €7/t!

Benchmark September milling wheat Had gained nearly 50 euros/tonne or more than 12% in just two weeks by the close on Tuesday evening.

The rise was probably excessive and demand could bend.

However, the fundamentals have not changed in the short term, and the gap between world supply and demand, particularly for cereals, remains in deficit.

Dry weather in the European Union could reduce the bloc's capacity to help relieve global supply tightness.

The world is facing food prices that we've never seen before and if the EU weather pattern doesn't change and don't start to get some rain in the wheat areas of France, this index will make some new highs, analysts said at the GrainCom conference in Geneva.

On this wake, some analysts expects EU all-wheat production, including durum, at around 133 million tonnes, 3.5 million tonnes lower than the U.S. Department of Agriculture forecast and well down from last year.

Low EU wheat stocks would also limit the bloc's scope to export in 2022/23 at 30 million tonnes compared with a USDA forecast of 36 million.

Other speakers, however, were less pessimistic.

Meantime, according to other analysts, in parts of Africa and Asia, the importance to diets of staples such as maize and rice may allow for less wheat consumption.

A shift to maize and other crops could potentially remove 5-6 million tonnes from sub-Saharan wheat demand.

Meantime, non-commercial market participants cut their net long position in Euronext's milling wheat futures and options in the week to May 13, data published by Euronext on Wednesday showed.

Non-commercial participants, which include investment funds and financial institutions, lowered their net long position to 186,215 contracts from 188,722 a week earlier, the data showed.

Commercial participants edged down their net short position to 210,394 contracts from 210,766 a week earlier.

Commercials' short positions accounted for 71% of the total short position, while commercial long positions accounted for 30.8% of total long positions.

Non-commercial short positions represented 29% of total short positions, while non-commercial net long positions accounted for 69.2% of the total longs.

The report covered all of the open short and long positions in the wheat derivatives.

In Euronext's rapeseed futures and options, non-commercial market participants cut their net short position to 4,965 contracts from 5,903 a week earlier.

Commercial participants reduced their net long position in rapeseed to 5,775 contracts from 6,482 a week earlier.

From North Africa, About 300 thsd tonnes of Ukrainian wheat booked by Egypt's state grains buyer for delivery in February and March is yet to be shipped, as the blockage of Ukrainian ports.

Two of the cargoes that have yet to be loaded were contracted by Nibulon and a further two by Inerco.?

A fifth cargo contracted by Olam is stuck at Ukraine's Chornomorsk Port on a GTCS ship.

Egypt's supply minister confirmed on May 16 that authorities had granted an extension for delivery of the cargoes.

From the Black Sea basin, Russia, will export more of the grain in the new July-June marketing season due to a large harvest and stockpile, the IKAR consultancy said on Wednesday, raising its estimate for the wheat crop.

Russia may export 39 million tonnes of wheat in the 2022/23 season, which starts on July 1, Dmitry Rylko, the head of IKAR, told a conference in Geneva.?

In the current season, IKAR expects the exports at 32.0-32.5 million tonnes.

The country's 2022 wheat crop is expected to reach 85 million tonnes.?

Previously expected a harvest of 83.5 million tonnes, still up from 76.0 million tonnes in 2021.

Sovecon, on its part, raised its forecast for Russia's wheat crop by 1.2 million tonnes to a new record-high of 88.6 million tonnes.

Sovecon estimated Russia's 2022/23 wheat exports at 41 million tonnes earlier in May.

In other news, the United States does not have legal authority to seize Russian central bank assets frozen due to its invasion of Ukraine, Treasury Secretary Janet Yellen said on Wednesday, but talks with U.S. partners over ways to make Russia foot the bill for Ukraine's post-war reconstruction are underway.

Yellen also said it is likely that the special license granted to allow Russia to make payments to its U.S. bondholders would not be extended when it expires next week, leaving Russian officials a fast-narrowing window to avoid its first external debt default since the Russian revolution.

Russia has some $40 billion of international bonds and has so far managed to keep current on its obligations and avoid the default.

Its ability so far to make the required dollar-denominated payments has come under a temporary general license issued by Treasury's Office of Foreign Assets Control in March.?

That allowed an exception to a ban on transactions with Russia's finance ministry for the purposes of "the receipt of interest, dividend, or maturity payments in connection with debt or equity."

The next payment is due May 25, the day the license expires.

On Wednesday Yellen said Treasury is unlikely to extend the exemption, which could result in a technical default if Russia then resorts to trying to pay in roubles rather than dollars as required under the bonds' covenants.

On the other hand, Russia will finance the reconstruction of territories in Ukraine that it has taken control of and will repair roads that link those areas with Russia, RIA quoted Russian Deputy Prime Minister Marat Khusnullin as saying on Wednesday.

Khusnullin said Russia had "freed" the territories.

He also said the Zaporizhzhia nuclear power plant, the biggest in Europe by capacity, will supply energy to Russia and to Ukraine if the latter pays for it, RIA reported.?

Russian troops seized the Zaporizhzhia plant from Ukraine.

In Ukraine, Ukraine exported almost 232.6 thsd tonnes of corn during the period May 1 - 9. 55% was transported by rail and 41% by sea, informed the Ministry of Agrarian Policy citing State Customs data.

Also, Ukraine exported:

wheat – 8.68 thsd tonnes (56% by sea);

barley – 2.57 thsd tonnes (92% by rail);

sunflower – 60.68 thsd tonnes (57% by sea);

soybean – 21.71 thsd tonnes (63% by sea);

sunflower oil – 38.8 thsd tonnes (38% by road);

soybean oil – 3.62 thsd tonnes (59% by rail);

oilseed cake – 32.24 thsd tonnes (46% by sea).

The Ministry added that 61% of the overall export volume of grains, oils and meals was transported by rail and 29% by sea over the period from March 1 to May 9.

Meantime, the indicative export prices of Ukrainian new-crop barley increased last week by average 20 USD/t to 330-355 USD/t FOB.

The bid prices of corn increased by 10-20 USD/t to 225-250 USD/t CPT-port.?

The bid prices on the FOB market were mainly announced at 285 USD/t FOB in the ports of Reni and Izmail.

At the same time, the purchasing prices of corn were mainly declining last week in the ports of Romania and Moldova.?

Overloaded logistics, delays in contract performance high delivery costs weighted on the prices.?

Thus, the bid prices of corn totalled 285-305 USD/t or 275-290 EUR/t for delivery to the port of Constanta, and 245-255 USD/t for delivery to the port of Giurgiule?ti.

From the Middle Kingdom, China has decided to allow canola imports from Canada again after a 3-year ban.

With the lifting of restrictions, there should be some trade flows but import volumes are not expected to be large.

China's own canola crop might keep trade flows from increasingly rapidly.

China is expected to produce a record volume of canola this year.?

Soybean production is also estimated to rise this year.

From South East Asia, after remaining suspended for more than three days due to a ban imposed by the government on exports of wheat, in India operations to load wheat on board five vessels berthed at Kandla port resumed late Tuesday after the Directorate General of Foreign Trade (DGFT) cleared the shipments cumulatively weighing more than 2.92 lakh metric tonnes.

The five vessels together are to take more than 2.92 lakh metric tonnes (MT) of Indian wheat to Egypt, Bangladesh, Oman, Indonesia and Brazil.

The news came as a huge relief to drivers and cleaners of around 4,000 trucks that were waiting at Kandla port and nearby areas with consignments from various parts of the country.?

Loading was halted on May 14 after the central government announced a ban on the exports of wheat the previous evening.

Around two million tonnes of wheat were being shipped to foreign shores as supplies from Russia and Ukraine were hit due to the ongoing war.

According to DPA officials, while MV Xin Yi Hai 16 is to ship 55,162 metric tonnes (MT) of wheat to Brazil, MV Jag Radha is to take 44,280 MT wheat to Bangladesh.?

MV Mana is to ship 60,000 MT of wheat to Egypt while MV Valiant Summer is to sea-transport 63,000 MT of wheat to Oman.?

MV Faedra is to take 69,579 MT wheat to Indonesia.

Indonesia exported 2.02 million tonnes of palm oil in March, including refined products, down 40% from the same month a year earlier, data from the Indonesia Palm Oil Association (GAPKI) showed on Thursday.

Indonesia produced 3.78 million tonnes of crude palm oil, taking end-March stocks to 5.68 million tonnes, compared to end-February stocks of 5.05 million tonnes, GAPKI data showed.

Indonesia has since April 28 stopped palm oil exports to control domestic prices.

From Australia, SFW wheat has passed the $500-per-tonne mark this week in eastern Australia, and is trading at close to $520/t in the Port Adelaide zone amid thin grower selling, buoyant demand from exporters with hatches to fill, and tight logistics.

The price exceeds the highs of around $465/t for ASW wheat delivered southern Queensland Downs in 2018, when drought had reduced local supplies, and ahead of interstate grain arriving in volume to settle the market at international parities.

In add to India’s weekend announcement of its limit on wheat exports, however, with much of Australia’s export surplus forward sold, it appears domestic issues, namely wet weather in places and a shortage of road transport everywhere, is driving prices higher.

Meantime, markets firmed again yesterday and the liquidity continued to flow through the depot sites.?

H2 wheat hit $570/t track Port Lincoln while on the east coast H2 traded at $534/t track Portland on Clear Grain Exchange.?

Delivered markets remain one sided with little bits and pieces trading as growers come to the back end of seeding programs and are looking to move some stock for June onward.

On the weather side, according to BOM the La Ni?a persists.?

While latest model outlooks show the majority of models return to neutral-ENSO by July, all models remain cooler than average in the central tropical Pacific over the southern winter, ranging from cool-neutral conditions to weak La Ni?a conditions.?

These patterns would be likely to favour above average winter rainfall for eastern Australia.?

Model accuracy at this time of year is moderate.?

The Indian Ocean Dipole (IOD) is neutral.?

Latest model outlooks indicate a negative IOD event may develop during early to mid-winter.?

A negative IOD event can enhance winter and spring rainfall across much of Australia.

The short-term outlook is for a relatively dry couple of days throughout the entire winter cropping belt with showers developing over southern Queensland and north western NSW on Saturday afternoon and spreading across NSW on Sunday and Monday but totals are forecast to be less than 10mm for most.?

Showers are forecast to continue into next week which will not help dry out the very wet areas through central and northern NSW and southern Qld.?

The forecast for next week for southern WA will be perfectly timed with at least 10-25mm expected.

On international trade scene, Japan's Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 174,744 tonnes of food-quality wheat from the United States, Canada and Australia in regular tenders that closed on Thursday.

Particularly, the purchase has been: U.S. Western White, 13,672t; U.S. Hard Red Winter (Semi Hard) 21,330t; U.S. Hard Red Winter (Semi Hard) 11,300t; U.S. Dark Northern Spring (protein minimum 14.0 pct) 13,254 t; Canada Western Red Spring (protein minimum 13.5 pct) 30,730t; Canada Western Red Spring (protein minimum 13.5 pct) 31,340t; Canada Western Red Spring (protein minimum 13.5 pct) 29,395t; Australia Standard White (West Australia) 23,723t;

Loading is between July 1 and July 31, 2022 and between September 1 and September 30, 2022.

Jordan?Barley Tender no. 50.2022.18 closing 18/05/2022 ( sixth tentative) got four participants (Cargill, Viterra, Bunge & Ameropa).

MIT canceled the tender to re-tender Thursday 26 May, same terms and shipment periods full August and full September.

Envelopes were opened.

TMO will hold tender for import of 175kMT(+/-5% at buyer’s option) corn on 26.05.

Bound or conditional offers will not be evaluated.

Offers can be given in TL/USD on CFR.

TMO also is tendering to bought 150kMT (+/-5% at buyer’s option) corn on 26.05, with offers can be given in TL/USD on Entrepot and/or Free zone.

That's all.

To all of you, I wish you a good day.

Author: Sandro F. Puglisi??

?To read more, check for free

www.bancadelgrano.it