Category Archives: Mark’s Minutes

US wheat futures finished last week in negative territory although was close to the top of the daily range and nowhere near the 5% selloff seen in corn futures.  A wetter forecast for parts of the dry Midwest as well as profit taking were thought to be the main driving factors.

A brief military coup by PMC Wagner Group, led by Yevgeny Prigozhin, over the weekend saw Wagner forces steamroll their way towards Moscow after taking Rostov with relative ease.  A deal brokered by Belarus President Lukashenko has seen Prigozhin back down and divert his forces to Belarus.

The CFTC’s COT report showed funds buy back net +29k wheat contracts in the week ending 20 June, to now hold a -84k net short.

Corn was more pronounced with a change of +56k net contracts to hold a net long of +58k.

 

There remains uncertain by World buyers especially Egypt, Saudi Arabia, Algeria, Morocco, E Africa and SE Asia (India) in confidence of Russia wheat exports.

Trade estimates US 2023 all wheat acres at 49.6 vs 49.8 in March.

Trade estimates June 1 wheat stocks at 611 mil bu vs 698 ly.

 

Corn and soybeans opened lower last night but the bulls were thrown a life raft by wheat, reacting to the weekend mutiny in Russia.

Rains didn’t save everyone over the weekend but should go a long way in the central and northern corn belt, and by most accounts the overall forecast trend appears to have shifted to a more beneficial pattern going forward.

Mexico on Friday imposed a 50% tariff on white corn imports, amid the ongoing North American trade dispute; they don’t import a lot of white corn, but what is bought comes from the U.S. or South Africa.

SovEcon is estimating June Russian grain exports at 3.8 MMT, down from 5.0 MMT in May, with wheat at 3.2 MMT versus 4.2 MMT last month.

Ukraine’s Ag Ministry sees cumulative grain exports since July 1 at 48.4 MMT with the 2022/23 season almost complete, roughly even with last year’s pace; 2023 grain output was revised up from 45 to 46 MMT.

 

Mpls wheat +11

KC wheat +14

Chic wheat +14

Matif wheat +5

Canola +8

Rapeseed +10

Soybeans +11

Soybean oil +93

Crude -33

Corn -1

CAD +13

NEW RECORD CANOLA VOLUME = 89,506.

Friday’s parabolic gains were all about the spec short position getting out tied to the sharp gains elsewhere, believe trend funds were active given the record volume trade, buying back 18,000 contracts, leaving them short 20,000 contracts in November.  Don’t believe there was much fundamental buying, leaving strength as technically driven, although board crush margins hit new rally highs.  Hedges were active on a scale-up and then weighed on prices despite outside markets holding sharp gains.  The farmer to no surprise, rewarded this week’s price surge with new sales. Commercial hedges will ultimately replace the shrinking fund short.

 

Global wheat futures finished the week higher once again on Friday as weather concerns in the US and funds unrolling a massive short combined to send CBOT(N) +26.50 for the day and +57.75c for the week.

The dry story unfolding in the US Midwest shows nearly all of the cropping areas currently under at least some sort of dry/drought due to the rain deficit over the past 4 weeks.

The 8-day forecast for Australia remains mostly dry with only VIC once again looking to receive rains over the course of the week. The 3-month BOM outlook predicts below median rainfall as likely to very likely for most areas.

Black Sea wheat is starting to find homes in SEA at CFR/CIF prices in the $260s and seems disconnected (for now) from the recent rally in Matif and CBOT.

 

Matif -1

Canola -2

Rapeseed -10

CAD -8

 

All 3 US wheat futures contracts rallied around +30c yesterday as hot/dry weather is compounding already drought type conditions that are affecting around 50% of the winter wheat crop.  Corn and soybeans were swept up in the rally as well due to below average rainfall forecast for the Midwest corn/soybean belt over the next 2 weeks, as well as unexpected demand.

With wheat planting underway in Argentina and already 30% complete, the Rosario Board of Trade revised its wheat average estimate 20% lower from May’s estimate to 5.6mln hectares.

Matif wheat futures did not follow US due to high stocks and better forecast.

Russia wheat export prices are USD 25-30 cents below French, 35-40 below Germany and 105 cents below US HRW on  FOB basis.

 

Grains strength continues ahead of the weekend despite a good rain event on tap Sat/Sun

The market has long been hearing of an overall pattern shift but concrete precipitation events are still slow to arrive.

The soybean complex got a nice boost from yesterday’s NOPA crush, one of the few positive demand indicators as of late.

FranceAgriMer reported a third straight weekly decline in French soft wheat ratings, down from 88% to 85% good/excellent this week; that’s still above 65% at this point a year ago and the highest on record for this time of year back through at least 2011.  Corn ratings fell two points, to 86% g/ex.

Russia’s Deputy Prime Minister said the country’s grain harvest could hit 130 MMT in 2023 “in the event of good weather”, above the Ag Ministry’s working 123 MMT estimate, but down from 158 MMT in 2022.  Exports are seen reaching as high as 30 MMT in 2023/24 (July-June).

The People’s Bank of China (PBOC) today announced plans to boost rural financing and aid the country’s ag industry, including strengthening infrastructure, the seed industry, and supporting banking and the loan industry.

Ukraine’s Ag Ministry report the 2023 spring grain planting campaign as “almost complete” on 13 million hectares (32.1 mln acres); that includes 4 mln ha of corn, 5.3 mln ha of sunflowers, and 1.8 mln ha of soybeans.  Cumulative grain exports with two weeks left in the 2022/23 marketing year stand at 47.5 MMT, down only slightly from 47.8 MMT at this point last year, and including 16.3 MMT of wheat and 28.2 MMT of corn.

 

Mpls wheat +12

KC wheat +18

Chic wheat +16

Matif wheat +5

Canola +17

Rapeseed +15

Soybeans +22

Soybean oil +95

Crude +13

Corn +13

CAD -4

Dry weather in northern Europe has prompted many to start cutting production estimates

This year’s grain harvest in the EU, plus the UK, is now seen at 296.7m tons, Coceral says in an emailed report.

The outlook is down from a March forecast for 303.5m tons due to dryness in the northern half of the bloc

This would still top last year’s harvest of 291.1m tons

Production cut for areas including the Baltics, Denmark, Germany and Spain

Latest expectations for the 2023 harvest:

Matif wheat, Sept23

 

Tunisia cancelled their tender on Friday that would have given the market a view of how Russian would price after the last Egypt tender implied a USD 240 FOB floor price

Ukraine reported cumulative grain exports since July 1 at 46.7 MMT, down from 47.8 MMT a year ago, with exports in June so far at 1.4 MMT.

 

Mpls wheat +1

KC wheat -3

Chic wheat +1

Matif wheat +2

Canola +0

Rapeseed +0

Soybeans -1

Soybean oil -19

Crude -212

Corn +8

CAD +6