US markets fell yesterday as traders returned their focus the strong start to the 2021 growing season despite some hot, dry weather lurking in the mid-range forecasts..
Corn prices sagged 2% lower.
Soybeans slid nearly 1% lower.
Wheat prices fell as much as 1.5%.
On macro markets, energy prices were lightly mixed.
Crude oil suffered a small setback.
Diesel dropped about 0.4%.
Gasoline, in contrast, firmed 0.1% higher.
Investors were hesitant yesterday, indeed on Wall St., the Dow, after lossed more than 250 points, was essentially unchanged, closing 23 points lower to 34,577.
Losses were erased by a set of better-than-expected jobs data from an ADP payroll report.
Meantime, FAO index of global food prices has risen for the 12th month in a row, the longest such streak in more than a decade.
The U.S. Dollar, firmed moderately.
Coming back on grain markets, wheat prices fell again, although traders are beginning to monitor hot, dry weather forecasts expected in the Northern Plains later this month.
However, technical selling yesterday left prices facing moderate cuts.
Corn prices retreated about 2% lower after a round of technical selling those eroded prices steadily throughout yesterday’s session.
Soybean prices followed corn lower, on a round of technical selling partly spurred by the faster-than-normal planting pace this year, plus solid expectations for trendline yields so far in the young season.
Meantime, in its weekly Petroleum Inventory Status report, the US Energy Information Administration provided updated ethanol production data.
Ethanol production moved back to the highest levels since last March, with a daily average of 1.034 million bushels for the week ending May 28, per the latest data from the U.S. Energy Information Administration.
Ethanol output had declined 2pc to 42.5 million gallons per day in the week ending May 21.
As the sector adjusts production capacity to current blending demand levels, ethanol stockpiles had dropped to their lowest level since 2016.
Now, ethanol stocks tilted 3% higher from a week ago, to 19.6 million barrels.
Indeed, fuel demand is rising as summer approaches, according to a research released last week that showed a 15pc increase in daily gasoline use since early March 2021.
Demand for gasoline has essentially returned to pre-pandemic levels, with a weekly gain of 2.8pc bringing the total to 398.1 million gallons/day.
However last week, ethanol blending rates dropped marginally, although this appears to be a temporary production adjustment based on lower ethanol inventory levels and increased gasoline demand.
This is good news for ethanol production, which was reported to have stabilised at a pre-pandemic level in last week’s report.
In this context, corn basis bids were mostly steady but did inch a penny higher at an Illinois river terminal and fall 4 to 5 cents lower at two other Midwestern locations.
Soybean basis bids, on the other hand, jumped 25 cents higher at an Indiana processor and shifted a penny higher at an Illinois river terminal while holding steady elsewhere across the central U.S..
The evolution of prices will be dictated mainly by the climatic conditions to come on the Corn Belt, knowing that for the moment the sowing conditions have been favorable.
The critical flowering period will be closely monitored.
Northern Plains weather is still a feature, the outlook continues to focus on temps.
Dry and hot weather in most areas through early next week will allow moisture shortages and stress on spring wheat germination to expand, especially across central Montana, eastern Dakotas, and Minnesota.
Readings will likely top out near 100°F (28°C) Friday and Saturday.
Spring wheat carries a large percentage of inelastic demand which partially explains the sometimes-violent market moves to adverse conditions.
In Argentina, the Buenos Aires Grains Exchange notes that the country’s 2020/21 corn crop is now 34% harvested and that late-planted corn yields “continue to exceed initial expectations” as the group held steady its prior forecast of 1.811 billion bushels.
Argentina is the world’s No. 3 corn exporter.
The Buenos Aires Grains Exchange reports also that Argentina’s 2020/21 soybean production will likely reach its prior projection of 1.598 billion bushels, with nearly 97% of this season’s harvest now complete.
A severe drought has affected coffee and maize output in Brazil since the pandemic began.
On European market, grain prices on Euronext ended the session fairly neutral yesterday.
However, the withdrawal of the Eurodollar parity and worrying weather conditions across the Atlantic allow European prices to remain in the green.
The threshold of 219/220 euros / t on the September wheat maturity constitutes a sales area and is used in particular by producers to set only the volumes for the new harvest.
The thunderstorms that are raging in France are sometimes violent and can cause damage locally, but the return of milder weather tomorrow shows some optimism about future French production.
Meantime, France’s soft wheat exports last month outside of the European Union was the lowest May tally in more than a decade, falling to 10.1 million bushels amid tightening supplies.
Algeria accounted for approximately 75% of the total.
Indonesia is thought to have passed in all offers for its international tender to purchase 8.8 million bushels of animal feed wheat that closed earlier this week.
Prices were regarded as too high.
Rapeseed, on the other hand, continued to grow yesterday in the wake of other vegetable oils.
Canadian canola prices are nevertheless down following favorable rains in the south of the country.
Meantime, the Malaysian palm after provided support to the oil market by reaching its highest level in two weeks, gives way in Kuala Lumpur this morning.
Vegetable oil production in Southeast Asia has remained stable.
From Black Sea basin, according to the TASS news agency, Russia’s agriculture ministry forecasts a wheat production of 81 million tonnes in 2021.
Last month, the ministry predicted that Russia’s grain crop for 2021 will be 127.4 million tonnes, with 81 million tonnes of wheat.
Russia is the world’s No. 1 wheat exporter.
Meantime, the countries of the Black Sea zone have officially entered summer since June 1, the mercury still remains below seasonal norms from Romania to the plains of eastern Russia.
A rise in mercury is expected for next week when precipitation should still be as recurring.
Meanwhile, as China’s economy recovers, growing meat consumption has raised the country’s demand for grain imports.
On this wake, negotiations continue with Australia about barley, to put an end to disagreements and the taxes imposed by China on Australian origins.
From Australia, old and new crop market bids remained relatively unchanged yesterday.
Values for the week have been steady on wheat and barley.
Yet again canola markets continue to provide fireworks with $30-40/t gains on new crop this week as we saw stronger offshore values and, same old story, balance sheets remain very tight globally.
Growers in northern NSW and central NSW received a nice top up with 10-20mm falling and still more forecast for the next 4-8 days.
Rain up along the border region of NSW/Qld has halted the sorghum harvest for the next few days.
This will continue to increase the chances of some more sprouted grain that is yet to come off.
The 8-15 day forecast still looks positive with 15-25mm forecast for SA early next week, while we saw precipitation push across Victoria in past 24hrs as the totals start to come in.
All is looking positive on the weather front.
Internationally, Indonesia did not respond to its initial tender for 240,000 t of feed wheat.
The German origin seems to be sought after by Iran, in particular because of its qualitative specificities.
In this context, Chicago wheat fell US11.25c/bu.
Kansas fell 9.5c/bu.
Minni even fell, down by 5.5c/bu to close at 777.5c/bu.
French milling wheat rallied €0.50/mt.
Black Sea wheat futures fell US$0.25/t and Black Sea cash was quoted unchanged.
Corn fell 13c/bu to settle at 662c/bu.
French corn fell €1/t.
China domestic corn fell CNY28/t.
Tonigth we will see how the session close.
