Daily International Grain Market View

Good morning Farmer Family ...

US farm markets were mixed but mostly higher on Wednesday.

Corn prices improved 0.87%, while soybeans firmed more then 1%.

The rest of the soy complex was also firm, as soymeal was up around 0.7%, while soyoil tracked more then 1.3% higher.

Wheat prices were mixed but mostly higher.

Chicago and Kansas City winter wheats trended moderately higher, by 0.64% and 0.47% respectively.

Meanwhile Minneapolis spring wheat eased 0.37% lower.

U.S. soybean, corn and wheat prices rose, after bargain buyers snapped up commodities that had posted sharp declines during February.

As for corn, according to the EIA, ethanol moved lower in the week ending February 24, with a daily average of 1.003 million barrels.

That rapresents a 26k barrels decline per day from the week prior.?

However, ethanol stocks also trended 3% lower week-over-week, at 24.775 million barrels which was a 3-wk low due to implied exports.?

Meantime, the U.S. Environmental Protection Agency, approved the petition for year-round sales of E15 for 8/9 states (IL, IA, MN, MO, NE, OH, SD, and OH – but not ND).

However, it will be effective in 2024. .?

Currently, EPA enforces a summertime ban on E15 due to supposed environmental impacts – however, research shows E15 does not increase smog more than E10, which is already sold year-round.

The monthly Grain Crush data from NASS showed 443.551 mbu of corn was used for ethanol production during January.?

That was 4.3% above December’s crush.

However, that was 4.3% under last year’s corn draw.?

The accumulated 2.152 bbu of corn use sits at 41% of the WASDE full year’s total through the first 5 months.?

That is the lowest pace relative to the Feb WASDE since 18/19, during which USDA eventually lowered the estimate by 197 mbu.?

The monthly draw needs to average 442.6 mbu to hit USDA’s Feb target.?

As for soybean, USDA’s NASS reported 191.128 mbu of soybeans were processed in January.?

That was just above the highest trade estimate going in, was a 2% boost from December’s crush, but was still down 1.6% from Jan last year.?

Crush YTD is 41.8% of the Feb WASDE’s full year forecasted total.?

Soymeal output was reported at 4.255m tons for the month, with 2.252b lbs of crude soy oil produced.?

Soybean oil stocks were 2.356b lbs, slightly below the trade average guess.?

Meantime, the U.S. Department of Agriculture (USDA) set the guarantees, which act as a floor price below which farmers with insurance can receive payments, at $5.91 per bushel for corn and $13.76 a bushel for soybeans across most of the U.S. crop belt.?

The insurance price for corn is up a penny from $5.90 in 2022 and the highest since the 2011 price projection of $6.01.?

The soybean price is down from last year's record high of $14.33, but still relatively strong.

The prices reflect the average settlement for Chicago Board of Trade December corn and November soybean futures during the month of February.

Those guarantee prices for the 2023 growing season are the highest since 2011 for corn and the second-highest on record for soybeans after last year's peak.

They are very encouraging prices to try to bring out as much available acreage as possible.

Still, the crop insurance prices seemed unlikely to shift planting expectations much from forecasts released by the USDA last week for 91 million acres of corn in 2023, and 87.5 million acres of soybeans.

As for wheat, the insurance guarantee for spring wheat was $8.87, down from $9.19 a year ago, based on the average price of Minneapolis Grain Exchange September spring wheat futures during February.

However, gains in wheat yesterday were curbed by expectations of a renewal of the Black Sea grain export deal and ample global supplies.

In the USA weather conditions improved, as a series of storms are expected to soak the Mid-South and Ohio River Valley between Thursday and Sunday, with large areas likely to receive another 1” to 2” or more for the rest of this week.?

NOAA’s latest 8-to-14-day outlook predicts more seasonally wet weather for most of the Corn Belt between March 8 and March 14, with cooler-than-normal conditions likely for most of the USA during that time.

Also, grain traveling the US railways totaled another 20,511 carloads last week.?

That brings cumulative totals for 2023 to 182,783 carloads.

However, thet is 3.6% below last year’s pace so far.

In this context, corn basis bids were steady to mixed across the central U.S., moving as much as 5 cents higher at an Illinois river terminal and as much as 5 cents lower at a Nebraska processor.

Soybean basis bids were mostly steady to firm after climbing 10 to 13 cents higher at two Midwestern processors and improving 2 to 3 cents at two other locations.

An Iowa river terminal bucked the overall trend after shifting 2 cents lower.

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

On this morning, Chicago wheat and corn prices edged higher.

Soybeans held steady.

Notably, the most-active wheat contract on the Chicago Board of Trade was up 0.3% at $7.12 a bushel, as of 04:14 GMT.?

CBOT corn rose 0.6% to $6.39-1/4 a bushel.

CBOT soybeans were nearly flat at $14.94-3/4 a bushel.

In energy markets, oil prices settled up slightly on Wednesday.

Notably, Brent crude futures settled up 86 cents, or 1%, to $84.31 a barrel.?

U.S. West Texas Intermediate crude (WTI) settled up 64 cents, or 0.8%, to $77.69.

U.S. crude inventories rose by 1.2 million barrels last week to 480.2 million barrels last week to the highest since May 2021, government data showed, beating analyst expectations of a 457,000-barrel rise. It was the 10th straight weekly increase.

However, a widening discount of WTI to Brent contributed to a jump in U.S. crude exports last week to record high at 5.6 million barrels per day, which resulted in a smaller build than in previous weeks, analysts said.

In other signs of ample supply, Russia's oil production reached the pre-sanctions level for the first time in February, the Kommersant business daily reported.?

Russian Lukoil has set up ship-to-ship loadings of Urals oil near the western port of Kaliningrad, Refinitiv Eikon data showed.

STS loadings of Russian Urals crude hit a record high in the Mediterranean in January as traders moved cargoes onto larger vessels to make long-haul shipments to Asia more cost-effective.

The Organization of the Petroleum Exporting Countries' production also rose in February, according to some analysts.

However, China's economy is rebounding now, and this can only be a positive driver for oil prices.

An official index showed China's manufacturing activity expanded in February at the fastest pace in more than a decade, feeding hopes for a boost in oil demand.

However, oil slipped on Thursday.

Expectations of rate hikes by the European Central Bank are growing after inflation in Germany rose more than expected in February, with food and energy prices increasing despite relief measures.

This comes after France and Spain, also key economies in Europe, posted unexpected gains in inflation.

In the U.S., manufacturing contracted for a fourth straight month in February, though there were signs that factory activity was starting to stabilise, with a measure of new orders pulling back from a more than 2-1/2-year low.

Meanwhile, crude oil processed by Indian refiners reached record levels in January, provisional government data on Wednesday showed, as the country boosted imports of Russian barrels that Western countries shunned.

Notably, Indian refineries reached 5.39 million barrels per day for January.

In this context, Brent crude futures fell 13 cents, or 0.15%, to $84.18 a barrel at 07:15 GMT, while U.S. West Texas Intermediate (WTI) crude futures were down 17 cents, or 0.2%, at $77.52 a barrel.

In ocean freight markets, the Baltic Exchange’s main sea freight index rose to its highest in over seven weeks on Wednesday, supported by higher shipping rates for all vessel segments.

The overall index, indeed, rose 109 points, or about 11%, to 1,099 — its highest since Jan. 10.

Notably, among other vessel segments, the capesize index rose 200 points, or 27.4%, to 929, marking its eighth straight session of gains.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, increased $1,661 to $7,703.

The panamax index gained 94 points, or about 6.6%, at 1,515, its highest in near 10 weeks.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, were up $849 at $13,634.

Among smaller vessels, the supramax index rose 51 points to 1,156.

In equity markets, US stock indexes Wednesday settled mixed.

An industry group, the Institute for Supply Management, reported an index of prices paid by manufacturers rose 51.3 from January's 44.5 on a 100-point scale on which numbers above 50 show an increase.

German Feb CPI unexpectedly accelerated to 9.3% y/y from Jan’s +9.2% y/y pace.

Thus, concerns that the world’s central banks will have to raise interest rates higher and for longer weighed on the overall market.??

As a result, the US 10-year T-note yield rose +7.1 bp to 3.991%.??

The two-year yield, which moves more on expectations for the Fed, widened to 4.89% from 4.82%.

The 10-year German bund yield climbed to an 11-year high of 2.728%.

Negative corporate news also weighed on the overall market.

Wednesday’s U.S. economic news was weaker than expected.??

The Feb ISM manufacturing index rose +0.3 to 47.7, weaker than expectations of 48.0.??

Also, Jan construction spending unexpectedly fell -0.1% m/m, weaker than expectations of an increase of +0.2% m/m.

However, losses were limited by optimism in the global economic outlook after Chinese manufacturing activity last month expanded +2.5 to 52.6, stronger than expectations of 50.6 and the fastest pace of expansion in more than ten years.

In this context, on Wall Street, the benchmark S&P 500 lost 0.5% to 3,951.39.?

The Dow Jones Industrial Average edged up less than 0.1% to 32,661.84.?

The Nasdaq fell 0.7% to 11,379.48.

On this morning, Asian stock markets were mixed.

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

Notably, the Shanghai Composite Index gained 0.2% to 3,318.25 while the Nikkei 225 in Tokyo lost less than 0.1% to 27,506.79.?

The Hang Seng in Hong Kong gave up 0.4% to 20,536.53.

The Kospi in Seoul rose 0.9% to 2,435.43 and Sydney's S&P-ASX 200 shed less than 0.1% to 7,248.70.

India's Sensex opened down 0.6% at 59,034.74.?

New Zealand, Bangkok and Jakarta gained while Singapore retreated.

In currency trading, the dollar rose to 136.42 yen from Wednesday's 136.17 yen.?

The euro declined to $1.0648 from $1.0658.

Going back to analyzing the other agricultural markets ...

From Canada, February 2023 was the best February ever for Western Canadian grain movement on CN’s network.?

The Company worked with its customers and supply chain partners to move more than 2.4 million metric tonnes of grain from Western Canada over the course of the month.?

This exceeds the previous record set in February 2021 by over 200,000 metric tonnes.?

CN attributes February’s performance to increased collaboration between supply chain partners, enabling strong performance through operational challenges, including periods of extreme cold.

From South America, per latest data from the USDA attaché in?Brasilia, in 2022/23, Brazil is forecast to reap a record soybean crop of 153 million metric tons (MMT).?

The attaché maintained the forecast for planted area expansion of 43.3 million hectares (ha).?

Harvest lags behind schedule compared to previous years, and frequent rains and the upcoming wet weather forecast could potentially impact soybean quality.?

The attaché however, maintained the soybean export forecast at 97 MMT.?

He also maintained the crush forecast of 51.5 MMT for 2022/23, driven by the domestic demand for soy oil.

Agroconsult confirms its soybean production estimate at 153 million tonnes and shows that of corn at 128.5 million tonnes, up 8.6% compared to last year.?

StoneX meanwhile shows an estimate of 154.66 million t for soybeans and 130.66 million t for corn.

Meantime, the Brazilian grain exporters’ association, ANEC, reported Feb soybean exports were 7.7 Mt (8.3Mt previous forecast), soymeal 1.3Mt (1.5Mt previously), maize 1.9Mt (2.0Mt) and wheat 548,800 tonnes (670,400 tonnes).?

However, new governmental data showed corn exports from Brazil were 2.277 MMT during February.?

That was up from just 768k MT last year.??

As for soybean, official soybean exports from Brazil were 5.2 MMT, compared to 6.27 MMT last year.?

From Argentina, private analyst firm Cordonnier reduced their estimate for Argentina corn by 2 MMT to 41 MMT.?

He also reduced their estimate for Argentina soybean production by 2 MMT to 32 MMT.?

Meantime, Argentina's crops brought in 74% fewer export dollars in February, from a year earlier.

Last month, the value of dollars from farm exports reached $664.9 million, down 30.5% from January, according to the combined oilseed industry and grains export chambers CIARA-CEC.

Farmers in Argentina have struggled with the worst drought in six decades, which has cut outputs and delayed planting.

The inflow of foreign currency in February is the reflection of a market strongly affected by the extreme drought," the export chambers said in a statement.

In Europe, another session of decline for grain prices on Euronext.

European wheat fell to a new one-year low, still pressured by poor export prospects.

Although Morocco imported 293,298 t of common wheat in February, including 172,219 t from France, 110,079 t from Germany and 10,999 t from Lithuania, the cheap wheat from Russia and other Black Sea suppliers is expected to cover upcoming import demand in the Middle East and North Africa.

Traders were awaiting more news about the extension of Ukraine’s safe shipping channel for grain exports which expires on March 19.

However, cheap sales offers for Ukrainian wheat continued to be made also on Wednesday for shipment after the expiry of the shipping agreement.

Just for exemple, a seller was offering up to 30,000 tonnes of Ukrainian 11.5% protein wheat for March 15-April 15 shipment from Ukrainian ports in the shipping corridor at about $280 a tonne FOB.

Meantime, standard 12% protein wheat for March delivery in Hamburg was offered for sale at a premium of about 6 euros over the Euronext May contract, with little purchase interest.

On the supply side, Refinitiv Commodities Research revised up its EU 2023-24 common wheat production forecast by 0.1Mt, to 133.9Mt (126.0Mt previous year) reflecting a higher area estimate for France.?

Its rapeseed production number was raised by 0.2Mt, to 20.6Mt (19.6Mt previous year).?

It noted that due to a generally warmer winter, crops are reportedly in good condition.?

During February, temperatures were mostly above average.?

While there were good rains in some parts, including Germany and northeastern Europe, limited precipitation was noted in some southern and western regions.?

Although dryness concerns was noted in France, soil moisture level were currently sufficient for dormant crops.?

Thus, benchmark May milling wheat on Paris-based Euronext closed in the red for a fourth consecutive session, down 1.3% at 272.25 euros ($290.35) a tonne after falling to 270.25 euros in earlier trade, its lowest level since Feb. 25 last year.

On the other hand, there is strong short-term demand for feed barley, the bases of which are clearly progressing.

The water deficit in France is beginning to arouse fears for spring crops where germination could prove difficult.?

Rapeseed prices, meantime, changed little yesterday after the sharp decline at the start of the week.

Meantime, per latest data published by Euronext on Wednesday, non-commercial market participants increased their net short position in Euronext milling wheat futures and options in the week to Feb. 24.

Notably, non-commercial participants, which include investment funds and financial institutions, lifted their net short position to 43,423 contracts from 9,344 a week earlier.

Commercial participants similarly expanded their net long position to 37,692 contracts from 4,384 a week earlier.

In Euronext's rapeseed futures and options, non-commercial market participants raised their net short position to 34,036 contracts from 29,290 a week earlier.

Commercial participants similarly increased their net long position in rapeseed to 32,347 contracts from 27,969 a week earlier.

From the Black Sea basin, the export corridor deal is set to expire on March 19th, barring successful negotiations to extend it.?

Russian Foreign Minister Sergei Lavrov had discussed the prospects for renewing the Black Sea Grain Initiative at a meeting with his Turkish counterpart on the sidelines of the G20 foreign ministers’ meeting in New Delhi, a ministry statement reported on Wednesday.?

It said continuation of the agreement would only be possible if the interests of Russian agricultural and fertiliser producers, in terms of unhindered access to world markets, were taken into account.

Ukraine is seeking a 1 year extension.?

Delays in inspecting cargos at Istanbul have been a major issue due to demurrage costs.?

Ukraine’s total grain exports reached 5.2 million metric tons in February, which was slightly than year-ago totals.?

The data showed that overall grain exports so far for the 2022/23 season were down almost 26% at 32.3 million tonnes.

The volume so far in the July to June season included more than 11.3 million tonnes of wheat, 18.6 million tonnes of corn and about 2 million tonnes of barley.?

Meantime, Refinitiv Commodities Research left the Ukraine 2023-24 wheat production forecast unchanged at 22.3Mt (incl. in uncontrolled territories).?

Production excluding non-occupied regions was forecast at 18.2Mt.?

Rapeseed production (incl. in uncontrolled territories) projection was broadly unchanged, at 3.5Mt.?

Production excluding non-occupied regions was seen at 2.9Mt.?

Weather conditions during February were mostly favourable, with precipitation recorded across the country except in the southern central oblasts, where rainfall was below average.?

Temperatures were mostly above average.

From Russia, agricultural consultancy Sovecon said on Wednesday that it had lowered its 2023 Russian wheat crop forecast to 85.3 million tonnes from 86 million tonnes due to challenging winter weather conditions.

However, Russia's agriculture ministry will not revise its grain export quotas for the current season, the Interfax news agency said on Wednesday.

It added that Russia's grain export target for the whole season is about 60 million tonnes.

From South East Asia, feed millers in Asia are boosting corn purchases from India.

Importers in Malaysia and Vietnam are booking around 200,000 tonnes of Indian corn a month.

India is offering competitive prices, so there is more interest in buying Indian corn.

Indian corn is quoted around $310-$315 a tonne, including cost and freight (C&F), to Southeast Asia, compared with South American corn being offered around $330 a tonne.

India is expected to continue corn shipments to Southeast Asia in the coming months amid ample supplies from crops in southern parts of the country.

Meantime, Indian government plans to buy about 34 million tonnes of new-season wheat from local farmers to shore up state reserves after purchases dropped last year because of a poor harvest.

However, India’s Meteorological Department reported enhanced probability of a heatwave likely during Mar-May over many regions in central and northwestern India, with hotter than normal temperatures expected in March, a crucial period for winter-sown crops.?

This followed unusually hot conditions in February, with the all-India monthly average maximum temperature the highest since 1901.?

From Australia, Australia's 2023/24 wheat crop is likely to be around 25 million-26 million tonnes, a senior executive of Graincorp Ltd said on Thursday.

Australia's wheat crop is likely to face risks from dry weather due to El Nino weather pattern in the second half of 2023, a consultancy said on Wednesday.

However, planting window is between April and June, and soil moisture level is good for planting, to date.

In the year through June 2023, wheat production is forecast to reach 36.6 million tonnes, a 1% increase over the previous record set last year.

However, solid export demand for wheat in southern markets and sorghum in the north has lifted values in the past week, with gains of $12-$15 per tonne seen.

Domestic consumers are mostly immune from the price hike, as they are well covered for nearby requirements.

Trade sources report trucks are in ready supply and freight rates are up to 20 percent cheaper than they were this time last year, which gives consumers no concern about booking up and taking delivery of tonnes in coming week.

The exception is on the run to the Port of Brisbane, where sorghum is being accumulated for bulk export, and containers loaded up-country are also on their way to port.

In this context, yesterday local wheat markets continued to hold up despite what is happening in wider global markets.?

Delivered wheat bids were a touch softer in eastern states while ASW1 in WA remained unchanged.?

Barley was a touch softer in SA and canola dropped $15-20/t on the back of offshore moves.

On the international trade scene, South Korean flour millers have reportedly purchased 85,000t milling wheat, including 50,000t US SW (8.5pc-11pc min. protein) at $304.96-$306.06 fob, HRW (11.5pc) at $359.53 fob and DNS (14pc) at $363.48 fob, as well as 35,000 t CWRS (13.5pc) from Canada.

An importer group in Thailand have reportedly purchased 30,000t feed wheat from Australia at $336/t c&f for May delivery.?

Turkeys state grain board purchased 790,000t milling wheat at $308-$320/t c&f, believed to be from Russia, for Mar/May shipment.

Jordan bought barley for 100k mt.

Notably, Ameropa sold two barley cargoes each 50k mt at $284 and shipment between June & July.

Other offers were: Viterra at $ 299.95, Bunge at $ 314, Grain flower st $ 298, Olam at $ 304.94, Drayfus at $ 297, Cargill at $ 300 and CHS at $ 293.98.

Jordan's state grain buyer has issued an international tender to buy up to 120,000 tonnes of milling wheat which can be sourced from optional origins.

The deadline for submission of price offers in the tender is March 7.

That's all, thank you.

We wish you a nice day.

?Author: Sandro F. Puglisi??

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