US farm markets were all firmed yesterday.
Corn prices rose 1.5%.
Soybean gained nearly 0.7%.
Most wheat contracts gained between 1.75% and 2.25%.
On macro markets, oil prices rose on this morning, extending strong gains overnight, as fuel demand growing and US crude stocks declining as production remains hampered in the U.S. Gulf of Mexico after two hurricanes.
The market was also supported by a broader switch back into risk assets as concerns eased over a potential default by huge property developer China Evergrande and the possible fallout on the world’s second-largest economy.
Chinese real estate group Evergrande, indeed, has apparently managed to resolve some of the debt payments.
Markets heaving a sigh of relief at the news.
There is speculation that the government will step in to protect the rest of the economy.
Thus, U.S. West Texas Intermediate (WTI) crude futures rose 13 cents, or 0.2%, to $72.36 a barrel at 01:43 GMT, while Brent crude futures rose 17 cents, or 0.2%, to $76.36 a barrel.
Both benchmark contracts jumped 2.5% yesterday after data from the U.S. Energy Information Administration showed U.S. crude stocks fell by 3.5 million barrels to 414 million barrels in the week to Sept. 17, the lowest since October 2018, in a bigger drawdown than analysts had expected.
On the financial side, investors were focused on the U.S. Federal Reserve, which indicated it wasn’t yet ready to raise interest rates or amend its current monetary stimulus policies, including monthly purchases of $120 billion in Treasurys and mortgage-backed securities.
Thus the three major U.S. stock indexes closed up 1%.
Meantime, also Asian shares moved higher on this morning, supported by some positive news from struggling developer China Evergrande Group.
Indeed, the Hong Kong benchmark rose 1.6%, boosting MSCI’s broadest index of Asia-Pacific shares outside Japan, which gained 0.64%
Elsewhere, Chinese blue chips gained 0.74%, Australia’s benchmark rose 1.04%, and Korea’s Kospi fell 0.6% after returning from a three-day break to catch up with global falls earlier in the week.
Coming back on grains market, between today and Sunday, Michigan and portions of northern Indiana and Ohio could gather another 1.5” or more total rainfall.
But the rest of the central U.S. is unlikely to see more than trace amounts of rains for the remainder of this week, according to the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts more seasonally dry weather for the Midwest and Plains between September 29 and October 5, with widespread warmer-than-normal conditions likely as well.
Meantime, all grain prices were up, despite harvesting sites are accelerating in corn and soybeans thanks to good weather.
US soybean complex, for its part, rebounded strongly in the green, supported by the resumption of port activity in the Gulf of Mexico.
Operators also anticipate a rapid return of China to purchases for US origins.
Corn prices moved around 1.5% higher on a round of bargain buying, with spillover strength from a broad range of other commodities lending additional support.
However corn could find a limiting factor in its increase if the Biden government were to revise downwards the obligations of industrialists to incorporate biofuels.
Meantime, according to the latest data from the U.S. Energy Information Administration, ethanol production fell slightly week-over-week, moving from a daily average of 937,000 barrels down to 926,000 daily barrels for the week ending Sept. 17.
Stocks were up again to 20.1 million barrels.
The daily average hasn’t cracked the one-million-barrel mark since late July and remains moderately below pre-pandemic production levels.
On the other hand, another ASF outbreak is being reported, this time in Haiti, raising some concerns about the possibility of it spreading to mainland North America.
Wheat prices found support from broad gains in other commodities as well as the strong international demand.
In this context, corn basis bids fell 3 to 10 cents lower at two ethanol plants and trended 3 cents higher at an Illinois river terminal while holding steady at most other Midwestern locations.
Soybean basis bids were largely steady but did jump 25 cents higher at an Indiana processor while tilting 1 to 2 cents lower at two other Midwestern locations.
Operators will closely scrutinize the US weekly export sales out today in the afternoon.
From Canada, Refinitiv Commodities Research estimates that 2021/22 Canadian wheat production potential fell 6% from prior forecasts, to 819.4 million bushels.
This season’s harvest is running ahead of schedule, meantime, amid widespread dry weather.
Canola prices are also advancing.
In the province of Manitoba 84% of the land would henceforth be harvested.
From South America, Brazil’s Anec lowered its estimates for the country’s corn exports in September by 5% to 109.4 million bushels.
Total Brazilian corn exports this marketing year could reach 866.1 million bushels.
Brazil’s Anec also expects the country’s soybean exports to reach 185.2 million bushels this month, which is a 4.3% increase from its forecast a week ago.
Total soybean exports this marketing year are easily expected to top 3 billion bushels.
The 2021/22 production season has already begun in some areas, amid concerns about a possible return of La Niña conditions.
On European market, we have seen a sharp rebound in grain prices yesterday in a context of sustained demand on the international scene.
About wheat, the market is testing the resistance of € 250 / t on the Euronext December deadline thanks to good export demand.
Rumours about Chinese purchases of French wheat have been doing the rounds.
Noting quality concerns in France there is no clarity about whether it has actually traded and if so how much.
Rapeseed, on its part, inexorably continues its rise in the wake of the palm.
The rise in fertilizer prices significantly increases the production costs of farmers, and even suggests supply problems for certain products.
From North Africa, after plummeting in 20/21 wheat production in Morocco is forecast to nearly triple this year, according USDA: 7.54mmt vs 2.56 LY.
Wheat imports expected to return to normal levels to 4.5mmt.
Same time import duty could be cut to 0% from current 135% since Nov as prices too high.
From the Black Sea basin, according to the Ministry of Agriculture, Russia has so far harvested in gross weight 72.9 million tonnes of wheat, 17.9 million tonnes of barley and 4.1 million sunflower.
Offer prices are continuing to push higher and the Russian wheat market is reported illiquid around the tax story.
On the other hand, Russian pasta makers want the government to impose additional export restrictions on durum wheat (on top of the existing export tax).
Durum ruble wheat prices rallied in recent months thanks to a very poor crop in Orenburg, a key growing region, & in Kazakhstan.
In general in the Black Sea area wheat and corn prices started to rise again, particularly on shipments with close deliveries.
Competition remains fierce between the various exporters, with competitive European origins.
Freight costs remain predominant in this competition, with of course for each country a competitive advantage for its closest buyers.
From Australia, selling pressure from growers has weighed on cash prices in the northern market this week, but the southern wheat and barley markets have traded sideways to reflect grower and trade reluctance to extend coverage because of weather risk.
While much of Australia’s wheat and barley crop is expecting average or better yields, patches of concern around dry conditions and/or frost are keeping a lid on expectations.
New-crop canola and old-crop wheat dominate the December and January shipping stem, and trade sources say the unknown quality profile of new-crop wheat is limiting interest in volume sales beyond that.
This is largely because growers and traders do not want to sell high-protein wheat into a short world market at multigrade prices.
Domestic consumers are seen as comfortable with their coverage which extends into January, with barley continuing to buy all the demand it can because of its sizeable discount to wheat.
Thus, Aussie markets were slightly weaker yesterday again on lower global board prices though looking to see more support today with the overnight CBOT rally.
CBH received the first canola loads yesterday, so Aussie farmers are rapidly moving into harvest mode and more early barley continues to come off in spots of northern NSW/Qld.
Extended run weather maps starting to add some more rain chances for early October but the coverage remains patchy and variable between models.
Internationally, Pakistan issued an international tender to purchase 640,000 t of wheat from optional origins that closes next Wednesday.
The grain is for shipment in January and February.
Pakistan has been a very active buyer of imported wheat in recent months.
The Philippines purchased around 112,000 tonnes of animal feed wheat from optional origins (but potentially from Australia) in a tender that closed yesterday.
The grain is for shipment in December and January.
Jordan received multiple submissions in its tender to purchase 120,000 tonne of milling wheat from optional origins that closed yesterday, but passed on all offers.
Participants were believed to be CHS, Cerealcom Dolj, Nibulon and Ameropa.
The country will likely issue another tender for the same amount, expiring September 29.
Egypt reportedly bought 12,000 t of sunflower oil.
We wish you a good day.
