Daily International Grain Market View

Good morning Farmer Family ...

US markets were closed yesterday, for the July 4 holiday.

Consequentially, no pre-opening for US farm markets, today.?

Meantime, in energy markets, Brent oil prices dipped on Tuesday, reversing earlier gains of $1, as concerns of a possible global recession curtailing fuel demand outweighed supply disruption fears, highlighted by a potential production cut in Norway.

Indeed, Brent crude futures for September settlement fell by 60 cents, or 0.5%, to $112.89 a barrel by 06:38 GMT.

U.S. West Texas Intermediate crude climbed $1.13, or 1.1%, to $109.58 a barrel, from Friday's close.

There was no settlement for WTI on Monday because of the Independence Day public holiday in the United States.

In freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, dropped towards an 11-week low on Monday, on lower demand across all vessel types.

The overall index, indeed, fell 55 points, or nearly 2.5%, to 2,159 points, its lowest since April 20.

Particularly, the capesize index lost 153 points, or 6.4%, to 2,228 points.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, fell $1,264 to $18,481.

The panamax index was down eight points, or 0.32%, at a 19-week low of 2,469 points.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $78 to $22,219.

The supramax index fell eight points to 2,282 points, its lowest since Feb. 15.

In equity markets, the futures for the Dow industrials and the S&P 500 were both up 0.4% early Tuesday.

Yesterday US market was closed.

Meantiome, Asian shares advanced across the board.

Analysts said the optimism may be driven by expectations the U.S. may decide to cut Chinese tariffs, a welcome move that would also help tame inflation.

China's Commerce Ministry said Tuesday that Vice Premier Liu He spoke with Treasury Secretary Janet Yellen about coordinating economic policy between the two biggest economies and maintaining the stability of supply chains.

Investors also have been encouraged by the lifting of restrictions related to the coronavirus pandemic across the region, including in Japan.

However, some risks remain because of inflation and slowing economic activity in some countries.?

Thus, investors are becoming more concerned amid a broad tightening in global financial conditions to fights rampant inflation with rapid interest rate increases.

Australia's central bank on Tuesday raised interest rates for a third month and flagged more ahead as it struggles to contain surging inflation even at the risk of triggering an economic downturn.?

In South Korea, inflation in June hit a near 24-year high, adding to concerns of slowing economic growth.

In Germany, Chancellor Olaf Scholz gathered top employer and labor union representatives at his Berlin office Monday to seek ways of addressing the impact of rising prices while preventing a spiral of inflation in Europe’s biggest economy.

Also, a resurgence in COVID-19 infections in Europe, the U.S. and parts of Asia is also looming, bringing the threat of a reversion to pandemic precautions.

Thus, Japan's benchmark Nikkei 225 added 0.9% in afternoon trading to 26,382.38.?

South Korea's Kospi jumped 1.4% to 2,332.32.?

Hong Kong's Hang Seng gained 0.4% to 21,915.99, although the Shanghai Composite reversed course, falling 0.3% to 3,395.72.

Australia’s S&P/ASX 200 rose 0.7% to 6,655.40 after the central bank lifted its benchmark interest rate for a third time in three straight months, changing the cash rate to 1.35% from 0.85%.?

The Reserve Bank of Australia’s half a percentage point rise on Tuesday was the same size as its June increase.

In currency trading, the U.S. dollar edged up to 136.31 Japanese yen from 135.69 yen.?

The euro cost $1.0446, up from $1.0423.

From Canada, the trade is expecting that Stats Canada will put Canadian all wheat acres at 23.4 million acres compared to Stats Canada’s April estimate of 25.0 million acres.?

Spring wheat acres are expected to be 16.5 million acres which would be 1.1 million acres less than Stats Canada’s current number.

The June seeded area update will be out today in the afternoon (July 5th).

Alberta’s spring wheat crop condition lost 2% from last week to 82% Gd/Ex.?

The decrease was from excessive moisture in parts of Central Alberta.?

The rest of the province, as well as the majority of Saskatchewan and Manitoba, have strong moisture conditions.?

As for durum, the trade is expecting that Stats Canada’s durum area number will be 6.1 million acres compared to their April number of 6.2 million acres.

Smaller seeded area in Canada looks like it will be largely offset by higher seeded area in the US.?

The USDA, indeed, put US durum acres at 1.98 million acres, up 61k acres from the March report and 341k acres (21%) higher than last year.?

Seeded area in Montana was decreased by 50k acres, but this is still 120k acres larger than last year.?

Seeded area in North Dakota is expected to rise to 1.05 million acres which is a 170k acre increase from last year.

Canadian durum production will be higher than last year, but the balance sheet does not look burdensome.

The USDA, indeed, put US old crop durum stocks as of June 1st at 21.1 million bushels, down 22% from last year.?

March - May disappearance was 9.11 million bushels which is 39% less than the same period last year.

From South America, Brazilian farmers have harvested nearly a third of their second corn in center south fields, as dry weather and the higher temperatures that prevailed last week continued to favor the work, especially in top grower Mato Grosso.

According to agribusiness consultancy AgRural on Monday, farmers harvested 30.7% of second corn fields so far in the season, or nearly 25 million tonnes.

Patria, another agribusiness consultancy, said on Monday harvesting reached 34.1% of area for the whole of Brazil, compared to 23.9% of a historical 5-year average.

In Europe, wheat market rebounded, yesterday.

Benchmark September milling wheat on Paris-based Euronext unofficially closed 2.8% percent higher at 344.00 euros a tonne.

Rapeseed, on its part, continued to suffer from the decline in palm prices, with Indonesia once again increasing its export quotas.?

In this context, canola is also plunging and the Statcan report to be released today should confirm a net increase in canola acreage in Canada, probably over 21 million acres.

The fallin price in recent weeks to back near levels before war in Ukraine, has attracted international wheat importers to the market.

Egypt’s GASC, after the big bougth past week,?has booked another 444,000t of wheat at $416/t.?

Of the nine cargoes booked, Russia picked up five, France three and Romania one.?

The cargoes were reportedly booked via private negotiations with trading houses without issuing an international tender.?

GASC typically purchases wheat through tender, but Egypt’s supply minister said in May that the cabinet had approved direct purchases from countries or companies.?

Wheat prices falling sharply in recent days has created more buying interest.

It is quite unusual to see the French origin selected at the start of the campaign, which suggests good competitiveness at present, and sustained international demand.

On the supply side, harvest in France are continuing rapidly thanks to the mild weather.?

The key word remains heterogeneity in terms of yields, while the quality is generally there.?

In rapeseed, the first results show satisfactory yields.

Meantime, welcome rain in much of Germany on Friday underpinned expectations of a good wheat crop this summer.

Germany’s farm cooperatives’ association currently forecasts a German wheat crop this summer increasing 5.9% on the year to 22.65 million tonnes.

Sellers of standard 12% protein wheat for September delivery in Hamburg were offering around 18.5 euros a tonne over the Euronext December contract.

However, world supplies remain so tight that the EU still looks likely to be able to sell all the wheat it has available in export markets.?

Also, the fall in prices is also likely to stimulate more purchase tenders, in the coming weeks.

From the Black Sea basin, Russia exported 250,000 tonnes of grain last week, down compared with 500,000 tonnes a week earlier according to data from ports.?

Russian farmers, mainly in the southern Stavropol region, have started harvesting new crop wheat.?

As of June 30, they had harvested from 92,200 hectares versus 117,900 hectares at the same date a year earlier.?

The average yield was 2.73 tonnes per hectare, up from 2.35 a year earlier.?

Dry weather in most parts of Russia's southern regions is expected to benefit the harvesting this week after rain last week.?

Sanctions-hit Russia reduced its grain export taxes sharply last week to support shipments in the July-June marketing season.

The market is still trying to work out what the Russian government actually wants to achieve with its export taxes, but a reduction would be expected to mean more Russian wheat will be sold internationally.

Thus, a renewed competitiveness of Russian wheat is to be expected, but it remains very difficult to anticipate what its export potential will really be for the 2022/2023 campaign.

Meantime, Russian wheat export prices fell last week.?

Particularly, according to the IKAR, prices for the new wheat crop with 12.5% protein content and for supply from Black Sea ports fell by $25 to $375 per tonne free on board (FOB) at the end of last week.?

According to Sovecon, wheat prices for supply in July-August were at $375-385 per tonne compared to $390-$400 a week ago.?

Price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 13,425 rbls/t ($243.4) -750 rbls (Sovecon);

Price for sunflower seeds was at 27,325 rbls/t -1,125 rbls (Sovecon);

Price for domestic sunflower oil was at 75,000 rbls/t -4,825 rbls (Sovecon);

Price for domestic soybeans was at 36,100 rbls/t -500 rbls (Sovecon);

Export price for sunflower oil was at $1,560/t -$40 (Sovecon);

Export price for sunflower oil was at $1,390/t -$110 (IKAR);

Price for white sugar, Russia's south, was at $1,089/t +$83 (IKAR).

($1 = 55.1500 roubles).

Negotiations are continuing to allow Ukrainian stocks to leave the country, with Turkey as the central negotiator to ensure the safety of the boats.

Russian-imposed authorities in the southeastern Zaporizhzhia region of Ukraine, which is partly under Russian control, said on Tuesday that an agreement had been reached to sell grain abroad, mainly to the Middle East, Russian state news agency TASS said.

The countries involved are mainly Iraq, Iran and Saudi Arabia, TASS reported, citing Yevgeny Balitsky, the head of the Russian-installed administration of the Zaporizhzhia region.

Ukraine and the West accuse Russia of stealing Ukrainian grain.?

Moscow denies this.

In Ukraine, the government eliminated licenses on wheat export.?

Corresponding decision was made during the meeting of Cabinet of ministers of Ukraine on July 1.

Additionally, the government lifted the quotas for export of oats and mineral and chemical fertilizers.?

These products now are subject for export?licenses.

Meantime, according to APK-Inform, the indicative FOB export prices of Ukrainian wheat decreased again last week.

The indicative offer prices of new-crop 12.5%, 11.5% and feed wheat decreased by another 10-15 USD/t to 395-415, 390-410 and 350-370 USD/t FOB deep-sea ports (July-August).

Ditto for the bid prices of Ukrainian corn.

As of the end of the last week, the bid prices of Ukrainian corn for delivery in July-August decreased by 5 USD/t to 205-220 USD/t DAP Poland and 210-225 USD/t DAP Hungary.

The bid prices of new-crop feed barley also decreased slightly in Ukrainian ports of Reni and Izmail.

Particularly, the bid prices of new-crop barley for delivery in July-August decreased to 165-190 USD/t CPT-port in ports of Reni and Izmail.?

In some cases, they were announced at 100-130 USD/t CPT-port (mainly from intermediaries).?

The bid prices in hryvnia terms were announced mainly in the range of 5000-6000 UAH/t CPT-port.

According to national statistics of Kazakhstan, the country exported 5.8 mln tonnes of wheat in July-May 2021/22 MY (excluding supplies to the EAEU members), up 10% compared to the preceding season.?

Growth of shipments was based on stronger supplies to Iran and Italy.

Iran climbed to the third position in a list of the largest importers of Kazakh wheat.?

It increased purchases by 3.9 times y/y to 765 thsd tonnes in July-May.

Uzbekistan remained the main destination for Kazakh wheat. It bought 2.6 mln tonnes of the grain in the reporting period, down 14% y/y.?

Tajikistan imported 856 thsd tonnes of Kazakh wheat, down 5% y/y.

China cut purchases of Kazakh wheat by 91% to 28 thsd tonnes.?

It was among TOP-5 largest importers in 2020/21 MY.

APK-Inform forecasts wheat export from Kazakhstan in 2021/22 MY at 7 mln tonnes.

From Australia, markets started the week off very quiet, with the US holiday and markets closed bids and offers were slow.?

New crop grower bids were softer by $5-10/t from Fridays bids on wheat.?

Barley was also off $10/t, canola also dipped and suspect we see further downside again today with both Matif and Winnipeg markets lower overnight.

On the weather sude, Queensland is looking at a dry week with less than 5mm forecast.?

Rainfall is set to continue this week with light falls in most New South Wales cropping regions, heavier totals expected in central and eastern NSW (10-100mm).?

South Australia and Victoria are looking at less than 15mm in most areas (some spots up to 25mm).?

Most Western Australian cropping areas have less than 15mm on the forecast with the heavier totals expected in the Great Southern region.

On international trade scene, South Korea's Major Feedmill Group (MFG) has issued an international tender to purchase up to 140,000 tonnes of animal feed corn.

The deadline for submission of price offers in the tender is believed to be Wednesday, July 6.

The corn is sought in two consignments of between 55,000 to 70,000 tonnes with the seller free to decide the volume offered in this range.

The first consignment is sought for arrival in South Korea around Oct. 27.

Shipment was sought between Sept. 3 and 22 if sourced from the U.S. Gulf or Black Sea region/east Europe, between Sept. 23 and Oct. 12 from the U.S. Pacific Northwest coast, between Aug. 29 and Sept. 17 from South America or Sept. 8 and 27 from South Africa.

The second consignment is sought for arrival in South Korea around Nov. 3.

Shipment was sought between Sept. 10 and 29 if sourced from the U.S. Gulf or Black Sea region/east Europe, between Sept. 30 and Oct. 19 from the U.S. Pacific Northwest coast, between Sept. 5 and 24 from South America or Sept. 15 and Oct. 4 from South Africa.

NeuRizer has signed a $1.5 billion offtake agreement with South Korea’s Daelim Co Ltd to supply 500,000 tonnes of urea per year from the company’s South Australia NeuRizer Urea Project.

That's all, thank you.

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

Good Harvest 2022!

?Author: Sandro F. Puglisi??

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