Category Archives: Mark’s Minutes

Wheat futures are higher following Ukraine drone strikes on key Russia grain export port of Novorossiysk.  Let’s see if the trend continues, higher on the overnight on war news, lower on the close as cooler heads prevail

Wheat made new lows on Thursday on talk that Romania would allow for Ukraine vessel loadout that would help clean up Ukraine vessel line up.

Informa continues to estimate US wheat crop near 1,712 mil bu vs USDA 1,739.

Overall wheat volatility remains high given Black Sea off and on tension and weather.

Mpls Dec has dropped from a high of 956 on July 25 to a low of 847 yesterday and is now 861, see line above

 

The bulls need Black Sea concerns to sustain any type of rally amid bearish U.S. weather conditions, and they got that GIFT again overnight as Ukraine drones hit a Russian military ship in the Novorossiysk port, a major hub for Russian grain exports.

Unlike Ukrainian shipments, Russian wheat and grains have been flowing freely during the war and they continue to set the baseline for the global wheat export market.  Very important to not forget this, many just want to see bullish news, re-read first line if in doubt.

Wheat is moving off lows, while Dec corn has put in seven straight lower lows but only matched yesterday’s bottom so far today, with Chic Dec bouncing back above $5

Algeria bought 40k tonnes of corn from either Argentina or Brazil this morning, in their tender for up to 120k, at $239-240/t C&F for Aug shipment.

Ukraine’s Ag Ministry reported the country’s grain harvest at 16.57 MMT, including 3.755 MMT of barley and 12.5 MMT of wheat thus far.

The French Farm Ministry raised their 2023 soft wheat production estimate from 35.0 to 35.6 MMT due to increased yields, now 5.6% above last year; corn output came in at 10.89 MMT in the Ministry’s first official estimate of 2023, up 2% from last season.  Corn yields are seen more than making up for a 10% year over year acreage loss, though production is still 16% below the 5YA.  Meanwhile, FranceAgriMer pegged the soft wheat harvest at 87% complete as of 7/31, up from 83% a week ago, with corn condition ratings at 81% good/excellent, steady from the previous week.

Mexican officials yesterday said the U.S. denied their request for joint scientific GMO research, still disagreeing with Mexico’s proposed eventual ban on GMO corn.  Mexico’s Ag Minister says between 10% and 15% of their corn imports could be substituted by domestic production by 2024.

 

China’s Ministry of Commerce said on Friday it would drop anti-dumping and anti-subsidy tariffs on Australian barley imports that had been in place for three years affecting billions of dollars of trade, as the two nations repair strained ties.

China and Australia agreed in April to resolve their dispute over barley imports, with Canberra to suspend a case at the World Trade Organization (WTO) over Beijing’s anti-dumping and countervailing duties on barley, while China promised to speed up a review into the tariffs.

The grains put in an impressive recovery into the late night hours last night on another Russian attack on Ukraine’s key grain port, but just as quickly and impressively wiped out those gains this morning with corn and wheat up against technical resistance and facing an extremely bearish U.S. weather outlook in the coming days and weeks.

Russia again struck Ukraine’s inland port on the Danube River this morning, damaging a grain silo on Ukraine’s main alternative route for grain exports without the Black Sea deal.  The port is just across the river from NATO member Romania.

Meanwhile, officials in the Kremlin today restated their position that Russia would return to the Black Sea deal “immediately” when their “interests are upheld”, meaning all restrictions on Russian grain and fertilizer exports are cleared, including payments, logistics, and insurance.

Egypt’s GASC is seeking wheat in an international tender today for Sept-Oct delivery; their lowest offer came in at $250/tonne C&F from Russia.

Taiwan’s MFIG bought 65k tonnes of Brazilian corn in their international tender this morning, for October shipment,

Kazakhstan’s grain union estimates their 2023 wheat production at 14.5 MMT, down from 16.4 MMT last season, with exports seen at 8.5-9.0 MMT for the 2023/24 season.

StoneX Brazil yesterday raised their 2022/23 second crop corn production estimate from 105.2 to 108.3 MMT due to widespread yield increases.  Total ‘22/23 corn output rose from 136.0 to 139.2 MMT, including a small rise in third crop production as well.  Initial production estimates see basically steady corn output next year (2023/24) at 139.3 MMT, with first crop output up slightly year over year to 28.6 MMT.

‘23/24 soybean production was initially pegged at 163.5 MMT, up almost 4% from the previous season due to small gains in both planted acreage and yields seen in the coming year.

 

Mpls wheat +6

KC wheat +8

Chic wheat +10

Matif wheat +4

Canola +2

Rapeseed +4

Soybeans -12

Soybean oil -63

Crude +11

Corn +4

CAD -14

Wheat markets ended the week lower on lack of Black Sea war headlines and US farmer selling the rallies on all classes, especially SRW

North American cash prices are still significantly higher than Russia, either US futures need more loses or Russian cash increases, but the spread is just too big for North American wheat to make any inroads in the world market

 

Wheat volatility continues with talk of lower Canada, US, Russia and Argentina wheat crops and lower EU quality.

Putin said reduced Ukraine exports is adding value to Russia exports.

 

Overnight grain volume was strong as the direction was clearly lower, with the most traded contracts contending with (and failing at) technical support on the charts.

Condition ratings will expected to decline this afternoon but the next two weeks look much more beneficial for crop development

Algeria tendered for a nominal 50k tonnes of optional origin soft milling wheat for October shipment, closing tomorrow morning.

Ukraine’s Ag Ministry reported July grain exports at 2.16 MMT, up from 1.61 MMT in July 2022, and including 1.11 MMT of corn, 758k tonnes of wheat, and 285k tonnes of barley.

Private analysts Safras & Mercado on Friday estimated Brazilian 2024 soybean exports at 99 MMT, up from 95 MMT in 2023, with crushing seen up from 53.4 to 55.0 MMT next calendar year.

 

Mpls wheat -16

KC wheat -15

Chic wheat -20

Matif wheat -4

Canola -19

Rapeseed -12

Soybeans -29

Soybean oil -172

Crude +102

Corn -14

CAD +20

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Further weakness seen across wheat markets

Wheat markets fell for their 2nd consecutive session, erasing part of the war risk premiums that flowed into markets following the collapse of the grain deal and subsequent attacks on Ukraine’s port infrastructure.  The open last night has fallen another -10c with no real news behind it.

At the NATO/Ukraine council held on Wednesday it was agreed that NATO will increase surveillance of the Black Sea with both maritime and drone patrols.

Putin has promised 25-50k of free wheat to 6 African countries at the ongoing Russian/African summit being held in St Petersburg.

Russian 12.5 FOB prices have dropped from $255 offers to $245 offers the past few days with bids around $240.

On a CFR basis, Bulg/Rom 11.5 offers are down from $310 to high $290s levels.

 

Trade is trading headlines that Ukraine exports will flow east.  Still no word on how and who will pay for additional transportation cost.

Funds are adding to net short futures position.

Recent attacks have damaged 26 Ukraine port facilities and 5 civilian vessels.

India reduced wheat crop to 108 mmt vs USDA 113, there were no news on lowering import tax or importing wheat.

Trade trying to deal with Black Sea supply and export unknown, 6 month lows in prices and wheat option volatility above normal levels. World wheat supply is dropping but so is demand

 

South Korea’s NOFI bought 68k tonnes of corn in an international tender for up to 138k tonnes, from South America or South Africa, for Oct shipment.

Iran’s SLAL reportedly rejected all offers and made no purchase in their international tender for 120k tonnes each of Brazilian corn and meal, for Aug-Sept

FranceAgriMer reported the French soft wheat harvest at 83% complete this week, up from 59% a week ago, with ratings down 2% to 78% g/ex.

The Buenos Aires Grains Exchange reported over 96% of the Argentine wheat crop planted, with 72% of that planted under “good and optimal conditions” thanks to improved rains as of late. Corn stands at 68% harvested.

Ukraine’s Ag Ministry reported the country’s grain harvest at 11.2 MMT thus far, including 8.1 MMT of wheat and 2.9 MMT of barley.

The European Commission cut their 2023 soft wheat estimate by 2.5 MMT, to 126.4 MMT, with ending stocks down from 20.5 to 17.4 MMT due to that output cut along with a carryin cut.  2023/24 exports were unchanged at 32.0 MMT.  2023 E.U. corn production fell from 63.7 to 63.0 MMT this month.

Day three of the Wheat Quality Council’s Spring Tour found average North Dakota spring wheat yields at 47.4 bushels per acre, down from 49.1 bpa last year but above the 40.1 bpa five year average figure.  The USDA has North Dakota spring wheat at 47.0 bpa, down from 50.0 bpa last season.

 

Mpls wheat -14

KC wheat -17

Chic wheat -17

Matif wheat -5

Canola -11

Rapeseed -13

Soybeans -12

Soybean oil +24

Crude -5

Corn -11

CAD +7