Grain prices were back in the red yesterday due to unfavorable macroeconomic factors (including falling energy prices and a rising U.S. Dollar) and a healthy harvest pace.
Thus corn prices dropped about 1.25%.
Soybeans and wheat contracts faced double-digit drops with soybeans that fell 0,81%.
Chicago and Kansas wheat contracts tumbled around 2,18%.
Minneapolis sheded more than 1,54%.
On macro markets, oil prices fell for the second straight day on this morning as doubts re-emerged over demand.
China’s weakening housing market and growing power outages have hit sentiment as any fallout for the world’s second-biggest economy would likely have a knock-on effect on oil demand.
Thus, Brent crude was down $1.03 or 1.3% at $78.06 a barrel by 01:30 GMT, after fell $0,37 on Tuesday.
U.S. oil fell $1.02 or 1.4% to $74.27 a barrel, having dropped 0.2% in the previous session.
Brent yesterday touched $80.75, its highest in nearly three years.
On the financial side, yesterday there were important losses in tech stocks, spooked by rising Treasury yields, which negatively impacts cash flows.
Indeed, after US weaker-than-expected consumer confidence data, technology heavyweights took a hit from a surge in bond yields on expectations of higher interest rates and a rising inflation.
U.S. consumer confidence unexpectedly fell to its lowest since February this month.
The Conference Board September Consumer Confidence Index came in at 109.3, versus an expected 115.3.
The Consumer Present Situation Index was 143.4, versus the last reading at 147.3, and the Consumer Expectations Index registered 86.6, compared with the previous number of 91.4.
Delta variant concerns and rising prices for a number of goods, particularly energies, appear to be taking a toll on consumer attitudes and spending.
The reading, coupled with a rising trade deficit and an expected decline in vehicle sales, brewed fresh concerns about the state of consumption in the country, which is a key driver of economic growth.
Thus, the Dow Jones Industrial Average was down 569.38 points, or 1.63%, at 34,299.99, the S&P 500 was down 90.48 points, or 2.04%, at 4,352.63, and the Nasdaq Composite was down 423.29 points, or 2.83%, at 14,546.
While, the two-year U.S. Treasury yield surged to 18-month highs, weighing on commodities ag and shares of high-growth companies whose values are closely linked to future earnings.
Asian shares lost ground on this morning, tracking declines on Wall Street.
Indeed higher yields and the strong dollar hurt Asian equities in early trading thus, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.43% with Australia off 1.5%, and South Korea falling 2.06%.
The Hong Kong benchmark shed 1.2% and Chinese blue chips were 1.1% lower.
Japan’s Nikkei shed 2.35% hurt by the general mood as the country’s ruling party votes for a new leader who will almost certainly become the next prime minister ahead of a general election due in weeks.
Coming back on grains market, harvest has been pushing along quickly in the US corn belt, but weather maps are still building up a storm system for early October.
Indeed, some wetter weather will return to the Central Plains and western Corn Belt later this week, with some areas set to receive 1” or more between today and Saturday, per NOAA’s latest 72-hour cumulative precipitation map.
The agency’s 8-to-14-day outlook predicts more seasonally wet weather for the Plains between October 6 and October 12, with warmer-than-normal conditions likely for all of the central U.S. during that time.
As we said yesterday, in the US harvest work is progressing rapidly.
The corn harvests are in fact completed at 18% (15% on average), while those of soybeans are advanced at 16% (13% on average).
The sowing of winter wheat is concluded at 34%.
However, heterogeneous yields are observed in corn, consequence of the impact of the water deficit in certain States.
Meantime, wheat markets took it on the chin last night with selloffs across the board being blamed on a mix of the firmer USD, position closure prior to Thursday’s reports, and broader macroeconomic concerns.
About this, the USDA quarterly report will be released tomorrow at 6 p.m. and the next monthly report, therefore the one for October, on the 12th.
Meantime, US corn flash sales overnight amounted to 150,000t sold to Mexico.
In this context, corn basis bids were mostly steady to weak, tumbling as much as 33 cents lower at an Iowa processor.
A Nebraska elevator and an Illinois river terminal bucked the overall trend after firming 2 cents, however.
Soybean basis bids spilled 2 to 25 cents lower across half a dozen Midwestern locations.
An Indiana processor bucked that overall trend after firming 5 cents higher.
From Canada, the Ministry of Agriculture is revising its production estimate for soft wheat slightly to 18.17 million tonnes, but reduced that of durum wheat to 3.5 million tonnes.
This is to be compared respectively to 16.4 million and 3.8 million posted previously.
Spring wheat harvest is essentially done, in Saskatchewan (94%), while in Alberta is ~87% done.
Average protein levels of spring wheat samples submitted to the CGC are 15.0%, well above the 13.5% average.
Over 80% of the samples tested by the CGC were n1 or n2 SWRS grade.
About durum wheat with 97% of the SK durum crop harvested, the SK Min. Ag. says that 89% of the crop is a N3 CWAD or better.
Cash bids for milling wheat have returned to their peak levels, due to the bad harvest in the US.
However Canadian farmers do not see much reason for the market to fall, thus they are content to wait before selling additional tonnage.
About durum wheat, current SK bids of $18/bu work into the Italian market at roughly US$620/mt CIF, thus, seems that sales to Europe from Canada are not possible right now.
In this context, during shipping week 7, Canadian spring wheat exports were 329.4k mt for a season total of 2.08 mmt, 73% (-752.7k mt) of last year’s volume.
While durum exports were 63.6k mt for a season total of 536.3k mt.
To note that this is 52% (185.3k mt) more than last year, despite there are very tigth stocks.
Canadian durum supplies, indeed, are estimated at only around 3.0 mmt and maybe demand rationing will be necessary.
That becouse even if Canadian farmers think local bids will return to $19.00-$20.00/bu levels, it may be difficult to return to the earlier (all-time) of $22/bu.
Thus Canadian farmers likely sold around 70% of their production.
On the other hand, Canadian canola crush melted to 662 kt last month, down from 830 kt a year earlier.
From South America, beneficial rains are expected in Brazil in the coming days, as soybean planting begins.
In the Brazilian state of Paraná, 2021/22 planting progress has reached 7%, according to the country’s Department of Rural Economy (Deral).
Dry soil conditions may hinder progress moving forward unless the area receives more rains soon, according to Deral.
Brazil’s total soybean plantings this season could approach 98 million acres.
Soybean production in Brazil in the 2021/2022 season is expected to reach 143.7 million tons, according to AgResource Brazil’s first production estimate.
Argentine farmers, meantime, have sold 30.5 million tonnes of soybeans from the 2020/21 crop, after registering sales over a seven-day period of 495,300 tonnes, the Ministry of Agriculture said on Tuesday.
On European market, operators remained hesitant yesterday.
Indeed, on Euronext, the prices of wheat and corn closed slightly higher.
Corn is still finding support in the delay in harvesting sites both in France and in Ukraine, but also in disappointing harvests in central Europe.
Rapeseed prices continue their upward path in a context of strained balance sheets but soaring biodiesel prices.
European wheat relies on sustained international demand.
Indeed, port activity in France is notably boosted by numerous loads destined for the Maghreb.
From the Black Sea basin, Russia’s wheat harvest keeps climbing; the Ministry of Agriculture report 74.2MMT (bunker weight) from 26.3MHA at a yield of 2.82MT/HA.
With 2.4 to 3.3 MHA still to cut, this crop could still finish up as the third largest on record.
Rains continue in Ukraine at present, delaying the corn harvesting sites and the sowing of autumn wheat.
According to the local Ministry of Agriculture, Ukrainian farms had sown 1.95 million hectares of winter wheat for the 2022 harvest as of Sept 27 or 29% of the expected area of 6.68 million hectares.
Winter wheat accounts for 95% of Ukraine’s total wheat sowing area.
The winter grain sowing area will also include 1.02 million hectares of winter barley and the sowing is 12% complete.
Meantime Ukraine, one of the major grain growers and exporters globally, plans to harvest a record 80.6 million tonnes of grain in 2021.
On the prices side, on Ukraine market, yesterday we witnessed a slight decline for wheat with11.5% protein on the close, while prices on the distant showed some firmness.
Conversely, 12.5% protein wheat grew by around + 1.50 usd / t within a short period of time.
In Russia, prices were maintained fo 12.5% protein.
From anther point of view, yesterday African Swine Fever is back in the news once again with an outbreak at a plant in Russia making headlines.
From the Mideast, in Iran 122 ships have offloaded 1,945,421 tons of wheat in the first six month of this Persian year (March 21, September 22) and 1.8 million tons is also expected to be offloaded during the rest of the Persian year.
From the Middle Kingdom, fertilizer markets remain hot in the news with yesterday’s announcement that China would stop phosphate exports coming on the heels of the natural-gas rally which has already pushed nitrogen prices higher.
Meanwhile, in China corn prices are down 13% from record highs captured in May, and anticipations of a big harvest there could further suppress prices moving forward.
Governmental thinktank CNGOIC speculates that Chinese corn imports for 2021/22 could fall by more than 30% from a year ago to around 20 million tonnes; as know last yesr corn imports were at 29 million tonnes.
Some analysts are currently working with an estimate of 25 million for current year.
From Australia, buyers yesterday lowered their bids as they watched the rain event unfold.
Indeed, a rain front moving across eastern Australia has forced a halt to the early stages of winter crop harvest in southern Queensland, but is good news for farmers waiting for a moisture trigger to fire up summer crop plantings.
On the Darling Downs where the first of the barley crops have been taken off in recent days, the rain front has brought patchy falls to much of the area and is likely to produce heavier showers and storms over the next couple of days.
Thus results off that have been very mixed so far, though the BOM is still calling for good coverage through the end of the week.
Internationally, Algeria OAIC starts buying optional origin milling wheat at around 364 usd a tonne C&F.
Unconfirmed initial estimates of volumes bought were around 500,000 tonnes.
Taiwan’s MFIG purchasing group bought about 65,000 tonnes of animal feed corn to expected to be sourced from Brazil in an international tender which closed yesterday.
The corn was purchased in a single consignment, all at an estimated premium of 292.00 U.S. cents a bushel c&f over the Chicago March 2022 corn contract CH2, they said.
Seller was believed to be trading house Viterra.
The tender was dominated by offers for Brazilian and Argentine corn.
Three other offers were submitted for Brazilian corn, all for 65,000 tonnes.
Four offers each of 65,000 tonnes were reported for Argentine corn, with the lowest at a premium of 292.25 U.S. cents over the Chicago March contract.
One offer was reported for U.S. corn for 65,000 tonnes at a premium of 398.00 U.S. cents over the Chicago March contract.
No offers were reported for South African corn.
Shipment was sought between Dec. 6 and Dec. 25 if the corn is sourced from the U.S. Gulf, Brazil or Argentina.
If sourced from the U.S. Pacific Northwest coast or South Africa, shipment was sought between Dec. 21, 2021 and Jan. 9, 2022.
We wish you a good day.
