Category Archives: Mark’s Minutes

Wheat retreats on Tuesday’s trade

As the market grapples with what the counter offensive in Kherson means and the uncertainty it brings for grain exports out of Ukraine

Ukraine managed to ship out 1.45mmt through the grain corridor during the month of August, most of which was corn.  If the pace end of the August is kept up, the grain corridor could get close to 3mmt.

In tender news, Jordan booked 60k of MW at $379.50/mt CFR Aqaba for LH Jan shipment.

Algeria tendered yesterday for Sep/Oct shipments with prices reported at $364-365/mt CFR from Russia.

Egypt was rumoured to be in the market yesterday for more private purchases for Nov/Dec shipments.

 

While profit taking was the main factor pressuring grains on the CBOT yesterday, it is not the only one.  With weakness seen in crude oil prices also taking a bite out of agricultural futures.  Oil prices are down over 2%, which in turn is pressuring grains due to their exposure in energy via renewable fuels.  The energy complex is still a big influence, with crude and corn very correlated lately.  When crude is down, the ags markets will struggle also.

 

Wheat futures are lower.  Most month end short covering may be done.  Concern about global stagflation and inflation quickly turning to deflation could reduce global food demand.

Many US jobs go unfilled while many workers are struggling to pay higher total bills.  This could also slow food demand and restaurant dining.

US wheat export prices are uncompetitive.  US SRW export price is near $346 while Black Sea is near $315.  Russia continues to lower export tax which is giving buyers some new confidence in buying wheat forward.

 

Mpls wheat -10

KC wheat -10

Chic wheat -8

Matif wheat -1

Canola -12

Rapeseed +3

Soybeans -14

Soybean oil -34

Crude -160

Corn -12

CAD -7

Friday wheat markets bounce back from Thursday’s drop

Despite Thursday’s selloff, wheat markets bounced back on Friday and finished in the black with the CBOT (Z) contract +16.25c for the day and +34.25c for the week.  Friday’s strength came from a weaker USD and a smaller corn yield figure from the Pro Farmer Tour at 168.1bpa than the USDA’s figure at 175.4bpa.

Strong French wheat exports lent strength to Matif wheat futures on Friday with demand usually not seen until October, filling up the stem.  China was heard to have bought several pmx vessels within he last 2 weeks.

This month so far Ukraine has shipped 1mmt of grain/oilseeds from Odesa port (mostly corn) under the Export Corridor brokered by the UN.  Ukraine’s Infrastructure Ministry previously stated August’s export number could hit 3-4mmt.

In cash markets, Aussie APW1 was stable around $400-405/mt CFR SEA for Jan/Feb shipment and ASW closer to $380/mt. Ukr11.5 remains aggressive in the $350s CFR SEA however buyers remain reluctant.

Pro Farmer obviously came out with even a more bullish corn yield estimate than was even expected, following some shaky results across the week during their crop tour

The trade will be very interested to see if private and public yield estimates follow suit in the next two weeks, starting with our StoneX September survey this Thursday.

So, wheat follows corn

Algeria tendered for a nominal 50k tonnes of optional origin soft milling wheat, with an offer deadline tomorrow, and shipment sought for Sept-Oct.

Bangladesh is looking to import 500k tonnes of wheat from Russia in a direct government-to-government deal, at $430/tonne C&F for shipment thru Jan.

Ukraine’s Ag Ministry reported cumulative grain exports at 3.6 MMT since July 1, down 53% from last year’s pace, including 2.33 MMT of corn, 981k tonnes of wheat, and 289k tonnes of barley. August exports so far stand at 1.9 MMT, down almost 60% from last year’s pace.

Russian consultancy SovEcon estimates August grain exports at 4.20 MMT, up from 2.65 MMT in July, with wheat at 3.5 MMT vs 2.3 MMT last month.

 

Mpls wheat -1

KC wheat +1

Chic wheat +3

Matif wheat +2

Canola -12

Rapeseed -1

Soybeans -8

Soybean oil -70

Crude +157

Corn +10

CAD +3

StatsCan July estimates of production of principal field crops

2020    2021    2022   2020-2021 2021-2022

thousands of tonnes         % change

Total wheat            35437   22296   34572       -37.1      55.1

Durum wheat        6571    3038    6473       -53.8     113.1

Spring wheat         26092   16250   25565       -37.7      57.3

Winter wheat         2774    3007    2534         8.4     -15.7

Barley                      10741    6959    9346       -35.2      34.3

Canola                     19485   13757   19499       -29.4      41.7

Chick peas              214      76     134       -64.5      75.6

Corn for grain        13563   13984   14825         3.1       6.0

Dry field peas         4594    2258    3610       -50.9      59.9

Fall Rye                   475     466     447        -1.9      -4.0

Flaxseed                  578     346     488       -40.2      41.1

Lentils                     2868    1606    2906       -44.0      80.9

Mustard seed          100      61     196       -39.5     223.3

Oats                          4576    2808    4471       -38.6      59.2

Soybeans                 6358    6272    6382        -1.4       1.8

No one believes the canola at 19.499 MMT

Wheat markets sharply lower yesterday on technical selling in unison with Matif close down 11 Euros/mt

Matif responded to reports of cash wheat trading in Ukraine for a low as 270/mt (40 to 50/mt below Russian and EU offers) as producers were hitting any bid they could find to generate cash flow and traders clearing inventory for new crop that is flowing in

Another headline fueling the sell off was talks of improving the current flow of grain from the Black Sea

 

Overnight grain volume slowed to a crawl with soybeans leading losses, while corn is stuck technically

The USD is making a charge back towards month ago highs as well, putting pressure on the commodities overall.

Wheat is rebounding a bit this morning but it seems to be a half hearted effort with values at post-war, or 10+ month continuous, lows.

Ukraine’s grain union UGA reported the country’s 2022 wheat harvest at 91% complete, or 17.4 MMT, with the total grain harvest at 25.7 MMT.

The country’s Ag Ministry reported cumulative grain exports at 2.99 MMT so far in 2022/23, July-June, down 52% from last year’s pace.  Final 2021/22 exports wound up at 48.5 MMT, up 8.5% year over year thanks to strong prewar shipments.

The government currently has overall grain production pegged at around 50 MMT in 2022, down from a record 86 MMT in 2021.

The Buenos Aires Grains Exchange pegged the 2021/22 Argentine corn crop at 52 MMT, up from 49 MMT just last week thanks to increased acreage figures; 98% of the corn crop was reported as harvested.

France AgriMer reported French corn condition ratings at 50% good/excellent as of 8/15, down from 53% the previous week and 91% a year ago.

The International Grains Council yesterday cut their 2022/23 world corn production estimate by ten million tonnes, to 1.179 billion tonnes, due to reduced forecasts for the U.S. and E.U.

Global wheat output rose by 8 MMT this month, to 778 million tonnes.

 

Mpls wheat +3

KC wheat +7

Chic wheat +5

Matif wheat +1

Canola -11

Rapeseed -7

Soybeans -7

Soybean oil -24

Crude -50

Corn unch

CAD -24