Grain Market View - Daily Update

Good morning, Farmer Family ...

US farm markets were mixed but mostly lower on Monday.

Wheat incurred the heaviest losses, as Chicago SRW ended the session 1.37% lower; KC HRW settled down by 0.72%; MGE spring wheat was 1.07% lower.

Corn settled 0.2% in the red.

The soybean complex was mixed, with soybean bucking the overall bearish trend, shifting 0.64% higher, soymeal faded 0.71% lower, while soyoil moved 0.92% higher.

Wheat and corn fell after the deal to export grains by sea from Ukraine was renewed on Saturday for at least 60 days.

Russia said any further extension beyond mid-May would depend on the removal of some Western sanctions.

Also, Russian President Vladimir Putin said Russia would provide grain to African countries for free if the grain deal is not extended in May.

Soy prices rallied from a three-month low to close higher, catching a tailwind from U.S. stocks reassured by the announcement that UBS agreed to buy battered rival Credit Suisse.

Gains in oil prices also pushed up soybeans.

Traders also had their eyes on whether the Federal Reserve will change its benchmark interest rate on Wednesday.

Thus, many operators, especially small traders, have run to the sidelines in anticipation of Fed's decision, looking how outside markets, the bond market, crude oil and the dollar will react.

On the supply side, approximately 53% of U.S. winter wheat is produced in an area currently experiencing drought, the USDA said last week, a reduction from 55% a week earlier and down from 69% as the year began.

Some more wet weather is set to arrive across much of the Corn Belt between Tuesday and Friday, per the latest 72-hour cumulative precipitation map from NOAA.

A band stretching from Missouri through southern Michigan is likely to gather the greatest amounts during this time.

NOAA’s new 8-to-14-day outlook predicts some wetter-than-normal conditions in parts of the Northern Plains and upper Midwest between March 27 and April 2, with seasonally cold weather likely for the western half of the country next week

Meantime, yesterday, the USDA in its weekly crop report rated 19% of the Kansas winter wheat in good to excellent condition, up from 17% the previous week.

For Texas, the USDA rated 23% of the crop as good to excellent, up from 17% the previous week, while 44% was rated as poor to very poor, compared with 50% previously.

For Oklahoma, the USDA rated 29% of the winter wheat crop in good to excellent condition, down from 30% a week ago.

For Colorado, the USDA rated 36% of the winter wheat as good to excellent, down from 40% the previous week.

In Arkansas, where farmers grow soft red winter wheat used to make cookies and snack foods, the USDA rated 60% of the state's wheat as good to excellent, down from 61% a week ago.

The USDA rated 65% of the Louisiana winter wheat crop and 68% of Mississippi's wheat as good to excellent, up from 64% and 57%, respectively, the prior week.

Meantime, the Texas corn crop was 40% planted, ahead of the state's five-year average for the same time of year of 35%.

Corn planting was 87% complete in Louisiana, 7% complete in Mississippi and 1% complete in Arkansas.

On the demand side, in its weekly Export Inspections report, the USDA reported 1.189 MMT of corn was inspected for export during the week that ended 3/16.

That was up from 1.015 MMT the week prior, but was down 308k MT from the same week last year.

Mexico and Japan were the top two destinations.

The season’s export reached 17.523 MMT as of 3/16, still trailing last year’s pace.

As for soybean, data had 716,618 MT of soybean exports for the week that ended 3/16.

That was up 83k wk/wk and up 160k MT from the same week last year.

China was again the No. 1 destination.

Accumulated soybean shipments were marked 1.226 MMT ahead of last year’s pace with 44.06 MMT shipped.

As for wheat, the report showed 374k MT of wheat was shipped during the week that ended 3/16.

That was up from 257k MT last week and from 335k MT during the same week last year.

China was the top destination.

Cumulative totals for the 2022/23 marketing year are slightly below last year’s pace so far, with 16.29 MMT.

In this context, corn basis bids were mostly steady across the central U.S., but did ease a penny lower at an Ohio elevator while firming 2 cents at an Illinois ethanol plant.

Soybean basis bids shifted 2 cents higher at an Illinois river terminal while holding steady elsewhere across the central U.S..

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

On this morning, Chicago wheat prices lost more ground.

Corn and soybeans were largely unchanged.

Notably, the most-active wheat contract on the Chicago Board of Trade fell 0.9% to $6.94-1/2 a bushel, as of 03:09 GMT.

Corn lost 0.3% to $6.31-1/4 a bushel and soybeans gave up 0.3% to $14.81 a bushel.

In energy markets, oil prices rebounded and rose over 1%, after diving to their lowest levels in 15 months as the market worried that risks in the global banking sector could spark a recession that would sap fuel demand.

In a volatile trade, indeed Brent crude futures for May rose 82 cents, or 1.1% to $73.79 a barrel.

U.S. West Texas Intermediate crude futures for April gained 90 cents, or 1.4%, at $67.64 on the eve of the contract's expiry.

The more actively traded May futures rose 89 cents, or 1.3%, at $67.82 a barrel.

Volatility is likely to linger this week, with broader financial market concerns likely to remain at the forefront.

The looming Fed decision adds to uncertainty in markets.

Meanwhile, Group of Seven Nations are not likely to revise a $60-per-barrel price cap on Russian oil this week, two European Union officials and one official from a coalition member said.

On this morning, oil rose, extending yesterday's recovery, as the rescue of Credit Suisse eased worries about global banking sector risks that could hit economic growth and fuel demand.

Also, major central banks said they would enhance market liquidity and support the banking system.

Thus, Brent crude was up 52 cents, or 0.7%, at $74.31 per barrel at 09:10 GMT.

U.S. West Texas Intermediate (WTI) also gained 52 cents, or 0.8%, trading at $68.16.

However, the dollar index , rose on Tuesday after hitting a five-week low the previous session.

A stronger dollar makes oil more expensive for holders of other currencies and so can temper demand.

In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, edged up on Monday as rates for the larger capesize vessel segment rebounded.

The overall index, indeed, gained 7 points, to 1,542.

Notably, the capesize index was up 32 points, or about 1.7%, to 1,945 – its biggest one-day rise since March 14.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, increased $267 to $16,134.

The panamax index was down by 26 points, or about 1.5%, at 1,697, extending its decline for the third straight session.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $239 to $15,270.

Among smaller vessels, the supramax index rose 11 points, to 1,329.

In equity markets, US stock indexes Monday closed moderately higher on a rebound in bank stocks as authorities attempted to boost confidence in the banking sector.?

UBS Group AG agreed to buy Credit Suisse Group AG for 3 billion francs ($3.2 billion) in a government-brokered deal.?

Also, the Federal Reserve and five other central banks boosted liquidity to ease growing strains in the global financial system.?

However, weakness in software and chip stocks undercut technology stocks and limited gains in the Nasdaq 100 as a rebound in bond yields weighed on tech stocks.

Global bond yields indeed rebounded from overnight lows and moved higher, with the 10-year T-note yield rose +5.0 bp to 3.479% after falling to a 6-month low in overnight trade of 3.286%.?

Also, the 10-year German bund yield rose +1.8 bp to 2.125% after falling to a 3-month low of 1.924%.

In this context, on Wall Street, the S&P 500 rose to 3,951.57.

The Dow Jones Industrial Average gained 1.2% to 32,244.58.

The Nasdaq composite added 0.4% to 11,675.54.

On this morning, Asian stock markets followed Wall Street higher.

The Shanghai Composite Index gained 0.4% to 3,246.88 and the Hang Seng in Hong Kong advanced 0.9% to 19,175.92.

The Kospi in Seoul rose 0.4% to 2,387.52 and Sydney's S&P-ASX 200 surged 0.8% to 6,955.40.

New Zealand declined while Southeast Asian markets rose.

In currency trading, the dollar index fell by -0.4% and posted a 1-month low, on reduced liquidity demand due to a rebound in stocks and the boost in dollar funding by the Fed and five other central banks.?

The dollar was also under pressure on speculation that the Fed may adopt a more cautious tone during the Tue/Wed FOMC meeting and could possibly dial back its quantitative tightening to preserve the amount of bank reserves in the financial system.

Notably, the EUR/USD rose by +0.47%.?

Hawkish comments Monday from ECB Governing Council member Kazaks gave EUR/USD a boost when he said price pressures remain too strong and warrant further action from the ECB.

German Feb PPI eased to +15.8% y/y from +17.6% y/y in Jan, the slowest pace of increase in 17 months.

The USD/JPY fell by -0.31% and the yen climbed to a 5-week high against the dollar.?

The -1.4% fall in the Nikkei Stock Index Monday boosted safe-haven demand for the yen.?

The yen fell back from its best levels Monday after T-note yields rebounded from early losses and moved higher.

On this morning, the dollar rose to 131.39 yen from Monday's 131.32 yen.

The euro declined to $1.0713 from $1.0724.

Going back to analyzing the other agricultural markets ...

From South America, Patria Agronegocios estimated that the Brazilian soybean harvest is 63.1% finished.

That trails Brazil’s unusually rapid 71.7% pace from last year.

On a related note, Brazil’s Safras & Mercado reported that the country’s 2022/23 soybean harvest has reached 58.6%, which is moderately behind last year’s pace of 69.9% so far.

In Europe, grain and oilseed markets sank.

Large flows from Black Sea origins combined with financial funds' sell-off in a fragile world economic context continue to weigh on prices.

Wheat prices on Euronext are returning to pre-war levels.

The latest EU MARS Crop Monitor reported that after the mild winter, winter crops entered spring in fair to good condition in most parts of Europe.

Wheat yields in Europe are expected to increase for the next harvest, to an estimated 5.99 t/ha, up by 3% compared to 2022.

Barley yields are potentially unchanged at 5.91 t/ha and rapeseed yields are slightly lower at 3.29 t/ha.

However, partially expanding and intensifying dry conditions in the south raise increasing concerns.

As it is still early in the season, crop yield forecasts are – with a few exceptions – based on historical trends.

From UK, Britain has reported a case of bovine spongiform encephalopathy (BSE), commonly called mad cow disease, in the southwestern county of Cornwall, the World Organisation for Animal Health said on Monday.

The case of the case of atypical H-type BSE was confirmed in a 17-year-old indigenous cow on a beef suckler farm, WOAH said in a note, citing information from the British authorities.

From Ukraine, the Ukrainian Ag Ministry reported the spring planting season has begun, earlier than normal, with 26k HA of spring wheat already planted.

Notably, according to Ukraine’s Ag Ministry 2023-24 spring sowing is underway in 10 regions and as at 17 Mar, total planting of 82 700ha included wheat on 26,000 ha and barley on 44,200 ha.

Ukraine's 2023 grain harvest is likely to fall to 44.3 million tonnes from 53.1 million in 2022 as less acreage is sown due to the war.

Ukrainian Agriculture Minister Mykola Solsky said that Ukraine’s 2023 combined grains and oilseed harvest is seen falling to a preliminary 63Mt (70Mt in 2022).

Wheat production for the 2023 harvest is estimated at 16.6 Mt compared to 20.5 Mt in 2022 and corn production at 21.7 Mt compared to 25.6 Mt last year.

Only oilseeds are expected to show a slight increase to 3.8 Mt for rapeseed compared to 3.7 Mt and 11.5 Mt for sunflower compared to 11.1 Mt in 2022.

Solsky declined to give an exact forecast but said the area under winter grains appeared to be slightly higher than the ministry expected.

Meantime, Ukraine’s Ag Ministry also reported that for the week ending 17 Mar, grain exports totalled 1.5Mt (maize 1.0Mt, wheat at 414,451 tonnes and barley at 93,081 tonnes).

Cumulative 2022-23 maize exports are at 20.7Mt which is similar to last years volume, wheat at 12.2Mt is down 33pc and barley at 2.2Mt is down 61pc.

From Russia, the country laid out conditions on Monday for agreeing to any further extension of the Black Sea grain deal, and President Vladimir Putin said that Moscow could send free grain to African countries if those conditions were not met.

Russia's foreign ministry, in a statement posted on its website on Monday, said Moscow had decided to limit the extension of the deal to 60 days over what it called "a lack of progress... on normalisation of domestic agricultural exports".

It said the deal's renewal in May would depend on certain conditions, including the restoration of access to the SWIFT financial messaging system for Russian state-owned agriculture-focused bank Rosselkhozbank, a resumption of farm machinery supplies, and the unblocking of foreign assets and accounts held by Russian agricultural companies.

Meantime, Russian President Vladimir Putin welcomed Chines President Xi Jinping at the Kremlin yesterday and pledged that Russia would study China’s peace proposals for Ukraine “with respect.”

It was noted that Xi Jinping did not mention Ukraine at all in his public remarks.

Russian state media reported Putin as saying that China took a “fair and balanced position on the majority of international problems.”

Xi hailed the two nations as “good neighbours and reliable partners”.

That is the first visit to Russia since the war started and Xi’s first foreign visit since his 3rd term reelection.

Some bilateral agreements are expected to be signed on Tuesday.

Meantime, according to Russia’s Federal Statistics Agency, February grain stocks and leguminous crops held at agricultural companies are seen at 28.8Mt (+49pc on from previous year), with wheat stocks of 17.3Mt (+58pc) and maize at 3.3Mt (+20pc).

Oilseed stocks at 5.1Mt (+53pc), including sunflower-seed at 2.5Mt (+49pc).

Russia exported 870,000 million tonnes of grain during the week to 15 March - 750,000 tonnes of which was wheat, the SovEcon agriculture consultancy said.

That was down from 1.14 million tonnes of grain and 1 million tonnes of wheat a week earlier, though remains at high levels compared to recent years.

SovEcon estimates Russia's wheat exports in March could reach 4.2 million tonnes, up from 2.1 million tonnes a year earlier and the highest level for March since 2018.

In this context, Russian wheat prices declined last week on the back of continued high supplies from Russia and lower prices from the country's major competitors, including Ukraine.

According to the IKAR, indeed, prices for Russian wheat with 12.5% protein content, delivered free on board (FOB) from Black Sea ports fell by $13 to $277 a tonne last week.

As for other products, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 12,050 rbls/t -50 rbls/t (Sovecon).

Price for sunflower seeds was at 26,100 rbls/t -1,825 rbls/t (Sovecon).

Price for domestic sunflower oil was at 77,025 rbls/t -1,150 rbls/t (Sovecon).

Price for domestic soybeans was at 33,600 rbls/t no change (Sovecon).

Export price for sunflower oil was at $990/t no change (IKAR).

Price for white sugar, Russia’s south, was at $700.17/t -$4.70 (IKAR).

From the Middle Kingdom, Chinese Customs data shows cumulative Jan-Feb wheat imports at 3Mt which is up 38pc compared to 2022.

Maize at 5.3Mt (+14pc), barley at 960,000 tonnes (-18pc) and sorghum at 330,000 tonnes (-79pc).

China's soybean imports from the U.S. rose 15.4% in the first two months of this year, data showed on Monday, as delays in harvesting in top supplier Brazil prompted buyers to seek more U.S. beans.

Notably, China bought 11.59 million tonnes of the oilseed from the United States, up from 10.04 million tonnes a year ago, data from the General Administration of Customs showed.

Imports from Brazil, meanwhile, fell 36% to 2.24 million tonnes.

Total imports in the period reached a record 16.2 million tonnes, data showed earlier this month, as buyers stocked up in anticipation of healthy demand this year.

According to the USDA attaché, modest growth in the animal protein sector is expected to raise China's soybean imports to 97 million metric tons (MMT) in Marketing Year (MY) 23/24.

The People's Republic of China's (PRC) removal of COVID-related restriction in December 2022 is expected to boost overall oilseed consumption.

However, relatively high prices for soybean meal (SBM) and low returns in the swine and poultry sector continue to disadvantage SBM inclusion in feed.

Following a significant increase in soybean area and production in MY 22/23, PRC polices supporting soybeans are expected to continue, yielding an additional 400,000 metric tons (MT) of production in MY 23/24."

From South East Asia, rapeseed output in India, is likely to rise 7.5% this year due to a record planting of the winter-sown oilseed.

Farmers are likely to harvest a record 11.5 million tonnes in the crop year to June 2023, the Solvent Extractors’ Association of India (SEA) told a news conference in the north-western state of Rajasthan, producer of more than half of India’s rapeseed.

Rapeseed planting touched an all-time high of 9.8 million hectares this year, 7.4% higher than the previous year.

Based on the higher area, the government has forecast a record rapeseed production of 12.8 million tonnes.

Higher rapeseed output will help India cut back expensive imports of vegetable oil.

In the fiscal year to March 31, 2022, New Delhi spent a record $18.99 billion to import vegetable oils.

From Australia, local markets started off the week a touch softer and were lacking bid side interest.

By the end of the day East Coast wheat and Barley markets felt heavy and very slow, while Canola continued to feel the pressure from offshore markets and was down again with domestic values pushing to 12-month lows.

CBH opened its new Kwinana Fertiliser Facility on Friday, which marks the start of CBH’s liquid fertiliser business and will expand its granular fertiliser capacity by 15,000 tonnes.

Located adjacent to CBH’s Kwinana Grain Terminal, the new facility has capacity to store 32,000 tonnes of Urea Ammonium Nitrate (UAN) and 55,000 tonnes of bulk granular fertiliser.

On the international trade scene, Algerian state agency ONAB has issued an international tender to purchase up to 70,000 tonnes of animal feed corn to be sourced from Argentina or Brazil.

The deadline for submission of price offers in the tender is Tuesday, March 21.

Corn shipment is sought in two 35,000 tonne consignments, the first by April 30 at the latest and the second between May 1 and May 15.

Jordan's state grain buyer is believed to have made no purchase in an international tender to buy 120,000 tonnes of milling wheat which closed on Tuesday.

A new tender is expected to be issued in coming days closing next week.

Participants in the tender on Tuesday were believed to be CHS, Cargill, Viterra, Farm Sense, Grain Flower, The Andersons, Ameropa, Buildcom and Agro Chirnogi.

Taiwan issued an international tender to purchase 56,300 t of grade 1 milling wheat, sourced from the United States, that closes on March 24.

The grain will be for shipment in May.

China sold 136,000t of its imported wheat reserves in an auction that was held on March 15, which was 97% of the total available for sale.

China has offered a series of similarly sized sales in recent months to boost local supplies and lower high prices.

That’s all, thank you.

We wish you a nice day.

?Author:?Sandro F. Puglisi

To read more, check for free

www.bancadelgrano.it