US farm markets were mixed but mostly higher, on Thursday.
Wheat prices found nice gains, recouping most of losses the previous session, on rising tensions in the Black Sea region.
An ammonia pipeline used to transport Russian ammonia was damaged in Ukraine, which prompted Kremlin officials to threaten “negative impacts” to the Black Sea deal.
Also, Ukraine could lose several million tonnes of crops because of flooding caused by the destruction of the Kakhovka dam in the south of the country, according to the Ukrainian agriculture ministry said on Thursday.
Thus, Chicago SRW gained 1.54%, Kansas City HRW rose 2.13%, and MGEX HRS climbed 2.74%.
However, after a later start to planting and slow progress the first few weeks, spring wheat seeding and crop development in the North Plains have caught up to the five-year average, as of June 6.
Seeding is nearing completion with 93% of the US spring wheat crop planted.
North Dakota is at 92% and Montana is at 88%.
Much of the remaining planting should take place this week.
The crop is emerging nicely under mostly good conditions.
About three-fourths of the US spring wheat crop has emerged about two-thirds of the North Dakota crop has emerged.
Crop condition ratings are mostly favorable with 64% of the US spring wheat crop in good to excellent condition.
Conditions vary by state and percent rated in good to excellent condition is listed below:
Minnesota – 77%, North Dakota – 67%, Montana – 58%, South Dakota 56%.
While soil moisture conditions are mostly rated as adequate to surplus in North Dakota, we are seeing more areas slip into the short to very short categories.
Currently topsoil and subsoil conditions are rated as 72% adequate to surplus and 28% short to very short.
Precipitation over the last week has generally been in the form of scattered, brief thunderstorms that have brought variable and isolated precipitation.
Most producers report that some precipitation would be beneficial at this point.
Durum seeding is also nearing completion in the state with just under 90% planted, right on par with the five-year average and well ahead of only 60% one year ago.
About half of the crop has emerged.
Crop condition ratings are not yet available, but most producers report good stands and healthy-looking crops so far.
In Montana, about 87% of the durum has been seeded and 60% has emerged.
As for corn, prices rose about 1%, benefiting by spillover strength from wheat.
Soybean prices followed suit, up 0.18%, though the rest of the complex was mixed, as soymeal lost 0.3%, while soyoil jumped 4.02% higher.
However, both markets mainly rebounded amid uncertainty about weather developments, especially in the Corn Belt.
US corn crops was experienced moderate to intense drought rose by 11 percentage points from the previous week to 45pc, this is compared to 19pc last year, per latest U.S. Drought Monitor out this week.
Soybean crops in drought also rose by 11 points, reaching 39pc.
However, wetter conditions are on their way to a large swath of the central U.S. between Friday and Monday, with many areas likely to see another 0.75” or more during this time, per the latest 72-hour cumulative precipitation map from NOAA.
Further out, the agency’s new 8-to-14-day outlook predicts near-normal precipitation levels for most of the Corn Belt between June 15 and June 21, with above-normal temperatures likely for the Midwest and Plains during that span.
As we said, it’s a “Weather Market”.
On the demand side, USDA’s FAS reported 172,709 MT of old crop corn bookings for the week that ended 6/1.
That was down 8 percent from the previous week, and 61% of the same week last year, but up noticeably from the prior 4-week average.
New crop saw 107k MT of net cancelations mostly via Mexico.
Exports of 1,244,700 MT were down 13 percent from the previous week and 4 percent from the prior 4-week average.
Commitments were at 38.34 MMT for old crop and 2.96 MMT for new crop as of 6/1.
As for soybean, data showed 207,236 MT of old crop soybeans were sold for the week that ended 6/1.
That was up 68 percent from the previous week and up noticeably from the prior 4-week, but near the high end of estimates.
New crop sales were 264,590 MT for the week, led by China.
The data showed old crop commitments were at 51.17 MMT and new crop commitments were at 3.117 MMT as of 6/1.
For the products, data showed 267,611 MT of sales for meal and net 139 MT of cancelations for the oil.
For soymeal that left the commitments at 11.15 MMT for 22/23 and 607k MT for 23/24, and total soy oil commitments were 126,287 MT and 3.9k MT respectively as of 6/1.
As for wheat, data release rounded out the 22/23 wheat export season with 17.758 MMT of exports and 877k MT of unshipped sales rolled into 23/24.
That was down 5 percent from the prior year’s total of 18,668,900 MT.
Total new sales for the week were 234,788 MT led by Taiwan.
The 23/24 season has 3.6 MMT on the books.
Meantime, traders were adjusting positions ahead of today WASDE report from USDA.
In its latest corn report, the USDA was very optimistic about US yield estimates at 181.5 bushels per acre.
As for soybean, WASDE May report was bearish across-the-board highlighting burdensome supply for the new crop.
However, the USDA could leave it unchanged this evening, as the June report is not usually subject to much change.
Thus, the report next month will be the one to watch more closely.
In this context, corn basis bids were mixed after firming 8 cents at an Illinois river terminal while fading 3 to 8 cents lower at three other Midwestern locations.
Soybean basis bids were steady to soft after tumbling 20 cents lower at an Iowa river terminal and dropping 4 cents at an Ohio elevator.
Commodity funds were net buyers of Chicago Board of Trade soybean, corn, wheat and soyoil futures contracts on Thursday, and net sellers of CBOT soymeal futures.
On this morning, Chicago soybean prices were tepid, but poised to post weekly gains.
Wheat and corn both edged lower and corn was headed for weekly losses, while wheat was set for weekly gains.
Notably, the most-active soybean contract on the Chicago Board of Trade (CBOT) was down 0.1% at $13.62-3/4 a bushel, as of 03:57 GMT.
Wheat lost 0.8% to $6.21-1/2 a bushel, while corn gave up 0.8% to $6.05-1/4 a bushel.
For the week, soybeans are up 0.7%, corn dropped about 0.6% while wheat gained 0.4%.
From Canada, Canadian Canola Prices were $7 higher on the day after seeing the lowest prices since August of 2021 last week.
Prices were underpinned by concerns about hot, dry Canadian weather for newly planted crops and higher soybean prices.
Weather models show cooler Canadian temperatures and better rain prospects in the near future, however.
From South America, Argentina’s current soybean harvest is nearing completion with total production expected to reach just 21 million metric tons.
The soybean harvest is nearly 94% complete, according to a report from the Buenos Aires Grains Exchange.
Corn harvest activity tends to intensify as the soybean crop concludes.
In its latest report, the grains exchange said about a third of planted corn has been threshed, while production for the cycle is estimated to hit 36 million metric tons.
Meanwhile, wheat planting during the upcoming 2023/2024 harvest suffered delays over the last week due to rainfall in Buenos Aires province, an important agricultural region, according to the grains exchange.
For now, Argentina’s wheat farmers have sown nearly 20% of the 6.3 million hectares set out for the grain’s cultivation, according to the exchange.
The wheat crop is expected to total 18 million metric tons.
In Europe, all three markets rebounded amid uncertainty about weather developments and extending the Black Sea corridor beyond 17 July.
In some European growing regions, despite thunderstorms expected this weekend, the water deficit remains in place and could have a significant impact on spring crops.
Several Spain grain supply chain actors have released their first estimates for grain production for MY 2023/24 and concur with the poor crop prospects.
Late May precipitation was not sufficient to counter the drop in production, although it may ultimately help restore soil moisture and alleviate the tight water storage levels.
Meantime, the condition of French soft wheat declined for the second week in a row, data from farm office FranceAgriMer showed on Friday.
Notably, an estimated 88% of soft wheat was rated in good or excellent condition in the week to June 5, compared with 91% the previous week and 93% two weeks ago, the office said in a cereal crop report.
However, the score was well above the 66% registered a year earlier and remained near the highest for the time of year in FranceAgriMer records going back to 2011.
The good/excellent ratings for other major cereal crops also fell for a second week.
The ratings for durum wheat, spring barley and grain maize declined more sharply, losing four percentage points each to 82%, 89% and 88% respectively, FranceAgriMer said.
For winter barley, usually the first cereal to be harvested at the start of summer, the score edged down to 87% from 88%.
From North Africa, Egypt may not achieve its local wheat procurement target of four million tonnes for the season, a senior government official said on Thursday.
The government official did not give details of expected procurement.
Egypt’s government usually procures wheat from April to July.
As of June 7, the government had procured 3.15 million tonnes, according to supply ministry documents.
That compares to 3.58 million tonnes on the same day last year.
The government procured a total of 4.2 million tonnes last year, from a target of at least 6 million tonnes.
Europa Centrale e Medioriente
From the Middle East, Iraq has procured three million tonnes of wheat from farmers so far, agriculture ministry official said on Thursday.
Iraq expects the local wheat harvest to yield between 4.0 and 4.5 million tonnes of wheat this season, the official said.
From the Black Sea basin, the fallout from the Kakhovka dam explosion is starting to be realised.
It is estimated by Ukraine’s Ag Ministry that 584 000ha of irrigated land will be unable to continue production.
However, part of that land is occupied by Russia, with the total production impact potentially over 3.5 million tonnes.
Also, there are also reports that up to 50 vessels loaded with grain and oilseeds are stuck in the reservoir.
However, also several million tonnes of Ukrainian crops may be lost due to flooding.
It is currently difficult to estimate the damage to the left bank of the Kherson region, but it is known that several hundred thousand tonnes of grain were stored there and more than 100 thsd tonnes of crops were on the right bank.
Also, “growing of grain and oil crops will take place according to an extensive model with low yields”.
On the other hand, it is being reported that Russian representatives of the JCC have stopped vessel inspections again and that threats have been made to attack port infrastructure if vessel traffic starts to move without participation of Russia.
Kremlin spokesman Dmitry Peskov commented that the explosion of the ammonia pipeline will become yet another complication in extension of the Black Sea Grain Initiative, as transit of ammonia was an integral part of the “half of the deal.”
A new round of Russia-UN talks will reportedly take place in Geneva on 9 June.
From Ukraine, Ukrainian production and export of rapeseed in 2022/23 MY became a record.
According to opening estimates of APK-Inform, 3.4 million tonnes will be shipped to foreign markets, which is 26% higher than last season.
55% of the total rapeseed exports in July-May 2022/23 MY went to Romania, Poland, Slovakia, Hungary, and Bulgaria.
At the same time, the share of Ukraine increased to 42% in the total import of rapeseed by the European Union.
In the new season, the rapeseed harvest can be collected at least as much as in 2022 – about 3.6 million tonnes, but export has more risks than last year”, the consultancy said.
At the moment, the APK-Inform forecast for rapeseed exports in 2023/24 MY is optimistic and amounts to about 3.4 million tonnes, although, volumes may be more extended than usual and will depend on a number of factors.
From Russia, the spring sowing campaign in Russia is entering the final stage, according to the Ministry of Agriculture of the Russian Federation.
As of June 5, in the country as a whole, spring sowing was carried out on an area of 50.7 million hectares, or 92% of the forecast.
The pace of work exceeds last year, in 2022, 49.1 million hectares were sown on the same date.
Spring grain crops were sown on 29 million hectares or 96.7% of the forecast (in 2022 – 27.2 million hectares), including spring wheat – on 13.5 million hectares, barley – on 7 million hectares, corn – on 2.5 million hectares, rice – by 159.4 thousand hectares.
Sunflower is sown on an area of 9.2 million hectares, rapeseed – on 1.5 million hectares, soybeans – on 3.2 million hectares.
“Currently, field work is going on regularly, farmers are provided with everything necessary for the successful completion of the sowing campaign,” the ministry said in a statement.
Meantime, some discussions are rising about Russian wheat exporter Agric SA, which offered a 55,000 mt parcel for $229/mt FOB Kavkaz in latest Egypt’s GASC tender.
There were 19 separate parcels offered into that tender, which closed late June 6, with a gap of more than $30/mt between the least competitive offer and Agric’s which was the only one that the grain board accepted.
“They [Agric] lost their bid bond … they received a call from the agriculture ministry not to sell,” said a Geneva-based trader, referring to the cost of around $500,000 that Agric would incur from defaulting on the sale to GASC.
However, Russia’s Ministry of Agriculture has not made any public comment on its pricing policy, though business daily Vedomosti reported that the ministry told trading companies at a June 1 meeting that they shouldn’t sell wheat for exports at less than $240/mt.
The offers of Russian wheat submitted to GASC, indeed, were all for $240/mt FOB except for Agric SA, a relatively unknown company on the market .
However, Platts assessed June 7 a 25,000 mt cargo of 12.5% protein Russian wheat at $223/mt for July 5-19 shipment, according to data from S&P Global Commodity Insights.
Meantime, Eduard Zernin, chairman of the Russian Union of Grain Union Exporters, said “we’re not interested in wasting our potential and trading at a loss to Russian agricultural producers,” said .
“We do not consider foreign exchanges as reliable price indicators,” said Zernin in comments published on the day of GASC’s tender.
The Russian Union of Grain Union Exporters represents the largest traders in the country.
From Kazakhstan, the country has almost doubled its export of fat and oil products to the EU and is ready to go on.
This was said by the chairman of the board of the National Oilseed Processors Association (NOPA) Yadykar Ibragimov during the international conference “VegOilTrade-2023” in Rotterdam.
According to the speaker, in 2022 Kazakhstan exported about 589`000 tonnes of oil and meal, which is 78% higher than in 2021.
For comparison, in the pre-COVID seasons, the export of these products did not exceed 505`000 tonnes.
In monetary terms, the export of oil and fat products increased even more significantly – by 118%, to $521 mln.
NOPA head noted that traditionally about 90% of Kazakh oil and meal are exported to China and the countries of Central Asia.
“However, recently, taking into account changes in the geopolitical situation, new directions of supply have been added, in particular Turkey and European countries,” Ya. Ibragimov said.
Thus, the TOP-10 buyers of Kazakh oil and meal in 2022 included, in particular, Latvia (33`300 tonnes, 6% of the total volume), Denmark (17`350 tonnes, 3%), Belgium (9`600 tonnes, 2%).
In general, the export of Kazakh oil and fat products to the EU countries in 2022 increased by 91%, to 75`530 tonnes, in monetary terms – by 118%, to $32 million.
“We will increase these volumes in the next 2-3 years,” said the head of NOPA.
From South East Asia, Malaysian palm oil prices fell to a one-week closing low on Thursday as prospects of rising inventories outweighed support from a weaker ringgit.
Notably, the benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange slipped 57 ringgit, or 1.72%, to 3,263 ringgit ($706.74) a tonne, its lowest closing since May 31.
Earlier this week, the Malaysian Palm Oil Association forecast May production to jump 26.3% from the month before.
Investors are awaiting data from the Malaysian Palm Oil Board, scheduled on June 12, to assess the extent of the production rise.
Capping losses, the ringgit MYR=, palm’s currency of trade, fell 0.48% against the dollar, making the commodity cheaper for holders of foreign currency.
In India, the country raised the government-mandated price for summer-sown crops such as rice and cotton by the most in five years.
Notably, India has raised the price at which it will buy new-season common rice paddy from farmers by 7% to 2,183 rupees ($26.45) per 100 kg.
The government also raised the cotton purchase price by nearly 9% to 6,620 rupees per 100 kg, also the highest increase in five years.
The hike in paddy prices would lift rice export prices by $30 per tonne.
“India might become uncompetitive in the world market unless government scraps 20% duty on exports,” said B.V. Krishna Rao, president, Rice Exporters Association of India.
From Australia, ABS reported 355kt canola exports in April, down from 661kt exported in March.
The EU was again the biggest market taking 198kt, followed by Japan with 70kt and the UAE with 55kt.
On the weather side, the meteorological forecast delivered notable rainfall this week including; most of WA (10-50mm), eastern SA (10-50mm) Vic (25-100mm) and southern and northwest NSW (10-100mm) and southwest QLD (10-50mm).
Unfortunately, those missing out included northern NSW, southeastern and Central Qld.
Meantime, local markets yesterday saw current crop wheat a buck or two softer while new crop was down $5-8/t.
Barley trades and quotes, current and new crop, again were unchanged.
Canola pulled back $10-20/t in eastern Australia.