TFM Morning Update 08-12-2022

Information produced by ADM Investor Services, Inc. and distributed by Stewart-Peterson Inc.

 

Wheat prices overnight are down 8 1/4 in SRW, down 8 1/2 in HRW, down 8 in HRS; Corn is up 2 1/2; Soybeans up 3/4; Soymeal up $0.09; Soyoil unchanged.

For the week so far wheat prices are up 22 3/4 in SRW, up 27 1/2 in HRW, up 26 1/2 in HRS; Corn is up 20 1/4; Soybeans up 40 1/2; Soymeal up $0.82; Soyoil up 3.65.

For the month to date wheat prices are down 7 3/4 in SRW, up 2 in HRW, up 8 1/2 in HRS; Corn is up 10 1/4; Soybeans down 19 1/4; Soymeal down $5.20; Soyoil up 1.96.

Year-To-Date nearby futures are up 4% in SRW, up 10% in HRW, down -7% in HRS; Corn is up 6%; Soybeans up 27%; Soymeal up 26%; Soyoil up 28%.

 

 

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Chinese Ag futures (JAN 23) Soybeans up 3 yuan; Soymeal up 16; Soyoil up 88; Palm oil up 190; Corn up 25 — Malaysian palm oil prices overnight were up 183 ringgit (+4.29%) at 4447.

There were no changes in registrations. Registration total: 2,653 SRW Wheat contracts; 0 Oats; 0 Corn; 0 Soybeans; 149 Soyoil; 0 Soymeal; 1 HRW Wheat.

Preliminary changes in futures Open Interest as of August 11 were: SRW Wheat up 1,401 contracts, HRW Wheat up 465, Corn down 722, Soybeans up 3,294, Soymeal up 2,429, Soyoil up 2,259.

Northern Plains Forecast: Isolated showers through Monday. Temperatures near to above normal through Monday. Outlook: Isolated showers Tuesday. Mostly dry Wednesday-Saturday. Temperatures above normal west and near to below normal east Tuesday-Saturday.

Central/Southern Plains Forecast: Mostly dry through Saturday. Isolated showers north Sunday-Monday. Temperatures near to above normal through Monday. Outlook: Isolated to scattered showers Tuesday-Saturday. Temperatures near to below normal north and above normal south Tuesday, near to below normal Wednesday-Saturday.

Western Midwest Forecast: Isolated showers north Friday. Mostly dry Saturday-Monday. Temperatures near to above normal Friday-Sunday, near normal Monday.

Eastern Midwest Forecast: Isolated showers through Sunday. Mostly dry Monday. Temperatures near to below normal through Monday. Outlook: Isolated showers Tuesday-Saturday. Temperatures near to below normal Tuesday-Saturday.

The player sheet for Aug. 11 had funds: net buyers of 3,500 contracts of  SRW wheat, buyers of 4,500 corn, buyers of 8,500 soybeans, buyers of 4,000 soymeal, and  buyers of 2,500 soyoil.

TENDERS

  • SOYMEAL SALE: The U.S. Department of Agriculture confirmed private sales of 103,400 tonnes of U.S. soymeal to Mexico for delivery in the 2022/23 marketing year that begins on Oct. 1.
  • FEED BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase 120,000 tonnes of animal feed barley
  • CORN PURCHASE: An importer group in South Korea is believed to have purchased about 60,000 tonnes of food-grade corn to be sourced from optional origins in a deal earlier this week
  • RICE PURCHASE: South Korea’s state-backed Agro-Fisheries & Food Trade Corp purchased an estimated 33,200 tonnes of rice to be sourced from China and optional origins in an international tender for about 92,000 tonnes that closed on Aug. 3

PENDING TENDERS

  • WHEAT TENDER: Iranian state agency Government Trading Corporation issued an international tender to purchase about 60,000 tonnes of milling wheat
  • WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy 120,000 tonnes of milling wheat, which can be sourced from optional origins
  • FEED WHEAT AND BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said it will seek 70,000 tonnes of feed wheat and 40,000 tonnes of feed barley to be loaded by Nov. 30 and arrive in Japan by Jan. 26 via a simultaneous buy and sell (SBS) auction that will be held on Aug. 19.

US BASIS/CASH

  • Basis bids for soybeans and corn shipped by barge to the U.S. Gulf Coast softened on Thursday as stiff premiums for old-crop grain eroded as the fall harvest approached, traders said.
    • CIF soybean barges loaded in September traded at 165 cents over November futures, down 5 cents from Wednesday’s trades, and were re-bid at 165 cents over futures.
    • Basis bids and offers for August barges continued to fluctuate widely. August barges traded at 290 cents over November futures, steady with Wednesday’s trades, and were re-bid at 250 cents over futures. However, barges loaded in the first half of August were bid at 300 cents over futures, underscoring tight supplies of old-crop soybeans available for prompt movement ahead of the fall harvest.
    • FOB export premiums for first-half October soybean loadings, the first available delivery period, were around 190 cents over November. Last-half October premiums were offered at around 170 cents over futures.
    • For corn, CIF barges loaded in August were bid at around 110 cents over September corn, down 5 cents from Wednesday. September corn barges were bid at 100 cents over futures, down 10 cents.
    • FOB corn export premiums for September loadings at the Gulf were nominally offered at around 140 cents over September and October premiums were around 147 cents over December.
    • Top global soy buyer China has increased inquiries about U.S. new-crop soybeans, traders said.
  • Spot basis bids for hard red winter wheat were unchanged at truck and rail market terminals on Thursday, grain dealers said.
    • Farmer sales were slow.
    • Growers were hoping that prices would rally back toward highs hit during the spring before committing to new deals, an Oklahoma dealer said.
    • Some farmers had price targets of $12 a bushel
  • Spot basis bids for corn were weak around the U.S. Midwest on Thursday morning, falling at processors, elevators, river terminals and ethanol plants, grain dealers said.
    • The soybean basis was mixed.
    • Cash bids for soybeans weakened at elevators but were steady to sharply higher at processors, rising by 30 cents a bushel in Lafayette, Indiana.
    • River bids for soybeans were unchanged.
  • U.S. cash millfeed values were steady to sharply lower on Thursday, with premiums eroding for prompt delivery in several markets.
    • Elsewhere, prices were underpinned by dry conditions in portions of the Plains and Midwest that have curbed growth on grazing pastures, boosting demand for supplemental livestock feed.
  • Spot basis bids for corn dropped at elevators in the U.S. Midwest rail and truck markets on Thursday, grain dealers said.
    • Corn bids were flat at the region’s processors and river terminals.
    • The soybean basis was steady to up strongly at processors, rising by 30 cents a bushel in Lafayette, Indiana.
    • Soybean bids were unchanged at elevators and river terminals.
    • Farmers sales were slow as growers waited to see how the U.S. Agriculture Department’s latest harvest forecasts would affect prices.
  • Spot basis offers for soymeal rose at truck market processors around the U.S. Midwest on Thursday.
    • Offers were unchanged in the rail market.
    • High prices on the cash market were chilling demand, keeping livestock and poultry producers off the market unless they had immediate feeding needs to fill, an Iowa dealer said.

US Export Sales of Soybeans, Corn and Wheat

Argentine Corn, Wheat Crop Estimates Aug. 11: Exchange

The Buenos Aires Grain Exchange releases weekly report on website.

  • 2021-22 Corn harvest advanced to 89.8% complete from 81.4%
  • 2022-23 Wheat planting area held at 6.1m ha

China Cuts 2021-22 Soy Import Estimate on Weak Demand: CASDE

China lowers estimate for its soybean imports in the 2021-22 year from the previous month due to weak demand for soybean meal, according to the latest China Agricultural Supply and Demand Estimates.

  • Soybean imports in 2021-22 are seen at 91.02 million tons, down 1.98 million tons from the estimate in the previous month, the Ministry of Agriculture and Rural Affairs said in the report
  • The cut comes as China is seen crushing a lower volume of soybeans after persistent losses for pig farmers earlier weakened demand for soymeal, the main protein ingredient in animal feed
  • Forecasts for soybean imports, output and planting acreage in the 2022-23 year remain unchanged from the previous month
  • Edible oils output in 2021-22 is cut from the previous month, on falling soybean and peanut imports
  • Imports of edible oils in 2021-22 are also lower after high import prices curbed demand
  • A lot of rain in July in most corn production regions benefited growth of the grain crop but flooding might hit some areas in the northeastern region, affecting the crop
  • Corn feed consumption is expected to rise, as pig farming margins are improving, while wheat has become less competitive as a substitute
  • China’s cotton output in 2022-23 is seen up 2% from the previous month forecast, at 5.86 million tons, according to the report

Ukraine Expects WFP Crop Vessel to Arrive at Pivdennyi Port

Ukraine expects a vessel for grain loaded for Africa to arrive at Pivdennyi port on Friday, the country’s Infrastructure Ministry said on Facebook.

  • The Brave Commander — under the flag of Liberia — is to be loaded with about 23,000 tons of grain
  • The vessel has been chartered under the framework of the United Nation’s World Food Programme and will sail to Ethiopia

Two Grain-Laden Vessels Leave Ukraine Ports For Turkey, Iran

Belize-flagged Sormovskiy 121 left Chornomorsk port carrying 3,050 tons of wheat for delivery to Turkey’s Tekirdag, according to Turkey’s Defense Ministry in tweet.

  • Star Laura left Yuzhny port carrying 60,000 tons of corn for delivery to Iran
  • Two more vessels — Efe and Sara — are authorized to go to Odesa, pending inspections, grain corridor’s Joint Coordination Centre said in emailed statement Thursday
  • Outbound vessel Rahmi Yagci to be inspected Friday

Brazil 2021-22 Corn Crop Seen at 114.7M Tons: Conab

Output est. cut from 115.7m tons in July, Brazil’s national supply co. says in its monthly report.

  • Analysts in a Bloomberg survey were expecting 116.6m tons
  • Yield and area both revised down slightly from the previous month’s est.
  • Soybean production unchanged at 124m tons

EU Corn Crop Seen Sinking to 15-Year Low as Drought Intensifies

  • Strategie Grains forecasts EU corn output at 55.4 million tons
  • The crop has ‘deteriorated drastically’ since last month

The European Union’s corn harvest will plunge to a 15-year low as drought gripping the continent parches fields, according to analysts at Strategie Grains.

The outlook for the crop has “deteriorated drastically” since last month, the French firm said Thursday in a report, slashing its production estimate by 15% to 55.4 million tons. Key growers including France, Romania and Hungary have been plagued by heat waves and a lack of rain this summer, hampering crops during their vital growth phase.

The shrinking corn harvest will tighten feed supplies for the region’s livestock herds, boosting costs for farmers already grappling with soaring energy costs and labor shortages. Meat prices in the EU jumped more than 11% in June from a year earlier, the fastest pace in data spanning two decades.

The EU often imports corn from Ukraine, even in years of better production. Some seaborne cargoes began flowing from the Black Sea country this month under a newly negotiated crop-export deal, but its grain shipments remain well below normal amid Russia’s invasion.

“For several years now, Ukraine has been the principal maize supplier to EU countries,” Strategie Grains said. “However, for the coming months, a great deal of uncertainty surrounds Ukraine’s capacities to export, because of the ongoing conflict.”

The European Commission in July forecast this year’s EU corn harvest at 65.8 million tons. The following is a table of the latest estimates from Strategie Grains:

China to Speed Brazil Corn Imports Amid Ukraine War, US Tension

  • Beijing waiver set to expedite arrival of cargoes this year
  • Move seeks to replace Ukraine supply and diversify from US

China is taking steps to accelerate imports of Brazilian corn, bringing on a new supplier of the grain at a time when the war in Ukraine has disrupted trade and tensions with the US are soaring.

Beijing will temporarily waive a key clause which paves the way for Brazil, the biggest exporter behind the US, to ship corn to China in the coming months, according to people familiar with the matter. This follows a deal in May that guarantees Brazil access to the world’s top grains market over the long term.

That agreement, which took years to conclude due to phytosanitary concerns, requires the Brazilian government to provide guidance to farmers on chemical application and crop management prior to seeding to ensure growers take measures to avoid diseases. China will waive this condition for the current season, said the people, some of whom asked not to be identified because they’re not authorized to speak publicly. If the rule still applied, it would hinder shipments as it was imposed after the start of planting.

Corn producers and exporters were informed of China’s decision by the Brazilian agriculture ministry in a meeting on August 5, according to Sergio Mendes, head of the Associação Nacional dos Exportadores de Cereais, a grain shippers’ association, and Glauber Silveira, executive director at the Associação Brasileira dos Produtores de Milho, a farmers’ group.

Both the Brazilian and Chinese agriculture ministries didn’t respond to requests for comment from Bloomberg News.

China has been seeking to diversify its corn imports, of which about 70% came from the US and 30% from Ukraine last year. The move to boost purchases from Brazil comes as Ukrainian supplies have been cut off from the world market by Russia’s invasion and as tensions between China and the US rise, fueled most recently by the visit of US House Speaker Nancy Pelosi to Taiwan earlier this month.

China already buys most of Brazil’s soybeans, another feed ingredient for its massive hog herd. The Asian nation has a history of shifting away from US agricultural supplies at a time of escalating tensions, such as in 2018-19 during a trade war, and has a broader goal to reduce reliance on a single supplier.

Smooth the Path

“It’s pretty clear Beijing is looking to smooth the path for Brazilian corn in order to replace corn that it would typically source from Ukraine,” said Even Pay, an analyst at consultancy Trivium China in Beijing.

“Beijing is worried about its high degree of dependency on the US for corn and other agricultural commodities,” Pay added. “It’s extremely unlikely that Beijing would be looking to cut off US corn imports. Beijing also wants to keep some kind of a floor under the relationship.”

China’s state grain traders are negotiating the first corn cargoes from Brazil, said some of the people, who asked not to be named. Supplies will likely come from Brazil’s 2021-22 crop and are set to arrive later this year, they said.

Despite the waiver, China hasn’t lowered the bar on sanitary requirements as the nation made it clear that cargoes with any disease listed as intolerable by local authorities will be turned away, said Mendes, head of the exporter group known as Anec. But it’s not demanding measures before the seeding anymore.

“The corn will need to be free of plagues anyway,” Mendes said by phone. First shipments should be made in the second half of the year, he added.

“Even though this crop ended up far from its potential because of dry weather, we have plenty of corn to export,” Silveira said by phone. Brazilian corn is about $17 a ton cheaper than US prices, according to Commodity3 data.

Brazil is expected to reap 114.7 million tons of corn this season, the national supply company Conab said Thursday. The harvest is almost finished.

Soybean Oil Imports by Top Buyer India Hit Record in July: Group

Soyoil imports by the top edible oil buyer more than doubled from a month earlier to record 519,566 tons in July as uncertainty over palm shipments from Indonesia prompted traders and refiners to boost purchases of the soft oil from Argentina and Brazil, according to a processors’ group.

  • Soybean oil imports rose from 230,992 tons in June, the Solvent Extractors’ Association of India said in a statement Friday
  • Palm oil purchases fell to 530,420 tons in July, from 590,921 tons a month earlier
  • Total vegetable oil imports, including non-edible oils, increased to 1.21m tons from 991,650 tons in June
  • India’s sunflower oil purchases 155,300 tons vs 119,558 tons a month earlier
  • Edible oil stockpiles at ports and in the pipeline were 2.3m tons on August 1, compared with 2.26m tons at the start of July

French Corn Ratings Decline, Worst for This Time in a Decade

The share of France’s corn crop that’s in good or very good condition dropped to 53% as of Aug. 8, crops office FranceAgriMer said on its website.

  • NOTE: That’s the lowest rating for this time of year in at least a decade, as heat and dryness grip French farms
  • Amount compares to 62% a week earlier and 91% a year earlier
  • The spring-barley harvest is now complete

Timely Rains Boost Wheat Crop Outlook in Western Australia: GIWA

Well-timed rainfall has improved the outlook for grain production in the key growing state, with wheat output seen slightly higher than an earlier forecast, according to the Grain Industry Association of Western Australia.

  • Wheat production is expected to rise to 10.3 million tons in 2022, compared with the group’s previous prediction of 10.15m tons
  • Some dry areas in the northern grain belt are on track for at least average grain yields, while other parts that were less impacted by a “dry July” should see above-average yields
  • A “very warm” winter has accelerated growth stages for all grain crops
  • A greater percentage of the crop will be filling grain prior to the inevitable heat in the spring, reducing the chance of heat shock
  • But, the crop will be exposed to a greater period of frost risk
  • Crop estimates from August forecast:
    • Wheat 10.3m tons, +1.5% from July
    • Barley 5.1m tons, -2.5%
    • Canola 3.2m tons, +11.3%
    • Oats 545,000 tons, -9.9%

Cropland Prices Soar With More Buyers From Outside Agriculture

Cropland is a growing asset class and demand for farms is outpacing available supply, according to a Federal Reserve Bank of Chicago report Thursday.

Farmland values rose 22% in the second quarter of 2022 in the district that includes all of Iowa and most of Illinois, Indiana, Michigan and Wisconsin, adding to double-digit gains in the previous two quarters. The rise also comes after Russia’s invasion of Ukraine in February sent crop prices soaring to the highest levels in a decade or more.

“Buyers from outside agriculture were helping to push farmland values higher,” said David Oppedahl, senior business economist at the Fed in Chicago.

Drought Exposure Eases in US Corn and Soybean Areas

 

US Barge Shipments of Grain Rose 3% Last Week

110,000 hens to be slaughtered after bird flu found on German farm

About 110,000 chickens are to be slaughtered after an outbreak of H5N8 bird flu on a farm in north Germany, authorities said on Thursday.

The disease was confirmed on an egg-producing farm in Langwege in the Vechta district in the northern state of Lower Saxony, the Vechta district council said.

Vechta is a major region for poultry production. A three kilometre lockdown area has been imposed around the farm plus an observation area with a ten kilometre radius, the council said. These areas contain 352 farms.

The spread of bird flu around the globe has raised concerns among governments and the poultry industry due to its ability to ravage flocks, generate trade restrictions and the risk of human transmission.

France’s farm ministry in June removed bird flu-related restrictions on poultry farming across the country, citing a halt in outbreaks after the worst-ever crisis of the highly contagious virus led to the culling of 16 million birds. (Full Story)

Risk to humans from the disease is considered low, but past outbreaks among farm birds have needed extensive slaughtering programmes to contain it.

La Nina conditions to continue, odds lower into winter -U.S. forecaster

Chances for La Niña are expected to gradually decrease from 86% in the coming season to 60% during December-February 2022-23, a U.S. government weather forecaster said on Thursday.

The La Niña weather pattern is characterized by unusually cold temperatures in the equatorial Pacific Ocean.

India Cumulative Monsoon Rainfall 8% Above Normal as of Aug. 11

India has so far received 588.5 millimeters of rains during the current monsoon season, which runs from June through September, compared with a normal of 543.9 millimeters, according to data published by the India Meteorological Department on Aug. 11.

  • The eastern and northeastern region got 16% below normal rains
  • Rainfall in the southern peninsular region was at 36% above normal
  • Cumulative seasonal rainfall data is compiled by the IMD

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This commentary is provided by ADM Investor Services, a futures brokerage firm and wholly owned subsidiary of ADM Company. ADMIS has provided expert market analysis and price risk management strategies to commercial, institutional and individual traders for more than 50 years. Please visit us at www.admis.com or contact us at sales@admis.com to learn more.

 Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by Archer Daniels Midland Company. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS.

 

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