Daily International Grain Market View

Good morning Farmer Family ...

US farm markets were mixed yesterday, as both wheat and corn prices were firmer, after easing to multi month lows, this week.

Meanwhile, soybean prices, which began the day firmer, failed to maintain support until the end of the session.

Notably, corn prices improved by 1.61%

Soybeans eased 0.12%.

Meal prices also backed off and went home 0.45% lower.

Soybean oil dropped triple digits, closing 1.71% weaker and weighening on the soy complex.

Wheat prices saw the biggest boost, as Chicago SRW ended the session with 2.01% gains.

Kansas City HRW settled the day 1.8% higher.

Minneapolis spring wheat closed with a 1.72% gain.

Corn and wheat were mostly underpinned as traders did look for bargain buying.

Export optimism was also in the mix after USDA reported a flash sale of 130,000 metric tons of corn for delivery to unknown destinations during the 2022/2023 marketing year.

Meantime, the office of the U.S. Trade Representative issued a stern statement regarding Mexico’s decision to begin banning GMO corn imports in the near future, noting USTR could even take steps to “enforce our rights under the U.S.-Mexico-Canada Agreement.

“Mexico’s proposed approach, which is not grounded in science, still threatens to disrupt billions of dollars in bilateral agricultural trade, cause serious economic harm to U.S. farmers and Mexican livestock producers, and stifle important innovations needed to help producers respond to pressing climate and food security challenges,” according to USTR.

Wheat prices rebounded, meantime, after having dropped to a 16-month low earlier this week.

Wheat was capped by comments from Russian Foreign Minister Sergei Lavrov on Monday, who said an agreement allowing grain shipments from Ukrainian Black Sea ports were "more or less being fulfilled", highlighting flows of Russian and Ukrainian grain despite the countries' 11-month-old war.

Also, precipitation across the U.S. Plains has recharged soil moisture for drought-affected parts of the winter wheat crop.

However, there are some lingering doubts that recent precipitation in the Plains will be able to significantly improve dismal crop quality.

According to the USDA, indeed, the Texas winter wheat rated in good-to-excellent condition for the week ending 22 Jan, declined by 10pc since a previous survey on 27 Nov 2022.

Notably, the Texas state Crop Progress report showed winter wheat conditions at 11% gd/ex.

Crops rated poor or very poor increased to 43pc up from 29pc in November.

Visible freeze damage was noted in the report for winter wheat in several areas.

Soybean prices, on their part, initially rallied as some traders said the recent rainfall may offer only limited benefit to drought-worn soybean crops, but ultimately pulled back as weather forecasts pressured the market.

The dollar remained around a nine-month low against the euro, as a European business indicator and corporate earnings bolstered hopes that a sharp global economic downturn may be avoided.

In this context, corn basis bids were mostly steady across the central U.S. on Tuesday but did tilt 3 cents higher at an Ohio elevator and 5 cents lower at an Indiana ethanol plant.

Soybean basis bids were steady to weak across the central U.S. after moving 2 cents lower at an Illinois river terminal and 5 cents lower at an Iowa processor.

Commodity funds were net buyers of CBOT corn and wheat futures contracts, and net sellers of soybeans, soymeal and soyoil futures.

On this morning, Chicago soybean prices rose for the first time in six sessions.

Wheat and corn prices rose for a second session.

Notably, the most-active soybean contract on the Chicago Board of Trade rose 0.1% to $14.89-3/4 a bushel, as of 03:59 GMT.

Wheat added 1.1% to $7.42-1/2 a bushel and corn gained 0.4% at $6.80 a bushel.

In energy markets, crude oil edged up on Wednesday as optimism for demand recovery in China and a likely unchanged output cut decision by major oil producers offset global recession worries.

Brent crude, indeed, rose 22 cents, or 0.3%, to $86.35 per barrel by 05:01 GMT after falling 2.3% in the prior session.

U.S. West Texas Intermediate (WTI) crude climbed 13 cents, or 0.2%, to $80.26 per barrel, after a 1.8% drop on Tuesday.

However, gains in oil prices were capped by a bigger-than-expected build in U.S. oil inventories that was reported after the market settled on Tuesday.

U.S. crude stocks, indeed, rose by about 3.4 million barrels in the week ended Jan. 20, according to the American Petroleum Institute figures.

That was triple of analysts forecast.

Investors are waiting to see if the U.S. Federal Reserve will "react to recent downside surprise in inflation and growth" when it meets next week.

However, data on Wednesday showed Australian inflation shot to a 33-year high last quarter as the cost of travel and electricity jumped, a shock result that adds to the case for the country's central bank to raise interest rates again next month.

In ocean freight markets, the Baltic Exchange’s main sea freight index extended losses to a sixth straight session on Tuesday to touch a fresh 2-1/2-year low, dragged down by a dip in capesize and panamax rates.

The overall index, indeed, fell 19 points, or about 2.6%, to 721, its lowest since early-June 2020.

Notably, the capesize index lost 50 points, or 6.8%, to 685, its lowest since mid-September 2022.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $410 at $5,684.

The panamax index was down 13 points, or about 1.2%, at 1,035, also a more than two-year low.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, fell by $115 to $9,313.

Among smaller vessels, the supramax index snapped its more than a month long losing streak, gaining four points to 649.

In equity markets, US shares were mixed.

Trading in more than a dozen companies was temporarily halted on the New York Stock Exchange after an apparent technical issue caused wide swings in their stock prices right as the market opened.

Meantime, on Wall Street, the S&P 500 slipped less than 0.1% to 4,016.95, its second loss in three trading days.?

The Dow Jones Industrial Average rose 0.3% to 33,733.96 and the Nasdaq composite fell 0.3% to 11,334.27.?

Small company stocks also lost ground, with the Russell 2000 shedding 0.3% to finish at 1,885.61.

Stocks have been volatile as investors try to get a better sense of how inflation is affecting the economy.

The latest batch of earnings show that companies continue to struggle with the effects of inflation on consumers and supply chains.

Post-it notes and industrial coatings maker 3M fell 6.2%.

Union Pacific fell 3.3%.

Microsoft rose 4% in afterhours trading after the software and technology giant reported earnings that topped Wall Street's forecasts.?

However, it closed down 0.2% in regular trading.

Wall Street will get a few economic updates this week that could provide more insight into inflation's impact.

The government will release gross domestic product data for the fourth-quarter on Thursday.?

Economists expect growth of less than 1%, down from 1.9% in the third quarter, and a contraction during the first half of 2022.?

Investors will get more updates on personal spending and income on Friday.

Meantime, long-term bond yields fell.?

The yield on the 10-year Treasury, which influences mortgage rates, fell to 3.46% from 3.52% late Monday.

On this morning, Asian shares were mixed Wednesday.

Japan's benchmark Nikkei 225 gained 0.6% in morning trading to 27,457.80.?

Australia's S&P/ASX 200 shed 0.1% to 7,480.20, while South Korea's Kospi jumped 1.4% to 2,427.63.

Markets were closed in Hong Kong and Shanghai for Lunar New Year holidays.

Australia reported higher than expected inflation figures, setting off expectations for another interest rate hike.?

Consumer inflation rose 8.4% in December, higher than the forecast of 7.6%.?

It anchored expectations for another 25 basis-point raise from the Reserve Bank of Australia in February.

In currency trading, the U.S. dollar edged up to 130.44 Japanese yen from 130.17 yen.?

The euro cost $1.0902, inching up from $1.0889.

Going back to analyzing the other agricultural markets ...

From South America, Brazil is poised to register record wheat shipments for January.

Based on shipping schedules, the National Association of Cereal Exporters (Anec) projected wheat exports at 803,800 tonnes for January.

If confirmed, the volume will represent a new historic high for the month, compared to the previous record of 695,900 tonnes registered in January 2022, according to Anec data.

Indonesia, Saudi Arabia and Sudan buy around 50% of Brazilian wheat exports.?

Vietnam is also a prominent buyer.

StoneX, however, projects Brazilian shipments of 3 million tonnes of wheat for the 2022/23 season, from August 2022 to July this year, stable from the previous cycle's record.

Meantime, recent rains in Argentina surpassed the "most optimistic" forecasts, the Rosario grains exchange said on Tuesday, bringing some relief for 2022/23 soy and corn yields.

South American crop consultant Michael Cordonnier, however, has kept his Argentine crop estimates at 39Mt soybeans and 44Mt corn, saying he will monitor weather developments before any additional adjustments.?

Dr Cordonnier kept his Brazilian crop forecasts unchanged at 151Mt soybeans and 125Mt corn.

In Europe, soft wheat exports?in the 2022/23 season had reached 18.14 million tonnes by Jan. 22, data published by the European Commission showed on Tuesday.

The total so far this season was up 6% compared with 17.10 million tonnes shipped by the same week in 2021/22, the data showed.

EU barley exports so far in 2022/23 totalled 3.09 million tonnes, down 40% from 5.17 million a year ago, while EU maize imports were at 16.13 million tonnes, 81% above a year-earlier 8.91 million.

EU soybean imports, meantime, had reached 6.08 million tonnes by Jan. 22.

That was down 19% from 7.47 million by the same week in the previous season.

EU rapeseed imports so far in 2022/23 had reached 4.26 million tonnes, up 41% compared with 3.02 million tonnes a year earlier.

Soymeal imports over the same period totalled 8.95 million tonnes, 2.5% below a year-earlier 9.18 million, while palm oil imports stood at 1.89 million tonnes, down 39% from 3.11 million by the same week in 2021/22.

However, the Commission said that it was still experiencing problems compiling trade figures from Germany and Italy.

Export data submitted by Germany from November may be inaccurate.

The next weekly grain and oilseed trade data will be published on Wednesday Feb. 1, a day later than usual, the Commision added.?

Meantime, Euronext wheat prices edged up on Tuesday in a technical recovery from an 11-month low a day earlier.

A firm euro, which held near a nine-month peak against the dollar, and cheaper Black Sea supplies were keeping a lid on Euronext prices.

Notably, March wheat contract on Paris-based Euronext settled up 0.9% at 281.75 euros ($306.63) a tonne, after holding above Monday's low of 278.75 euros that was a weakest front-month price since February last year.

In Germany, some traders were hopeful the 11-month low on Euronext could generate new export sales, while estimating wheat export loadings in January could reach 300,000 tonnes.

In rapeseed, May contract on Euronext ended up 0.6% at 529.00 euros at tonne, after earlier setting another 17-month low.

Rapeseed has been pressured by large EU imports and German plans to phase out crop-based biofuels.

From Ukraine, according to APK-Inform, last week, the indicative FOB offer prices of Ukrainian corn and purchasing prices of traders increased slightly.

Notably, the indicative offer prices of corn for delivery in February increased from 250-275 to 255-275 USD/t FOB Black Sea ports.

The purchasing prices of traders in the ports of Great Odesa and the Danube totaled 195-220 USD/t CPT-port compared to 180-220 USD/t week ago.

The demand from EU importers were stable supporting prices despite large carry-over stocks in Ukraine.?

Limited sales by farmers as well as slow harvesting pace and possible damage to corn quality added an additional support.

Meantime, for January 16-20, 14 vessels left the ports of Great Odesa carrying 0.68 mln tonnes of agricultural products.?

For 9-13 January, there were 14 ships with 0.4 mln tonnes.?

For 1-20 January, 52 vessels left ports with 1.97 mln tonnes compared to 66 vessels and 2.17 mln tonnes for 20 days of December.?

In general, in the first half of January, the number of ship departures from ports decreased to 2.6 per day, which is one of the lowest indicators since the beginning of the functioning of the "grain corridor".?

From Australia, wheat and barley prices have softened in the southern market this week, while barley rates in the north have firmed to reflect limited supply.

Some sell-side pressure on wheat is being seen in the northern market as growers make room for corn and sorghum soon to be harvested, and supply-side pressure in the south appears to be coming from the trade and not the grower.

Harvest is fast coming to a close in all states bar Tasmania, where the headers have gotten going in the past week or two.

Grower selling liquidity has been mostly poor.?

The Darling Downs has experienced a heavier offer side, with crops coming off in western Downs this week and next.?

Qld crop prospects are still sound but are more variable through NNSW as patchy establishment and a dry December caused some yield loss.?

Viterra reports that growers delivered another 160,000t during the week, taking total receivals to 8.61Mt and that despite deliveries slowing, more records were broken last week.

In this context, yesterday local markets markets dipped, reflecting softer futures and the AUD rising beyond US0.70c.?

Wheat cash bids eased A$5-7/t, while barley values in Victoria delivered prompt held ground.?

Canola bids eased $15/t to take them below $700/t track on the east coast and their lowest level since August 2021.?

On the international trade scene, Japan's Ministry of Agriculture, Forestry and Fisheries (MAFF) said it received no offers for feed-quality wheat or barley in a simultaneous buy and sell (SBS) auction that closed late on Wednesday.

The ministry had sought 70,000 tonnes of feed wheat and 40,000 tonnes of feed barley to be loaded by Feb. 15 and arrive in Japan by March 16 in the tender.

Iraq’s state grains buyer has issued a tender to buy a nominal 50,000 tonnes of milling wheat with participation restricted to a limited number of trading houses.

The deadline for submission of price offers was not immediately clear.

“It does not seem to be a tender deadline in the usual sense, but negotiations are expected to start on Jan. 25”.

The wheat can be sourced only from the United States, Australia and Canada.?

Volumes in Iraq’s tenders are nominal and the country often buys more than sought in the tender.

That's all, thank you.

We wish you a nice day.

Author: Sandro F. Puglisi??

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