GRAIN & PRICES WEEKLY REPORT

Good morning Farmer Family ...

US farm markets rallied on Friday.

The wheat complex led the rally, supported by concerns the Black Sea grain deal could splinter amid escalations in the war between Ukraine and Russia.

Russia's ambassador to the United Nations said Moscow has not been able to export any grain as part of the Black Sea grain deal.

This was the second time in a week a Russian official has complained about the Grains Initiative.?

That is raising doubts about how much longer Russia will be willing to cooperate in the Black Sea.

That, could slow the Ukrainian exports and the planting for the 2023 crop and it could also lead to increased sanctions against Russia.

Meantime, Ukraine's agriculture ministry on Friday has proposed increasing the minimal tonnage of ships which carry grain and vegetable oil from the country via the grain corridor, aiming to boost exports despite opposition from Russia.

Meantime, some strength was also derived from stronger energy markets following Russia’s announcement that it would be making drastic production cuts in the coming weeks.

As a result, Chicago wheat prices were pushed up to its highest level since Jan. 3.

Corn and soybean prices also were strong, following the gains in wheat.

As for soybean, derivatives largely drove the rally.

U.S. soymeal supplies are tightening.?

Plus, more production cuts forecasted for Argentina added even more supply pressure to the soymeal market.

Soyoil prices surged as rains in Malaysia disrupted harvest progress for competing palm oil production.?

Also, markets are increasingly uncertain about Indonesia’s palm oil export allowances going forward, creating more supply pressure for the edible oils market as China begins to return to elevated demand levels following its release from COVID restrictions.

Traders were also monitoring forecasts projecting rain in South America in the coming days.

Expectations of a record soybean crop in Brazil have tempered worries over Argentine losses.

However heavy rains there threatened to delay the harvest and push seeding of the country's safrinha corn crop beyond the ideal time frame.?

Thus, the Friday session ended for corn with 1.45% gains.

The soybean market was 1.53% higher.?

Meal prices bounced at the close posting 0.79% gains.?

Soybean oil closed up by 2.54%.?

Chicago SRW was up by 3.8%.?

Kansas City wheat ended the day 3.41% higher.?

Minneapolis spring wheat settled Friday with 1.42% gains.?

For the week, corn prices rallied back 0.44% higher thanks Friday’s move.?

Ditto for the soy complex, with soybeans closed 0.69% higher from prior Friday, while the products saw meal up 0.58%, and bean oil up 2.51%.

The wheat complex was still more bolstered thanks Friday rally.??

Notably, the Kansas City HRW market was the leader, up 4.12%.?

Chicago SRW was 3.87% higher.?

Minneapolis was behind, but still rallied 0.95% on the week.?

Going inside the numbers, corn prices closed the week $0.030 firmer at $6.81/bu.

Soybean was $0.105 higher from the prior Friday at 15.43/bu.

Soymeal rose $2.90/smt, closing at $499.4 smt.

Soy oil lifted $1.48, to close at $60.54.

CBOT soft red winter (SRW) prices jumped $0.293 for the week to close at $7.86/bu.

KCBT hard red winter (HRW) prices soared $0.360, ending at $9.09/bu.

MGE hard red spring (HRS) prices was $0.088 higher to $9.30/bu.

The CFTC will again not have CoT data this week.?

No announcements have been made regarding when the report will resume.?

The rally in grain futures in response to Russian criticism of the Black Sea export corridor pressured basis this week.

As for wheat, HRS basis was down in both the PNW and Gulf, weighed by futures prices.?

Weaker rail freight prices also helped draw down basis, though some regions still have poor performance.

HRW basis was up in the Gulf and down in the PNW.?

Farmer selling has increased slightly; however, grain movement remains slow and demand light, especially as the U.S. Plains HRW crop condition remains uncertain.?

SRW basis and SW prices were steady, bouncing from lows in late January.?

In this context, as at February 9, 2023, FOB prices saw US wheat No 2 Hard Red Winter (HRW) valued at $393/mt (unchanged from prior week).

US wheat No 2 Soft Red Winter (SRW) was valued at $328/mt (down $3/t from prior week).

Northern Durum offers from the Great Lakes, for April 2023 delivery were quoted at $11.85/bu ($435.00/MT), unchanged from prior week.

As for corn, US corn 3YC (Gulf) was at $303/mt (unchanged from prior week).

As for soybean, US soybean 2Y (Gulf) quoted at $599/mt (down $25 from prior week).

USDA’s weekly Ethanol report showed ethanol prices averaged $1.95 - $2.20/gal regionally, which was mostly up from 1 to 9 cents over the week.?

The corn oil quotes ranged 59 to 68 cents/lb this week, which was mostly lower by 2 to 8 cents.?

DDGS prices were shown mostly $15 to $20 lower from $235 to $270/ton regionally.?

DDGS prices to the Export Point averaged between $264 to $342/ton, slightly weaker from prior week.

USDA saw the MN cash B100 market 6 cents weaker through the week at $5.64/gal.?

In energy markets, oil prices rose more than 2% on Friday.

Brent crude futures indeed rose to settle at $1.89, or 2.2%, to $86.39 a barrel.?

U.S. West Texas Intermediate crude futures (WTI) were up $1.66, or 2.1%, at $79.72.

Brent posted a weekly gain of 8.1%, while WTI gained 8.6%.

Russia announced it would reduce its oil production by 5% (about half a million barrels) in March 2023.?

The production cut is a retaliatory response from the Kremlin towards recent Western sanctions on Russian energy products.?

The sanctions capped Russia’s oil price at $60/barrel, so Russia’s retaliation likely reflects growing challenges for Russia to sell its oil at a profitable level internationally.

The Wall Street Journal’s Georgi Kantchev notes that “Friday’s move was the first in which Moscow has telegraphed a specific oil-markets response to the Western measures, raising the specter that it was now brandishing oil as a weapon in the economic war playing out between Russia and the West.”

There were conflicting statements from the Russian government regarding whether this move had received OPEC+’s blessing.?

Meanwhile, Russian Deputy Prime Minister Alexander Novak said Russian state media - “We will not sell oil to those who directly or indirectly adhere to the principles of the ‘price ceiling’”.

In U.S. supply, energy firms cut the number of natural gas rigs by the most in a week since October 2017, while adding the most oil rigs in a week since June, energy services firm Baker Hughes Co said.

The total oil and gas rig count, an early indicator of future output, rose two to 761 in the week to Feb. 10.

In ocean freight markets, the Baltic Exchange's main sea freight index, which measures the cost of shipping goods worldwide, rose about 1.7% to 602 points on Friday, but still hovering close to 2020-lows.

Notably, the capesize index, which tracks iron ore and coal cargos of 150,000 tonnes, increased about 7.5% to 486 points; and the panamax index, which tracks coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, was up for the second day, rising 0.4% to 864 points.?

Meanwhile, the supramax index shed 8 points to 628 points.?

For the week, the benchmark index lost 3.1%, notching its sixth consecutive weekly fall, reflecting a combination of sluggish demand and an over-abundance of ships.

In equity markets, The Nasdaq ended lower on Friday as megacap growth stocks came under pressure by Treasury yields higher.

U.S. equities, indeed, were rattled over the week by strong jobs data, investors are waiting for January consumer inflation data next week for clarity on the Fed's rate-hike path.

Meantime, yields on the benchmark 10-year Treasury note rose to their highest in more than a month following an auction on Thursday of 30-year bonds that saw weak demand.

Notably,?the yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, rose to 3.73% from 3.66% late Thursday.

The two-year yield, which moves more on expectations for the Fed, ticked up to 4.50% from 4.48%.?

It was at 4.08% just over a week ago and is near its highest level since November.

The Russell 1000 Growth index that houses many large-cap growth names fell 0.33%.

Lyft Inc plummeted 36.44% as it lowered prices, raising concerns it was falling behind bigger rival Uber Technologies Inc.?

Uber shares also dropped 4.43%.

But the rally in energy stocks as oil prices climbed helped push up the Dow and the S&P 500.

Most of the 11 major S&P 500 sectors edged higher with the energy sector jumped 3.92%, although the consumer discretionary sector fell 1.22%.

More than half of the firms listed on the S&P 500 have reported earnings.

U.S. consumer sentiment improved further in February month-on-month.

Hopwever, the University of Michigan's preliminary February reading, showed households expected higher inflation to persist over the next 12 months.

Thus, the Dow Jones Industrial Average ended up 169.52 points, or 0.5%, to 33,869.4, the S&P 500 gained 8.98 points, or 0.22%, to 4,090.48 and the Nasdaq Composite dropped 71.46 points, or 0.61%, to 11,718.12.

The Nasdaq posted its first weekly fall this year, down 2.41%, while the S&P 500 ended the week lower 1.11% and the Dow Jones lost 0.17%.

That comes after a stellar performance by stocks in January.?

In currency trading, the U.S. Dollar Index increased from last week's 102.5 to 103.63.

Notably, the yen broadly moved higher after reports that the Japanese government was set to appoint academic Kazuo Ueda as the central bank's next governor.

The Japanese yen, indeed, strengthened 0.14% at 131.38 per dollar.

In Europe, German government bond yields edged higher, with the 10-year bund hitting 2.377% before easing at session's end.?

The euro fell 0.55% to $1.0677.

Going back to analyzing the other agricultural markets ...

In Canada, the Grain Statistics weekly report, had producers' deliveries of common wheat at 412,8k mt for week 27 of this shipping season.

That was down from 432,4k mt posted prior week.?

Deliveries of durum wheat, were at 106,5k mt, down from 141,5k mt showed in prior week.

Meantime, Canada exported 354,7k mt of common wheat in week 27.

That was down from 395,7k mt of a week earlier.

Durum wheat exports, were also weaker moving down from 192,6k mt to 97,1k mt.?

Total Commercial Stocks of common wheat stood at 2.841,8k mt.

That was down from 2.863,7k mt posted in week 26.

Durum total commercial stocks, were also weaker from 685,4k mt a week earlier, at 644,6k mt.?

Cumulative exports for common wheat were at 10.278,5k mt.

That is compared 6.065,8k mt a year ago.

Durum cumulative exports reached 2.793,0k mt vs 1.342,7 a year ago.

In this context, cash bids for Canadian durum wheat rose week over week.?

Indeed, looking at the average regional price of C$448.59/mt as of Feb 10, that was C$2.17/mt firmer from the prior week.

Going inside the numbers of the week, as at February 6, 2023, Canadian wheat prices for FOB delivery West Coast were (Cdn$/mt):?

- for the N1 class CWRS 13.5% - $500.39 per tonne, up C$1.05/t wow;?

- for the N2 class CWRS 13.0% - $494.19/t, up C$0.99/t wow;

- for the N3 CWRS - $503.85/t, up C$8.93/t wow.

- for the N1 CWAD 13% (durum wheat first class) average street price in Rosetown was at C$440.93, down C$36.74/t from prior week.

The export basis West Coast & Central SK, was not valued as Great Lakes are closed in this period of shipping season.

Meanwhile, the European Commission reported Canada's No. 1 CWAD at US$425/mt USD FOB the St. Lawrence as of Feb. 8.

That was down US$10/t from prior week, and in Canadian dollars meant C$567.21/mt, down C$15.66/t from prior week.

As at February 10, 2022, for the N1 CWAD 13% (durum wheat first class), average street price in REGIONAL ZONES was at C$448.59 per tonne, up C$2.17 from prior week.

(1USD=Cnd$1.3346 down from 1.3399 a week earlier).

From South America, as at Feb 9, 2023 - Argentina Wheat Grade 2 export price, (Up River) was at $363, down $13/t from prior week.

Argentina corn feed was down $6/t for the week, closing at $311.

Brazilian corn feed (Paranagua) was valued at $307, was down $2/t from prior week.

Argentina feed barley, was unchanged for the week to $345.

Argentina soybean was down $5 at $619.

Brazilian soybean was down $11, finishing the week at $567.

In Europe, March wheat on Paris-based Euronext, jumped at 297 euros ($317.11 + $9.38 wow) a tonne on Friday, posting a €12.5/t weekly gain.

As for the other products, price for March's European Durum Wheat, tumbled €47/t for the week, settling at €434/t.?

March corn price, was up €13.75/t for the week, closing at 291.75 euros per ton.

Rapeseed closed at €550.5/t, up €5.25/t for the week.

UK wheat feed, Mar 23 contract, closed at ￡235, up ￡5.15/t week on week.

Meantime, as of Feb 9, 2022, FOB prices in US dollar for French wheat with 11.5% protein and Feb - March delivery, were at $326/mt, up $3 from prior week.

German wheat price, Deposilo Hamburg, was not available also this week.

Baltic wheat, delivery first Vilnius, was at $321.38/t, up $12.65/t from prior week.

Spanish durum wheat Sevilla (Depo Silo), was not available also this week.

French durum wheat - delivered La Pallice Spot - July 2022 basis, this week was valued at $448.43/mt, down $26.55 from prior week.

Italian durum wheat Bologna (Delivered to first customer), was valued at $446.30, down $26.52/t week on week.

Corn, delivered Bordeaux Spot - July 2022 basis, was at $311.77 per tonne, up $10.59/t from past week.

Corn FOB Rhin Spot - July 2022 basis, was up $12.75 to $311.77/t.

Feed barley delivered Rouen was at 287.21$/t, up $6.54 per tonne.

Malting barley FOB Creil Spot - July 2022 basis was at $320.31 per tonne, down $5.69/t from prior week.

Rapessed FOB Moselle - 2022 harvest was at 585.10$/ton, down $2.15 compared to prior week.

Standard sunseed FOB Bordeaux - 2022 harvest was up 4.07$ from prior week at $608.59 per tonne.

(Eur/USD = 1.0677 vs last week 1.0795).

From Russia, as the Black Sea export corridor approaches its March 19, 2023 expiration date, Russian officials have voiced criticism of the agreement citing barriers to Russian exports in the form of sanctions.?

Russia expressed hesitancy to extend the agreement and had a similar stance in November 2021 when the agreement approached its first expiry period.

However the initiative was extended for another 120 days.

Meantime, Russian wheat exports reached record levels in January at 3.5 MMT, 120% above the January 2021 pace.?

SovEcon expects Russia to ship a record-high export pace in the coming months, with wheat exports during the first half of 2023 expected to reach 21.3 million metric tons, compared to 10.9 million metric tons during the same period last year.

In this context, the Russian agriculture ministry revised the export tax for wheat, corn and barley.

Particularly, as of Feb 15, the export duty on wheat will increase to 4,653.5 from 4,496.6 rubles per ton a week earlier.

Ditto for corn, rised from 1,505.7?rubles of a week earlier, to 1,670.0 rubles per ton.

Also for barley, the duty will be higher for this period, increasing to 3,209.1 rubles from 3,175.2 rubles per ton a week earlier.

This new duty rates will be in effect through Feb 21, inclusive.

The duties were calculated based on indicative prices: $306.2 per ton for wheat ($307.2 a week earlier), $261 for barley ($264), $230 for corn ($229.8).

From the Middle Kingdom, tensions with China have returned to the forefront after the U.S. government shot down the alleged Chinese spy balloon on Saturday, February 4, 2023.?

Despite the recent friction, agricultural exports to China have reached a record $36.4 billion for the fiscal year 2022.?

China is the 5th largest market for U.S. wheat in the marketing year 2022/23, with 750,000 MT purchased year-to-date.

However, U.S. chief agricultural trade negotiator Doug McKalip altough wants China to keep striving to meet U.S. farm goods purchase commitments under the 2020 "Phase 1" trade deal, said in a statement that he also is pushing to diversify exports beyond the biggest U.S. grain customer.

Meantime, in a sign of thawing tension between the two countries China's ports have been clearing cargoes of Australian beef within one or two weeks since the start of this year.

That was much faster than the months taken during the last two years and comes after a visit to China by Foreign Minister Penny Wong, the first such trip by an Australian minister in three years.

Australia shipped 145,000 tonnes of beef to China in the first 11 months of 2022, up 19% on the prior year, according to MLA data, but sharply down from 300,000 tonnes in 2019 before the factory suspensions.

China imported 2.73 million tonnes of beef in 2022, up 65% since 2019, according to Chinese customs data, and worth 120 billion yuan ($17.64 billion).

From South East Asia, although wheat prices in India have remained elevated, the area planted with wheat in the world's second-largest wheat producer remains steady, increasing by only 0.4% to 34.3 million hectares.?

Indian farm ministry data showed that some farmers are shifting production to rapeseed to capitalize on higher returns.

Thus, India may extend the ban on wheat exports, set to expire in April 2023, to preserve domestic supplies and help cap prices.

Wheat stocks are down 49.2 percent to a six-year low of 17.2 MMT, and the government hopes to replenish state wheat reserves after government purchases decreased by 53 percent in 2022.

From Australia, prices for feed and barley in southern and northern markets have firmed for the week as consumer and trade bids lift to pull grain out of grower hands.

In southern Queensland, the sorghum harvest is gathering pace, with truckloads from western regions already delivering at container packers and bulk sites.

Traded volume of wheat and barley remains thin as uninspiring elevator margins temper export demand, and growers are yet to push the button on prompt selling so they can backload fertiliser ahead of winter-crop planting.

In this context, indicative delivered prices in Australian dollars per tonne for prompt crops during the week were:

Barley Downs: $405, up $5 from Feb 2;

SFW wheat Downs: $395, up $5 from Feb 2;

Sorghum Downs: $400, unchanged from Feb 2;

Barley Melbourne: $375, up $5 from Feb 2;

ASW wheat Melbourne: $422, up $10 from Feb 2;

SFW wheat Melbourne: $412, up $2 from Feb 2.

(AUD/USD=> US$0.6918 vs US$0.6923 a week earlier).

On the international trade scene, the Korea Feed Association (KFA) purchased about 64,000 tonnes of animal feed corn sourced from optional origins in an international tender on Friday.

It was bought an estimated outright price of $335.48 a tonne c&f plus a $1.25 a tonne a surcharge for additional port unloading.?

The seller was believed to be trading house Posco.

The corn was sought for arrival in South Korea around May 20.

Ports in Russia and Ukraine cannot be used for ship loadings, the KFA tender said.?

If Ukrainian corn is supplied, sellers have no right to declare force majeure on deliveries because of the war in the country.

The shipment was sought between April 16 and May 5 if the corn is sourced from the U.S. Pacific Northwest coast, between March 27 and April 15 if from the U.S. Gulf or eastern Europe, between March 22 and April 10 if from South America and between April 1 and April 20 if from South Africa.

The tender continues a series of South Korean corn purchases this week, with other buying reported from importers NOFI, the Major Feedmill Group and Feed Leaders' Committee.

Watching the next week's market, the week will be sort of quiet on the report side of things.?

On Monday, we start the week with the Export Inspections report released in the afternoon.?

On Tuesday, February Lean Hog futures and options expire.?

Skip ahead to Wednesday and EIA will release their weekly ethanol production and stocks data.?

Thursday in the afternoon will see the release of weekly Export Sales report.

That's all, thank you.

We wish you a nice day and a good weekend.

?Author: Sandro F. Puglisi??

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