winter wheat

The Commodities Feed: Copper spread tightens on inventory withdrawals Oil prices are trading under pressure this morning on demand side uncertainties as Saudi Arabia increased the official selling price for July deliveries for all regions. LME copper continues to see inventory withdrawals as demand in Asia picks up.   Energy – Saudi increases the official selling price for oil Saudi Arabia increased its official selling price for all regions for July, a day after the nation pledged an additional oil supply cut for the same month. Saudi Aramco will sell the Arab Light crude for buyers in Asia at a US$3/bbl premium for July deliveries, an increase of US¢45/bbl compared to June 2023.The premium for the US and European deliveries has increased by US¢90/bbl, while buyers in the Mediterranean region will see an increase of US¢60/bbl. The hike in premium comes as a surprise considering ongoing demand concerns and that Saudi Arabia has been pushing for supply cuts to bring the oil market into balance.   Metals – Declining copper on-warrant stocks tighten LME spread Recent LME data shows that total on-warrant stocks for copper dropped by 17,750 tonnes – the biggest daily decline since October 2021 – for a second consecutive session to 71,575 tonnes (the lowest level in almost a month) as of yesterday. The majority of the outflows were reported from South Korea’s Busan warehouses. Meanwhile, cancelled warrants for copper rose by 18,025 tonnes after declining for three consecutive sessions to 27,375 tonnes yesterday, signalling potential further outflows. The cash/3m for copper stood at a contango of just US$4/t as of yesterday – compared to YTD highs of a contango of US$66.26/t from 23 May – indicating supply tightness in the physical market.   In mine supply, Peru’s latest official numbers show that copper output in the country rose 30.5% year-on-year (+1.2% month-on-month) to 222kt in April. The majority of the annual production gains came from the higher output levels from mines like Southern Peru Copper, the Las Bambas and Cerro. Cumulatively, copper production grew 15.7% YoY to 837.5kt in the first four months of the year. Among other metals, zinc production in the nation increased 31.4% YoY to 130.6kt in April.   In ferrous metals, the most active contract of iron ore trading at the Singapore Exchange extended its upward rally for a fifth consecutive session and traded above US$108/t this morning on speculations of more supportive steps from China to accelerate its economic growth. The recent market reports suggest that the People’s Bank of China is likely to cut the reserve-requirement ratio for banks and might also lower interest rates in the second half of the year. Meanwhile, BBG also reported that the Chinese government is preparing a new batch of measures to push growth in the property market.     Agriculture – US crop planting maintains the pace The USDA’s latest crop progress report shows that US corn plantings continue to rise with 96% of plantings completed as on 4 June, compared to 93% of planting done at this point in the season last year and the 5-year average of 91%. Similarly, soybean plantings are also growing, with 91% planted as of 4 June – well above the 76% seen at the same stage last year and the 5-year average of 76%. Meanwhile, spring wheat plantings are 93% complete. This is above the 81% planted at the same stage last season and in line with the 5-year average. Meanwhile, the agency rated around 36% of the winter wheat crop in good-to-excellent condition, up from 34% a week ago and 30% seen last year.   The USDA’s weekly export inspection data for the week ending 1 June indicated a drop in demand for US grains over last week. The agency stated that US corn export inspections stood at 1,181kt, lower from 1,346.4kt in the previous week and 1,458.5kt reported a year ago. For wheat, export inspections stood at 291.6kt, down from 391.3kt from the previous week and 355.3kt reported a year ago. Similarly, soybean export inspections fell to 214.2kt, compared to 243.1kt from a week ago and 370kt from a year ago.   The director general of the Ivory Coast's cocoa regulator, Conseil Café Cacao, stated that the domestic cocoa crop is expected to improve in 2022-23 (compared to the previous year) despite intensifying concerns about a potential outbreak of the swollen shoot virus. Ivory Coast cocoa production is stabilizing despite a slow start, taking the season's harvest projections between 2mt-2.2mt. Last week, the International Cocoa Organization (ICCO) projected an increase of 4% in Ivory Coast's cocoa output this season, reaching 2.20mt.

Agriculture – USDA slashes corn and soybean crop ratings The USDA’s latest crop progress report shows that the USDA trimmed its crop condition ratings for US corn and soybean following dry weather conditions. The USDA rated 55% of the corn crop in good-to-excellent condition as of 18 June, lower than 61% a week ago and 70% seen at the same stage last year. Similarly, the agency rated 54% of the soybean crop in good-to-excellent condition, lower than 59% a week ago and 68% seen at the same stage last year. On the other hand, the USDA rated around 38% of the winter wheat crop in good-to-excellent condition, unchanged from a week ago, and up from 30% seen last year. Weekly data from the European Commission show that soft wheat shipments from the EU reached 30.4mt for the season as of 18 June, up 11% YoY. Morocco, Algeria, and Nigeria were the top destinations for these shipments. Meanwhile, EU corn imports stood at 25.3mt, compared to 16.1mt reported a year ago.

Agriculture – US corn and soybean concerns The United States Department of Agriculture's (USDA’s) latest crop progress report continues to highlight concerns for the US corn and soybean crop, given current dry weather conditions. The USDA rated 50% of the corn crop in good-to-excellent condition over the last reporting week, lower than 55% a week ago and 67% seen at the same stage last year. In fact, the rating for the corn crop is the lowest seen for this time of year since 1988, whilst it is a similar story for soybeans, with 51% of the soybean crop rated good-to-excellent condition, down from 54% a week ago and 65% seen at the same stage last year. These poor crop conditions will leave speculative shorts nervous as we move through the growing season, and this is the reason why we have already seen some large amounts of short covering. Meanwhile, for winter wheat, an improvement was seen in crop conditions with 40% of the crop in good-to-excellent condition, up from 38% seen a week ago. Ukraine’s Agriculture Ministry reported that Ukrainian grain exports remained almost unchanged from the previous year and stood at 48.4mt for 2022/23 as of 26 June with the current season nearing its end. These shipments include 16.6mt of wheat (down 11% year-on-year) and 28.8mt of corn (up 23% YoY). In a separate data release, the EU’s Monitoring Agricultural Resources unit projects Russia’s wheat harvest to fall 17% YoY to 86.7mt for 2023, as mixed weather conditions continue to hurt the wheat crop.

Another season of tightening for the global wheat balance The US wheat balance is expected to loosen over the course of the 2023/24 season due to higher output, largely as a result of winter wheat. The USDA expects domestic wheat output to increase by 74m bushels to 1,739m bushels. As a result, ending stock estimates for the season have been raised from 562m bushels to 592m bushels. This is above the roughly 565m bushels the market was expecting. The global wheat balance was more constructive with ending stock estimates for 2023/24 lowered from 270.7mt to 266.5mt, which is also lower than the more than 270mt the market was expecting. If realised, this would be the fourth consecutive year of declines in stocks. The revision lower was driven by expectations of lower output from the EU, Canada and Argentina, whilst demand is also expected to edge higher.   Wheat supply/demand balance

Agriculture - US harvest progress The USDA’s weekly crop progress report for the week ending 29 October shows that 71% of the US corn crop was harvested, down from 74% at the same stage last year. However, it was above the five-year average of 66%. Similarly, 85% of the US soybean area was harvested, down from 87% at the same stage last year, but higher than the five-year average of 78%. Finally, 84% of the winter wheat area has been planted, down from 86% at the same stage last year and slightly lower than the 5-year average of 85%. Weekly export inspection data from the USDA for the week ending 26 October shows that US corn and wheat inspections rose, while soybean exports eased over the last week. Export inspections of corn stood at 531.5kt, up from 449.3kt in the previous week and 445.7kt reported a year ago. Similarly, US wheat export inspections stood at 189.8kt, above 169.5kt a week ago, and also higher than 137.1kt seen last year. For soybeans, US export inspections stood at 1,890.2kt, down from 2,625.7kt a week ago and 2,586.2kt for the same period last year.