Afternoon wheat commentary: Another defensive overnight session, and another bounce-back performance during the day
Surprisingly, just a few minutes into the night session, all three classes of wheat quickly found themselves testing their prior session's lows. SRW futures fell to more than 30 cents lower, HRW more than 25 cents lower and Spring more than 20 cents lower. Trade in Mpls was able to bounce back rather quickly and maintain only slight losses throughout the night, but Chicago and KC were not as fortunate. Both markets hovered near their lows for much of the evening, only to finally come off them during the final hour or so of the night. And even then, it was not much of a bounce, with both markets finishing the night around 15 cents lower. Similar to Wednesday, once trade moved into the day session the momentum turned much more positive. Mpls July made a run at $13.00, and even though trade did not succeed in extending further, the market did not back off much and futures finished with solid gains. The rallies in both Chicago and KC were able to extend to almost 15 cents higher at one point during the late morning, but trade was unable to hold its momentum as well as Mpls did and backed off over the latter half of the day and finished with modest losses.
The big story this morning was Russia's defense ministry said a maritime humanitarian corridor was opened today in the Azov Sea. Civil vessels may use the Mariupol port, which has been cleared of mines, for international shipping. No confirmation of other port openings yet. Early in the day the Ministry had mentioned they would be willing to open ports in exchange for relaxing some sanctions. But earlier this afternoon Italy's Prime Minister said after talking with Russia's Putin, he did not see any hope for peace in Ukraine, and he went on to say he will talk with Ukraine's President about unblocking Black Sea ports for food exports. He further noted attempts maybe uncertain, but given the seriousness of the situation, attempts must be made. Late this afternoon, the Biden administration said they are not considering holding talks about relaxing Russian sanctions to secure Ukraine grain exports. My comments regarding this situation from yesterday have not changed. At this point, how can anyone believe anything that comes from Russia? How is the Ukrainian port infrastructure? What about all the mines in the waters outside the ports? These are just a few questions of about a thousand that could be asked, yet trade continues to run with this headline like it was gospel. Rather hoping that this continues to be more of a correction between US and European values. Exports have been awful, and considering how expensive US wheat had become, this correction needed to take place.
A reminder that Monday is Memorial Day in the US, and the grain markets will be closed. Friday will be a normal trading session. The grain markets will be closed Sunday night and Monday during the day, re-opening Monday night at its usual time of 7:00 pm CDT.
Export sales this morning was not expected to be very good, and they were not. Wheat sales came in at a net NEG 2,400 mt, with 246 TMT of new crop, for combined sales of 244 TMT. The breakdown included HRW sales of a net NEG 1,800 mt old crop and 64 TMT new, SRW sales of a net NEG 8,200 mt old crop and 23 TMT new, HRS sales of 2,900 mt old crop and 113 TMT new, and White sales of 4,500 mt old crop and 46 TMT new. The Philippines and Japan each picked up a cargo of new crop, Taiwan bought 40 TMT new and Honduras 32 TMT new. Italy picked up 20 TMT of old crop and Mexico switched 38 TMT old crop to new crop. Other cancellations were minimal.
The USDA issued a statement allowing US farmers in their last year of participation in the CRP federal conservation program to voluntarily terminate their contracts and plant on that land to help with the global food crisis.
DERAL increased their wheat production forecast for Parana, Brazil by 20 TMT up to 3.88 MMT.
Export business around:
*** Egypt's Trade Ministry said they would accept imported wheat moisture levels up to 14% (currently 13.5%).
*** Iran and Russia are finalizing an agreement for Russia to supply Iran with 5.0 MMT of wheat or grain.
*** Oman based Salalah Mills said they have purchased a total of 180 TMT of wheat from Australia and India, adding the volume is enough to cover the country's consumption through the end of 2022.
*** The lowest offer in Pakistan's 500 TMT tender is thought to be $515.49/mt C&F. No purchase has been finalized yet.
*** Jordan made no purchase in their 120 TMT wheat tender.
*** Saudi state grain buyer said they have purchased 89,290 mt of domestically farmed wheat so far this season.
*** Bangladesh is in for 50 TMT of milling wheat. Only one firm has thus far given an offer.