LAST WEEK MARKET COMMENT

US farm markets were mixed but mostly lower on Friday.

Corn prices faded 0.57% lower, primarily on planting progress pressure.?

Soybeans, in contrast, has been buck compared the overall trend, tracking 0.87% higher thanks export optimism and relatively tight US and global stocks.

Soymeal prices went home 1.08% higher.

Soy oil prices also squared up for the week’s end with 1.76% gains.?

Wheat prices, meantime, slumped for the third session in a row, after the July contracts had printed new highs on Tuesday.

Chicago wheat closed 2.64% lower.?

Kansas City wheat markets were 3.28% weaker.?

Minneapolis wheat prices were down by 3.87%.

For the week, corn prices slipped just 0.32% since the prior Friday.

Soybeans were up 3.6% during the week.

Soymeal prices rallied by 5.03%.?

Soybean oil, in contrast, despite the triple digit bounce on Friday, was still down 3.4% for the week.?

Chicago SRW was down 0.75% for the week.??

KC wheat reported weeklost by 2.29% and MPLS was down 3.47% from Friday to Friday.

The wheat complex had started the week with a very bullish note after India annunced exports ban on wheat last Saturday, but then collapsed on its self as the ban quickly turned to just restrictions and analysts said Russia's 2022/23 wheat crop may reach 85 million tonnes.

Meantime, Indonesia indicated it would resume palm oil export shipments this Monday.

In energy markets, oil prices settled slightly higher on Friday.

Brent futures for July delivery rose 51 cents, or 0.5%, to $112.55 a barrel.?

U.S. West Texas Intermediate (WTI) crude for June rose $1.02, or 0.9%, to settle at $113.23 on its on its last day as the front-month.

WTI notched its fourth straight week of gains, which it last did in mid-February.?

Brent gained about 1% past week after falling about 1% last week.

The more actively-traded WTI contract for July was up about 0.4% to $110.28 a barrel.

Meantime, oil prices gained on Monday.

U.S. fuel demand, tight supply and a slightly weaker U.S. dollar supported the market.

Also, Shanghai prepares to reopen after a two-month lockdown.

Thus, Brent crude futures rose 97 cents to $113.52 a barrel at 06:51 GMT, while U.S. West Texas Intermediate (WTI) crude futures climbed 80 cents, or 0.73%, to $111.08 a barrel, adding to last week's small gains for both contracts.

The European Union's inability to reach a final agreement on banning Russian oil, has also stopped oil prices from climbing much higher.

In freight markets, the Baltic Exchange Dry Index rose 55 points, or 1.7% to 3,344 points on Friday, the highest since December 8th, extending gains for the fourth straight session, amid stronger demand.?

The capesize index, which tracks iron ore and coal cargos of 150,000-tonnes, advanced 3.2% to 4,526 points; the panamax index which tracks cargoes of about 60,000 to 70,000 tonnes of coal and grains, increased 0.4% to 3,382 points; and the supramax index added 16 points to 2,816 points.?

On a weekly basis, the Baltic Exchange Dry Index advanced by 7.7%, extending gains for the sixth straight week.

In equity markets, the S&P 500 finished the end week session up 0.57 points at 3,901.36.?

The Dow Jones Industrial Average swung from an early loss of 617 points to close 8.77 higher, or less than 0.1%, at 31,261.90.?

The Nasdaq composite trimmed a big loss to finish 33.88 points lower, or 0.3%, at 11,354.62.

Stock indexes, on Friday morning had extended the week’s sell-off, with the S&P 500 and Dow Jones Industrials dropping to 14-1/2 month lows and the Nasdaq 100 falling to a 1-1/2 year low.??

But then stocks recovered most of their losses Friday in the afternoon on positive comments from St. Louis Fed President Bullard, who said, "we have a very good economy," and that while U.S. economic growth may slow this year, it will still be above trend for 2022.

However, the S&P 500 past week fell 3.05%.

That was the seventh consecutive falling week, the longest stretch of declines since 2001.?

The Dow was 2.9% weaker from prior week.

The Nasdaq was the drag of the markets closing by 3.81% weaker on the week.

The Russell 2000 fell 2.96 points, or 0.17% on Friday, to close at 1,773.27.

For the week it lost 19.4 points or 1.08%.?

Meantime, shares are mixed in Asia on this morning in cautious trading after Wall Street rumbled to the edge of a bear market on Friday.

The Nikkei 225 in Tokyo gained 1% to 27,001.52. .

South Korea's Kospi climbed 0.3% to 2,647.38.

Australia's S&P/ASX 200 edged 0.1% higher to 7,148.90.

Hong Kong's Hang Seng index lost 1.4% to 20,424.70 while the Shanghai Composite index was nearly unchanged at 3,146.86.

In currency trading, the dollar index (Jun '22) on Friday posted moderate gains by +0.422 (-0.41%) closing the week at 103.173.

The euro ended the end week session down 0.23% at $1.0562.

The Japanese yen also weakened by 0.05% to 127.86 per dollar.

However for the week, the euro rose by 0.015 points or 1,44%, while the yen gained 1.35 poits or 1.04%.?

The dollar index fell 1.38% from prior week.

On the weather side, conditions past week were cooler than normal in the High Plains and hotter than normal in the southern Plains.?

North Dakota and eastern Montana received 2 to 4 inches of rain while eastern Nebraska and Kansas, northern Wyoming and South Dakota got 0.5 to 1 inch of rain past week.?

No rain fell in Colorado and moderate to severe drought conditions expanded in the state.?

Texas and Oklahoma experienced persistently hot temperatures, drying out soil.?

In the western states, Oregon, Washington, and Idaho received 0.5 to 1 inches of rain past week shrinking drought conditions across the region.

Meantime, heavy rain and flash flooding possible over portions of the Southeast and Southern Plains today.

Increasingly warm/hot with fire conditions for the Sacramento Valley early this week.

The agency’s 8-to-14-day outlook predicts seasonally dry weather building in the Central Plains between May 27 and June 2, with widespread warmer-than-normal conditions across the Midwest and Plains during that time.

On the supply side, the 2022 Wheat Quality Council’s Hard Winter Wheat Tour across Kansas wrapped up on May 19.?

The three-day average yield for the fields that were calculated was 39.7 bushels per acre.?

While an estimated 7.4 million acres of wheat were planted in the fall, the Kansas wheat crop varies in condition based on planting date and amount of moisture received.?

What Mother Nature has in plan for the wheat crop still remains to be seen, but the tour captures a moment in time for the yield potential for fields across the state.

The official tour projection for total production of wheat to be harvested in Kansas is 261 million bushels, indicating that tour participants thought abandonment might be higher than normal at 11%.?

Based on May 1 conditions, NASS predicted the crop to be higher at 271 million bushels, with a yield of 39 bushels per acre and abandonment at only 6%.

Overall, the Kansas wheat crop is spotty and short, but the eastern half of the state generally had better growing conditions than the western half.

Another surprise of this year’s tour was the lack of disease pressure, especially wheat streak mosaic virus.?

Also, there was little to no insect pressure of concern for reducing yield.

The USDA estimate for the Nebraska wheat crop is ??36.9 million bushels, down from 41.2 from last year.?

The estimated yield average is 41 bushels per acre.?

The Colorado crop is estimated at 49.6 million bushels, down from 69.6 million bushels last year.?

The estimate is for an average of 31 bushels per acre across the state.?

Brad Erker, executive director of Colorado Wheat, estimated the crop at 40.1 million bushels, based on a yield of 28.6 bushels per acre, 1.4 million acres harvested and 30% abandonment rate.?

Oklahoma reported that the state’s production is estimated at 60 million bushels, down from 115 million bushels last year, with 25 bushels per acre yield.

These fields are still 3-6 weeks from harvest.?

A lot can happen during that time to affect final yields and production.

On this wake, Planalytics estimates the US winter wheat yield at 48.7 bpa, from their initial 48.8 bpa estimate.?

Operators, however, will scrutinize the crop rating which will be published this evening.

The crop rating should however change little from prior week.

Meantime, the 2022 U.S. wheat harvest season has officially begun.?

The HRW crop in Texas is 7% harvested with test cutting in Oklahoma, while 4% of Alabama’s SRW harvest is complete.

In this context, corn basis bids were steady to mixed on Friday after firming 2 cents higher at an Indiana ethanol plant and eroding 3 to 17 cents lower at two Midwestern processors.

Soybean basis bids were steady to firm, climbing 2 to 10 cents higher at three Midwestern processors and firming 4 to 7 cents higher at two other central U.S. locations.

As for wheat basis past week was mixed in both the Gulf and Pacific Northwest (PNW).?

HRW basis softened as futures prices remain elevated.?

HRS basis was up slightly as rain continues to slow down planting.?

The funds were net sellers on Friday for 10,500 lots of wheat and 5,500 lots of corn.?

They were net buyers for 4,000 lots of soybeans.

The Friday Commitment of Traders report showed managed money spec funds in corn added on ly 1,149 contracts to their net long, however, taking it to 339,711 contracts of futures and options.

Commercial corn hedgers added 24.7k new shorts against 2.8k new longs, which expanded their net short to 693,535 contracts.?

As for soybeans the report showed the managed money spec funds expanding their net long position in soybeans by another 16,674 contracts in the week ending May 17, putting them net long 147,335 at that point.

Commercial bean traders added 5k new shorts for a 4,134k contract stronger net short of 233,528.?

In soymeal, the weekly CoT report showed managed money closed 11.8k existing longs and sold 4.56k contracts short for their weakest net long since December at 35,923 contracts.?

As of 5/17 managed money traders were 86,237 contracts net long in soy oil, a 2,139 contract lighter net position wk/wk.?

As for wheat, CFTC showed the managed money spec funds adding 11,039 contracts to their net long in the week ending 5/17, taking it to a still modest 26,586 contracts.

In KC wheat, the spec funds were 3,877 contracts more net long to 46,790.?

For Minneapolis wheat, managed money traders were reported 18,175 contracts net long, an 82 contract reduction on lighter OI wk/wk.??

From South America, Argentine President Alberto Fernandez said on Friday that higher food export tariffs would help curb rising food prices, but admitted that he lacked support in Congress to push through legislation to raise levies in the major grains producer.

The South American country, is battling raging inflation heading towards 60%, which has forced the government to seek ways to bolster domestic supply and rein in prices.

The government in March hiked export taxes on soy oil and soymeal from 31% to 33% and created a wheat stabilization fund to tamp down local prices of flour.

Hiking tariffs on soybeans, corn and wheat, however, would need approval in Congress.

Argentina currently taxes shipments of wheat and corn at 12% and soybeans at 33%.?

Argentina, could raise its limit for corn exports of the 2021/22 harvest to 35 million tonnes, from 30 million tonnes currently.

Grains are the country's major export and top source of foreign currency, which is sorely needed to replenish depleted reserves after years of debt crises.

Meantime, the Buenos Aires Grains Exchange estimated soybean harvest at 78% complete compared to 65% prior week.?

Argentina corn harvest was delayed at 27.4% of acreage vs 55% last year.

In Brazil, Brazilian corn is seen at 107-116 million tonnes (Mt).

Some areas of Brazil's Parana, Sao Paulo and southern highland parts of Minas Gerais regions saw frost due to sub-zero temperatures on Friday.

IMEA released first report for second corn Brazilian Mato Grosso corn harvest: 1.24% of 2nd crop had been harvested as of May 20.?

By this time last year, the harvest had not yet started.?

The average of the last five years also pointed to nothing harvested at this time of the year.

In Europe, last week was marked by a downturn in all commodities ag.?

The Paris-based Euronext exchange set a record closing price of €438.50 ($462.51) per MT on Tuesday after retreating from near all-time highs earlier in the trading session.?

However, by Thursday, prices on the Euronext exchange had fallen more than €20 per tonne.

Rapeseed regained some color on Friday after the decline of the previous days, it closed the week down, nevertheless.

Farm office FranceAgriMer showed growing conditions for wheat and barley crops in France fell sharply for a second straight week.

An estimated 73% of French soft wheat was in good or excellent condition by May 16, against 82% the previous week.

That followed a 7-percentage-point decline in the previous week and meant the rating was now below a year-earlier score of 79%, the office's data showed.

Durum conditions also moved down to 74% from 77% a week ago.

Regional data in FranceAgriMer's cereal report suggested contrasts in growing conditions.?

In the Ile de France region around Paris, just 45% of the soft wheat crop was rated good/excellent, while in the Hauts de France, a key production region in the far north, the score was 77%.

Showers on Friday and in the coming days could help crops recover although, as in a previous unsettled spell at the start of the week, rainfall may be erratic.

French barley conditions also dropped sharply, as in the previous week.

The good to excellent rating for winter barley fell 8 percentage points to 71%, while the corresponding score for spring barley dropped 7 percentage points to 69%, FranceAgriMer's report showed.

Farmers were rounding off maize planting, with 98% of the expected area sown.

In a first published rating for emerged maize plants, FranceAgriMer said 93% of the crop was in good or excellent conditions against 95% a week earlier.

In Germany, farmers are growing winter wheat for harvest in 2022 on 2.89 million ha.?

This area is roughly equivalent to level of last year (+0.6% on 2021).?

Based on first estimates, Federal Statistical Office also reports that 1.22 million ha (-1.4%) weresown with winter barley.

From North Africa, supply Minister Ali El-Moselhi said Egypt currently has strategic reserves of 750,000 tons of vegetable oil and reserves of wheat that are enough to cover the local needs for 4.1 months.

From Central Africa, Kenya has authorised the importation of 540,000 tonnes of maize duty-free until August to forestall a looming shortfall.

From the Middle East, in Iraq, the economic ministerial council agreed on increasing the price for state purchases of local wheat by 100,000 dinars to 850,000 dinars ($583) per tonne, state news agency reported last Tuesday.

Iraq, is taking urgent measures to secure strategic stocks of wheat and support a local food subsidies programme.

Iraq's current wheat reserves are sufficient for four months after buying 800,000 tonnes from local farmers, a trade ministry spokesman, Mohammed Hanoun, told state news agency INA last Tuesday.

($1 = 1,458.5200 Iraqi dinars).

In Kuwait, the Government Communications Center said the supply of wheat to Kuwait is safe, since the supply has been approved by sources which have nothing to do with the current events, reports Al-Qabas daily.

The Communication Center quoting sources from the Kuwait Flour Mills and Bakeries Company, stated that the strategic stock of wheat in Kuwait is reassuring and the scheduled periodic supply continues to be secure.?

The company added, “The wheat imported into Kuwait is characterized by its low moisture content, which makes it suitable for storage in the hot conditions of our country.”?

The sources pointed out that “the imported wheat is clean and free from impurities, and is of high productivity.”

Saudi Arabia's state grains buyer (SAGO) procured 89,290 tonnes of wheat from local farmers so far, it said in a statement on Monday.?

In Oman, allaying concerns about the availability of wheat in the market, the Ministry of Commerce, Industry and Investment Promotion confirmed that the Sultanate of Oman is taking all possible steps to ensure sufficient stocks.

After a break in supply from Russia following its war with Ukraine, the Sultanate of Oman had signed agreements with three countries, including India and Australia, to import 160,000 tonnes of wheat.

The total area of land planted with wheat in the 2020-2021 season in the Sultanate of Oman, according to the Ministry of Agriculture, Fisheries, and Water Resources, stood at 2,449 acres and produced 2,649 tonnes of wheat crop.

From Ukraine, Ukraine’s spring plantings are now 98% complete and will drop 25% from a year ago, per the country’s agriculture ministry.

Ukraine, indeed, could sow 190,000 ha of spring wheat, 900,000 ha of spring barley and 3.9 million ha of corn this year.?

Meantime, Ukrainian export data showed 643k MT of grains were shipped MTD in May, down from 1.8 MMT during May 2021.?

Of that, just 16k MT were wheat and 617k MT was corn.?

Ukraine's grain exports could reach 1.5 million tonnes in May compared with around 1 million tonnes in April, Roman Slaston, Director General of the Ukrainian Agrarian Business Club Association, said on Monday.

He also told a briefing that the near-term aim was to increase the volume to 3 million tonnes per month.?

Ukrainian wheat exports for next season is expected to be at zero to 20Mt.

From Russia, Russian analyst SovEvon raised the forecast for Russian wheat production this week by 1.2 MMT to 88.6 MMT.

If realized, this will be the second highest yield on record said SovEcon.?

Indicative export prices for Russian wheat with 12.5% protein for delivery in May-June continued to grow, reaching levels of $410-415/t FOB (+$25/t compared to the previous week).

The cost of wheat of the 4th class in deep-water ports was in a downward trend, adjusted to 15.5 thousand rubles/ton without VAT.?

This is 400 rubles cheaper than the previous week.?

The ruble continued to strengthen, the export quota of 8 million tons was selected by more than two-thirds, a number of large exporters have either exhausted their volume or are close to it.?

Purchase prices at low water remained at the level of 14.9 thousand rubles/ton without VAT.

Export prices are approximately $400-405 per ton. The index of exporters’ purchase prices for wheat in the deep-sea ports of the Black Sea decreased by 3.8% over the week (from 16.1 thousand rubles to 15.5 thousand rubles per ton) against the background of declining demand on the eve of the end of the season and the strengthening of the ruble.

The duty on wheat exports from Russia from May 25 to May 31, 2022 will decrease to $110.5 per ton against $111.9 per ton this week, according to the materials of the Ministry of Agriculture.?

The duty on barley exports remains at the same level of $76.5 per ton, the duty on corn will decrease to $76.5 against $77.3 per ton.?

The wheat rate is calculated based on the indicative price of $357.9 per ton, for barley — $294.3 per ton, for corn — also $294.3 per ton.

Meantime, analysts estimates Russian wheat exports at 20-40Mt for next season.

From the Middle Kingdom, China is planning to auction off another 500.000t of its state soybean reserves next Friday in an attempt to tamp down high prices and replenish local supplies.?

The country has already concluded a flurry of similar auctions earlier this year.

In April, Chinese purchases of Brazilian soybeans jumped 120% above March’s tally, with 6,3 MMT after some weather-delayed cargoes finally arrived.?

China also imported 1,65 MMT of soybeans from the United States last month, which was roughly half of its U.S. deliveries in March.

China’s total wheat imports decreased by 22.4 percent year-on-year in April, but imports from Australia, France and Russia have skyrocketed, the latest statistics from Chinese customs showed.

Imports from Australia, in particular, surged by over 500 percent from last year, due to a low basis and changed domestic and global market conditions.?

In April, China imported 495,614 tons of Australian wheat, up 10.5 percent from March and 525.72 percent year-on-year, according to statistics from the General Administration of Customs (GAC).

Australia was China’s largest import source of wheat, accounting for 64.2 percent of total imports of 698,900 tons.?

And France was the second largest, with 192,584 tons, up 180.3 percent on a yearly basis.

Wheat imports from Russia stood at 2,990 tons, which only accounted for 0.39 percent of China’s total wheat imports in April, down from 0.5 percent in 2021.?

But the volume in April increased by 940.3 percent year-on-year, per GAC data.

On February 24, the GAC announced that China allowed wheat imports from all over Russia, expanding from the previous import permission given to seven states.

The annual increase in Australia and Russia is mainly because of a low base in 2021, Li Guoxiang, a research fellow at the Rural Development Institute under the Chinese Academy of Social Sciences, told the Global Times on Friday.

In the wheat imports to China in 2021, Australia ranked first with 28.14 percent, followed by the US with 28.05 percent and Canada ranked third.

But in April, Australian wheat bounced back, while China’s imports of US wheat went down about 100 percent year-on-year.?

In April, US wheat only took 0.004 percent of total imports.

“China is pragmatic about trade. For China, the essence of trade is mutual benefit,” Li noted.

In other news, China, is still in the midst of an extensive COVID lockdown, and its purchases of Russian energy jumped 75pc in April.

Meantime, China's central government has made available 10 billion yuan ($1.49 billion) for "one-off" subsidies to support individuals and companies involved in grain cultivation and production, according to a statement published on Sunday by the country's Ministry of Finance.

The subsidies aim to support grain growers during the summer and autumn harvest and sowing period, to alleviate any impact of rising costs and to "further mobilise farmers' enthusiasm" for cultivating grain, the statement said.

The announcement comes at a time when China's farmers are grappling with high fertiliser prices, which have soared globally since last year.

($1 = 6.6921 Chinese yuan renminbi).

From South East Asia, after India surprised wheat markets May 15 by announcing a sudden ban on wheat exports, the farm ministry past week said the ban is just a restrictions and India is likely to harvest 106.41 MMT of wheat in 2022.

That is just 4.4% less than the previous estimate of 111.3 MMT although would now be a reduction yr/yr from 109.6 MMT last season.?

Yields were slashed due to a sudden rise in temperatures.

Indonesia will begin allowing palm oil exports again starting today.?

Shippers will still have to divert 20% of production to the domestic market.

In Bangladesh, a ship with 52,500 tonnes of government wheat has arrived at Chattogram Port from neighbouring India.

The ship is currently at the outer anchorage of Kutubdia Port. Once the customs clearance and other ancillary processes, including the plant quarantine certificate, are completed on Monday, they will be unloaded at Chattogram Silo by a lighter ship, according to Chattogram Food Department sources.

The previous week, another ship brought 52,500 tonnes of wheat.

Bangladesh has a demand for 75 lakh tonnes of wheat every year.?

Of this, 11 lakh tonnes of wheat is produced locally and the rest is imported.?

From 1 July to 30 April this year, 55.46 lakh tonnes of wheat arrived in the country.

Chittagong Chamber of Commerce and Industry President Mahbubul Alam said wheat has been imported at the public-private level keeping in view the demand of previous years.?

There is no bar on importing wheat from India on the G2G agreement.?

If the dollar price is kept under control, the situation will become normal.

From Australia, Australia exported 857,832 tonnes of canola in March, up 41 per cent from the 608,557t shipped in February, according to the latest export data from the Australian Bureau of Statistics (ABS).

The March figure is believed to be represent a record for monthly canola exports out of Australia to beat the 748,982t shipped in March 2021.

Belgium on 193,773t was the biggest market for March 2022 shipments, followed by Germany on 183,258t, France on 147,980t and The Netherlands on 123,241t, and a cargo to the United Kingdom rounded up shipments to Europe for the month.

Additional demand came from Asia and the Middle East, and surprise entrant the United States, which will appear in the April data with what is believed to be its first full cargo ever of Australian canola.

Australia’s canola exports for the January-March quarter total 2.1 million tonnes, close to quadruple the tonnage shipped in the October-December quarter.

The jump reflects new-crop availability, and the string of cargoes heading to offshore markets from ports stretching from Port Kembla in New South Wales to Geraldton in Western Australia.

According to Lachstock Consulting, shipping stems had indicated 600,000-700,000t of canola was to be exported in both April and May before volume reduce to around 400,000t in June.

Meantime, local markets were a bit of a mixed bag to finish the week, with liquidity in cereal markets remaining in depot sites and well bid, although we did see things run out of puff come Friday.?

Trade markets were softer by Friday close.?

New-crop canola bled a little lower, with east-coast grower track bids at the A$1030/t level and Western Australian canola free in store finishing the week bid at $1140/t.

Port congestion is not getting any better, with wait times increasing in most major ports, and the longest being in Albany, Brisbane, Esperance, Kwinana and Port Lincoln.

On the weather side, the weekend was dry for most winter-cropping areas, with the exception of some showers in northern NSW and southern Queensland, where they are least wanted.?

The eight-day forecast is looking promising for South Australia, southern WA, southern NSW and most of Victoria, but more showers for central and northern NSW and southern Queensland will keep adding pressure to very wet paddocks.

Watching this week market

The week starts off with the weekly Export Inspections report today in the afternoon and the NASS Crop Progress report overnight after the sessions close.?

NASS will also release their monthly Cold Storage report.?

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

Thursday will feature the weekly Export Sales report in the morning, as well as the expiration of May Feeder Cattle futures and options.

That's all.

To all of you, I wish you a good start to the week.

Author: Sandro F. Puglisi??

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