US farm markets continued to be mixed.
Corn climbed around 1% higher.
Soybean prices were mixed.
Wheat prices faded moderately lower, meantime, with most contracts losing less than 0.5%.
On macro markets, oil fell on this morning for the first session in four amid renewed concerns about demand recovery as more restrictions are imposed to curb COVID-19 infections.
Thus, Brent crude was down 45 cents, or 0.6%, at $71.80 a barrel by 0222 GMT, having risen 1.7% on Wednesday.
U.S. oil was down 55 cents, or 0.8%, at $67.81 a barrel, after gaining 1.2% in the previous session.
Fresh outbreaks fuelled by the Delta variant of the coronavirus are raising concerns about the strength of the economic recovery globally, hitting demand for oil and other commodities.
Oil prices boosted around 10% through Wednesday, as U.S. crude inventories fell last week for a third consecutive week while overall fuel demand increased to the most since March 2020.
In fact, oil stocks dropped by 3 million barrels in the week to Aug. 20, a little above than analysts’ expectations.
Crude stocks at 432.6 million barrels, were at their lowest since January 2020.
Additionally, gains this week in oil prices have been also helped by a major outage in Mexico, where a fire on Sunday on an offshore platform killed at least five workers and knocked out a bit over 400,000 barrels per day (bpd) of production.
However, the demand picture wasn’t entirely bullish.
Indeed, distillate stockpiles, which include diesel and jet fuel, rose last week, gaining 0.6 million barrels to 138.46 million barrels, against expectations for a 0.3 million-barrel drop, according to the EIA data.
On the financial side, trading remained muted yesterday for the most part of the session, as investors await fresh insights from Federal Reserve Chairman Jerome Powell on Friday, following the Fed’s annual symposium in Jackson Hole.
However, overnight U.S. shares inched higher with the S&P 500 closing at its 51st record high of the year, gaining 0.22%.
The Dow Jones Industrial Average closed up 0.11% and the Nasdaq Composite added 0.15%.
Chipmakers and financials drove the gains, helped by a rise in U.S. treasury yields, with the rate on benchmark 10-year Treasury notes rising to 1.349%, the highest since Aug. 13.
They last yielded 1.3424%.
Asian shares, meantime, stepped back on this morning after a sharp rebound this week.
Indeed, in early trading MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.22%, with declines in Chinese bluechips off 0.81%, Hong Kong down 0.31% and Australia shedding 0.49%.
Korea’s Kopsi was little affected by the central bank hike, falling 0.31% in line with regional moves while Japan’s Nikkei gained 0.04%.
Coming back on grains market rains will continue to be variable across the central U.S. later this week.
Some areas won’t receive any additional moisture, while parts of Iowa, Minnesota and Wisconsin could gather another 3” or more between Thursday and Sunday, per NOAA’s latest 72-hour cumulative precipitation map.
The agency’s 8-to-14-day outlook predicts a return to seasonally warm, wet weather for much of the central U.S. for the first week of September.
Meantime, corn prices moved steadily higher throughout Wednesday’s session, as traders remained somewhat focused on USDA’s lower-than-expected quality ratings the agency released Monday afternoon, and there are still doubts that yields can reach the agency’s latest estimate.
Soybean prices were mixed as traders assessed the latest short and mid-range weather forecasts and look for the next round of clues concerning export demand.
Wheat prices, on the other hand, saw moderate losses after some technical selling and profit taking, but remain relatively close to multiyear highs captured earlier this summer.
The lack of China buying is becoming interesting, thus operators will be closely monitoring weekly export sales today.
Meantime, ethanol production continues a somewhat worrisome trend after falling lower for the second consecutive week, moving to a daily average of 933 million barrels for the week through Aug. 20, against 973,000 prior week.
That’s the lowest weekly tally since late February.
Stocks fell another 2% to 21.2 million barrels, against 21.6 million last week, to reach a six-week low.
In this context, corn basis bids were mostly steady but mixed at a few Midwestern locations, trending as much as 5 cents higher at an Iowa river terminal and as much as 5 cents lower at a Nebraska processor.
Soybean basis bids were steady to weak across the central U.S., after falling 4 to 10 cents lower at three Midwestern locations.
From Canada, Statcan will release its crop production estimates next Monday.
Meantime, the huge differences in rainfall across the Canadian growing belt have led to massive variation in crop estimates.
While there has been a history of subsequent revisions to the August report the market will pay attention to the numbers posted.
Harvest would be around 40pc done on the cereals and canola.
From South America as another La Niña cycle looms in the shadows this fall, corn and soy growers in Argentina are weighing rising costs of transportation against production prospects for the 2021/22 growing season.
The past year’s La Niña event resulted in dryness in South America, which left the Parana River at record low levels.
The Parana River is the main shipping artery for Argentina, Brazil, and Paraguay’s grain flows.
La Niña-induced drought dropped the river to levels unfit for cargo ships to traverse through the channel, raising shipping costs ultimately passed on to farmers in the region.
“At best it could become normal in some areas. But a return to normal rainfall will not correct the flow of the river, which is going to have an extremely serious effect on shipping logistics, hydroelectric power generation, and the provision of drinking water,” German Heinzenknecht, a meteorologist at Argentine consultancy Applied Climatology, told Reuters.
Argentina plants its corn and soybean crop in September and October.
The Rosario Grains Exchange believes La Niña could reduce rainfall in Argentina by 20%-30% this year, which is leading some growers to already downgrade 2021 yield forecasts.
Grain exports are a critical source of revenue for the Argentine government.
The South American country is the world’s largest soymeal exporter and the world’s third largest corn and soybean exporter.
On Eurpean market, Germany’s 2021 wheat crop of all types is expected to fall 3.6% on the year to 21.37 million tonnes after poor weather, according to estimates released by the agriculture ministry on Wednesday.
Crops suffered from swings in weather.
It is not yet possible for detailed judgements about wheat quality.
First indications of wheat quality criteria show protein content little changed on the year but test weights lower.
The winter barley harvest will rise 2.2% on the year to 8.96 million tonnes, while the spring barley crop, used in malt and beer production, will fall 18.4% to 1.62 million tonnes.
Corn crop will fall 1.8% to 3.94 million tonnes.
On the other hand, the country’s winter rapeseed harvest will increase only 0.2% on the year to 3.52 million tonnes.
In contrast, Romanian cereal production has surpassed, until now, 15 million tons, wheat and barley registering record-numbers this year, of 11.4 million tons, 1.9 million tons, respectively, the Minister of Agriculture, Adrian Oros, declared yesterday, adding that “the Ministry and minister have no merit for these large productions”.
There are three star crops that registered record-numbers this year, namely wheat and barley, in both overall productions and yield, but also rapeseed, which for the first time the average production surpasses the 3,000 kilogram / hectare threshold.
Wheat reached a total production of 11.4 million tons.
It is the largest production from 2007 and until now.
The average production for hectare is at its highest point – 5,349 kg / hectare.
Regarding the export potential in 2021, this remains high, given that the total internal consumption raises up to 4.5 million tons at most.
According to the minister of Agriculture, Romania also registers record levels for barley in 2021, for both the total production – 1.88 million tons, but also the average one – 5,599 kg / hectare.
Corn is also projected to show a nice increase with an expected output of 13.7 MMT, compared with 10.2 last year.
Last but not least, rapeseed registered the largest average production per hectare since 2007 and until now, namely 3,022 kg / ha, due to the types of plants used, application of adequate technology and favorable agro-meteorological conditions.
In this context, wheat continued its bearish correction on Euronext, despite a probable further downward revision of production expected in Russia and Argentina, both due to water deficit, with the bears animated by the wet French harvest that had a carnage in the near deadline contracts futures.
Indeed, the Sep v Dec differential was trading at EUR-2.50/t on the 12th of Aug, by the 23rd of Dec it traded to a high of EUR$+35.50/t and on the close yesterday it was pegged at EUR+1.25/t
Corn prices, on the other hand, maintained their progression despite a rather poor meeting in terms of information.
Rapeseed remains in the spotlight with gains that took the November 2021 contract to new records, while Canadian canola returns to its mid-August highs.
In addition to extremely tight fundamentals on both sides of the Atlantic, seeds rich in oil were once again supported by a rise in crude prices.
From Africa, Benin has identified an outbreak of the highly contagious H5N1 avian flu in two districts near the capital Porto Novo, the agriculture ministry said on Wednesday.
Benin is the latest West African country to declare an avian flu outbreak, after Ivory Coast identified the disease last week near its commercial capital Abidjan.
Cases have also been detected this year in Ghana, Togo, Niger, Burkina Faso, Nigeria, Mauritania and Senegal.
Benin is now awaiting for those results to be confirmed by a laboratory in Italy, the statement said.
Consequentially, it called on those working in the poultry sector to strengthen biosecurity measures and report any suspected cases to the ministry.
From the Black Sea basin, Ukraine has exported almost 6.5 million tonnes of grain since the start of the 2021/22 July-June season versus 6.4 million exported at the same point a year earlier, agriculture ministry data showed on Wednesday.
That included 3.1 million tonnes of wheat, 2.2 million tonnes of barley and 1.17 million tonnes of corn, the data showed.
The government has said that grain exports could rise to 56 million tonnes in the 2021/22 season, including 20.7 million tonnes of wheat, 30.7 million tonnes of corn and 4.1 million tonnes of barley.
Meantime, the ministry last week said farmers had almost completed the 2021 wheat harvest, threshing 32 million tonnes from 97.6% of the sown area.
Ukraine plans to thresh about 76 million tonnes of grain in 2021, up from 65 million tonnes in 2020.
As of August 25, 2021, Russia has harvested 86.4 million tonnes of grain before drying and cleaning with an average yield of 2.80 tonnes per hectare, data from the agriculture ministry showed on Wednesday.
Russia’s grain harvest progress, indeed, saw wheat at 63.2 million tonnes, barley at 15.3 million tonnes.
The average yield, tonnes/hectare for the total grain was at 2.80, for wheat at 3.09 for barley at 2.48.
The harvested area was around 30.9 mln hectares for total grain, of which 20.5 for wheat and 6.2 mln hectares for barley.
Meantime, farmers have already sown winter grains for next year’s crop on 1 million hectares, down from 1.5 million hectares as of the same date in 2020, the data said.
Kazakhstan will increase purchases of Russian grain to cover demand from neighbors that suffered from drought.
As border between Russia and Kazakhstan open these volumes will not be included into statistics and could be used to explain why there is less wheat in Russia than ministry expects.
In this context, wheat and corn prices crumbled slightly mainly due to a lack of dynamism on the part of buyers, while on the Russian side we are also still witnessing a certain retention of sales on the part of producers.
As expected, the threshold of 300 usd / t FOB in wheat has come to play in recent days its role of resistance in the firmness of prices.
From Australia, ABARES next crop report is due out next week Tuesday, 9 September.
Meantime, weather maps continue to provide some relief for those wet areas through western Victoria leading into early next week and scattered showers of 5mm are forecast to fall along the east coast over the next 8-10 days.
In this context, Aussie local markets were again relatively unchanged yesterday.
Kwinana APWMG saw bids at A$355/t FIS and Port Kembla APW track $343-345/t, while the spread to barley has been trading around $60-70/t under wheat in WA and along the east coast.
New crop canola rebounded yesterday with local domestic crush bids up $8-10/t pushing back to levels around the $900s per tonne delivered January 2022 plus carry.
With canola crops largely in the flowering stage across the country, grower marketing has been quiet in the past week.
Old crop bids for wheat and barley continued to remain supportive, with a mix of consumers and exporters still on the buy-side for Sep-Oct delivery.
In LSC’s latest Australian Export Vessel lineup report, August will be similar to July with another sub-3 million tonnes (Mt) combined wheat, barley and canola export number, with wheat at 1.7Mt.
The logistical issues do not seem to be easing in a hurry, with border restrictions getting ever tighter.
Internationally, Jordan’s state grains buyer purchased 60,000 tonnes of hard milling wheat to be sourced from optional origins in a tender which closed on Wednesday.
It was bought from trading house Cargill at an estimated $345 a tonne c&f for shipment in the first half of February 2022.
Four other trading houses participated in the tender: Cerealcom offered $251.88, CHS offered $354.72, Ameropa $358.13 and Nibulon $361 all per tonne c&f.
Tunisia’s state grains agency has issued an international tender to purchase 100,000 tonnes of soft milling wheat and 100,000 tonnes of animal feed barley.
The origin was optional.
The deadline for submission of price offers in the tender is Thursday, Aug. 26.
The wheat and barley are both sought for shipment between Sept. 20 and Oct. 25 depending on origin supplied in four 25,000 tonne consignments.
If supplied from east Europe or the Black Sea region, the wheat shipment periods for the four consignments are Oct. 1-10, Oct. 1-15, Oct. 10-20 and Oct. 15-25.
If supplied from west Europe, shipment periods for the wheat consignments are Sept. 25 to Oct 5., Oct. 1-10, Oct. 5-15 and Oct. 10-20.
Turkish Grain Board (TMO) will hold a tender for the import of 300.000 MT (+/- 5 % at buyer’s option) of milling wheat for shipment/delivery Sep 10-Oct 10.
Acceptable quality: 11.5p/76.5TW or 12.5p/78TW/225W.
Tender is on September 2nd.
Turkey issued an international tender to purchase 300,000 t of milling wheat from optional origins, which closes Sept. 2.
Shipment was requested between Sept. 10 and Oct. 10.
Pakistan has provisionally purchased 160,000 t of milling wheat from optional origins in an international tender that closed on Monday. Once confirmed, the grain is for shipment between mid-September and the end of October.
Taiwan issued an international tender to purchase 50,000 t of grade 1 milling wheat from the United States that closes Sept. 3.
The grain is for shipment between mid-October and Nov. 1.
The Philippines issued a tender to purchase 169.000 t of animal feed wheat from optional origins, which closes tomorrow.
The grain is for shipment from September through November, depending on origin.
We wish you a good day.
