Yesterday US farm markets react negatively to the hurricane damage at export facilities.
At the close, the Dec. corn futures finished 1.56% lower.
November soybean futures settled 0,82% down.
Chicago wheat futures closed 0,17% lower.
Kansas moved marginally lower.
Minneapolis fell 0,68%.
On macro markets, oil prices recovered on this morning after the lower yesterday session.
Investor are waiting an OPEC+ meeting, that will sit today at 15:00 GMT in which will be decided whether to stick to a plan to add 400,000 barrels per day (bpd) each month through December.
Meantime, COVID-19 cases soar in Asia and U.S. refiners assess flood damage in the wake of Hurricane Ida.
A total of 2.3 million bpd of refining capacity, or 13% of U.S. capacity, was shut in Louisiana, the U.S. Department of Energy estimated.
At the same time, about 94% of oil and natural gas production remained suspended in the U.S. side of the Gulf of Mexico.
Supporting the market, meantime, American Petroleum Institute industry data showed U.S. crude stocks fell by 4 million barrels for the week ended Aug. 27, which was a bigger decline than analysts had expected.
Official U.S. Energy Information Administration inventory data is due on this morning at 10:30 a.m. EDT (1430 GMT) .
In this context, Brent crude futures for November gained 45 cents, or 0.6%, to touch $72.08 a barrel by 06:51 GMT, after losing 42 cents on previus session.
U.S. West Texas Intermediate (WTI) crude futures for October was at $68.95 a barrel, up 45 cents, or 0.6%, after falling 1% on Tuesday on expectations oil demand would drop as six refineries in Louisiana were shut.
On the financial side, fears about slowing growth are not unique to China.
Indeed, Wall Street finished marginally lower yesterday, after U.S. consumer confidence fell to a six-month low in August as soaring COVID-19 infections and rising inflation dampened the economic outlook.
Meantime, Asian shares recovered from losses of this morning even as data in several markets suggested global economic growth is slowing, while the dollar inched up from three-week lows.
MSCI’s broadest index of Asia-Pacific shares outside Japan turned positive, up 0.32% to its highest since early August, having posted gains in six out of the last seven sessions.
U.S. stock futures, the S&P 500 e-minis, rose 0.29%, and in early European trade, the pan-region Euro Stoxx 50 futures climbed 0.66% and FTSE futures gained 0.42%.
Japan’s Nikkei gained 1.1% and reached its highest level since mid-July as some investors speculated political instability in the country was coming to a head.
There were also gains in Chinese blue chips, up 1.76% and in Hong Kong up 0.62% despite China’s Caixin/Markit Manufacturing Purchasing Managers’ Index, showing a contraction in activity for the first time in nearly 18 months, because of COVID-19 containment measures and supply bottlenecks.
Australian shares fell 0.28% after reporting that economic growth slowed in the June quarter, though it still beat expectations.
Coming back on grains market, yesterday session was dominated by position closures with the September expiry coming to maturity.
First deliveries on September futures contracts saw 1k of Chicago wheat – making headlines with questions about what the quality on that may be.
Meantime, it is difficult to estimate the impact of Hurricane IDA on port capacities in the south of the country.
According to some analysts there is little to fear about the country’s export capacities overall.
However, export delays through New Orleans are a concern.
The CHS terminal is not expected to be back up until at least mid-September, and potentially only early October.
Other terminals are expected to be similarly affected.
Cash basis on barges continues to collapse with the impacts to demand.
No corn deliveries were reported, and no beans, although there were 283 lots of Minneapolis wheat delivered.
On the other hand, the number of ships waiting to enter the biggest U.S. gateway for trade with Asia reached the highest since the pandemic began, exacerbating delays for companies during one of the busiest times of the year for freight.
Forty-four container carriers were anchored and awaiting a berth space outside the twin ports of Los Angeles and Long Beach, California, as of late Friday, topping the record of 40 initially set in early February, according to officials who monitor marine traffic in San Pedro Bay.
The average wait rose to 7.6 days, from 6.2 in mid-August, according to L.A. port data.
About corn, Midwest rains are believed to be helpful to the bulk of the corn crop, 94% of which is not yet mature.
Ahead of USDA’s monthly Grain Crushings report, traders surveyed are expecting to see 448.8 mbu of corn used for ethanol production in July.
If realized that would be a 5.8% increase from July 2020’s corn grind.
However, its should to note also that for new crop January Dalian Corn Prices set a new LOC low on Monday at 2,481 yuan/MT ~ ($9.76/bu).
About soybeans, ahead of the monthly Fats and Oils report, the trade is looking for a 165.2 mbu July soybean crush.
If realized that would be down 10.4% from July ’20.
NOPA members showed a July crush of 155.105 mbu.
BO stocks are estimated at 2.136 billion lbs.
From South America, good rains seen over the last 10 days in southern Brazil gave the soil moisture a boost and favored the 1st corn crop planting progress in Rio Grande do Sul.
According to the AgRural, 5% of the area had been planted in south-central Brazil by Aug 26.
In contrast, Argentine wheat in the west is especially need of rainfall as this area has been dry since planting was completed.
Meantime, Argentina’s government extended beef export restrictions on Tuesday until the end of October, seeking to bolster domestic supply to help contain rising local food prices, according to a decree published in the official gazette.
The South American country has suffered from high inflation for years with the annual rate now running above 50%.
The sector lost around $100 million in exports last month alone due to the restrictions and the measures could even adversely push up prices.
Approximately 96% of Paraguay’s grain exports utilize the Paraguay and Parana Rivers and the movement of grain has been slowed significantly, and for barges that do make the trip to Argentina, it is taking three times longer than normal.
There are silos in Paraguay still full of last year’s production, and if the situation does not improve by the end of 2021, there may still be gain in Paraguay that has not been exported.
The old crop will have to be moved out to make way for the new crop which will start to be harvested in January.
Meantime, meatpackers in landlocked Paraguay will probably slaughter 20% to 25% fewer cattle this month due to a lack of shipping containers, soaring transport costs and erratic transit times, said Korni Pauls, deputy chairman of trade group CPC.
On European market, Euronext fell sharply into the red yesterday.
European wheat prices dropped to their lowest in almost two weeks as traders priced in larger global supplies than previously feared and awaited the results of the Algerian tender.
A couple of shipments could be sourced from Poland, one or two shipments from Germany but a good volume could come from France after OAIC informally compromised on the test weight quality criteria.
While qualitative issues dominate the French market, the qualitative criteria are more consistent in Germany, which could therefore benefit from export markets generally dominated by France.
Meantime, Asian countries have accounted for a greater share of the EU’s wheat shipments so far in 2021-22, as larger domestic feed wheat production has partially displaced the region from its traditional milling wheat buyers in north Africa this year.
South Korea emerged as the second-largest importer of EU wheat over 1 July-30 August, having received a combined 428,000t in the period, or 11.6pc of overall shipments from the EU, provisional European Commission data show. In comparison, no wheat cargoes were delivered from the EU to South Korea at the same time last year.
Meanwhile, Vietnam became the fifth-largest importer of EU soft wheat in the first nine weeks of the current marketing year, having received 259,000t of the product in the period.
This compares with nothing received by Vietnam in July-August last year and just 1.39t for the whole of 2020-21.
In contrast, shipments to Algeria — one of the largest importers of EU wheat — fell to 539,000t so far in 2021-22 from 668,000t last year, forming 14.7pc of overall EU shipments this year, down from 20.4pc in same period of 2020-21.
As of August 29, the EU exported 3.68 million tonnes of wheat against 3.28 million the previous year.
Barley exports reached 2.12 million tonnes against 1.60 last year.
To note that the current figures no longer take into account those of the United Kingdom since January 1, 2021.
Rapeseed imports stood at 574,664 tonnes on August 29, compared to 809,917 tonnes last year.
From the Black Sea basin, according to the Ministry of Agriculture in Ukraine, the wheat harvest could reach 32 million tons this year, allowing an export potential for the country of 23.8 million tons.
The barley harvest would reach 10 million tonnes and that of rapeseed 2.79 million.
This compares to 24.9 million tonnes of wheat and 7.6 million tonnes of barley last year.
In contrast, Russian agriculture consultancy Sovecon said on Tuesday it has cut its forecast for Russia’s 2021 wheat crop to 75.4 million tonnes from 76.2 million tonnes because of low spring wheat yields.
Consequentially, Sovecon said last week that it expects Russia’s 2021/22 wheat exports to decline to the lowest level in five seasons due to the smaller crop, slow pace of exports and tough competition with other suppliers such as Ukraine.
In contrast, according to the Head of the analytical center at Rusagrotrans JSC, Igor Pavensky, export of Russian wheat will exceed the preliminary expectations and will reach about 4.75-4.8 mln tonnes in August (excluding supplies to the EAEU).
Meantime, Black Sea cash markets remain firm despite the board drops.
Wheat prices, in particular, rose again yesterday, while we are witnessing a slight decline in corn prices.
Farmer selling is picking up at the higher prices amid active buying interest and the compounded tax lag impact in Russia.
Meantime, Russia harvested 65.54mmt of wheat with current avg yields 3.01.
75.9% of harvest area (tot. 28.7177 mln ha) was done.
From the Middle Kingdom, the WTO will examine the dispute between China and the US over China’s grain import restrictions.
China has imported about 23mmt of corn in 20/21, close to USDA’s forecast of 26mmt.
The department kept its official forecasts unchanged for 2021-22, while the USDA Foreign Agricultural Service said imports would likely be 20 million tons.
Meantime, Beijing bought more than 50,000 tonnes of meat during July, after pork prices fell below the cost of raising pigs.
Although this helped prices stabilize last month, they have fallen again in recent weeks, causing producers across the country to suffer losses.
The National Development and Reform Commission said in a statement on its official WeChat account that it will “once again launch the purchase work of the central pork reserve within a year.”
He also urged local governments to buy pork to “ensure the smooth running of the live pig market” and said that food processing companies should take the opportunity to replenish their inventories.
Meantime, African swine fever is spreading rapidly in China, again.
In this context, new crop January Dalian Corn Prices set a new LOC low on Monday at 2,481 yuan/MT ~ ($9.76/bu).
From Australia, local wheat markets were up another couple of bucks, albeit in quiet trade and with little origination business happening.
Most growers appear happy to wait before making further sales.
Weather remains in focus amid warmer temperatures and more chance of rain.
Internationally, Algeria’s OAIC tender reportedly traded around US$355/t said to be in the order of ~300,000t.
The specific weight criteria are revised downwards to 76 minimum against 77/78 usually to take into account the problems this year, in particular on the western European harvests.
Taiwan bought 65,000 t of maize, the origin of which could be Argentinian.
Iran has bought around 200,000 t of wheat over the past two weeks, probably from Russia.
Price was between $300-$305 (FOB).
Turkey has launched a tender for 245,000 t of feed barley loaded between September 15 and October 8.
We wish you a good day.
