Grain Market View - Daily Update

Good morning, Farmer Family ...

US farm markets rose on Monday, also supported by soaring in energy prices and solid gains on Wall St.

Notably, corn continued its rally, up 0.82%.

Soybean was up 0.98%%.

Soyoil jumped 2.4% higher, while soymeal gathered 0.2% gains.

Wheat gained the most, with MPLS HRS up 1.87%, KC HRW was up 1.44%, Chicago SRW 1.38% higher.?

Corn prices reversed morning losses to close higher on Monday on concerns about U.S. planting delays.

The USDA said on Monday the Texas corn crop was 52% planted, ahead of the state's five-year average for this time of year at 45%.

Corn planting was 95% complete in Louisiana, but only 14% complete in Mississippi and 2% complete in Arkansas.

Thus, traders are looking ahead to Friday's annual U.S. Agriculture Department planting intentions report, with analysts expecting the U.S. 2023 corn seeding at 90.880 million acres, soy at 88.242 million acres and wheat at 48.85 million acres.

Soybean prices trended higher spurred by a slower-than-normal Brazilian harvest, and by spillover strength from a broad set of other commodities, especially crude oils, lending additional support.?

Wheat posted bigger gains amid concerns about unfavorable crop weather.

Notably, prices for spring wheat are increasing due to a lack of snow melt, while Kansas City wheats are rising on concerns from dryness in the southern plains.

Large portions of the Corn Belt will remain completely dry until Friday, although parts of the Northern Plains, upper Midwest and Great Lakes region will see at least some measurable rain and/or snow during that time, according to the NOAA.?

The agency’s new 8-to-14-day outlook predicts a return to seasonally wet weather for most of the central U.S. between April 3 and April 9, with colder-than-normal conditions likely for the northern U.S. next week.

Meantime, approximately 51% of U.S. winter wheat is produced in an area currently experiencing drought, the USDA said last week.

That represent a reduction from 53% a week earlier and down from 69% as the year began.

On this wake, for Oklahoma, the USDA rated 34% of the winter wheat crop in "good-to-excellent" condition, up from 29% a week ago.

For Montana, the USDA in a monthly report rated 31% of the wheat crop in good condition, up from 21% at the end of February.

For Nebraska, the USDA in a monthly report rated 22% of the state's wheat as "good-to-excellent", up from 19% at the end of February.

In North Carolina, the USDA in a monthly report rated 88% of the state's wheat as "good-to-excellent", up from 87% in late February.

The USDA rated 71% of Mississippi's winter wheat crop as "good-to-excellent", compared with 68%, the prior week.

However, the USDA rated 19% of the winter wheat in Kansas in "good-to-excellent" condition, steady with the previous week.

For Texas, the USDA rated 18% of the crop as "good-to-excellent", a drop from 23% the previous week, while 48% was rated as poor to very poor, compared with 44% previously.

For Colorado, the USDA rated 28% of the winter wheat as "good-to-excellent", down from 36% the previous week.

For South Dakota, the USDA in a monthly report rated 22% of the state's wheat as "good-to-excellent", down from 23% at the end of February.

The USDA rated 56% of the Louisiana winter wheat crop as "good-to-excellent", compared with 65% the prior week.

In Arkansas, where farmers grow soft red winter wheat, the USDA rated 51% of the state's wheat as "good-to-excellent", down from 60% a week ago.

In Illinois, another soft wheat producer, the USDA in a monthly report rated 58% of the crop as "good-to-excellent", down from 82% at the end of February.

On the demand side, yesterday the USDA reported a private export sale for 112,800 MT of old crop corn to unknown destinations.?

In its weekly export inspections report the USDA showed 666,325 MT of corn was exported during the week that ended 3/23.?

That was down from 1.19 MMT last week and was only 41% of the same week last year.?

USDA had the season’s total shipment at 18.194 MMT, compared to 29.045 MMT last year.?

As for soybean, data showed 888,707 MT of soybeans were exported during the week that ended 3/23.?

That was up from 720k MT last week and was 41% above the same week last year.?

The accumulated exports reached 44.95 MMT as of 3/23 – compared to 43.47 MMT last year.?

As for wheat, the report had 392,484 MT of wheat shipments for the week that ended 3/23.?

That was up 17k from last week and 49k MT from the same week last year.?

Accumulated wheat exports were marked at 16.679 MMT as of 3/23, trailing last year’s pace by 220k MT.?

In this context, corn basis bids were steady to weak across the central U.S., after spilling 2 to 12 cents lower at four Midwestern locations.

Soybean basis bids were largely steady across the central U.S., but did trend 3 cents higher at an Ohio elevator and 2 cents higher at an Iowa river terminal.

On this morning, corn prices slipped, after touching a one-month high in the previous session, while wheat and soy prices were little changed.

Notably, the most-active corn contract on the Chicago Board of Trade declined 0.31% to $6.46-1/4 a bushel, as of 04:17 GMT, after a two-day climb.

Soybeans gained 0.03% to $14.42-3/4 a bushel supported by worries about the new crop season.?

Wheat was also up 0.04% at $6.98-1/4 a bushel.

The market remains in a short-term uptrend as traders see the smaller corn crop in Argentina, the smaller meal production from Argentina and better demand as short-term positive forces.

Continued uncertainties on the fate of the Black Sea corridor for grain shipments, helped support wheat prices.

In energy markets, oil prices rose more than $3 on Monday.

Notably, Brent crude futures settled up $3.13, or 4.2%, at $78.12 a barrel.?

West Texas Intermediate U.S. crude closed $3.55, or 5.1%, higher at $72.81.

Prices received a lift as Turkey stopped pumping crude from Kurdistan via a pipeline following an arbitration decision that confirmed Baghdad's consent was needed to ship the oil.?

The exports amount to about half a percent of global oil supply, or 450,000 barrels per day (bpd).

First Citizens BancShares Inc said it will acquire deposits and loans of failed Silicon Valley Bank, closing one chapter in the crisis of confidence that has roiled financial markets.

There are also hopes for extra support for bank funding after reports that U.S. authorities were in early deliberations about expanding emergency lending facilities.

Thus, investors weighed up efforts by the authorities to calm concerns regarding the global banking system.

Oil prices also drew support from worries of geopolitical turmoil after Russian President Vladimir Putin's plans to station tactical nuclear weapons in Belarus.

On the demand side, China's crude oil imports are expected to rise 6.2% in 2023 from last year's level to 540 million tonnes, according to an annual forecast by a research unit of China National Petroleum Corp on Monday.

On this morning, crude prices eased after rising at the fastest pace in more than four months on Monday.?

Notably, Brent crude futures fell 19 cents to $77.93 a barrel by 06:51 GMT.

West Texas Intermediate U.S. crude was down 1 cent, or 0.01%, to $72.80 a barrel.?

In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities fell on Monday, pressured by lower shipping rates for all vessel segments.

The overall index, indeed, fell 33 points, or about 2.2%, to 1,456.

Notably, the capesize index lost 87 points, or about 4.6%, to 1,795.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes carrying commodities such as iron ore and coal, decreased $723 to $14,888.

The panamax index shed 7 points, or about 0.5% to its lowest since March 3 at 1,565.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $64 to $14,085.

Among smaller vessels, the supramax index lost 6 points to 1,326.

In equity markets, US stock indexes settled mixed.

Banks and energy stocks led the gainers in the benchmark indexes.

Strength in bank stocks after the prospect of additional support from U.S. authorities eased some concerns about liquidity at regional banks.??

A Bloomberg report said U.S. authorities are considering expanding an emergency lending facility for banks.

Moody's said in a research report that weekly data collected by the Federal Reserve showed deposits in small U.S. banks fell -$109 billion, or -1.5% y/y in the week through March 15, the first annual decline since 1986.

Thus, an emergency lending from authorities, would give some banks more time to shore up their balance sheet.

On this wake, First Republic Bank closed up more than +11%, PacWest Bancorp rose 3.5%.

First Citizens BancShares surged more than +50% after it agreed to buy all deposits and loans of SVB Financial Group’s Silicon Valley Bank after the regulatory seizure.

However, Morgan Stanley warned that corporate earnings estimates and valuations need to come down as given the events of the past few weeks.

Meantime, global bond yields rose on easing bank concerns.??

The 10-year T-note yield rose +14.6 bp to 3.52% from 3.37% late Friday.?

Also, the 10-year German bund yield rose +9.9 bp to 2.227%, and the 10-year UK gilt yield rose +8.3 bp to 3.366%.?

However, Higher bond yields weighed on technology stocks and kept the Nasdaq 100 in negative territory.

Monday’s U.S. economic news was also negative for stocks after the March Dallas Fed manufacturing outlook level of general business activity index unexpectedly fell -2.2 to -15.7, weaker than expectations of an increase to -10.0.

As a result, on Wall Street, the S&P 500 eked out a 0.2% gain to 3,977.53 after having been up by as much as 0.8%.?

The Dow Jones Industrial Average rose 0.6% to 32,432.08, while the Nasdaq composite fell 0.5%, to 11,768.84, reflecting losses in Google parent Alphabet and other tech companies.?

The Russell outgained the broader markety, however, adding 1.1%, to 1,753.67.

The Russell 2000 index of smaller stocks, however, is on track for a 7.6% loss this month versus a 0.2% gain for the S&P 500.

On this morning, Asian shares were mostly higher.

Notably, Japan's benchmark Nikkei 225 lost 0.1% to 27,456.98.

Australia's S&P/ASX 200 jumped 1.1% to 7,036.20.?

South Korea's Kospi added 0.4% to 2,419.43.?

Hong Kong's Hang Seng rose nearly 0.4% to 19,644.68, while the Shanghai Composite inched up less than 0.1% to 3,249.39.

In currency trading, the U.S. dollar fell to 130.62 Japanese yen from 131.56 yen.?

The euro cost $1.0813, up from $1.0804.

Going back to analyzing the other agricultural markets …

From Canada, according to the USDA attaché, dryness persists in scattered growing areas of Alberta and Saskatchewan.?

However, there is still time for spring precipitation.?

Meanwhile, most eastern soybean producers await warmer temperatures to dry the heavy-to-adequate snow accumulation.?

MY (marketing year) 2022/23 canola seed production rebounded on improved growing conditions, and exports to China increased after access was reinstated for Canada's two largest canola-handling companies.?

In MY 2023/24, Canada's net total production of oilseeds (canola, soybean, and sunflower seeds) is forecast to decrease by less than 1% to 24.7 million metric tons (MT).?

Canola production is forecast to increase while soybean production is forecast down.?

However, it should to note, that Statistics Canada's planting intentions survey was not available at the time of this report.

From South America, according to AgRural, Brazilian farmers have harvested 70% of the soybean area planted for 2022/23 through last Thursday.

That was up 8 percentage points from the previous week.

At the same time last year, 75% of the Brazilian soy fields had been reaped, said AgRural.

Patria Agronegocios reported the Brazilian soy harvest reached 71% of expected area.?

That trails last year’s 77% pace.?

Brazil’s AgRural also reported that the country’s 2023 center-south second corn crop planting progress has reached 96% through March 23.?

All of the second corn crop had been planted by this time last year.

In Europe, grain prices soared mainly driven by the Russian announcements concerning possible state purchases to secure the country's national reserves.

Prices rose both on Euronext as well as on the physical markets, with wheat prices, both on old and new crop, are back to last week's levels.?

However, operators remain vigilant on the price gap now reached between European and Black Sea origins.?

Romania and Poland are in talks with the European Commission over export tracing mechanisms for Ukrainian grains to ensure local farmers are not hurt by a flood of cheap imports, the Polish and Romanian prime ministers said on Tuesday.

Earlier this month, Romanian Agriculture Minister Petre Daea said the European Commission has estimated farmers from Poland, Romania, Hungary, Bulgaria and Slovakia have lost 417 million euros ($451.15 million) overall from the inflows of cheaper Ukrainian grains on their markets.

Daea also said the Commission aimed to hand out compensation worth 56.3 million euros to Polish, Bulgarian and Romanian farmers, with a final decision expected on March 30.?

Oilseed prices also rallied yesterday, erasing part of the recent downward movement.?

The downward movement has favoured the return of buyers on both the domestic and export markets.?

Thus, buyers are looking to take advantage of the recent price decline to advance their hedging.

From Ukraine, country grain exports for the 2022/23 season were down 17.7% to 36.9 million tonnes as of March 27, agriculture ministry data showed.

The ministry said Ukraine had exported 44.8 million tonnes of grain as of the same date last year.

The volume so far in the July-to-June season included about 12.6 million tonnes of wheat, 21.7 million tonnes of corn and 2.27 million tonnes of barley.

The ministry said grain exports in March had reached 4.63 million tonnes as of March 27.

From Russia, Russia's agriculture minister said last week that 93% of Russia's winter crops were in a good or satisfactory condition, down from 95% reported in February.?

The current weather prognosis is friendly for winter crops, according to SovEcon.?

Thus, export prices for Russian wheat fell again last week, especially after the deal allowing the safe Black Sea export of Ukrainian grain was renewed, which increased available export volumes.?

Notably, according to the IKAR, prices for Russian wheat with 12.5% protein content, delivered free on board (FOB) from Black Sea ports, fell $5 to $272 a tonne last week.?

Also for other products prices fell last week.

Notably, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 11,775 rbls/t -275 rbls/t?(Sovecon).?

Price for sunflower seeds was at 23,625 rbls/t -2,475 rbls/t (Sovecon). Price for domestic sunflower oil was at 75,525 rbls/t -1,500 rbls/t (Sovecon).

Price for domestic soybeans was at 33,400 rbls/t -200 rbls/t (Sovecon).

Export price for sunflower oil was at $840/t -$150 (IKAR).

Price for white sugar, Russia's south was at $705.02/t +$4.85 (IKAR).

In this context, Russia exported 1.16 million tonnes of grain during the week to March 24 - 970,000 tonnes of which was wheat, SovEcon said.?

That was up from 870,000 tonnes of grain and 750,000 tonnes of wheat a week earlier.?

SovEcon estimates Russia's wheat exports in March could reach 4.3 million tonnes, up from 2.1 million tonnes a year earlier and the highest level for March since 2018.?

Russian FOB still could go lower, but the downside looks limited.

The Vedomosti business daily reported on Friday, citing two unidentified sources, that Russia could recommend a temporary halt in wheat and sunflower exports after the sharp drop in global prices in recent weeks.

According to SovEcon, "this story looks like an attempt to support the market which worked well in the short-term but doesn’t look like a game-changer for the wheat market as the probability of any export disruptions remains low (not zero, of course)".?

From South East Asia, Malaysian palm oil prices closed higher on Monday, after falling for the last seven consecutive trading days.

Notably, the benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange ended up 65 ringgit, or 1.9%, to 3,577 ringgit ($809.46) a tonne.

Exports of Malaysian palm oil products for March 1-25 rose between 11.4% and 19.8% from a month earlier, cargo surveyors said on Saturday.

Indonesia shipped 2.95 million tonnes of palm oil in January, up 35.2% from a year earlier, the Indonesian palm oil association said in a statement.

Crude palm oil output at the world’s biggest producer stood at 3.89 million tonnes in January, while inventories fell 3.56% from the month before to 3.09 million tonnes.

In India, the recent unseasonal rains and hailstorms have caused significant damage to the wheat crops in pockets of Punjab, Haryana, and Rajasthan at the harvest stage, resulting in losses ranging from around 25-50 per cent.?

Furthermore, the weather bureau has predicted another bout of rain and hailstorms in the north-west starting from March 29, which may cause further harm to the crops that managed to survive the previous western disturbance.

The Agriculture Ministry is likely to take a preliminary assessment of crop losses with states on Tuesday as the usual collection of information through girdawari (survey) takes time.?

Govt sees 1 million tonne drop in wheat production.

India’s State Ag. Dept. in Punjab reported that heavy rain and hailstorms during the past few days damaged the wheat crops in parts of Punjab, thought to have affected more than 40pc of sown area, equivalent to about 1.5 million hectares (Mha).?

On this wake, already, Punjab and Haryana governments have ordered special girdawari and promised compensation to affected farmers.

From Australia, local markets started the week on the quiet side, bids were still lacking in the market and liquidity was very steady.?

WA ASW1 and barley continue to find some trading activity while we saw some faba bean demand on Clear Grain Exchange hit the screen in Port Adelaide zone.?

Canola values finally saw a green day and were up $20/t across the cash boards.

Weekly rainfall totals for the week to 27 March were handy across NSW and WA with a widespread 15-50mm received, with some pockets of NSW receiving between 50-100mm.?

Totals for Qld, Vic and SA were lower, but the start is certainly looking better than the long-range forecast predicted.

On the international trade scene, Turkey's state grain board TMO has started buying milling wheat in an international tender on Tuesday with about 100,000 tonnes initially bought.

The tender sought a total 695,000 tonnes and more is expected to be purchased later on Tuesday.

The tonnages purchased in TMO’s tenders are provisional and still subject to final confirmation in coming days.?

Purchases can be reduced or cancelled completely.

Wheat shipment is sought in two periods: May 18 to June 16 and June 12 to July 10.

Red milling wheat is sought in a series of consignments to different Turkish ports.?

Wheat already in warehouses in Turkey can also be offered in the tender.

That’s all, thank you.

We wish you a nice day.

?Author:?Sandro F. Puglisi

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