Daily International Grain Market View

Good morning Farmer Family...

US farm markets were mixed but mostly lower on Tuesday.?

Corn prices crumbled 1.84% lower after USDA’s latest data showed faster-than-expected planting progress and following the trade agreement authorizing Brazil to export corn to China.?

Soybeans bucked the overall trend, capturing modest gains by the close around 0.35%, as exports remain high.

Soybean meal prices ended the day with 1.09% recovery.??

Soybean oil prices were mostly higher on Tuesday, though broke for 0.43% daily losses by the close.?

The wheat complex slumped, incurring losses for four out of the past five sessions as fresh supplies from the Northern Hemisphere will soon come online.

Kansas City HRW wheat prices led the descent with 3.04% losses.?

Chicago wheat prices were also down 2.96%.?

Minneapolis spring wheat closed the day 1.64% in the red.?

Oats prices?firmed up, going home with a 7% gain.

In energy markets, oil prices rose more than $1 on Wednesday.

Global crude supplies continue to tighten as buyers avoid oil from Russia.

France's new foreign minister said European Union would strike a deal on ban Russian oil.

That would have the effect of curtailing global supply.

A Biden administration official headed to India on Tuesday to talk with officials and private industry executives as Washington seeks to keep India's purchases of Russian oil from rising.

The crude supply situation is tightening as U.S. Memorial Day weekend travel is expected to be the busiest in two years despite high fuel prices.?

US gasoline inventories fell by 4.2 million barrels last week, market sources, citing American Petroleum Institute figures, said on Tuesday.

Distillate stocks also dropped by 949,000 barrels, the sources said, while U.S. crude stocks rose by 567,000 barrels.

Data from the U.S. government on stockpiles will be released on Wednesday.?

In China, Beijing stepped up quarantine efforts to end its month-old COVID-19 outbreak, while in Shanghai, authorities plan to lift of the two-month-old lockdown from June 1.

In this context, Brent crude futures for July rose $1.38, or 1.2%, to $114.94 a barrel by 05:11 GMT.?

Brent futures gained 0.1% on Tuesday and are up for a fifth day.

U.S. West Texas Intermediate (WTI) crude futures for July delivery rose $1.35, or 1.2%, to $111.12 a barrel.

The contract settled down 52 cents on Tuesday.

In freight markets, the Baltic Exchange’s main sea freight index dipped on Tuesday, snapping a five session winning streak, as rates declined across the larger vessel segments.

The overall index, indeed, lost 116 points, or 3.4%, to 3,253. The index had risen to its highest in over five months in the last session.

Particularly, the capesize index dipped 314 points, or 6.8%, to 4,288 points.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $2,605 at $35,564.

The panamax index fell 56 points, or 1.7%, at 3,321 points.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $500 to $29,892.

The supramax index rose 10 points to 2,828 points.

In equity markets, U.S. stock indexes Tuesday settled mixed.??

Global growth concerns weighed on the overall market.

The disappointing U.S. economic data saw the May S&P Global U.S. manufacturing PMI falling -1.7 to 57.5, weaker than expectations of 57.7.??

Also, Apr U.S. new home sales plunged -16.6% m/m to a 2-year low of 591,000, weaker than expectations of 749,000.?

That represent a 26.9% decline from a year earlier.

In addition, the May Richmond Fed manufacturing survey fell by -23 points to a 2-year low of -9, weaker than expectations of 10.

In this context, retailers and companies that rely on direct consumer spending declined.?

Amazon slid 3.2% and Target fell 2.6%.

KB Home fell 2.7%.

Cruise lines and other travel-related companies took heavy losses. Carnival slid 10.3% and Norwegian Cruise Line fell 12%.

Snapchat plunged -43.1%.??

The plunge in Snap also weighed on other social media stocks and digital advertisers, with Trade Desk down more than -19% and Meta Platforms down more than -7%.?

Google’s parent fell 5.1%.

Also, China’s Shanghai Composite sank more than -2% when UBS cut its China 2022 GDP forecast to 3.0% from 4.2%, citing the impact of its Covid Zero policy.?

Meanwhile, JPMorgan Chase cut its 2022 China GDP forecast to 3.7% from 4.3%, citing a deep contraction in Q2 because of China's Covid restrictions.

The Dow Jones Industrials, in contrast, moved into positive territory on strength in utility stocks and consumer staples.

Thus, the S&P 500 fell to 3,941.48.?

The Dow Jones Industrial Average gained 0.2% to 31,928.62.

The Nasdaq composite, dominated by tech stocks, slide 2.3% to 11,264.45.

Meantime, Asian stock markets were mixed on Wednesday.

Shanghai and Seoul advanced while Tokyo and Hong Kong declined.?

Particularly, the Shanghai Composite Index advanced 0.1% to 3,074.51 while the Nikkei 225 in Tokyo shed 0.1% to 26,713.08.?

The Hang Seng in Hong Kong lost less than 0.1% to 20,093.33.

The Kospi in Seoul rose 0.7% to 2,623.41 and Sydney's S&P-ASX 200 gained 0.6% to 7,173.30.?

New Zealand and Jakarta declined while Singapore advanced.

Investors are on edge about the impact of interest rate hikes in the United States and other Western economies to cool surging inflation, as well as Russia's war on Ukraine and a Chinese economic slowdown.

On Wednesday, the Federal Reserve is due to give insight into its decision-making by releasing minutes of its latest policy meeting.

In currency trading, the dollar gained to 127.05 yen from Tuesday's 126.82 yen.?

The euro rose to $1.0725 from $1.0693.

The dollar index on Tuesday fell by -0.241 (-0.24%) extending Monday’s losses to a 4-week low.??

The dollar was undercut by weaker-than-expected U.S. economic data and the decline in the 10-year T-note yield to a 3-1/2 week low.??

However, losses in the dollar Tuesday were limited as the slide in stocks boosted the liquidity demand for the dollar.

On the weather side, more wet weather is ahead later this week, with large portions of the Corn Belt set to receive 1” or more between today and Saturday, per the latest 72-hour cumulative precipitation map from NOAA.?

The agency’s 8-to-14-day outlook predicts more seasonally wet weather for the central U.S. between May 31 and June 6, with cooler-than-normal conditions returning to the Northern Plains and upper Midwest likely.

On the supply side, as we said yesterday, corn plantings are 72% complete through Sunday, up from 49% a week ago and four points above the average trade guess of 68%.?

However, this year’s progress is still markedly slower than 2021’s pace of 89% and the prior five-year average of 79%.?

Emergence moved to 39%, up from 14% a week ago but still substantially behind 2021’s pace of 61% and the prior five-year average of 51%.

Soybean plantings reached 50% through Sunday, up from 30% a week ago and slightly besting the average trade guess of 49%.?

That still puts this year’s crop well below 2021’s pace of 73% and five points below the prior five-year average of 55%.?

Twenty-one percent of the crop is now emerged, up from 9% a week ago.?

Last year’s pace was faster, at 38%, and the prior five-year average is 26%.

Winter wheat quality ratings improved a point and matched analyst expectations with 28% of the crop rated in good-to-excellent condition, making it among the worst on record.?

Another 32% of the crop is rated fair (unchanged from a week ago), with the remaining 40% rated poor or very poor (down a point from last week).?

Physiologically, 63% of the crop is headed, versus week-ago results of 48%.

Meantime, spring wheat plantings made it to 49%, up from 39% a week ago.?

That was well below the average trade guess of 56%.?

It’s also well below 2021’s pace of 93% and the prior five-year average of 83%.

In North Dakota, rain last week across the state ranged from ? inch to 2-3 inches and temperatures were below average.?

Sunny weather, drier conditions and warmer temperatures to start off the week have producers optimistic that they might finally be able to make decent planting progress.??

While some producers have been able to make fairly steady progress the past few days, others are still waiting for dry ground.??

Planting pace thus far has been painfully slow and at least two to three weeks of cooperative weather conditions are needed for most of the state to finish planting.?In some cases, fields may simply be too wet and will not get planted.??

The weather forecast for this week does look promising with only sporadic chances of precipitation and warmer temperatures.

Monday’s USDA Crop Progress report indicated that producers in North Dakota have now planted 27% of the intended spring wheat acres, up only 10% from last week and well behind last year’s pace of 93% and the five-year average of 80%.??

About 9% of the state’s planted crop has emerged.?

As a whole, the U.S. spring wheat crop is now about 50% planted, compared to 83% on average.??

Minnesota remains significantly behind with only 11% of their spring wheat planted, while Montana and South Dakota have planted 85% and 94%, respectively.??

Emergence of the U.S. crop is at 29% compared to 50% on average.

Planting of the North Dakota durum crop has faced the same challenges as spring with very slow planting progress due to the unusually wet conditions.??

Only 17% of the state’s durum has been put in the ground compared to 75% last year and 69% on average.??

Most of the durum that has been planted so far is in the southwest portion of the state where conditions have been a bit drier recently.??

Producers have commented that warmer, drier conditions are needed to dry fields.??

In Montana, producers have made better progress due to dry weather with about two-thirds of their durum planted, which is near the average pace.??

In Montana, Many areas need precipitation for crop development.

On the demand side, the bearish factors yesterday included the announcement that China Customs and the Ministry of Brazil signed an agreement on CIQ Inspections Requirement for corn and soymeal export.?

While the initial reaction was pretty bearish for the US, the impact will be negligible.?

Brazil sells to China, the US sells to the people previously buying from Brazil.?

We could argue that this will push Brazilian basis the next leg higher, which turns on a bunch of US-relative value buying.

In this context, corn basis bids were steady to firm on Tuesday after rising 2 to 10 cents higher across three Midwestern locations.

Soybean basis bids were mostly steady to firm across the central U.S. after rising 3 to 10 cents higher at three Midwestern locations.?

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

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

They were net buyers for 1,500 lots of soybeans.

From Canada, Saskatchewan seeding progress for wheat at only 26% as of May 16th compared to a 67% five-year average is concerning.?

Alberta seeding progress at 59% (compared to a general 55% five-year average) is much better, but the dryness in southern and central Alberta is clearly sub-optimal.?

In their May report on Friday, AAFC increased their 2022 wheat acreage (excluding durum) by 1% from 18.8 million acres to 19 million acres.?

As for durum, Saskatchewan seeding progress for durum is at 51% as of May 16th which is 28% below the 5-year average seeding progress in Saskatchewan.?

Alberta durum seeding progress at 84%, which is closer to normal, but dryness in south and central AB is worrisome.?

In their May report on Friday, AAFC revised their 2022 durum wheat acreage up by 160k acres from their April number to 6.22 million acres.?

This is in line with the earlier April 26 StatsCan number and represents a 13% increase over last year’s acres.??

AAFC expects production in 2022 to reach 5.7 million mt compared to 2.7 million mt last year.??

Meantime, at 187k mt, Canadian wheat exports were relatively small last week (wk. 41), advancing year-to-date wheat exports to 9 million mt, 7 million mt smaller (-44%) from last year-to-date.??

As for durum exports for week 41 were a 47k mt, for a year-to-date total of 2 million mt, compared to 5.1 million mt last year-to-date.?

This is now 61% below last year’s pace.

From South America, reports from the Rosario Board of Trade suggest Argentinian wheat farmers have forward contracted 8.2 MMT of wheat for export.?

That compares to 2.4 MMT at the same point last year and 1.4 MMT in 2020/21.?

Rosario Grains Exchange cites the urgency to book wheat to the global market before the export quota is filled.?

22/23 wheat planting in Argentina is in the beginning stages.?

Wheat planting is also underway in Brazil, with CONAB reporting 16.2% of the crop was planted as of 5/14.?

Meantime, Brazil’s Anec estimates that the country will export 1.24 MMT of corn in May.?

That is slightly lower than its prior projection from a week ago.?

Brazilian wheat exports are expected to come in around 109.000t this month.

Brazil’s Anec also estimates that the country will export 11.28 MMT of soybeans in May.?

That’s down slightly from its last estimate from a week ago.?

Brazilian soymeal exports are expected to reach 1.903 million metric tons this month.

In Europe, the markets fell sharply yesterday.?

September wheat on Paris-based Euronext settled down 15.50 euros, or 3.6%, at 410.50 euros ($440.51) a tonne, after earlier falling to its lowest since May 12 at 409.00 euros.

European Commission chief Ursula von der Leyen on Tuesday called for talks with Moscow on unlocking wheat exports that are trapped in Ukraine as a result of a Russian sea blockade.

Von der Leyen said a food crisis was approaching at full speed and some sort of dialogue with Moscow was needed to unlock 20 million tons of wheat stuck in Ukraine.

She also indicated it was up to the EU to help find ways to facilitate exports from the Ukraine.

Russia has indicated it would only unblock the Ukrainian port of Odesa if sanctions were relaxed.

This will condition the evolution of prices in the coming weeks.?

Weaker equity and oil markets and a stronger euro also weighed on Euronext as investors remained wary of an economic slowdown and the prospect of more interest rate rises to counter inflation.

Meantime, the EU exported 24.13 million tonnes of wheat as of May 22, a volume close to that of last year at 24.23 million tonnes to date.?

Barley exports are down slightly to 6.75 million tonnes against 7.07 million last year.?

Corn imports are up to 14.66 million tonnes, against 13.64 million last year.

European rapeseed imports stood at 4.77 million tonnes on May 22 against 5.91 million last year.

European Union soybean imports reached 12.83 MMT through May 22, which is a year-over-year decrease of 5.1% so far.?

Eu soymeal imports are also down from a year ago, with 14.47 million metric tons during the same period.

From the Black Sea basin, APK-Inform further raised its estimate for Ukraine's maize harvest this year by 6.7 Mt, to 25.2 Mt, while the wheat harvest was increased by 140 kt, to 17.1 Mt.?

APK-Inform estimated Ukraine’s 22/23 sunflower oil output at 5.3 MMT, compared to 9.2 MMT from 21/22.?

Meantime, according to APK-Inform, the indicative export prices of Ukrainian new-crop barley kept on growing last week, as offer prices of new-crop barley increased by average 10 USD/t to 340-365 USD/t FOB.

In Russia, as of May 1, 2022, the stocks of grains in agricultural organizations of the Russian Federation totaled 13.3 mln tonnes, up by 897.4 thsd tonnes (7%) compared to the figure on the same date in 2021, declared the Federal State Statistics Service (Rosstat).

In particular, wheat stocks amounted to 7.3 mln tonnes, up by 697.3 thsd tonnes (11%) compared with the same date in 2021, corn stocks – 1.9 mln tonnes, up by 264.6 thsd tonnes (15%).

Sunflower seed stocks totaled 672.6 thsd tonnes, up by 948.2 thsd tonnes (3.4 times).

From the Middle Kingdom, China has reached a phytosanitary deal allowing Brazilian corn to be shipped into China.??

While firms will take time to generate qualifying paperwork, the deal appears to give China an alternative to buying US corn.?

Supplies from their main supplier, Ukraine, are not currently available due to the Russian blockade of the ports.??

Meantime, Dalian Corn Prices for the July contract were firmer on Friday and more so on Monday up to 2,944 yuan/MT (~ $11.24/bu).?

Since May 16th, their corn premium on the board had grown from aprx $2.92 to $3.40/bu, but prices in China relative to the CBOT price has gotten cheaper from $5/bu in Feb (accounting for exchange rate changes).?

From South East Asia, Indonesia is establishing a palm oil export quota that will ensure a minimum domestic supply but free up trapped surplus product.?

The Indonesian government is validating palm oil stocks that can determine and adjust the amount under the quota is set, but exporters can begin applying for permits.?

India has imposed restrictions on sugar exports for the first time in six years by capping this season’s exports at 10 million tonnes, a government order said, to prevent a surge in domestic prices after mills sold a record volume on the world market.

Initially, India planned to cap sugar exports at 8 million tonnes, but the government later decided to allow mills to sell some more sugar on the world market as production estimates were revised upwards.

The Indian Sugar Mills Association, a producers’ body, revised its output forecast to 35.5 million tonnes, up from its previous estimate of 31 million tonnes.

Indian mills have so far signed contracts to export 9.1 million tonnes of sugar in the current 2021/22 marketing year without government subsidies.?

Out of the contracted 9 million tonnes, mills have already dispatched around 8.2 million tonnes of the sweetener.

On the other hand, India's move to remove import taxes on soyoil will lift the country's purchases in coming months and will support soybean prices, said a Mumbai-based dealer with a global trading firm.

India has allowed duty-free imports of 2 million tonnes each of crude soyoil and crude sunflower oil for the current and the next fiscal year to March 2024.

From Australia, local markets continued to ease yesterday on current crop.?

The spot buying demand now feels to be out of the way and buyers have some breathing space.?

New-crop APW white multigrade grower bids remained relatively unchanged, with Victoria at around A$480/t and South Australia bid at $490/t.

Showers are expected to continue this week throughout the winter-cropping belt with the highest rainfall totals expected to build from Sunday into next week in SA, Victoria and south-east New South Wales.

On international trade scene, Jordan's state grain buyer is believed to have made no purchase in an international tender to buy 120,000 tonnes of milling wheat which closed on Tuesday.

Only one trading house participated, CHS.

A new tender is expected to be issued in coming days closing on June 2.

That's all.

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

Author: Sandro F. Puglisi??

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