USDA’s monthly World Agricultural Supply and Demand Estimates (WASDE) report typically makes some impact on the grain markets on the day it is released – and the latest report was no exception.
Corn and wheat prices slumped lower 1% and 2.5% respectivily, while soybeans climbed another 1.75% higher.
On macro markets, energy prices, meantime, moved higher amid some supply concerns unfolding in some parts of the U.S.
In fact, crude oil firmed nearly 1%.
Diesel and gasoline rose by similar percentages.
The latest data suggests US inflation has climbed 4.2% over the past year, versus analyst estimates of 3.6%.
Consequentially, on Wall St., inflation concerns tumbled the Dow down another 681 points to 33,587.
The U.S. Dollar firmed moderately.
Coming back on grains markets, corn prices stumbled after USDA’s ending stocks came in higher than analyst estimates, which triggered some technical selling.
Also wheat prices stumbled on a round of technical selling that eroded prices throughout the session.
Meantime, soybean prices firmed on a round of technical buying inspired by strong supply and demand fundamentals and energy prices more higer.
A slowdown in Argentine sales applied additional tailwinds.
Going inside the WASDE numbers, USDA sees Brazil’s 2020-21 corn production at 102 million tonnes (Mt), down 7Mt from the April estimate, and 1Mt lower than where commentators expected USDA to land, but well above some industry forecasts.
USDA have seen a record new-crop wheat.
USDA’s initial forecast for new-crop global wheat production has come out at a record 789Mt in the May WASDE report.
This includes: Argentina 20.5Mt with exports of 13.5Mt; Australia 27Mt and exports 20Mt; Canada 32Mt and exports 23.5Mt; EU 134Mt and exports 33Mt; Russia 85Mt and exports 40Mt, and Ukraine 29Mt with exports at 20Mt.
USDA’s initial estimates for US new-crop wheat are a 51Mt crop and exports of 24.5Mt, compared with a current crop seen at 49.7Mt with 26.3Mt exported.
“The initial global wheat outlook for 2021-22 is for larger supplies, higher consumption, increased trade, and marginally higher stocks,” USDA said in its report commentary.
“Higher production for Argentina, the EU, UK, Morocco, Ukraine, and the United States is expected to more than offset reductions for Australia and Canada.
“Projected 2021-22 world consumption is raised 7.8Mt to a record 788.7Mt, primarily on higher food, seed, and industrial use (FSI), continuing a long-term uptrend.
“Wheat feed and residual use is projected up relatively less than FSI as increases in the EU, UK, Russia, and the United States are partially offset by decreased feed use for China, Canada, and Australia.
Current-crop global wheat production is seen unchanged at 776.1Mt, with global ending stocks dropping 1Mt to 294.7Mt, with China’s imports unchanged at 10.5Mt and its ending stocks also steady.
China’s new-crop wheat imports are forecast at 10Mt, while its total coarse-grain imports are forecast at a record high of 46.3Mt, up 3.1Mt from 2020-21.
“Expectations are for continued relatively high corn and other energy feedstuff prices in China, despite an increase in corn production.”
China’s estimated 2021-22 corn imports are seen at 26Mt, with barley and sorghum at 10Mt each.
Bigger also Black Sea crops.
USDA has released its initial new-crop corn production estimates in this report, and has come out at 380.8Mt for the US, down slightly on market expectations.
Ukraine’s new-crop corn production is seen at 37.5Mt, 7Mt up from 2020-21, while Russia is pegged at 14.9Mt, 1Mt up on last year.
“The USDA is putting a lot of weight on backend supplies coming from Ukraine and Russia,” Lachstock Consulting said in its commentary of the report.
Ukraine’s new-crop corn exports are seen at 30.5Mt, up 7.5Mt on 2020-21 shipments.
USDA’s estimate of China’s 2020-21 corn imports has lifted 2Mt to 26Mt, while current-crop corn exports are seen at 34Mt for Argentina, unchanged from April, and 35Mt for Brazil, 4Mt down from last month.
Soybeans up on year with USDA that has forecast new-crop US soybean production at 119.9Mt, up from 112.6Mt grown in the US over last summer.
New-crop US soybean exports are forecast at 56.5Mt, down from 62.1Mt shipped from the current crop.
On China’s soybean imports, USDA’s estimate for 2020-21 is unchanged at 100Mt, while its 2021-22 figure has come out at 103Mt.
The season-average corn price received by producers in 2021/22 is projected at $5.70 per bushel, up $1.35 from a year ago when much of the crop was marketed at lower prices.
Soybean prices could average $13.85 per bushel, which is an improvement of $2.60 compared to 2020/21.
USDA estimates wheat prices will average $6.50 per bushel, which is a year-over-year increase of $1.45, if realized.
Meantime, ethanol production showed moderate signs of improvement for the week ending May 7, with a daily average of 979,000 barrels, according to the latest data from the U.S. Energy Information Administration, released yesterday.
That’s up from 945,000 barrels per day during the prior week and reaching the highest levels since late November.
Private exporters yesterday announced to USDA the sale of 3.9 million bushels of corn to Mexico.
Thirty percent of the total is for delivery during the current marketing year, with the remaining 70% for delivery in 2021/22.
In this context, corn basis bids fell 3 to 7 cents at two interior river terminals while moving as much as 8 cents higher at a Nebraska processor.
Soybean basis bids were steady to weak across the central U.S. after falling 3 to 6 cents lower at two interior river terminals and dropping 5 cents at an Iowa processor.
From South America, also Brazil’s Conab relesed its forecasts, estimating the country’s 2020/21 soybean production will reach 4.975 billion bushels, representing a slight reduction from its prior projection in April. Exports are expected to reach 3.145 billion bushels this marketing year.
Brazil’s Conab expects a drop in its second corn crop this season, in add, offering a latest estimate of 3.142 billion bushels.
However, the country’s total corn crop for the 2020/21 season is expected to climb 3.7% above last year’s total, with 4.190 billion bushels.
Exports are forecasted at 1.378 billion bushels.
Argentina’s agriculture ministry reports that farmers have sold 635.7 million bushels of soybeans during the 2020/21 marketing year.
But sales have been relatively sluggish this year as farmers are holding grain as a hedge against the weak peso.
Sales are down 19% year-over-year so far.
From European markets, non-commercial market participants extended their net long position in Euronext’s milling wheat futures and options in the week to May 7, data published by Euronext on yesterday showed.
Non-commercial participants, which include investment funds and financial institutions, raised their net long position to 145,178 contracts from 133,450 a week earlier, the data showed.
Commercial participants similarly increased their net short position to 169,572 contracts from 150,465 a week earlier.
Commercials’ short positions accounted for 62.7% of the total short position, while commercial long positions accounted for 32.9% of total long positions.
Non-commercial short positions represented 37.3% of total short positions, while non-commercial net long positions accounted for 67.1% of the total longs.
The report covered nearly all of the open short positions and all of the open long positions in the wheat derivatives.
In Euronext’s rapeseed futures and options, non-commercial market participants flipped to a net short position, going to a net short of 3,161 contracts from a net long of 448 a week earlier.
Commercial participants changed to a net long position, going to a net long of 634 contracts from a net short of 3,730 contracts a week earlier.
Farm office FranceAgriMer yesterday cut its forecasts of French wheat, barley and maize stocks at the end of this season to the lowest levels in years, underscoring tight grain supply as attention turns to harvest prospects.
For soft wheat, France’s main cereal crop, stocks at the close of the 2020/21 season on June 30 are now expected at 2.6 million tonnes, down from 2.7 million projected last month, FranceAgriMer said.
The new stocks forecast was down more than 13% from 3.0 million tonnes at the end of 2019/20, and would be the smallest volume since 2013/14, it said.
France, the European Union’s largest grain producer and exporter, has seen wheat supply eroded by a four-year low for harvest production in 2020 along with steady export demand, including to China.
This month’s cut to the soft wheat stocks outlook notably reflected an increased projection of exports within the EU, at 5.7 million tonnes against 5.6 million last month, FranceAgriMer said.
The office also made a smaller upward revision to domestic bakery demand, factoring in recent data and expectations that easing coronavirus restrictions would help late-season consumption, Marion Duval, deputy head of FranceAgriMer’s grain unit, told reporters.
FranceAgriMer kept unchanged its forecast of French soft wheat exports outside the EU in 2020/21 at 7.55 million tonnes, down 44% from a record 13.54 million last season.
Expected maize (corn) stocks were lowered to 1.9 million tonnes from 2.0 million in April, potentially the lowest since 2006/07.
Forecast maize exports within the EU were revised up, reflecting French competitiveness amid surging global prices.
Projected barley stocks were trimmed to 1.02 million tonnes from 1.06 million last month, now the lowest since 2011/12.
That reflected a slight increase in expected exports outside the EU, dominated by sales to China.
For this year’s harvests, the return of rain helped stabilise wheat and barley conditions after a sharp decline in April when crops endured dryness and frosts, Catherine Cauchard, head of FranceAgriMer’s crop monitoring service, said.
A moisture deficit remained the main concern, including for just-planted maize, although wheat and barley would also have to be monitored for delayed signs of frost damage, she added.
Britain’s wheat imports accelerated in March and are running well above last season’s pace, customs data showed on Wednesday.
Wheat imports for the month totalled 176,615 tonnes, up from 95,266 tonnes in February.
Canada was the largest supplier in March, shipping 74,370 tonnes followed by Denmark with 55,056 tonnes.
Cumulative imports since the start of the 2020/21 season, which started on July 1, 2020, totalled 1.86 million tonnes, up from 835,994 tonnes in the same period a year earlier.
Germany remains Britain’s largest supplier so far in the 2020/21 season with shipments of 499,038 tonnes.
Imports are expected to climb this season after the nation’s wheat harvest totalled just 9.66 million tonnes last summer, a drop of 40.5% from the previous year.
From North Africa, Egypt procures 2.2mln tonnes of local wheat, the supply minister said yesterday.
Egypt is expecting to procure a total of 3.4 million tonnes of local wheat from this year’s harvest, which began in April, Ali Moselhy said in a statement.
From Black Sea basin, Russian wheat exports between January and March reached 321 million bushels, which was a 19% increase versus the first three months of 2020, according to official customs data.
Russia is the world’s No. 1 wheat exporter.
Ukraine’s grain exports down 24.1% so far in 2020/21 season.
The exports included, 15.30 million tonnes of wheat, 19.60 million tonnes of corn and 4.13 million tonnes of barley.
From Middle Kingdom, China’s agriculture ministry is projecting the country’s 2021/22 corn production will increase by 4.3%, based on more acres and improved yields.
Total production is expected to reach 10.701 billion bushels.
From Australia, aussie local new-crop canola rebounded from its prior down day to be back up AU$10-$15/t.
Seems more strength flow into markets today, with more gains through the offshore boards on Winnipeg and MATIF contracts of up to AU$20-25/t on the Nov contracts.
Current crop-markets were flat to up $1-2/t.
The wheat bids have started to scramble for spot loads for next week as the logistical nightmare continues.
System grain continues to leak out across the country on wheat and barley, with the unknown factor being how much grain remains on -farm.
With a late break through parts of South Australia and Victoria, and limited precipitation on the outlook for central and southern New South Wales, we may start to see this supply tighten and stocks remain on farm.
The sorghum harvest through Queensland and northern NSW continues to grind away with many delays caused by high-moisture grain and frustrating harvest conditions.
Two export vessels totalling 60,000t are on the stem out of Newcastle are to load by the end of May.
On international trade scenario, Japan is looking to purchase 2.9 million bushels of feed wheat and 4.6 million bushels of feed barley in a simultaneous buy-and-sell auction that will be held May 19.
The grain would be for arrival by October 28.
Tonigth we will see how the sessions close.
