US grain prices moved back into the green yesterday, with big gains in wheat, as more worries has come about production in the U.S., Russia cut its wheat harvest and emerged a lower Brazilian corn harvest than expected.
Expectations for lower quality ratings pushed corn and soybeans higher.
So, the wheat complex caught the bigger gains, with Chicago wheat September contract up around 3,66% higer.
Kansas wheat September contract jumped by 4,49%;
Minneapolis wheat September contract moved up around 1,99%;
Corn moved around 2% to 2.5% higher.
Soybean trended only slightly higher by the close.
On macro markets, oil prices collapsed over two bucks as worries over China’s economy resurfaced after a survey showing growth in factory activity slipped sharply in the world’s second-largest oil consumer, with concerns compounded by higher crude output from OPEC producers.
Consequentially, Brent crude oil futures and U.S. West Texas Intermediate (WTI) crude futures dropped more 3%.
On Wall St., US stocks indexes limited loss as investors attempt to balance bullish earnings reports against worries over a rise in the coronavirus delta variant.
In this context, the Dow Jones Industrial Average fell 0.28%, the S&P 500 lost 0.18% and the Nasdaq Composite added 0.06%.
Meantime, Asian stocks slipped this morning, as the Delta coronavirus variant spread in key markets in the region and put Chinese authorities on high alert, rattling investor confidence.
In fact, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.40% in early trading.
Japan’s Nikkei was off 0.85% in early trade.
China’s blue chip index CSI300 shed 0.80% while Hong Kong’s Hang Seng Index fell 0.83%.
Australia’s benchmark index, the S&P/ASX200 is off 0.25%.
Currencies have seen U.S. Dollar softened slightly, with the AUD up to 73.6¢, the CAD $1.251, and the EUR $1.187.
Coming back on grains market, US Corn Belt weather maps still are attracting attention, with central Corn Belt areas nearly unchanged in the latest runs but some increases in chances for rain in parts of central MN and eastern ND, boosting some hopes for more normal yields in parts.
USDA WASDE and crop production reports will publish next 12 August.
Meantime, the weekly USDA crop update rated corn condition 62pc good-to-excellent, 2pc lower than last week.
Soybeans were at 60pc, 2pc higher than last week, and milo 62pc, 4pc lower than previous.
Spring wheat saw its condition improve by +1 point to 10% from “good to excellent” “.
The most degraded wheat is in fact already harvested as fodder.
Spring wheat quality ratings actually improved a point this past week, but only 10% is rated in good-to-excellent condition.
Compare that to year-over-year results of 73%.
Another 26% of the crop is rated fair (up a point from last week), with the remaining 64% rated poor or very poor (down two points from a week ago).
Harvest is now 17% complete, up from 3% a week ago and firmly ahead of the prior five-year average of 8%.
The North Dakota first estimate of harvest progress this week was 6pc.
The winter wheat harvest is moving even closer to completion, with 91% progress through Sunday.
That’s up from 84% last week and favorable to the prior five-year average of 86%.
Eight of the top 18 production states are now 100% complete, according to USDA.
Idaho has the furthest to go, at 47%.
Weekly export inspections were good for corn at just under 1.4Mt, and mediocre for wheat and beans (0.4Mt and 0.2Mt respectively).
Milo/sorghum had a Texas Gulf boat to China.
Corrections to previous reports got a little attention too as two boats of corn to China were added for mid-July shipment.
USDA June crush figures were 162.1 mbu, down from earlier this spring but about as expected.
Ethanol crush was reported a hair under 440 mbu, down from 449 in May.
In this context, corn basis bids tanked 8 to 29 cents lower at three interior river terminals while firming 5 cents at an Iowa ethanol plant.
Other locations across the central U.S. held steady.
Soybean basis bids were mostly steady to soft after dropping 6 to 25 cents lower at three interior river terminals.
An Ohio elevator bucked the overall trend, firming 2 cents.
From South America, Brazil’s second corn crop production has tumbled to a decade-long low of 2.031 billion bushels, according to the country’s AgRural consultancy.
That will be a year-over-year decline of nearly 27%, if realized.
Indeed, the reduction by 3.1 Mt, give a total corn crop production by 82.2 Mt, a drop of nearly 20 Mt in one year!
Brazil has struggled through drought conditions and a late-planted Safrinha crop this season.
There were also some frost events in late June that caused additional problems.
Meantime, Brazilian corn exports last month fell substantially year-over-year, with 78.1 million bushels.
In contrast, Brazilian soybean exports in July reached 318.6 million bushels, a year-over-year drop of 13%, per the latest governmental data.
On European market, grains also started their week on a strong increase in the face of production estimates which continue to decline around the globe.
Meanwhile, the new season begins with low stocks among the major wheat exporters.
Additionally a chaotic European harvest due to repeated rains and here continue to delay.
In France, the return of the rains is also worrying while the return of yields are disappointing and fears about quality are confirmed.
And this situation give no room for production losses.
Consequentially, milling wheat market is returning to its peaks of last spring.
Wheat is pulling in its wake the other cereals on the rise, and in particular European corn, despite good growing conditions in Europe.
So with the exception of 2012, wheat which had never reached the € 230 / t mark on Euronext for the beginning of August, yesterday, has been increase of +5.25 to 230.75 € / t at closing in December 2021.
Meantime, the lean period poses some additional problem for corn, which reached a new historic high yesterday at € 300 / t during the session on the August 2021 deadline which expires on Thursday August 5th.
Conversely, the health situation is pushing the oil market down.
The Malaysian palm was weighed down by a rebound in national production at the end of July.
However, rapeseed all the same withstood the pressure from the oils after the European Commission announced that it was renewing anti-dumping taxes on American biofuels for an additional five years.
Meantime, Stratégie Grain forecast EU canola production just over 17 million tonnes (Mt).
From the Black Sea basin, Russian wheat harvest figures were pegged at 12.8 million ha, with field work starting to slow down some as earlier maturing areas wrap up harvest.
Ukrainian harvest was pegged at a little under two thirds complete too.
Meantime, market is still very concerned about announcements of revisions to production potential in Russia.
Yields are revised downwards in the later areas, areas which currently suffer from dry conditions.
After Ikar, SovEvon notably cut its Russian harvest estimate by 5.9 Mt, to 76.4 Mt!
The 2021 production of the country would thus drop back below 80 Mt, thus pushing operators to make more use of the starting stock, which is more substantial than in previous years.
Consequentially, grain prices in Russia are firming up again with little enthusiasm for sales on the part of producers.
In this context, Russia will export 47.8 mln tonnes of grain in 2021/22 MY, said the Head of the analytical center at Rusagrotrans JSC, Igor Pavensky.
The expert cut wheat export forecast to 35.3 mln tonnes in 2021/22 MY, down by 2.3 mln tonnes compared to 2020/21 MY.
Wheat prices in Ukraine are also rising at the start of the week.
The rise in grain prices, meantime,is boosting with interest in purchases from European importing countries and China.
Prices for October / November loads are on the rise and back to levels similar to last month.
The tension over the lean season for maize seems to be currently benefiting Ukrainian maize, where the state of crops is reassuring for the moment.
From the Middle Kingdom, China’s state grain stockpiler, Sinograin, sold another 1.2 million bushels of its state corn reserves on auction Friday.
The grain had been imported prior to the sale.
Only around 13% of the total available for purchase was sold. Sinograin has held more than half a dozen similar auctions throughout June and July as it attempts to boost local supplies and tamp down high prices.
From Australia, extended run weather maps are flirting with another rain event for WA later this month, but still dry forecasts across the east coast.
Meantime, grain markets firmed to start the week.
Old crop protein continued to shine as bids picked up on the east coast.
Canola bids were down nearly $20/t with the board move, but again limited liquidity and almost no offers out there.
Internationally, Egypt’s GASC tender saw them buy one Romanian boat at a ~US$294/t candf (including GASC costings).
Russian offers were about ten bucks over the cheapest Romanian after freight.
Jordan issued a new international tender to purchase 4.4 million bushels of milling wheat from optional origins that closes on Wednesday.
The grain is for shipment between February and March.
Meantime, discussions are underway with the OAIC in Algeria interested to buy milling wheat.
