LAST WEEK MARKET COMMENT

Good morning Farmer Family ...

US farm markets closed mixed but mostly higher on Friday, with most contracts posting weekly gains.

We received a flood of data past week, especially starting Thursday morning.

Came the January WASDE report, the annual USDA Crop Production, Quarterly Grain Stocks, Winter Wheat Seedings, and Cotton Ginnings reports, December CPI and core CPI in the USA, the weekly jobless claims, and still many others data.

Core CPI inflation is still 5.7%, but broad CPI slowed to 6.5%.

That encouraged the idea, that next Fed rate hike would be only 25 basis points.

The US dollar index dropped to the lowest reading since June.

With a weaker dollar, ag commodities were looking for evidence that the weaker dollar was actually stimulating US export sales.

However operators found disappointed figures in Thursday's weekly export sales report from USDA.

Thus, weekly gains were mostly from tighter USDA ending stocks projections released on Thursday.?

On Friday, indeed, after incurring in modest overnight losses, soybean prices climbed for a third straight day.

Corn scaled to a 1-1/2 week top.

And that only thanks bullish USDA crop data the prior day and concerns about poor South American weather.

Among other info came into the end week session, indeed, ahead of the next monthly report from the National Oilseed Processors Association (NOPA), out next Tuesday, analysts expect the group to show a December crush totaling 182.907 million bushels.

That would be 2.1% above November’s total but the smallest December crush in three years, if realized.

Soyoil stocks are estimated at 1.725 billion pounds through December 31, which would be a decline of 15.1% from year-ago volumes.

Wheat prices, meantime, were mixed as traders weighed the USDA's larger-than-expected winter wheat plantings estimate in Thursday's reports against tighter supplies and poor crop conditions in the U.S. Plains farm belt.

In this context, corn prices improved 0.6% on Friday.

Soybeans were up 0.61%.

Meal lost 1.04%.

Bean oil fell 0.3%.

Winter wheat gains were variable with Kansas City HRW contracts saw the most upside, as the March contract rose 1.05% for the session.

Chicago SRW contracts were also firm, picking up 0.13%.

In contrast, Minneapolis spring wheat prices faded lower, although they finally were still unchanged by the close.

For the week, corn prices were up 3.21%.

Soybeans managed to pull out a 2.36% gain, despite product weakness.

Soy Meal, indeed, was down 0.27% since prior Friday, and bean oil 0.17% lower.

The wheat complex pulled out some gains, with Kansas City the leader again for the week, as was up by 1.41%.

Minneapolis spring wheat was up 1.16% since prior Friday.

Chicago SRW was dragged higher by the other wheats, closing up 0.04%.

In this context, corn basis bids faded 2 to 10 cents lower at three Midwestern locations while holding steady elsewhere across the central U.S..

Soybean basis bids were steady to soft after dropping 2 to 7 cents lower across three Midwestern locations.

As for wheat, basis levels for U.S. wheat softened almost across the board as many traders look to position themselves for increased wheat exports following the typical seasonal response to increased overseas corn and soybean demand from October to December.

Gulf HRS basis decreased as farmer selling improved.

Gulf HRW held steady, supported by concern about Southern Plains drought stress, even as planted acres increased.

PNW HRS also remained flat, with farmers in the Northern Tier still reluctant to sell.

PNW HRW softened slightly; however, limited exportable supplies should continue supporting basis levels.

PNW soft white wheat and Gulf SRW decreased in response to competition with other origins.

Meantime, commodity?funds were net buyers for 2,000 lots of corn, 4,000 lots of soybeans and 1,000 lots of wheat.?

After the sessions cloese, CFTC data as of Jan 10th had a strong bear move from the funds for corn.

Through the week, indeed, managed money funds closed 31.7k longs and added 15k shorts for a 46.8k contract weaker net long of 149,605 contracts.

The commercials moved in a bullish direction through the week, with 29.5k new long hedges and 16.8k fewer short hedges as of 1/10’s settle.

That left the group 372,866 contracts net short.

As for soybean, report data showed managed money firms trimmed their net long by 11.3k contracts to 131,704 as of 1/10.

That came via 9k closed longs and 2.2k new spec shorts added through the week.

Commercial soybean hedgers added positions, with 15.9k new longs in play against 8.5k new shorts.

That left the commercial net position at 166,462 contracts net short as of 1/10.

For the products, managed money was 834 contracts more net long in meal and 9k contracts less net long in soy oil.

As for wheat, CFTC reported Chicago wheat specs at 63,134 contracts net short as of 1/10.

That was a 10,419 contract stronger net short wk/wk given net new selling.

In KC, managed money firms flipped net short for the first time since August of 2020.

Their combined long liquidation and net new selling hadthe group at 8,023 contracts net short as of 1/10.

The funds were 127 contracts less net short in spring wheat, now at 1,574.

In energy markets, oil prices settled more than a dollar a barrel higher on Friday, notching their biggest weekly gains since October.

Brent crude futures, indeed, settled at $85.28 a barrel, up by $1.25, or 1.5%.

West Texas Intermediate (WTI) crude futures rose for the seventh-straight session to settle at $79.86 a barrel, up by $1.47, or 1.9%.

Brent gained 8.6% for the week, while WTI rose by 8.4%, recouping most of the previous week's losses.

The dollar index had hit it lowest level since June 6 earlier in the session, following data on Thursday that showed cooling U.S. inflation, firming up expectations the Federal Reserve will slow the pace of its interest rate hikes.

It posted the biggest weekly fall in the latest 2-1/2 years as decreased from last week's 104.5 to 102.46.

A weaker greenback tends to boost demand for oil, making it cheaper for buyers holding other currencies.

Recent Chinese crude purchases and a pick-up in road traffic in the country had also fuelled hopes of a demand recovery.

Thus, next thing to watch is if this translates also into higher Chinese crude imports and if energy agencies (IEA, OPEC) will revise upwards their first quarter demand estimates.

The OPEC+ will meet in February to assess market conditions, and there is some concern that the group could cut oil output again to lift prices after recent declines.

In ocean freight markets, the Baltic Exchange’s main sea freight index on Friday fell to its lowest since June 2020 as demand across all vessel segments declined.

Cargo activity, indeed, is expected slow down dramatically during the Chinese New Year holidays.

The upcoming rainy season in Brazil is adding to market uncertainty.

The overall index, indeed, was down 30 points, or about 3.1%, at 946.

The index was down about 16.3% for the week, its third consecutive weekly fall.

Notably, the capesize index lost 50 points, or about 3.7%, at 1,299. It was down about 14.1% for the week.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $418 at $10,770.

The panamax index dropped 15 points, or about 1.4%, to 1,069.

The index posted its worst week since late-August 2022, down about 17.7%.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, fell by $139 to $9,618.

Among smaller vessels, the supramax index fell 29 points to 686.

In equity markets, the S&P 500 and Nasdaq finished at their highest levels in a month on Friday.

All three major indexes also registered strong gains for the week.

Notably, the Dow Jones Industrial Average rose 112.64 points, or 0.33%, to 34,302.61, the S&P 500 gained 15.92 points, or 0.40%, to 3,999.09 and the Nasdaq Composite added 78.05 points, or 0.71%, to 11,079.16.

The S&P 500 closed at its highest level since Dec. 13 and is up 4.2% so far in 2023 , while the Nasdaq closed at its highest level since Dec. 14.

For the week, the S&P 500 gained 2.7% and the Dow rose 2%.

The Nasdaq increased 4.8% in its biggest weekly percentage gain since Nov. 11.

U.S consumer prices fell for the first time in more than 2-1/2 years in December.

Gasoline prices tumbled 9.4% after dropping 2.0% in November.

Prices for used cars and trucks fell 2.5%, recording their sixth straight monthly decline.

New motor vehicles slipped 0.1%, falling for the first time since January 2021.

That has offered hope that inflation was now on a sustained downward trend.

Americans also got more relief at the supermarket last month, with the report from the Labor Department on Thursday showing food prices posting their smallest monthly increase since March 2021.

Food prices, indeed, climbed 0.3%, after rising 0.5% in the prior month.

The cost of food consumed at home increased 0.2%, also the least since March 2021.

Fruit and vegetable prices fell as did those for dairy products, but meat, poultry and fish cost more.

Egg prices surged 11.1% because of avian flu.

However, the labor market remains tight.

The unemployment rate back at a five-decade low of 3.5% in December, and 1.7 jobs for every unemployed person in November.

A separate report from the Labor Department showed initial claims for state unemployment benefits fell 1,000 to a seasonally adjusted 205,000 for the week ended Jan. 7.

Economists had forecast 215,000 claims for the latest week.

Claims have remained low despite high-profile layoffs in the technology industry as well as job cuts in interest rate-sensitive sectors like finance and housing.

Economists say companies are for now reluctant to send workers home after difficulties finding labor during the pandemic.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, dropped 63,000 to 1.634 million in the week ending Dec. 31, the claims data showed.

The government had reported in the prior week the economy had created 223,000 jobs in December, more than double the 100,000 that the Fed wants to see to be confident inflation is cooling.

Rents remained very high and utilities were more expensive.

The cost of natural gas increased 3.0%, while electricity rose 1.0%.

In this context, the Consumer Price Index dipped 0.1% last month, the first decline since May 2020.

It was third straight month that the CPI came in below expectations and raised buying power for consumers as well as hopes the economy could avoid a dreaded recession this year.

Excluding the volatile food and energy components, the CPI climbed 0.3% last month after rising 0.2% in November.

In the 12 months through December, the so-called core CPI increased 5.7%.

In the 12 months through December, the CPI increased 6.5%.

That was the smallest rise since October 2021 and followed a 7.1% advance in November.

Cooling inflation could allow the Federal Reserve to further scale back the pace of its interest rate increases next month.

However, inflation remains well above the Fed's 2% target.

Thus, even if the Fed delivers a downshift in pace, it will continue tightening past its next meeting.

Money market participants now see a 91.6% chance the Fed will hike the benchmark rate by 25 basis points in February.

Focusing on Friday session, stocks on Wall Street mainly rose, as shares of JPMorgan Chase and other banks rising following their quarterly results, which kicked off the earnings season.

Strength in technology stocks, also supported gains in the overall market.

Giving some support to the market, the University of Michigan's survey showed an improvement in U.S. consumer sentiment, with the one-year inflation outlook falling in January to the lowest level since the spring of 2021.

Notably, the University of Michigan’s U.S. Jan consumer sentiment index rose +4.9 to a 9-month high of 64.6, stronger than expectations of 60.7.

The University of Michigan’s Jan 1-year inflation expectations measure fell to a 21-month low of 4.0% from 4.4% in Dec, weaker than expectations of 4.3%.?

However, the longer-term 5-10-year inflation expectations measure unexpectedly rose +0.1 to 3.0%, stronger than expectations of no change at 2.9%.

Also, the U.S. Dec import price index ex-petroleum unexpectedly rose +0.8% m/m, the most in 9 months and above expectations of a -0.3% m/m decline, which was an unfavorable inflation indicator.

In this context, the yield on the 10-year Treasury rose to 3.50% from 3.45% late Thursday.

That yield helps set rates for mortgages and other loans that are crucial for wide swaths of the economy.

The two-year yield, which tends to move more on expectations for the Fed, rose to 4.21% from 4.15%.

In currency trading, the EUR/USD fell by -0.12% at $1.0833 on Friday and posted an 8-1/2 month high.??

Lower European government bond yields Friday weakened the euro’s interest rate differentials and weighed on EUR/USD.?

However, losses in the euro were limited by hawkish ECB comments.

Also, Friday’s economic news supported EUR/USD after Eurozone Nov industrial production rose +1.0% m/m, stronger than expectations of +0.5% m/m.

The USD/JPY, meantime, fell by -1.04% at $127.88, adding to Thursday’s rally and posted a 7-1/2 month high against the dollar.?

Speculation that the BOJ will end its ultra-easy monetary policy has sparked short-covering in the yen.?

The yen also garnered support Friday from soaring Japanese government bond yields after the 10-year JGB bond yield rose to an 8-1/4 year high at 0.575%, well above the upper limit of the BOJ’s 0.00%-0.50% targeted 10-year yield range.

The yen rallied Friday even after the BOJ announced two unscheduled bond purchases.

In this context, the dollar index on Friday fell -0.03% at 101,965 and posted a 7-1/4 month low.

Strength in the Japanese yen and Chinese yuan Friday undercut the dollar.?

The yuan climbed to a 6-month high against the dollar.?

Also, the strength in stocks Friday reduced the liquidity demand for the dollar.?

However, higher T-note yields Friday limited losses in the dollar.

As reminder, the U.S. stock and commodity markets are closed today for the Martin Luther King Jr. Day holiday.

Going back to analysing the other agricultural markets ...

In Canada, the Grain Statistics weekly report, had producers' deliveries of common wheat at 526,7k mt for week 23 of this shipping season.

That was up from 506,7 posted prior week.

Deliveries of durum wheat, were at 127.,k mt, up from 79,4k mt showed in prior week.

Meantime, Canada exported 477,3k mt of common wheat in week 23.

That was down from 552,3k mt of a week earlier.

Durum wheat exports, meantime, soared at 174,0k mt.

That was sharply higher from 97,4k mt the prior week.

Total Commercial Stocks of common wheat stood at 2.818,2k mt.

That was up from 2.686,6k mt in week 22.

Durum total commercial stocks were also higher from 652,7k mt a week earlier, at 717,8k mt.

Cumulative exports for common wheat were at 8.585,3k mt.

That is compared 5.179k mt a year ago.

Durum cumulative exports reached 2.116,1k mt vs 1.201,1 a year ago.

A combination of significantly higher crop year supplies, high quality and Canada's weaker dollar against the U.S. dollar has proved supportive for wheat exports.

At the same time, hopes are for improvements in rail service over the balance of the crop year.

When Agriculture and Agri-Food Canada released its first estimates for 2022-23 in January of 2022, wheat exports (excluding durum) were pegged at 17 million metric tons (mmt), although this was well in advance of spring planting.

Since this estimate was released, the wheat export forecast has been revised higher eight times, including the past four months (Sept-Dec), with exports estimated at 18.9 mmt in the December Outlook for Principal Field Crops.

The cumulative exports of 8.5853 mmt of common wheat founded in the week 23, is second only to the 2020-21 volume of 8.9 mmt shipped during the first 23 weeks, which led to record exports of 20.6 mmt.

Note that in 2020-21, all-wheat exports reached a record 26.3 mmt, a volume that includes not only shipments through licensed terminals, but also unlicensed exports and the export of products such as flour, in addition to durum exports.

Week 23 exports are up 65.8% from the same period in 2021-22, and 19.8% higher than the five-year average.

During the past five years, an average of 40.4% of total crop year exports have been achieved during the first 23 weeks.

Projecting this pace forward, crop year exports could reach 21.2 mmt, should supplies make this possible.

It is interesting to note that this projected volume, added to AAFC's durum export forecast of 4.8 mmt would lead to all-wheat exports of 26 mmt, just shy of the 2020-21 record.

Week 23 data showed commercial stocks of 2.8122 mmt of wheat (excluding durum).

That was up 11.9% from the same week last year and 3.2% higher than the five-year average.

That was also the highest volume reported in four years.

Of this volume reported, 50% is found in-store terminal positions, the highest percentage reported in five years and compares to the five-year average of 44.2%.

Thus, shippers are well positioned to maintain the current pace of exports.

In this context, cash bids for Canadian durum wheat trended lower week over week.

Indeed, looking at the average regional price of C$494.23/mt as of Jan 13, that was C$1.6/mt weaker from the prior week.

Going inside the numbers of past week, as at January 9, 2023, Canadian wheat prices for FOB delivery West Coast were (Cdn$/mt):

- for the N1 class CWRS 13.5% - $491.59 per tonne;

- for the N2 class CWRS 13.0% - $485.44/t;

- for the N3 CWRS - $477.84/t.

- for the N1 CWAD 13% (durum wheat first class) average street price was at C$503.39.

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

Per latest data from European Commission, as at Jan 11, 2023, Durum wheat - FOB CA St Lawrence (CWAD) for April 2023 delivery, was offerd at C$610.7/t ($455/t unch), down C$6.69/t from prior week.

As at January 13, 2022, for the N1 CWAD 13% (durum wheat first class), average street price in REGIONAL ZONES was at C$494.23 per tonne, down C$1.6 from prior week.

(1USD=Cnd$1.3395 down from 1.3444 a week earlier).

From South America, in Brazil, CONAB on Thursday trimmed its forecast of the 2022/23 soybean crop, but still pegged it at a record 152.7 million tonnes.

According to Abiove, Brazil's soybean crop is expected to reach 152.6 million tonnes in 2023, lowering its previous estimate of 153.5 million tonnes but still forecasting a record output.

That, indeed, would represent a 24 million-tonne rise from the previous year.

CONAB corn production is pegged at 125Mt, pretty much the same as USDA.

Meantime, Brazil’s ANEC (grain exporters’ association) expects 2023 soybean exports to exceed 90Mt, with maize shipments expected to exceed last year’s 43.2Mt, including potential exports to China of about 4Mt.

Abiove is seen a record of shipping in oilseed this year 92 million tonnes , a 16.6% jump over the previous season.

The industry group - which represents global firms like Cargill, Bunge, Archer-Daniels-Midland Co, Louis Dreyfus Co and Cofco - also said that soybean crushing in the country should total a record 52.5 million tonnes this season, up from 50.4 million in 2022.

Meantime, Anec confirmed “atypical” sales of Brazilian soybeans to Argentina after rumors about unusual cargos being booked at this time of the year.

AgRural, estimates Brazilian soy sales of 200,000 to 300,000 tonnes to Argentina for delivery in February and March.

The expectation that a drought will reduce Argentina’s domestic soy production in 2023, together with a possible renewal of Argentina’s so-called soy dollar program, could mean that it will import “much larger” volumes from Brazil this year.

In Argentina, the Rosario grain exchange on Wednesday sharply cut its forecast for the 2022/23 soybean harvest, to 37 million tonnes from a previous forecast of 49 million.

The exchange also slashed its 2022/23 corn harvest estimate to around 45 million tonnes, from 55 million previously.

According to the Buenos Aires Grain Exchange, 2022-23 soybean production outlook could be slashed by as much as 25pc to 35.5Mt vs USDA on 45.5Mt, which would represent a worst-case scenario, reflecting the potential impact of hot dry weather.

Maize output is seen as low as 37.8Mt against USDA’s 52Mt.

The exchange said some 500,000 hectares were left out of the current soybean campaign.

Until Wednesday, Argentine farmers had planted 89.1% of the 16.2 million hectares planned for cultivation, the grains weekly report showed.

The exchange also cut its estimate for the 2022/23 corn planting area to 7.1 million hectares, down from the 7.3 million hectares previously expected.

So far, producers have planted 83% of the area planned for corn, the exchange said.

On this wake, USDA forecast for Argentina a soybean crop of 45.5 million tonnes, 8.1% lower than its December outlook, and a corn crop of 52.0 million tonnes, down 5.5% from the December estimate.

Meantime, harvest of Argentine wheat for the 2022/23 campaign ended last week, with a final production of 12.4 million tonnes, well below the 22.4 million tonnes collected in the previous campaign, also due to the severe lack of water that affected the plants during the campaign.

In this context, as at Jan 12, 2022 - Argentina Wheat Grade 2 export price, (Up River) was at $365, down $8/t from prior week.

Argentina corn feed was up $4/t for the week, closing at $308.

Brazilian corn feed (Paranagua) was valued at $305, was up $7/t from prior week.

Argentina feed barley, was unchanged for the week to $350.

Argentina soybean was up $22 at $623.

Brazilian soybean was up $19, finishing the week at $604.

In Europe, on Euronext, wheat once again gave up more ground on Friday, mainly in a context of continued rise in the euro and competitiveness of Black Sea sources.

March wheat on Paris-based Euronext, indeed, settled down 0.86% at 288.75 euros ($312.80) a tonne, posting a €11.25/t weekly decline.

Russia and Australia have a huge amount of wheat.

Russian wheat is very competitive in c&f terms.

Russian and Ukraine cheap sales offers likely will intensify this week, as more Russian dealers start to return on the market after the Orthodox New Year holiday.

In Germany, standard 12% protein wheat for February delivery in Hamburg was offered for sale at a premium of about 12 euros over Euronext March futures, with buyers at around 10 euros over.

However, the bases are strengthening on wheat delivered to Rouen thanks to an export activity which remains sustained in the Maghreb.

This week the temperatures will drop again with probable new frosts.

There would not be particular fears for crops, though a sudden drop in temperatures could hit well-advanced crops sown.

Nearly all French winter wheat and barley were in good condition ahead of winter, according to farm office FranceAgriMer.

Also in Germany the warm conditions have left fields with no protective snow cover, raising worries that crops may suffer from a cold snap after appearing to come through last month's wintry spell unscathed.

However crops are looking good.

In Poland, there were similar concerns, as crops are fully exposed to frosts, but are very good so far.

Regular rain has helped early growth by replenishing soil moisture after severe drought last year.

Meantime, Consultancy Strategie Grains increased its forecast of European Union soft wheat production in 2023, confirming its expectation of a bigger crop than last year.

The French firm now sees EU soft wheat output at 129.3 million tonnes this year, compared with its initial projection of 128.7 million in December, it said on Thursday.

That would be 3% above 2022’s production that it estimated at 125.6 million tonnes.

“Winter wheat is currently in good condition across the EU-27, with the growing area slightly above the five-year average,” it said in a monthly cereal report.

The anticipated rise in production would contribute to a sharp rise in wheat supplies next season, with demand expected to be curbed by export competition and economic pressures affecting the livestock sector, Strategie Grains said.

“The soft wheat balance sheet is set to be heavy,” Strategie Grains said of 2023/24.

For barley, the consultancy trimmed its forecast for this year’s harvest to 52.3 million tonnes from 52.5 million projected last month, but that would still be 2% above 2022 production.

For maize, it increased its 2023 production outlook to 63.8 million tonnes from 63.7 million, confirming its expectation of a sharp rebound from last year’s drought-hit harvest that it estimated at a 15-year low of 50.6 million.

Meantime, March's European Durum Wheat, on Friday settled at €480/t, up €2.5/t for the week.

March corn price, was down €10.5/t for the week, closing at 280 euros per ton.

Rapeseed closed at €566.75/t, down €11/t for the week.

UK wheat feed, Mar 23 contract, closed at ￡228.65, down ￡6.25/t week on week.

In this context, as of Jan 12, 2022, FOB prices in US dollar for French wheat with 11.5% protein and Feb delivery, were at $330/mt, up $4 from prior week.

German wheat, Deposilo Hamburg, was valued at $337.99/t, up $4.12/t week on week.

Baltic wheat, delivery first Vilnius, was at $328.24/t, up $9.24/t from prior week.

Spanish durum wheat Sevilla (Depo Silo), was not available past week, the prior week was valued at $476.96/t.

French durum wheat - delivered La Pallice Spot - July 2022 basis, this week was valued at $498.32/mt, up $8.7 from prior week.

Italian durum wheat Bologna (Delivered to first customer), was valued at $499.94, the prior week was N.Q..

Corn, delivered Bordeaux Spot - July 2022 basis, was at $306.57 per tonne, up $0.26/t from past week.

Corn FOB Rhin Spot - July 2022 basis, was up $0.22 to $304.40/t.

Feed barley delivered Rouen was at 289.24$/t, down $0.11 per tonne.

Malting barley FOB Creil Spot - July 2022 basis was at $335.82 per tonne, up $1.95/t from prior week.

Rapessed FOB Moselle - 2022 harvest was at 616.4$/ton, down $1.52 compared to prior week.

Standard sunseed FOB Bordeaux - 2022 harvest was up 13.69$ from prior week at $633.73 per tonne.

(Eur/USD = 1.0833 vs last week 1.0644).

From North Africa, Egypt relied more heavily on Russian wheat imports last year despite a sharp drop in its imports of the grain and moves to diversify the sources of its wheat purchases.

Though Egypt's wheat imports from Russia fell by 6.7% in 2022, Russia's share, including purchases by Egypt's state grains authority and the private sector, rose to 57% from 50% in 2021.

That partly made up for a fall in shipments from Ukraine, which accounted for 8.9% of Egypt's wheat imports, down from 28% in 2021.

Egypt's total wheat imports fell 18.7% to around 9.5 million tonnes in 2022.

Notably, shipments from Romania were down 35% to 1.3 million tonnes and Ukraine 74% to around 845,587 tonnes.

In contrast, there was an uptick in shipments from France, which quadrupled to 1.26 million tonnes.

Economic fallout from the war in Ucraine triggered a foreign currency crunch in Egypt, leading to a slowdown in overall imports, a backlog of goods in ports, and a $3 billion financial support package from the IMF.

However, the private sector was able to diversify some of its purchases, with rare shipments from the United States, India, and Brazil making their way to ports.

From Ukraine, Ukrainian farmers harvested almost 51 million tonnes of grain from 94% of the expected area as of Jan. 12, the agriculture ministry said.

The ministry's statement said that farmers had harvested 10.9 million hectares of crops, with the grain yield averaging 4.7 tonnes per hectare.

It said farmers had completed the 2022 wheat and barley harvests, threshing 20.2 million and 5.8 million tonnes respectively.

The total volume also included 23.5 million tonnes of corn, harvested from 85% of the expected area, with a yield of 6.57 tonnes per hectare.

The ministry said that farmers also harvested 10.5 million tonnes of sunflower seeds from 99% of the planted area and 9 million tonnes of sugar beet from 99% of the area.

Meantime, weather conditions were satisfactory for wintering of crops in Ukraine until the middle of the first ten-day period of January, only at the beginning of the period the elevated temperatures in some areas led to a weak renewal of growth processes of wintering crops, reported by the Ministry of Agrarian Policy of Ukraine on January 3 with reference to the National Academy of Sciences.

At the same time, the conditions became somewhat more difficult in the second half of the first ten-day period of January due to a sharp drop in average daily temperatures, especially in areas with a complete absence of snow cover.

At the end of the first ten-day period of January, winter grain crops were again in a state of deep winter dormancy.

"Currently, winter crops are in satisfactory condition", – the ministry added.

From Russia, the Russian agriculture ministry revised the export tax for wheat, corn and barley.

Particularly, as of Jan. 18, the export duty on wheat will slightly decrease to 4,719.4 from 4,766.3 rubles per ton a week earlier.

Ditto for corn, lowered from 1,289.4 rubles of a week earlier, to 1,174.6 rubles per ton.

For barley, in contrast, the duty will increase to 3,977.6 rubles from 3,870.6 rubles per ton a week earlier.

This new duty rates will be in effect through Jan 24, inclusive.

The duties were calculated based on indicative prices: $309.5?per ton for wheat ($311.1 a week earlier), $278.4 for barley ($276.8), $221.4 for corn ($224.2).

From the Middle Kingdom, China's top planning body has asked slaughter firms to increase commercial stocks of pigs to help revive market demand and drive up sluggish hog prices.

The National Development and Reform Commission (NDRC) also said it would take timely measures, such as increasing meat reserves, if needed to promote hog market stability.

Hog prices had suffered rapid falls due to weak consumption and increased supplies, according to the statement.

Recently, however, pork consumption has recovered somewhat, and a further pickup in demand is expected to pull hog prices back to reasonable levels, the statement added.

Slaughter firms said at the meeting they would study plans to step up pig purchases, and increase slaughtering and commercial stocks, as current prices are relatively low.

The NDRC said it paid close attention to hog price stability, and would continue to monitor supply and demand.

From South East Asia, palm oil prices in Malaysia on Friday logged a second consecutive weekly loss and fell to their lowest levels in three weeks, dented by a stronger ringgit and tepid demand.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange, indeed, slid 69 ringgit, or 1.76%, to 3,842 ringgit ($886.48) a tonne.

For the week, the contract lost 5.2%.

The ringgit MYR=, palm’s currency of trade, rose 0.53% against the dollar, making the commodity more expensive for buyers holding other currency.

From Australia, prices for feed barley and wheat have firmed past week to reflect limited grower selling in the past month which has seen one of the biggest ever harvests take place across south-eastern Australia.

Yields have generally been better than expected, and quality has been mixed, with less downgraded grain than was initially forecast hitting the market.

Combined with healthy export demand, however, prices have escaped supply-side pressure because growers have offered only modest amounts of feedgrain to the market thus far as they concentrate on selling their higher-value commodities.

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

Barley Downs: $405, up $13 from Dec 15;

SFW wheat Downs: $408, up $8 from Dec 15;

Sorghum Downs: $400, unchanged from Dec 15;

Barley Melbourne: $370, up $15 from Dec 15;

ASW wheat Melbourne: $420, up $10 from Dec 15;

SFW wheat Melbourne: $415, up $15 from Dec 15.

(AUD/USD=> US$0.6977).

Meantime, local markets held their breath for the USDA report at the end of last week which, in the end, did not provide any pivotal turning points.?

Shorts are still dominating the feed grain market with delivered SFW firming toward the end of the week for prompt demand.?

The same can be said for barley, while domestic shorts are squeezed, track values are reasonably stagnant.?

Milling demand is also fairly stagnant with little to no export demand presence in the east coast at the moment.

You could throw a handkerchief over wheat values as spreads from milling to feed have been crunched.?

We are rounding the final bend for harvest.?

Looming wet weather on the 10-day forecast will no doubt provide an incentive to get it done.?

The sorghum crop will benefit from this rain though as crops had been under moisture stress through late December early Jan.?

GIWA released its January crop report on Friday with another big revision to numbers, with total production now seen at 26.14Mt, 2Mt higher than the 2021-22 WA record.?

Wheat production is now pegged at 13.9Mt and canola at 4.3Mt.?

The report noted that whilst most growers are winding up getting the grain off, there is still a long way to go to move what is on-farm into the bin, particularly in the south of the state.

Durum crops have also posted some bumper yields and delivered better-than-expected quality for growers in south-eastern Australia after one of the wettest springs on record.

While durum grown in South Australia and Victoria primarily supplies domestic pasta manufacturing, durum tonnes surplus to local needs are likely to go to export.

The market has softened considerably in the past fortnight as exporters ingest the impact of a bigger and better crop than earlier expected from the extremely late harvest, and options for selling it along with the tonnage available out of northern NSW and southern Queensland.

The three durum grades are: DR1 for minimum 13pc protein; DR2 for 11.5-12.9pc protein, and DR3 of minimum 10pc protein, and most deliveries in NSW, Victoria and SA are understood to have made at least DR3 specs.

Australia’s annual durum production varies considerably, but around 400,000 tonnes seems likely, with big yields in SA and Victoria offsetting a troubled year for NSW.

On the international trade scene, South Korean flour millers reportedly purchased 80,000 tonnes of milling wheat from the US for Mar/Apr shipment, including SW wheat (9.5pc-11.0pc min protein) at $308-$309 fob, SW wheat (8.5pc) at $310-$312 fob, HRW (11.5pc) at $371 fob and NS/DNS (14pc) at $387-$388 fob.?

Algeria's state grains agency OAIC has issued an international tender to buy soft milling wheat to be sourced from optional origins.

The tender sought a nominal 50,000 tonnes but Algeria often buys considerably more in its tenders than the nominal volume sought.

The deadline for submission of price offers in the tender is Tuesday, Jan 17, with offers having to remain valid until Wednesday, Jan. 18.

The wheat is sought for shipment in two periods from the main supply regions including Europe: March 1-15 and March 15-31.

If sourced from South America or Australia, shipment is one month earlier.

IGC’s Grain Market Report - Jan Update

The International Grains Council (IGC) on Thursday raised its forecast for 2022/23 global wheat production, driven largely by a larger-than-expected crop in Ukraine.

Notably, the IGC’s Grain Market Report pegged 2022-23 global wheat production at a record 796Mt versus the USDA ‘s 781Mt.

The forecast is 5Mt up on the November Grain Market Report, including upward revisions for Ukraine by 3.8Mt to 25.2Mt and Australia, up 3.4Mt to 38.5Mt.

In contrast, the outlook for Argentina is down 1Mt to 12Mt on disappointing harvest results.

The IGC’s wheat carryout was down by 1 MMT to 281 MMT.

The IGC said little change in planted area for wheat was anticipated for 2023/24 and a pullback in yields could limit production to 788 million tonnes, down 1%, year-on-year.

The council also cut its 2022/23 world corn (maize) crop forecast by five million tonnes to 1.161 billion tonnes.

The shift again reflected a major revision for Ukraine with production revised to 25.5 million tonnes from a previous forecast of 29.9 million.

Their corn consumption was reduced by 2 MMT for a net stocks drop of 3 MMT from December (-27 MMT yr/yr) to 254 MMT.

The IGC reduced their global soy production outlook by 3 MMT to 385, as dryness in Argentina offset boosts to Brazil and China.

Soybean consumption was also trimmed by 3 MMT, leaving carryout at 54 MMT compared to 45 last season and 55 MMT 2 years back.

Looking at this week's market, today markets in the United State are closed for Martin Luther King Jr. Day.

Thus, the Export Inspections report will be released on Tuesday afternoon.

The weekly EIA report showing ethanol production and stocks will be pushed back to Thursday.

Weekly Export Sales will be delayed until Friday.

Later that day, NASS will release the monthly Cattle on Feed report.

That's all, thank you.

We wish you a nice day and a good start to the week.

Author: Sandro F. Puglisi??

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