May 22, 2024 - Newswires

Wheat prices reached their highest level since July 2023 …

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"As the 2024 harvest started, depending on the activities keeping us busy in the field, the publication of this newsletter may vary or be cancelled. Therefore, we do not guarantee a daily release as usual. Thank you."

Good afternoon, Farmer Family ...

US farm markets were mixed but mostly lower on Tuesday.

Corn prices slid 0.54%.

Soybeans stumbled 0.94% lower.

The rest of the soy complex also was in the red, as soymeal shifted 0.48% lower, while soyoil closed down 1.1%.

Wheat prices were mixed but mostly higher, as Chicago SRW rose 1.27%, Kansas City HRW added 0.68%, while Minneapolis spring wheat eased 0.07%.

• The wheat complex was mixed, with the winter wheat holding up.
• Chicago wheat prices have reached their highest level since July, as frost damage in top-exporter Russia and lower U.S. crop ratings supported the market.
• However, Illinois is poised to produce a higher-yielding wheat crop than a year ago, when the state produced a record yield, the Illinois Wheat Association said following a one-day crop tour.
• The one-day Illinois tour projected an average yield of 104 bushels per acre (bpa) after scouting 59 fields, mostly in the state's southern third.
• A year ago, the same tour projected an average yield of 97.1 bpa based on 57 fields scouted.
• Both figures are well above the U.S. Department of Agriculture's official projections.
• The government forecast the state's 2024 wheat yield at 83 bpa, down from last year's record high of 87 bpa.
• Illinois was the seventh-largest U.S. winter wheat producer in 2023 and the top producing state of soft red winter wheat.
• However, with the harvest still a few weeks away, crop scouts on the tour cautioned that disease pressure, amplified by wet conditions this spring, could reduce final yields.
• Tour scouts noted the presence of fusarium head blight, a fungal disease also known as head scab, in many fields.
• Scab can cause elevated levels of a toxin called vomitoxin in wheat that can sicken animals and people.
• The infection level appeared to be low but experts cautioned that the true impact of the disease won't be clear until closer to harvest time.

• As for corn, U.S. exporters sold 113,050 metric tons of corn to Mexico, of which 56,525 tons are scheduled for delivery in the 2023-24 marketing year and 56,525 tons for 2024-25, according to the USDA.
• The USDA also reported sales of 110,000 metric tons of U.S. corn to Spain for 2023-24 delivery.
• However, corn prices ticked down on technical trading and rapidly advancing U.S. plantings that also weighed on soybeans market.
• Soybeans closed lower, after three sessions of gains.
• Chinese importers are believed to have purchased at least two shipments of soybeans from the United States in the past few days.
• However, weak soymeal prices and a stronger-than-expected U.S. spring planting pace, pressured prices.
• The competitiveness of U.S. soymeal on the global market indeed remains in doubt as Argentina is expected to start crushing increasing amounts of soybeans.

In this context ...

• Corn basis bids were steady to mixed after tracking 3 cents lower at an Indiana ethanol plant while rising 2 cents higher across three other Midwestern locations.
• Soybean basis bids were steady to firm after trending 3 to 5 cents higher across three Midwestern locations.
• Commodity funds were net buyers of CBOT wheat, but net sellers of soybeans and corn.

This morning ...

Chicago wheat prices rose to their highest levels since last July. Corn and soybean also rose.

• Notably, the most-active wheat contract on the Chicago Board of Trade (CBOT) was up 1.8%, as of 0538 GMT, soybeans were up 0.3%, and corn was nearly 1% higher.
• Wheat prices have raised about 18% so far this month.
• All three contracts hit their lowest levels since 2020 earlier this year, but have rebounded. Wheat has gained most, up 35% from a low seen two months ago.
• Soybeans are up around 10% from this year's lows, while corn is up 13%.

South America

Brazil

Brazil national agricultural agency Conab reported that as at 18 May, 2023-24 soybean harvest was 97pc complete.

• That is compared with 96pc the previous week, and 99pc previous year.
• Rainfall in Rio Grande do Sul hampered fieldwork, lowered productivity potential and eroded quality.
• Notably, in Rio Grande do Sul harvest was 85pc complete.
• That is compared with 79pc a week ago, but with 93pc last year.
• Primary (full-season) maize harvest was 72pc finished (68pc, 77pc), with the impact of heavy rains and flooding in Rio Grande do Sul evident in delayed harvest and crop quality issues.
• Secondary (safrinha) harvest is underway, estimated to be less than 1pc complete.
• 2024-25 wheat planting is 24pc complete (21pc, 31pc).
• Meantime, Dr Cordonnier left his crop forecasts at 147Mt for soybeans and 112Mt for corn, with a neutral bias for both.

Argentina

South American crop consultant Michael Cordonnier left his Argentine crop estimates at 50Mt for soybeans and 47Mt for corn, though he has a lower bias for both amid declining yields as harvest progresses.

Europe

European grain market ended mixed.

• Wheat slightly rose, unlike corn and rapeseed.
• After the Monday's sharp rise, prices went through a day of consolidation.
• In France, excess rain is seen still as a problem, both for winter grains and for spring crops.
• Meantime, the return of wheat importers to purchases has been closely watched, though Jordan passed on all offers, while Tunisia is tendering for today.
• Per latest data from the European Commission, indeed, European common wheat exports have reached 26.26 MMT through May 3.
• That represent a 8% year on year decline.
• Barley exports have reached 5.06 MMT, down 17% from a year ago.
• Meantime, on the imports side, durum imports were up 25% to 2.20 MMT.
• Maize import were down 36% to 15.69 MMT.
• Soybeans imports were at 10.48 MMT, down 8% from a year ago.
• Rapeseed imports were at 4.87 MMT, -31% YoY.
• EU soymeal imports reached 12.96 MMT over the same period, decreasing by 9%.
• Palm oil imports were at 2.87 MMT, down 22% from a year ago.

Ukraine

According to the producers' union Agrarian Council, Ukraine's 2024 rapeseed crop could fall to no more than 4.1 million metric tons, mostly due to unfavourable weather in early May.

• The council said in a statement that Ukrainian rapeseed export prices had already risen to 420-425 euro per ton.
• The group also said contracts for deliveries of rapeseed to Germany were concluded at 460-465 euros per ton.

• However, recent frosts in the east, north and centre of Ukraine have not caused significant damage to grain and oilseed crops, a state weather forecaster said.
• Wheat and other cereals are frost-tolerant crops and should be able to pass through minor frosts.
• For the plant to die, the temperature must fall below 9 degrees Celsius, which we have not had, the scientist said.
• Thus, the occurred frost could not have killed the plants as expected.
• As a result, Ukraine’s agriculture ministry said that its crop forecast was unchanged, though it could be reviewed in June.
• The ministry has forecast the 2024 combined oilseed and grain harvest at 74 million metric tons.
• It also said Ukrainian farmers had sown 5.1 million hectares of spring grain crops as of May 16.
• Together with 6.3 million hectares of sowed oilseeds, more than 11 million hectares have now been sown, equating to more than 90% of the planned area.
• The area included 781,600 hectares of spring barley, 249,000 hectares of spring wheat and 3.57 million hectares of corn.

Russia

An emergency regime remains in place in a dozen Russian regions, with Russia’s agriculture ministry having estimated that 900,000 hectares needs to be replanted.

• That is about 1% of the total area under crops.
• Meantime, as of May 1, Russian agricultural enterprises had 18.4 mln tonnes of grains and pulses in stock, according to the Federal State Statistics Service.
• Wheat stocks were estimated at 11.3 mln tonnes, down 6% from 2023.
• Corn stocks were at 1.9 mln tonnes (-10%).
• As for oilseeds, their total stocks decreased even more significantly to 2.4 mln tonnes.
• In particular, the reduction in sunflower stocks is estimated at 31%, to 1.1 mln tonnes.

China

China's Finance Ministry on Tuesday announced the nationwide implementation of full-cost insurance and planting income insurance policies for rice, wheat and corn, as part of a food security drive to encourage planting of staple grains.

• The policy is aimed at improving the level of agricultural insurance protection, stabilizing farmers' income, supporting the revitalization of rural areas and safeguarding food security, according to a notice released with the Agriculture Ministry and the State Administration of Financial Supervision.
• In April, China lost 379,500 hectares of crops to floods, droughts, sandstorms, earthquakes, forest fires, and freezing temperatures that caused direct economic losses of 14.81 billion yuan ($2.05 billion), the Emergency Management Ministry said last week.
• The full cost insurance covers income losses from major natural disasters, pests and diseases, accidents, wild animal damage and other risks, while the planting income insurance covers losses caused by fluctuations in agricultural product prices and output.
• The notice, which was released on Tuesday, will be backdated to apply from Jan. 1, 2024, and protects all farmers and organisations involved in agricultural production.

Southeast Asia

Malaysia

Malaysian palm oil prices declined.

• The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange closed down 1.48%.
• According to cargo surveyor Intertek Testing Services, exports of Malaysian palm oil products for May 1-15 fell 5.2% from the same period in April to 600,777 metric tons.
• Cargo surveyor Societe Generale de Surveillance (SGS) estimated exports of Malaysian palm oil products for May 1-15 at 426,947 metric tons, according to LSEG data.
• Expectations of a sharp rise in production also weighed on prices.
• Meantime, Malaysia has maintained its June export tax for crude palm oil at 8% and lowered its reference price to 3,956.06 ringgit per ton for June, compared with May’s 4,273.93 ringgit, a circular on the Malaysian Palm Oil Board’s website showed.

Australia

The 10-day forecast for WA, are showing a potential rainfall, however, this event cannot be overstated.

• Without any rain in early June, production potential will going to keep slipping away.

• Meantime, this week’s line ups data showed total grain on the stem ticked higher to 2.97Mt.
• That is compared with 2.88Mt a week earlier.
• Wheat was unchanged at 1.65Mt.
• Barley was down slightly at 453kt.
• Canola was at 680kt down from 725kt.
• Sorghum was at 190kt up from 60kt.
• In this context, local markets opened with a surge after the big offshore moves, while volume of activity on grain exchange lifted noticeably.
• As a result, Kwinana FIS wheat H2 grade traded A$422/t.
• CAN1 at $768/t.
• The ASX Jan 25 contract ended the day up $6.70/t at $400/t.
• While ASX January 2025 barley ended down $2.50/t to $337.50/t.

International grain and oilseed tenders & trade

• Jordan’s state grain buyer has issued an international tender to buy up to 120,000 metric tons of milling wheat which can be sourced from optional origins. The deadline for submission of price offers in the tender is May 28. A new announcement had been anticipated by traders after Jordan made no purchase in its previous tender for 120,000 tons of wheat on Tuesday. Shipment in the new tender, for hard wheat, was sought in a series of possible combinations in 50,000 to 60,000 ton consignments. Possible shipment combinations were between June 16-30, July 1-15, July 16-31 and Aug. 1-15.
• Turkish state grain board TMO is believed to have provisionally allocated the sale of an estimated 75,000 metric tons of durum wheat in an export tender for the same volume on Wednesday. The sale was expected to be made to trading house Casillo at an estimated $366.50 and $365 a ton FOB. Loading should take place between June 6 and June 28 in the Turkish ports of Mersin and Iskenderun. Offers in the tender were submitted earlier on Wednesday. Other offers saw Amber srl at $343.25, Raya with two offers at $340.69 and $342.89 respectively, Viterra at $338, and Agri Viesti srl at $325.
• The Korea Feed Association (KFA) in South Korea purchased up to 60,000 metric tons of soymeal to be sourced from optional origins in a private deal on Monday without issuing an international tender. The volume to be supplied depends on origin selected. If sourced from Brazil, 60,000 tons should be supplied. If sourced from Argentina 45,000 tons and 50,000 tons if sourced from the United States or China. Price was estimated to be $479.90 a ton c&f including a surcharge for additional port unloading. Seller was believed to be trading house Cofco. If sourced from South America, the shipment will be between July 15 and Aug. 15.

Outside markets ...

Energy markets

Oil prices settled 1% lower.

• Brent crude futures settled down 1%, while U.S. West Texas Intermediate crude (WTI) futures for Jun, which expired on Tuesday, slipped by 0.7%.
• The more active July contract settled down 64 cents, at $78.66.
• U.S. crude oil and gasoline inventories rose last week, while distillates fell, according to the American Petroleum Institute figures.
• Notably, the API figures showed crude stocks were up by 2.48 million barrels in the week ended May 17.
• Gasoline inventories rose by 2.1 million barrels, and distillates fell by 320,000 barrels.
• Higher borrowing costs can slow economic growth and pressure oil demand.
• Meantime, ahead of this weekend's Memorial Day holiday, which kicks off the U.S. peak summer driving season, retail gasoline prices fell for the fourth consecutive week to $3.58 per gallon on Monday, the Energy Information Administration (EIA) said in its gasoline and diesel fuel update.
• The U.S. will sell the nearly 1 million barrels of gasoline in a reserve in northeastern states, with bids due on May 28, the Department of Energy said on Tuesday.
• U.S. diesel prices have also slipped, according to the EIA, down 5.9 cents on the week on Monday, at $3.89 per gallon.

This morning, oil prices fell, retreating for a third straight day.

• Brent crude futures were down 1.2%, while U.S. West Texas Intermediate crude (WTI) dropped 1.6%, as of 0802 GMT.
• Expectations that the Federal Reserve might keep U.S. interest rates higher for longer due to sustained inflation, weighed on prices.
• Investors are awaiting minutes from the Fed's last policy meeting and, following the API data, the latest official U.S. oil inventory figures from the Energy Information Administration (EIA) due later on Wednesday.
• Meantime, inflation in Britain fell, but less than expected in April and a key core measure barely dropped, figures showed on Wednesday.

Ocean freight markets

The Baltic Exchange’s dry bulk sea freight index in London dropped.

• The overall index fell 0.97%%.
• The capesize index slipped 1.96%.
• The panamax index snapped a six-session losing streak and rose about 0.61%.
• The supramax index eased 0.72%.

Equity markets

US stock indexes closed moderately higher.

• The Dow Jones Industrial Average climbed 0.2%, the S&P 500 rose 0.3%, and the Nasdaq composite gained 0.2%.
• A decline in T-note yields was a supportive factor for equities.
• The 10-year T-note yield fell -3.1 bp to 4.412%.
• However, stock gains were limited on comments from Fed Governor Waller and Atlanta Fed President Bostic, who said they favor waiting for inflation to decline before cutting interest rates.
• In Europe, the Euro Stoxx 50 fell to a 1-1/2 week low and closed down -0.54%.
• Eurozone Q1 labor costs accelerated to +4.9% y/y from +3.4% y/y in Q4.
• German Apr PPI eased to -3.3% y/y from -2.9% y/y in Mar.
• In China, the Shanghai Composite Index closed down -0.42%.
• In Japan, the Nikkei Stock Index closed down -0.31%.

This morning, European stocks dropped in early trading and Asian markets were mostly lower.

• Britain’s FTSE 100 fell 0.5%, France’s CAC 40 lost 0.4%, while Germany’s DAX declined 0.2%.
• The UK Office for National Statistics announced a stronger-than-expected inflation reading that dashed hopes for a rate cut in June.
• Inflation fell to 2.3% in April, down from 3.2% in March, but it remained above the Bank of England’s 2% target.
• In Asia, Tokyo’s Nikkei 225 fell 0.9%, Hong Kong’s Hang Seng index lost 0.2%, the Shanghai Composite index was nearly unchanged, in South Korea, the Kospi also was virtually unchanged, Australia’s S&P/ASX 200 edged 0.1% lower, Taiwan's Taiex gained 1.5%.
• Japan reported that its trade deficit rose last month as rising costs for imports outpaced an 8% rise in exports from the year before.

Currency trading

The dollar index rose.

• Comments from Fed Governor Waller and Atlanta Fed President Bostic, supported the dollar.
• However, gains were capped due to lower T-note yields.
• Meantime the EUR/USD fell.
• Eurozone Q1 labor costs accelerated.
• The German Apr PPI eased.
• Central bank divergence limited the upside in the euro.
• The USD/JPY fell.
• However, divergence in government bond yields is undercutting the yen’s interest rate differentials, with 10-year JGB yields well below those of other G-7 countries.

This morning, the U.S. dollar rose to 156.42 Japanese yen from 156.16 yen. The euro cost $1.0857, up from $1.0854.

Settlement Prices for Key Commodity, Index & Currencies

• Chicago wheat Jul contract was up 8.6c/bu to 697.4c/bu;
• Kansas wheat Jul contract was up 4.6c/bu to 701.4c/bu;
• Minneapolis wheat Jul contract was down 0.4c/bu to 738.6c/bu;

• MATIF wheat Sep was up €0.5/t to €257/t;

• ASX wheat Jul contract was up A$4.7 to A$384/t;
• US DWI Cash (durum wheat index), was down 1.88c/bu to to 766.06c/bu;
• 1CWAD (Canadian durum) avg spot prices was down C$0.76/t to C$391.4/t;
• EDW (EU durum) Sep contract was unchanged to €345.5/t;

• Chicago corn Jul was down 2.4c/bu to 458c/bu;

• MATIF corn Jun was down €2.5/t to €221.75/t;

• Chicago soybeans Jul down 11.6c/bu to 1236.2c/bu;
• Winnipeg canola Jul contract was up C$4.1/t to C$665.2/t;

• MATIF rapeseed Aug was down €5.75/t to €479.25/t;

• Brent crude Jul was down US$0.83 to $82.88;
• WTI crude Jul was down US$0.64 per barrel to $78.66;

• BADI (Baltic Dry Index) was down 18 points to 1.829;

• Dow Jones was up 66.22 points to 39.872,99;
• S&P 500 was up 13.28 points to 5.321,41;
• NASDAQ Composite up 37.75 points to 16.832,62;

• US dollar index (Jun '24) was up 0.096 points to 104.556;

• AUD/USD weaker at US$0.6665;
• USD/CAD firmer at $1.3654;
• EUR/USD weaker at $1.0854;
• USD/RUB weaker at ?90.2293.

That's all, thank you.

We wish you a nice day.

Author: Sandro F. Puglisi

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