LAST WEEK MARKET COMMENT

Good morning Farmer Family and good start to the week...

Funds continue to exit Ag commodities.?

Per latest Friday ‘s Commitment of Traders report, indeed, indicated corn spec funds pared 36,649 contracts from their net long position in the week ending June 28.?

That took their net long down to 228,615 contracts by Tuesday but they probably wished it was even smaller by Friday!

Commercial corn hedgers lifted 223,224 contracts (14.5%) through the week for a 58k contract weaker net short.?

At 507,502 contracts as of 6/28, that was the commercial’s smallest net short since October.?

As for soybean, the weekly CFTC report showed the managed money spec funds reducing their net long by 29,915 contracts in the week ending June 28, putting them net long 124,498 on that date – their weakest since January.?

Commercial soybean traders closed 116,964 contracts (15.1%), while reducing their net short to the lowest level of 2022 at 191,916 contracts.?

In the products, CFTC reported spec traders were 62,457 contracts net long in soymeal – up 2,076 wk/wk.?

Managed money firms were selling soy oil through the week, with 10.3k closed longs and 6.9k new shorts for a net long of 33,605 contracts.?

That was the lowest spec net long in bean oil since July of 2020.?

As for wheat, CFTC showed the managed money spec funds removing another 2,915 contracts from their CBT net long in the week ending 6/28, taking it to 1,020 contracts.??

Commercial OI was down 42.8k contracts (22.4%) on the week.

Spec longs in KC trimmed 7,738 contracts from their position that week, bringing it down to 24,856 contracts as of Tuesday night.

Spec funds were 8,086 contracts net long in spring wheat futures and options.?

Chicago wheat was 54usc/bu lower over the reporting period, but given wheat is another 90usc/bu lower the spec would arguably be short now.?

As for row crop, contracts suffered flat price losses, so it’s safe to assume they will see another week of unwinding when we get the data next Friday.

Meantime, for the week ending July 01, July corn price gained 0.58% during the week, but Sep prices collapsed by 9.23% of which 1.4% on Friday.

Soybeans had a very ugly Friday, with Sep contract down 3.25% for the day, but gains from the first part of the week buffered the end week session sell off.

Thus, July soybean prices were up 0.93% for the week, while Sep contract had a net change of -0.7%.?

November contract was down 62.6 cents on the day, and had a net loss of 2.6% for the week.??

Product values were mixed, with July meal up 6.26% for the week, while soy oil fell by 5.84%.

Soy meal September contract's, was up 2.6% for the week but down 3.08% during the end week session.

Sep soy oil contract dropped 3.85% for the day and another 3.7% for the week.

Wheat prices led all the grains complex lower.?

Minneapolis HRS contracts were the weakest, down 12.14% in July contract and 11.4% in Sep contract.?

On Friday session lost 4.24%.

Chicago wheat contracts for the week were down 10.07% for July deadline and 9.7% in Sep.

During the end week session Sep contract was down 4.3%.

KC HRW dropped 8.26% in July deadline and 8.5% in Sep for the week.

Sep contract fell 4.02% for the session.?

As for basis, corn basis bids were mostly steady across the central U.S. on Friday but did pick up 2 cents at an Illinois river terminal while eroding 5 to 15 cents lower at two Midwestern ethanol plants.

Soybean basis bids were steady across most Midwestern locations, but did climb 10 cents higher at an Indiana processor.

As for wheat, grain elevators are buying wheat from farmers; however, slow international demand continues to keep basis stable week-over-week.?

Particularly, basis past week was flat for nearby delivery in the Gulf, except for SRW, which was up.?

In the Pacific Northwest (PNW) basis was flat in the near term both for HRW and HRS.?

Meantime, the funds were net sellers on Friday for 13,500 lots of corn, 17,500 lots of soybeans and 14,000 lots of wheat.

In energy markets, oil prices gained more than 2% last Friday.

A planned strike among Norwegian oil and gas workers on July 5 could cut the country's overall petroleum output by around 8%, or around 320,000 barrels of oil equivalent per day, unless a last-minute agreement is found over wage demands.

Libya's National Oil Corporation past Thursday declared force majeure at the Es Sider and Ras Lanuf ports, as well as the El Feel oilfield.?

Production has seen a sharp decline, with daily exports ranging between 365,000 and 409,000 barrels per day, a decrease of 865,000 bpd compared with production in "normal circumstances".

The U.S. oil rig count, an early indicator of future output, rose by one to 595 past week, its highest since March 2020

On Thursday, the OPEC+ group of producers, agreed to increase output each month by 648,000 barrels per day (bpd) in July and August, sticking to its output strategy after two days of meetings.?

However, the producer club avoided discussing policy from September onwards.

Output from the 10 members of Organization of the Petroleum Exporting Countries (OPEC) in June fell 100,000 barrels per day (bpd) to 28.52 million bpd, off their pledged increase of about 275,000 bpd

Traders will be watching out for official prices for August from Saudi Arabia for signs of how tight the market is.

Operators are expecting Saudi's flagship Arab Light crude official selling price could rise by about $2.40 a barrel from the previous month.

On this wake, U.S. President Joe Biden will make a three-stop trip to the Middle East in mid-July that includes a visit to Saudi Arabia, even if the President said last Thursday he would not directly press Saudi Arabia to increase oil output, but it is evident that he wil pushing energy policy into the spotlight.

In this context, Brent crude futures on Friday settled at $111.63 a barrel, rising $2.60, or 2.4%.?

West Texas Intermediate crude (WTI) settled at $108.43 a barrel, gaining $2.67, or 2.5%.

For the week, Brent lost 1.3%, while WTI rose 0.8%.?

For June, both benchmarks had ended the month lower for the first time since November.

On this morning oil prices edged up as concerns of tight supply, outweighed fears of a global recession.

Thus Brent crude futures for September rose 55 cents, or 0.5%, to $112.18 a barrel at 06:50 GMT, after falling over $1 in early trade.

U.S. West Texas Intermediate (WTI) crude futures for August delivery gained 44 cents, or 0.4%, to $108.87 a barrel, after also falling $1 earlier.

In freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, fell for a second straight week past Friday, dragged down by declines across all vessel segments.

The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels, was down 26 points, or nearly 1.2 %, at 2,214 points.?

The index posted a weekly fall of about 5%.

The index also registered an about 12.7% decline for the month of June, and 5% for the quarter.

The capesize index lost 53 points, or 2.2%, at 2,381 points, down about 0.6% for the week.

The capesize index fell 8.8% for the month of June, but still notched up a 38.3% quarterly gain.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, fell $445 to $19,745.

The panamax index was down eight points, or 0.32%, at 2,477 points, which took its second straight weekly fall to about 8.1%.

It registered its third consecutive monthly drop of 13.5% in June, bringing it down 20.9% for the quarter.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $72 to $22,297.

The supramax index fell 16 points to 2,290 points, registering a sixth straight weekly fall of 6.5%.

It was down 15.9% for the month of June.

In equity markets, the second half of the year started with gains in global stock indexes last Friday.

Particularly, MSCI's world stocks index, which on Thursday notched its biggest percentage decline for the first half of the year since its 1990 creation, rose 0.4%.

The pan-European STOXX 600 index lost 0.02% and MSCI's gauge of stocks across the globe gained 0.39%.

The S&P 500 which closed out its worst first-half since 1970 on Thursday, on Friday rose 39.95 points or 1.06% to 3,825.33.?

The Dow gained 321.83 points or 1.05% to 31,097.26, while the Nasdaq rose 99.11 points or 0.9% to 11,127.85.?

The Russell 2000 index of smaller companies rose 19.77 points, or 1.2%, to 1,727.76.

Kohl's dove 19.6% after the department store's potential sale fell apart amid the shaky retail environment as consumers lose confidence and cut spending.

Other retailers, restaurant chains and companies that rely on direct consumer spending helped lead the market rally.?

Amazon rose 3.2%, Home Depot gained 1.8% and Starbucks rose 3.8%.

Banks and health care stocks also notched gains.?

Wells Fargo rose 1.9% and Johnson & Johnson closed 1.1% higher.

Technology stocks largely bounced back from their broad morning slump, though many still closed lower.?

Chipmaker Micron slid 3% after giving investors a disappointing profit forecast amid concerns about falling demand.?

That weighed heavily on other chipmakers.?

Nvidia fell 4.2% and Qualcomm lost 3.3%.

Thus, the rebound was not enough to erase their losses for the week.

Bond yields fell significantly.?

The yield on the 10-year Treasury, which helps set mortgage rates, fell to 2.89% from 2.97% Thursday.?

The yield on the 2-year Treasury slipped to 2.83% from 2.92%.

Economic data over the last few weeks has shown that inflation remains hot and the economy is slowing.?

The latest economic update on Friday for the manufacturing sector shows a continued slowdown in growth in June that was sharper than economists expected.?

On Thursday, a report showed that a measure of inflation that is closely tracked by the Fed rose 6.3% in May from a year earlier, unchanged from its level in April.

Annual inflation in the eurozone’s 19 countries hit 8.6% in June, surging past the 8.1% recorded in May, according to the latest numbers published Friday by the European Union statistics agency, Eurostat.?

Inflation is at its highest level since recordkeeping for the euro began in 1997.

Past week, a worrisome report showed that consumer confidence slipped to its lowest level in 16 months.?

The US government has also reported that the U.S. economy shrank at an annual rate of 1.6% in the first quarter and weak consumer spending was a key part of that contraction.

Meantime, shares were mixed in Asia on Monday.

Benchmarks rose in Tokyo, Shanghai and Sydney but fell in Hong Kong and Seoul.?

Shares in Japanese telecoms carrier KDDI Corp. fell as much as 4% Monday as the company grappled with outages that began early Saturday, affecting services to nearly 40 million people.

As of mid-afternoon on Monday, KDDI's shares were down 1.8%.

Japan is enduring one of its worst heat waves on record.?

Officials are urging people to keep their air-conditioners running to avoid heat stroke, though doing so could lead to potential power shortages.?

Japan’s aging population is especially vulnerable to heat stroke and exhaustion, and officials have attributed several deaths to the heat

In this context, Tokyo's Nikkei 225 rose 0.8% to 26,153.81, while the Shanghai Composite index added 0.3% to 3,396.70.?

Australia's S&P/ASX 200 climbed 1.1% to 6,609.20.

Hong Kong's Hang Seng index lost 0.3% to 21,791.36 and the Kospi in Seoul declined 0.4% to 2,207.42.?

India's Sensex edged 0.1% higher, while shares fell in Bangkok and Taiwan.

In currency trading, the dollar was up on Friday, having just scored its best quarter since 2016.?

Pessimism about the global economic outlook boosted demand for the safe-haven U.S. dollar Friday while the Australian dollar, a proxy for global growth, fell to a two-year low.?

The dollar index gained 0.36% against a basket of currencies to 105.12.?

It is holding just below a 20-year high of 105.79 reached on June 15.?

The Australian dollar fell as low as 67.64 cents, the weakest since June 2020.

On this morning, the U.S. dollar rose to 135.37 Japanese yen from 135.27 yen.?

The euro climbed to $1.0435 from $1.0429.

From South America, an Argentine trucker strike ended on Thursday after some unions upset with diesel shortages and prices reached a deal to lift the one-week protest around the major port of Rosario.?

This is expected to help the flow of grains for export.?

Some protests, however, could continue since some smaller trucker groups were not involved in the deal.?

Autoconvocados Unidos, one of the trucker unions participating in the strike called the lifting of the strike an act of good will.

Meantime, Argentine exports of grain, oilseeds and their derivatives totaled $3.82 billion in June, the country's CIARA-CEC chamber of oilseed crushers and export companies said on Friday, a record for the month since it started polling such figures.

CIARA-CEC, said $19.15 billion in accumulated agro-export revenue was earned in the first half of the year.

The latest monthly figure, however, represented a drop from May, when exports reached $4.23 billion, the chamber added.

Meantime, Argentina's wheat crop for the 2022/23 season is the country's most delayed in a decade, as a period of drought and coming frosts force farmers to put planting off for better conditions, the Rosario Grains Exchange reported Thursday.

The announcement came a day after the Buenos Aires Cereal Exchange said it could again cut its estimate of the area that will be planted with wheat in the 2022/23 season, currently at 6.3 million hectares, if in the short-term rains do not bring relief to agricultural areas suffering from dry conditions.

Brazilian fertilizer imports in June totaled 4.15 million tonnes, up from 3.5 million tonnes in the same month of 2021, according to government trade data on Friday.

The figure indicates that Brazil, a net fertilizer importer, should have enough supplies to start planting summer crops like soybeans and first corn starting in September.

Meantime, Stone X is revising its corn production estimate for Brazil upwards to 119.3 million tonnes from 116.8 previously estimated.

In Europe, we saw a very sharp drop in grain prices on Friday, in spite fundamental are unfavoreble.

Harvesting sites are accelerating in France, thanks to milder weather, even if in several regions thunderstorms continue to rage.?

There is a gradient in terms of yields in France, a gradient ranging from disappointing yields in the southern regions to more satisfactory yields going up in the north.

FranceAgriMer posted a winter wheat crop rating of 64% as good to excellent, unchanged from last week.?

In winter barley, the crop rating stands at 62% against 63% last week.?

Drop of one point in crop rating for spring barley and corn, to 52% and 83% respectively.

With a big surprise, durum condition declined by 4 point to 56% as good to excellent, vs 60% a week's earlier.

Meantime, the European Commission is significantly revising its estimate of wheat production for the EU to 125.0 million tonnes from 130.4 million posted last month.?

However, it leaves its third country export estimate unchanged at 38 million tonnes, resulting in a downward revision of the 2022/2023 end-of-campaign stock to 13.2 million against 17.15 last month.?

Barley production is left almost unchanged at 52.2 million tonnes and that of corn at 71.7 million tonnes against 72.5 estimated last month.

On the other hand, two more case of African swine fever (ASF) have been confirmed in farm pigs in Germany, Germany’s federal agriculture ministry said.

One was in the western state of Lower Saxony which was previously free of the disease and one in the eastern state of Brandenburg where the disease has been found before.

Some 280 pigs and 1,500 piglets have been be slaughtered on Sunday.

From North Africa, Egypt’s strategic wheat reserves are sufficient for 6.5 months, Supply Minister Aly Moselhy said in an event in Cairo, local TV channel CBC showed him on Sunday.

The country's strategic reserves for sugar are sufficient for 7.7 months, while those of vegetable oils are enough for 6.1 months, Moselhy added.

Egypt spent 24 billion EGP ($1.28 billion) to secure strategic reserves of staples between April 15 and now, the state news agency reported on Sunday citing Supply Minister Aly Moselhy.

($1 = 18.7600 Egyptian pounds).

From Levant, Turkish customs authorities have detained a Russian cargo ship carrying grain which Ukraine says is stolen, Ukraine's ambassador to Turkey said on Sunday.

"The ship is currently standing at the entrance to the port, it has been detained by the customs authorities of Turkey," ambassador Vasyl Bodnar said on Ukrainian national television.

Bodnar said that the ship's fate would be decided by a meeting of investigators on Monday.

From the Black Sea basin, Russia has reduced its grain exports taxes sharply after changing the formula it uses for calculating them to support shipments in the July-June marketing season, the agriculture ministry said on Friday.

The new base price for calculating the wheat export tax is set at 15,000 roubles ($283.68 at the current rate) per tonne, the ministry said.

It was previously in U.S. dollars at $200 a tonne.?

The Agriculture Ministry used the base price as well as price indicators reported by traders to determine the level of tax on a weekly basis.

The wheat export tax itself is set at 4,600 roubles ($85.8 at the current rate) per tonne for July 6-12 against $146.1 per tonne for June 29-July 5, the ministry said in a separate note.

Russia also decided to change the base price for calculating barley and maize export taxes: 13,875 roubles a tonne will replace the current $185 a tonne, the ministry said.

This led to lower taxes for barley (3,307 roubles or $62.54), and maize ( 2,168.8 roubles or $41.02) from July 6 as well.

For sunflower oil, the base price for tax calculation will be 82,500 roubles per tonne rather than the current $1,000 a tonne.

Thus, the sunflower oil export tax is set at 8,408.7 roubles ($163.3 at the current rate) per tonne for July, the ministry said in a note.

The tax for July was previously set in U.S. dollars, at $560.1 per tonne.

The new July tax is based on an indicative price of $1,800.2 per tonne, the agriculture ministry said.

The rouble strengthened to seven-year highs past week, supported by capital controls, but is expected to depreciate in the longer term.

Indeed, it lost almost 6% on Friday in Moscow trade, closing at 51.50 to the dollar on the interbank market, stronger than the Moscow close of 54.50.

From the Middle East, Saudi Arabia's state grains buyer (SAGO) will reimburse local farmers for any wheat price increase if it had awarded international tenders at a price exceeding the approved one, SAGO said on its website on Sunday.

The decision will cover those local farmers who supplied wheat during this current agricultural season.

The decision came after SAGO's board of directors agreed to review the purchase price of wheat from local farmers for the current procurement season that ends in October, SAGO said.

Recently, the grains buyer bought 495,000 tonnes of wheat in an international purchasing tender for shipment from November 2022 to January 2023, with the average price at $441.93 per tonne.

SAGO's board of directors had previously approved two increases in the local wheat procurement price during the current agricultural season, in line with the rise in international prices, the organisation added.

In March, SAGO approved an increase in the local wheat procurement price to 1,700 riyals ($453.04) per tonne for the current season. ($1=3.7524 riyals).

From Australia, local markets drifted lower to round the week out.?

Wheat markets were off $20-30/t by the end of the week on new and old crop in a fickle market where liquidity is thin.?

We saw moments of buying interest in Western Australia over the week and bits and pieces on the East Coast.?

Barley and canola markets were sideways with barley finishing a touch lower for the week and canola rebounded $10/t on Friday on new crop but still remains volatile internationally.

There was no improvement to grain port congestion this week with wait times at Kwinana and Newcastle still out at 31 and 29 days respectively.?

Albany improved slightly with wait time down to 17 days and Port Lincoln increased from 7 to 14 days.?

There are currently 34 vessels anchored at ports around Australia.

Heavy rainfall over the weekend in parts of Queensland and New South Wales will certainly bring the late winter plant to an end.?

Showers are forecast to continue until Thursday in parts of central and northern NSW.

On international trade scene, South Korea's Major Feedmill Group (MFG) purchased an estimated 68,000 tonnes of animal feed corn to be supplied from optional origins in a private deal on Friday without an international tender being issued.

The corn was purchased at an estimated $337.25 a tonne c&f plus a surcharge of $1.75 a tonne for additional port unloading.?

Seller was said to be trading house Cofco.

The corn is for arrival in South Korea around Oct. 17.?

If South African corn is supplied, the consignment can be reduced to 52,000 tonnes.

The Korea Feed Association (KFA) Busan section on Friday purchased about 58,000 tonnes of animal feed corn in an international tender.

It was purchased in one consignment at an estimated $343.49 a tonne including a surcharge for additional port unloading.

Trading house Olam is expected to be the seller with corn arrival in South Korea around Oct. 15.

If sourced from South Africa, the seller can supply 52,000 tonnes.

Shipment is sought for Sept. 11-30 if the corn is sourced from the U.S. Pacific Northwest coast; for Aug. 22 - Sept. 10 if sourced from the U.S. Gulf or Black Sea region/east Europe; for Aug. 17 - Sept 5 if sought from South America; and for Aug. 27 - Sept. 15 if sourced from South Africa.

Watching this week's market, the week gets off to a delayed start, as the trade take Monday off in the USA for July 4th.?

Thus, US export inspections data will be out on Tuesday afternoon, with the Crop Progress report released that overnight after the sessions close.?

Moving to Thursday, EIA will update their weekly production and stock data for ethanol.?

Monthly trade data form Census will also be published.?

Due to the holiday, Export Sales will be pushed back to Friday morning.

That's all, thank you.

To all of you, I wish you a good day and ...

Good Harvest 2022!

?Author: Sandro F. Puglisi??

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