Commodity prices again accelerated upward on Tuesday evening, in the wake of the US market.
Corn’s blown back up to pre sell-off levels building on yesterday’s bounce, with excitement across the market after 1.36 million tonnes of old crop corn sold to China was flash reported.
Two more boats were reported but destination is yet unknown.
There had been rumours of more Chinese buying last week and the sales flashes on Thursday to unknown, but the size of the flash was a major surprise.
Bulls are now talking up the demand story again and hoping that strong purchase interest in domestic reserve sales there is an indicator of more yet to come.
So, in Chicago corn prices jumping nearly 4% higher; soybeans rose more than 2%, meantime, and wheat contracts tracked as much as 2.5% higher.
With, corn March futures that climbed 19.75 cents to $5.3125, with May futures up 18.5 cents to $5.3275.
Soybean March futures that gained 28 cents to $13.7150, with May futures up 28.25 cents to $13.71.
And the wheat March Chicago SRW futures that rose 16.5 cents to $6.65; March Kansas City HRW futures gained 13 cents to $6.4025, and March MGEX spring wheat futures added 11 cents to $6.37.
Wheat and corn market on Euronext does not have to envy other markets.
About oilseeds, canola prices in Canada started to rise again, reaching their highest level in 13 years.
However, rapeseed recorded more limited gains on its short-term contract.
Oilseeds indeed came up against the symbolic ceiling of 440 € / t.
The slowdown in Malaysian exports since the start of the month and production which is ultimately tending to recover are also weighing on the oil market as a whole.
On Wall St., the Dow inched 28 points higher to 30,988 (a pickup of around 0.1%) as investors attempt to untangle the latest batch of corporate earnings reports.
Energy prices were mixed.
Crude oil spilled about 0.25% lower to remain just below $53 per barrel.
Diesel picked up 0.25%, in contrast, with gasoline rising 1.25% higher this afternoon.
The dollar evolves a little bit to 1.2190 against the euro and to 74.80 against the ruble.
Now, we would like to go into the news of the day.
This outstanding corn sale to China was the largest since last July.
Regular export inspections from the other day had corn at 1.4 million tonnes, beans 2Mt, and wheat at 524,000t and three boats of milo/sorghum to China.
ADM’s CEO Juan Luciano also expects China’s corn imports to rise to 984 million bushels as the country continues to rebuild its hog herd.
Another factor supporting the market is the demand for American ethanol, which is again coming from China.
About that ADM also reports that China purchased around 200 million gallons of U.S. ethanol for the first half of 2021.
So, ahead of tomorrow’s weekly ethanol production report from the U.S. Energy Information Administration, it may be worth taking a quick look back at the latest few batches of data.
Ethanol production has been slowly but steadily creeping higher since late December, moving higher for four consecutive weeks to reach 945,000 barrels per day through January 15.
Wednesday’s report will cover the week through January 22.
Therefore, in this context, it talk about a “new” lower corn carryout in the US is doing the rounds, with some of the demand optimists pushing talk that we might approach the billion bushel mark.
It’s certainly not there yet, but easy to pencil if you were generous with export and feed figures.
Next year’s lower expected US corn acres would add further fuel to the fire.
Brazil’s Anec predicts the country’s corn exports for January will reach 91.1 million bushels, which is slightly lower than its prior forecast made a week ago.
A new report from US Ag estimates that 2020/21 corn production in Argentina will reach 1.850 billion bushels.
That’s nearly 20 million bushels lower than prior figures; the agency assumes drought damage earlier this season has trimmed production potential.
Some are forecasting drier-than-normal weather in February, which could further lower yields.
This balance sheets stretched out in corn, it is also supporting wheat.
In add, about wheat, USDA’s latest round of winter wheat quality ratings showed Kansas, the No. 1 wheat producing state, has 43% of its crop rated in good-to-excellent condition through January 24, which is three points lower than it was at the beginning of the month.
Quality ratings also fell in Colorado, Nebraska and South Dakota while firming in Montana.
Climatic conditions in the Black Sea are also worrying again, with a thermostat rising rapidly over a large part of Russia and Ukraine.
The agronomic services of the Ukrainian Hydrometeorological center confirm that the cold snap of the past week did not caused significant damage to the winter crops in place.
Depending on the region, the minimums temperatures observed were between -18 ° C and -32 ° C. however, it has to be noted that the potential damage is localized along the Black Sea coast, near the coasts of the Kherson and Odessa regions.
Too early to make any large yield calls, but it’s supporting the continued concerns.
About soybeans, Brazilian soybean harvest continues to peck along slowly, with some fairly disappointing yield talking coming in, even as market crop estimates have been trending upwards.
It’s still early days for harvest, but the coming weeks will see a lot of attention to field results coming off.
However, it is paradoxically the rains in Brazil that are now supporting prices, because they arrive during the harvest time, delaying the progress of the harvest.
And the news of sluggish harvest pace in Brazil added to the bullish sentiment today, with consultancy AgRural estimating that only 0.7% of this season’s harvest is complete through January 21.
Progress crept just 0.3% above the prior week’s tally.
However, the rains could be a mixed blessing, however, because they could benefit late-planted crops despite slowing down harvest for earlier planted crops.
In the meantime, Anec is only projecting January soybean exports at 8.3 million bushels, which is sharply lower than its previous forecast last week.
We also note a return of the other international buyers interests.
Japan issued a regular tender to purchase 2.2 million bushels of food-quality wheat from Australia that closes later this week.
The grain is for shipment in April.
Trade relations between China and Australia have been rocky, but after a three-month dry spell for wheat exports, China purchased more than $191 million worth of Australian wheat in December.
That helped push Chinese imports of Australian goods to near-record levels in 2020.
Jordan purchased 5.5 million bushels of animal feed barley from optional origins in an international tender that closed earlier today.
The country has sought similar volumes of wheat and barley on a near-weekly basis this past year.
The latest sale is for shipment in late July.
Saudi Arabia’s SAGO barley tender results out late Monday had sales in the ~$277/t Gulf / $278-9 Red range.
Algeria’s new OAIC tender offers are due tonight, Wednesday.
We are surprise as Egypt has still not come back to purchasing.
So, while the “new” US stimulus bill keeps getting kicked down the road, with comments from politicians suggesting that they are aiming for early/mid-March at the best, markets are running up, looking new oppotunities, even if cash markets there are reportedly very quiet but stable.
