Grain Market View - Daily Update

Good morning, Farmer Family ...

US farm markets closed mixed but mostly higher after the long Easter weekend.

Notably, corn prices snagged double-digit gains, up 1.63%.

The soybean complex faced moderate cuts, with soybean down 0.35%, soymeal 0.79% weaker and soyoil posting fractional losses by the close.

Wheat prices were firmer, with Chicago SRW up 0.44%, Kansas City HRW up 1.33%, and Minneapolis HRS up 0.34%.

The FAO Friday revised 2023-24 global wheat production up by 2Mt to 786Mt, though global production is seen 1.3pc below 2022.?

However, wheat prices rose, mainly because dry weather put Kansas City wheat at risk.

USDA weekly crop progress report, indeed, showed Hard Red Winter wheat crop conditions were lower again this week at just 27pc good/excellent, compared to 32pc last year and the market expectation of 28pc.

Above average temps are expected this week, along with mostly dry conditions across the central US which will improve field conditions for spring planting in the Corn Belt but will continue to stress dry HRW areas of the Southern Plains.?

Spring wheat planting progress was delayed, as cold temperatures and snow covered key portions of the Midwest, thus, warmer, drier weather will be welcome in the Delta and Southeast after heavy weekend rainfall.

Rising tensions from the Black Sea, with Russia's threat to bypass the UN-brokered grain deal, unless obstacles to its agricultural exports were removed, made an additional support.

Corn also closed higher, with the USDA's weekly crops report said farmers made scant progress in corn planting, due to cold temperatures and snow cover across key portions of the Midwest limiting the window for fieldwork.

Soybeans, in contrast dipped, as warm and dry weather improved the planting outlook.

Meantime, Weekly Export Inspections data showed 805k MT of corn was shipped during the week that ended 4/6.?

That was down from 1.1 MMT last week and was under the 1.5 MMTs for the same week last year.?

Accumulated corn shipments were marked at 20.17 MMT as of 4/6, compared to 32.06 MMT last year.?

As for soybean, USDA reported 669,566 MT of soybeans were exported during the week that ended 4/6.?

That was up from 504k last week but was under the 821k MT shipped during the same week last year.?

The weekly report had 46.133 MMT of exports through 4/6, compared to 45.03 MMT last season.?

As for wheat, USDA announced 335,444 MT of wheat was exported during the week that ended 4/6.?

That was up from 168k MT last week and was 412k MT during the same week last year.?

The accumulated wheat export was reported at 17.195 MMT as of 4/6, trailing last year’s pace by 2.5%.?

In this context, corn basis bids were mostly steady across the central U.S. to start the week but did trend as much as 5 cents higher at an Indiana ethanol plant and as much as 10 cents lower at an Illinois ethanol plant.

Soybean basis bids were mostly steady across the central U.S., but did tilt 3 cents lower at an Ohio elevator.

Commodity funds were net sellers of CBOT soybean, soyoil and soymeal futures contracts.?

Funds were net buyers of corn and wheat futures.

Meantime, traders were looking the release of USDA monthly global supply and demand report, scheduled later this evening.

In energy markets, oil prices settled lower on Monday, after rising for three straight weeks.

Brent crude settled down 96 cents, or 0.2%, at $84.58 a barrel while U.S. West Texas Intermediate also fell 94, or 0.1%, to $79.74.?

Both benchmarks fell by more than $1 earlier in the session.

The U.S. dollar rose after U.S. jobs data pointed to a tight labor market, heightening expectations of another Federal Reserve rate hike.?

Dollar strength makes oil more expensive for other currency holders and can weigh on demand.

Crude last week jumped more than 6% after OPEC+ surprised the market with a new round of production cuts starting in May.

Oil also drew support from a steeper-than-expected drop in U.S. crude inventories last week, as well as a decline in gasoline and distillate stocks.

In Equity markets, US stock indexes recovered from early losses and settled mixed.??

Last Friday’s stronger-than-expected U.S. March payroll report pushed bond yields higher Monday and weighed on technology stocks, bolstering also expectations for another 25 bp Fed rate increase at the May 2-3 FOMC meeting.??

However, stocks found support later on the session, on hopes that strength in the U.S. labor market can prop up consumer spending and prevent the economy from falling into recession.?

In currency trading, the dollar moved moderately higher on carryover support from last Friday’s stronger-than-expected U.S. March payroll report.??

Higher T-note yields on Monday strengthened the dollar’s interest rate differentials and supported the dollar.?

Also, an early slump in stocks boosted the liquidity demand for the dollar.??

However, trading activity Monday in EUR/USD was muted, with European markets closed for the Easter Monday holiday.??

The yen dropped to a 3-1/2 week low against the dollar, under pressure after comments from BOJ Governor Ueda, who said it is “appropriate” for the BOJ to continue with its yield-curve control framework, which signals no shift in the central bank’s ultra-easy monetary policies.??

However, Monday’s Japanese economic news was bullish for the yen.??

Japan’s March consumer confidence index rose +2.6 to a 13-month high of 33.9, stronger than expectations of 31.5.??

Also, the March eco watchers outlook survey rose +3.1 to a 16-month high of 54.1, stronger than expectations of 50.9.

Going back to analysing the other agricultural markets …

From Canada, the Grain Statistics weekly report, showed producers’ deliveries of common wheat at 481,8k mt for week 35 of this shipping season.

That was down from 558,9k mt posted prior week.

Deliveries of durum wheat, were also weaker at 114,9k mt, compared with 129,7k mt showed in prior week.

Canada exported 388,9k mt of common wheat in week 35.

That was down from 392,7k mt of a week earlier.

Durum wheat exports, in contrast, were stronger moving up from 53k mt to 88,7k mt.

Total Commercial Stocks of common wheat stood at 2.855.7k mt.

That was down from 2.955.2k mt posted in week 34.

Total durum commercial stocks, in contrast, were higher moving up from 647,6k mt a week earlier, to 666,6k mt.

Cumulative exports for common wheat were at 13.584,1k mt.

That is compared 7.834,8k mt a year ago.

Durum cumulative exports reached 3.684,4k mt vs 1.651,5 a year ago.

From South America, Brazilian consultancy AgRural reported that 82% of the country’s 2022/23 soybean harvest is now complete through April 6.?

That’s two points slower than last year’s pace of 84% so far.?

Safras and Mercado reported Brazil’s 22/23 soy harvest was 80.8% complete.?

That is down from 85.5% last year when dry weather speeded progress.?

Safras raised their production estimate to 155.1 MMT from 152.4 MMT.?

Meantime, Brazilian farmer soy sales were marked at 44.3% of the crop, compared to 60% on average.?

In Argentina, Buenos Aires Grain Exchange reported that for the week ending 5 Apr maize conditions were rated at 48pc fair/excellent (47pc previous week, 76pc previous year), with favourable weather required over the coming weeks to stop the further loss of yield potential.?

The forecast for output is maintained at 36Mt.?

Soybean crop conditions rated 34pc fair/excellent (33pc previous week, 69pc previous year).?

Early harvest was underway in central areas, with initial yields seen lower than anticipated, so current expectations for production of 25Mt could be downgraded.?

In Europe, French news is dominated by the ANSES decision to ban phosphine, an insecticide used to preserve cereals at the time of loading.?

This insecticide is also imposed by some importing countries, which would compromise French exports.?

The other European countries are exempt from this ban.?

The final decision will be taken on 25 April.

FranceAgriMer reported that for the week ending 3 April, soft-wheat crop rated/excellent condition edged lower 1pc to 93pc.

Imports of Ukrainian grain to Poland will be temporarily halted to mitigate the impact on prices, but transit will still be allowed, Polish Agriculture Minister Robert Telus said on Friday.?

Transit would be allowed but would be closely monitored in both countries, so that Ukraine grain did not stay in Poland.

From North Africa, Morocco will offer this month almost the same wheat import subsidy for Black Sea shipments as for other origins, eroding an advantage held by European Union supplies, a document published by state grain agency ONICL showed.

For milling wheat cargoes shipped in April from Russia, Ukraine and other countries using Black Sea ports, Morocco will offer a subsidy of 70.64 dirhams ($6.92) per quintal (0.1 tonne), slightly below a 71.58 dirham ($7.02) per quintal rate for other origins, the document showed.

On a per tonne basis, this means Black Sea cargoes would receive a subsidy of about $1 per tonne less than other origins, whereas previously the gap was more than $10.

From Ukraine, Ukrainian grain exports for the 2022/23 season were at 38.8 million tonnes as of April 10, Agriculture Ministry data showed on Monday.

The volume so far in the current July-to-June season included about 13.3 million tonnes of wheat, 22.8 million tonnes of corn and 2.31 million tonnes of barley.

The ministry said grain exports during April were 848,000 tonnes as of April 10.

From Russia, Russian Foreign Minister Sergei Lavrov said Russia could work outside the deal if Western countries maintain what he said were obstacles to agricultural exports that were getting tougher.?

Lavrov said that if the West did not want to be honest about what UN Secretary-General Antonio Guterres had sought to do with the deal, then Ukraine would have to use land and river routes to export its grain.

Russia's agriculture ministry on Friday sets its grain harvest plan for 2023 at 120 million tonnes.

State weather forecaster Hydrometcentre in April called the conditions for winter crops and spring sowing work as "satisfactory" for both the European and Asian parts of Russia.

Meantime, Russia exported 1.1 million tonnes of grains during the week ended April 7, of which 930,000 tonnes were wheat, SovEcon said.?

That was compared with 1.09 million tonnes of grain and 970,000 tonnes of wheat the previous week.

The first estimate of wheat exports in April is 4.2 million-4.5 million tonnes, which is close to an all-time high of 4.9 million tonnes, SovEcon said.

Egypt's state grains buyer, the General Authority for Supply Commodities (GASC), said on Thursday it bought 600,000 tonnes of Russian wheat in an international tender.

In this context, export prices for Russian wheat remained stable for the second week in a row.

Notably, according to the IKAR, prices for Russian wheat with 12.5% protein content, delivered free on board (FOB) from Black Sea ports in the first part of May, were $273 a tonne.

From April 12, 2023, customs duties for wheat and meslin will rise to 5339.4 rubles/t (+160.0 / +3.09%), for barley they will rise to 1646.7 rubles/t (+847.3 / +105.99%), corn will rise to 3185.7 rubles/t (+242.1 / +8.22%).

Meantime, Russia is considering raising its base price for calculating the wheat export tax to 17,000 roubles ($212.23) per tonne from 15,000 roubles per tonne, the Vedomosti daily reported last week, citing two unnamed sources in exporting companies.?

The move would reduce the rate for export shipments and is being considered by the agriculture ministry.

As for other products, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 11,475 rbls/t, -75 rbls/t (Sovecon).

Price for sunflower seeds was at 21,675 rbls/t, +600 rbls/t (Sovecon).

Price for domestic sunflower oil was at 74,000 rbls/t, +1,000 rbls/t (Sovecon).

Price for domestic soybeans was at 30,475 rbls/t, (Sovecon).

Export price for sunflower oil was at $870/t, +$45 (IKAR).

Price for white sugar, Russia's south was at $700.38/t, -$7.88, (IKAR).

From the Middle Kingdom, USDA’s Ag Attache expects China will import 18 MMT of corn for the 23/24 season.?

From South East Asia, Flour Millers Federation of India cut expectations of wheat output to 102.9Mt, compared to the March forecast of 104.2Mt, reflecting unseasonal rains and hailstorms in some growing states in late March.?

From Australia, Australia's foreign minister said on Tuesday the country had reached an agreement with China to resolve its dispute over Australian barley.

Australia will suspend its case at the World Trade Organization (WTO) while China conducts a review into duties imposed on the grain, Penny Wong told a news conference.

"China has agreed to undertake an expedited review of the duties imposed on Australian barley over a 3-month period, that may extend to a fourth, if required," she said.

"In return, we have agreed to temporarily suspend the WTO dispute for the agreed review period."

Meantime, local markets led into the Easter long weekend with a very much risk-off tone about them.?

Bids were hard to come by and offers were standing their ground.?

SA growers had good rains scattered across the state over the past 4 days.?

Most winter cropping regions in Australia have a good moisture profile and seeders are ramping up, starting on canola.

The CSIRO is urging growers to be vigilant with mouse monitoring, warning that given the large volumes of grain on the ground following a big harvest last year there is ample food to allow mice to breed up to problematic numbers.?

Growers are already reporting mouse activity in Queensland and New South Wales summer crops while there are concerns about mouse numbers in parts of western Victoria and South Australia.

On the international trade scene, Taiwan's MFIG purchasing group has issued an international tender to buy up to 65,000 tonnes of animal feed corn which can be sourced from the United States, Brazil, Argentina or South Africa.

The deadline for submission of price offers in the tender is Wednesday, April 12.

Price offers are being sought for one consignment of yellow corn at a premium over the Chicago July 2023 corn contract.

Shipment is sought between May 26 and June 14 if the corn is sourced from the U.S. Gulf, Brazil or Argentina.

If sourced from the U.S. Pacific Northwest coast or South Africa, shipment is sought between June 10 and June 29.

Jordan's state grains buyer has issued a new international tender to purchase up to 120,000 tonnes of animal feed barley.

The deadline for submission of price offers in the tender is Wednesday, April 12.

Shipment in the tender is sought in a series of possible combinations in 50,000 to 60,000 tonne consignments.?

Possible shipment combinations are Oct. 1-15, Oct. 16-31 and Nov. 1-15.

OAIC Algeria is tendering for Durum, with shipping for May and June.

FAO Food Price Index - Apr Update

The FAO Food Price Index, averaged 126.9 points?in March 2023, down 2.8 points (2.1 percent) from February, marking the?twelfth consecutive monthly decline since reaching its peak one year?ago.

The FAO Cereal Price Index averaged 138.6 points in?March, down 8.2 points (5.6 percent) from February and 31.6 points (18.6?percent) below its one year ago.?

This month’s decrease reflects a fall?in international prices of all major cereals.

The FAO Vegetable Oil Price Index averaged 131.8 points?in March, down 4.1 points (3.0 percent) from February and standing as?much as 47.7 percent below its level a year ago.?

The decrease in the?index was the net result of lower soy, rapeseed and sunflower oil?quotations.

That’s all, thank you.

We wish you a nice day.

?Author:?Sandro F. Puglisi

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