US farm markets closed mostly double-digits lower yesterday.
At the close, the Dec. corn futures finished 2.15% lower.
November soybean futures closed 1,14% down.
CBOT December wheat futures settled 1.10% lower.
KC wheat gave back 1,12% on the day.
Minneapolis wheat futures ended the midweek session with 0,52% losses.
On macro markets, oil prices fell on this morning after OPEC+ agreed to keep its policy of gradually returning supply to the market at a time when coronavirus cases around the world are surging and many U.S. refiners, a key source of crude demand, remained offline.
Indeed, OPEC+, agreed yesterday to continue a policy of phasing out record production reductions by adding 400,000 barrels per day (bpd) each month to the market.
On the other hand, U.S. crude inventories dropped by 7.2 million barrels and petroleum products supplied by refiners rose to a record, the Energy Information Administration said on Wednesday.
Stocks likely will rise in the weeks ahead as reports suggest that refinery activity will take longer to restart than crude production in the aftermath of Hurricane Ida.
Consequentially, Brent crude was down by 16 cents, or 0.2%, at $71.43 a barrel by 04:22 GMT, after dropping 4 cents on Wednesday.
U.S. oil fell 23 cents, or 0.3%, to $68.36 a barrel, after rising 9 cents in the previous session.
On the financial side, Wall Street has been preoccupied with second guessing U.S. August payrolls, due out on Friday, with the task made all the more uncertain by a disappointing reading on ADP private payrolls but a solid ISM survey of manufacturing.
Consequentially Nasdaq futures was up 0,33%, while the Dow Jones and S&P 500 were barely changed.
EUROSTOXX 50 futures lifted 0.74%, FTSE futures 0.66%.
Meantime, Asian share markets were in a cautious mood on Thursday as concerns grew over the Chinese economy after a run of soft data.
Thus, the uncertainty kept Chinese blue chips flat, though speculation of more fiscal stimulus offered some support.
MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.2% to a five-week high, helped by buying for the new quarter.
Japan’s Nikkei added 0.1%, while South Korea fell 0.6%.
Coming back on grains market, about weather, beneficial rains are observed on the Corn Belt and on soybeans which are approaching maturity.
Forecast rains in parts of the western Corn Belt are showing 2-3″ in places but fairly limited concerns about adverse crop impacts at this point.
Meantime, there was a sharp decline in all prices yesterday in Chicago.
Traders are highlighting the consequences of Hurricane IDA now declassed in NOLA which damaged several port facilities, thus complicating export loads.
The latest headlines about the impacts report 22 barges drifting, with at least one colliding with a bridge.
Thus, ideas about the re-opening of export terminals remain widespread and dynamic as they continue working to evaluate the damage to infrastructure, while on new crops, harvest pressure is caming soon.
US corn harvest, indeed, continues to gradually push north with central Corn Belt crops rapidly maturing and not far off harvest.
US boards will be closed for the night session on Sunday and Monday day-session there, reopening on the Monday night session, Tuesday Italian time.
September’s WASDE will puplished next weekend and USDA will be reviewing and potentially incorporating into the 10 September report acreage changes, based on the RMA (USDA Risk Management Agency is the manager of the Federal Crop Insurance Corporation, Ed) acreage figures.
To nnote the timing is a month earlier than normal.
Meantime, Ethanol producers averaged 905k barrels per day, down 28,000 barrels, through the week that ended 8/27.
That was the 8th consecutive weekly production decrease.
Thus ethanol stocks tightened another 113k barrels to 21.110 million.
USDA yesterday also released the monthly Grain Crushings report showing July corn used for ethanol production totaled 449.121 mbu, or 5.86% above July 2020.
The trade average guess was 448.8 mbu.
That left the MYTD accumulated corn grind at 4.615 bbu, compared to USDA’s August estimate of 5.075 bbu.
August use needs to total 459.834 mbu, or 11.85% above August 2020, to reach that target.
About soybeans, USDA reported 164.29 mbu of soybeans were processed during July.
That was about 1 mbu below the average trade estimate and set the marketing YTD soy crush at 1.973 billion bushels.
USDA’s August crush estimate was for 2.155 bbu.
July’s crush was 10.2% below 2020’s and the final month of August will need to be 181.52 mbu, or 3.4% above August 2020 to meet the WASDE number.
BO stocks were seen at 2.07b lbs, compared to the trade average guess of 2.136b lbs.
About the wheat complex, with the break on Chicago of the key technical support of 7.20 usd / bushel in December deadline, traders got the opportunity to take profits on so-called long positions.
US export sales will be communicated today and will be closely monitored.
In this context, the US corn average spot basis from cmdtyView firmed to almost even on First Notice Day, but is back to -3 3/4 cents for September delivery on 9/1.
The December delivery US corn average basis from cmdtyView was also the firmest since at least January at 16 3/4 cents under December.
The board spread was a 7 1/4 cent carry at the bell.
The US soybean average basis for September beans was 48 1/2 cents under Sept futures on FND according to cmdtyView data.
The November delivery average basis was 45 cents under.
Since Friday, CBT SRW basis has weakened from 4 cents under Sept to 8 3/4 cents, HRW basis has weakened from 25 cents under Sept to 56 1/2 cents under, and Spring wheat basis has firmed from -48 1/2 cents to -38 1/4 cents.
The Sept to Dec basis spreads maintained their carry, while board prices only offered carry in winter wheats.
The SRW basis differential favored Dec by 21-25 cents prior to FND, and is now 47 3/4 cents.
The board spread remained mostly firm at a 13 1/4 cent carry.
The KC basis spread favored Dec by a dime, but bids are now near even, while the board initially reduced carry to just 6 3/4 cents but was 8 3/4 cents at the close.
MGE wheat basis went from a 21 to 26 cent Dec premium to now a 12 3/4 cent premium.
From South America, Brazilian soybean farmers are keeping their crops instead of selling them because they expect prices to rise further as global supplies tighten.
Farmers hope to force exporters and the local processing industry to pay more.
Local soy crushers are willing to pay more than the export markets for soy.
Farmers hope prices can reach $14 per bushel.
That could limit the amount of soy Brazil has to export to China, its top buyer by far.
In this context, earlier this month, the Brazilian government cut its soy export forecast to 83.4 million tonnes in 2021.
In southern states like Rio Grande do Sul and Paraná, farmers still have a combined 12.4 million tonnes of soybeans from the 2021 crop to sell, according to early August estimates from agribusiness consultancy Safras&Mercado.
That represented about half of Brazil’s nearly 25 million tonnes left from the 2021 cycle.
Indeed, in Rio Grande do Sul, one of Brazil’s top soybean states, farmers had sold 62% of their 2021 soy crop through Aug. 6, 11 percentage points below the historical average, Safras data showed.
In neighboring Paraná, farmers traded in 78% of their 2021 soybeans, two points below a five-year average.
Both states are expected to harvest a combined 42.2 million tonnes of soy in 2022, but only around 12% of their combined future crop has been committed for sale, according to Safras, below the historical average.
By August of last year, Rio Grande do Sul had pre-sold an estimated 27% of its future soy crop and Paraná 45%. ($1 = 5.1748 reais).
On this wake, also Argentina soybean exports.
Indeed, according to the Ministry of Agriculture, Argentine farmers have sold a total 28.5 million tonnes of soybeans from the 2020/21 crop, after registering sales over a seven day period of 568,600 tonnes.
On the previous season, by this point some 30.3 million tonnes of the oilseed had been sold.
The 2020/21 soy harvest in Argentina ended in June at 43.5 million tonnes, according to the Buenos Aires grains exchange.
In contrast, sales of 2020/21 corn had reached 38.7 million tonnes, about 3 million tonnes more than sales registered at the same time last year.
The exchange estimates 50.5 million tonnes of corn were harvested in the 2020/21 season, which finished last month.
Meantime, Argentine farmers have already sold a total of 5.7 million tonnes of wheat for 2021/22, with the harvest starting in November.
The Buenos Aires exchange has estimated the new wheat crop at 19 million tonnes.
On European market, Euronext was caught in Chicago’s downward spiral again on Wednesday night.
Corn was pulled down by a further reduction in US ethanol production last week (905,000 barrels per day).
Additionally, according to state and federal authorities, Germany is facing a long-term battle to eradicate African swine fever carried into the east of the country by wild animals.
Some 2,036 cases of the disease have been confirmed in wild boar near the border with Poland, where the disease is widespread.
Rapeseed, on its part, fell in the wake of canola and in a context still uncertain about the strength of global economic activity, given the health crisis.
Meantime, in the province of Manitoba in Canada 7% of areas are estimated harvested according to the government.
The wheat market, on the other hand, was driven by the Algerian purchase of an estimated volume of nearly 300 kt, at around $ 355 / t C&F, i.e. a price up by $ 4 / t compared to the deal concluded in mid-August, limiting losses in the farthest contracts and gaining on September delivery.
On the other hand, non-commercial market participants cut their net long position in Euronext milling wheat futures and options in the week to Aug. 27, data published showed yesterday.
Non-commercial participants, indeed, lowered their net long position to 169,831 contracts from 178,038 a week earlier.
Commercial participants cut their net short position to 180,132 contracts from 190,111 a week earlier.
Ditto in rapeseed futures and options, non-commercial market participants dropped their net long position to 4,800 contracts from 7,770 a week earlier.
Commercial participants reduced their net short position in rapeseed to 11,341 contracts from 11,605 a week earlier.
According to the United Nations food agency, world food prices jumped in August after two consecutive months of decline, pushed up by strong gains for sugar, vegetable oils and some cereals.
FAO’s food price index, which tracks international prices of the most globally traded food commodities, averaged 127.4 points last month compared with 123.5 in July.
The July figure was previously given as 123.0.
On a year-on-year basis, prices were up 32.9% in August.
In particular, FAO’s cereal price index was 3.4% higher in August from the previous month, with lower harvest expectations in several major exporting countries shunting up world wheat prices by 8.8% month-on-month, while barely surged 9.0%.
By contrast, corn and international rice prices declined.
FAO also said in a statement that worldwide cereal harvests would come in at nearly 2.788 billion tonnes in 2021, down on its previous estimate of 2.817 billion tonnes but still up on 2020 levels.
The fall in its estimate for world cereal production this year was triggered by persistent drought conditions in several major producing countries.
Among the major cereals, the forecast for wheat production saw the biggest downward revision — down 15.2 million tonnes since July to 769.5 million tonnes — due mainly to adverse weather conditions in the United States, Canada, Kazakhstan and Russia.
The forecast for world cereal utilization in 2021/22 was cut by 1.7 million tonnes from July to 2.809 billion tonnes, still 1.4% higher than in 2020/21.
The estimate for world cereal stocks by the close of seasons in 2021/22 was lowered by 27.0 million tonnes since July to 809 million tonnes, pointing to a decline of 0.9% on stock levels registered at the start of the period, FAO said.
From the Black Sea basin, Ukraine is experiencing an almost record harvest this year.
Wheat prices also in Ukraine stalled yesterday in the wake of other places.
Meantime, according to the Russian AgMin, as of 09/01/2021, 90.9 MMT of grain harvested from 33.4 MHA, with 2.72 MTHA yield, incl.
Wheat: 66 MMT from 22 MHA with 3 MTHA yield.
Barley: 16.4 MMT from 6.7 MHA with 2.45 MTHA yield.
Corn: 122.9 KMT from 27.7 KHA with 4.43 MTHA yield.
Russian wheat harvest in net weight of wheat could be below 75 million tonnes according some analysts.
However, all the Black Sea production (Russia and Ukraine) is projected 11 MMT higher this year with 90+% of that increase headed for the export market.
About this, Russian export activity was very sustained in August, despite the export taxes which should continue given the inflationary context.
And Ukraine grain exports rise 11% so far 2021/22 to 8.6mln T.
That included 4.6mln tonnes of wheat.
From Australia, a late-season run on export accumulation has lifted values for northern wheat by up to $15 per tonne in the past week, and barley has also firmed as the market starts to process the likelihood of a two-stage harvest.
Southern markets have traded mostly sideways in the past week as consumers see above-average yield potential from most crops in higher-rainfall areas countering below-average prospects for pockets of the Mallee and south-western New South Wales.
Meanwhile, panamaxes and handy-size vessels booked some months ago are continuing to load wheat and barley ahead of end-of-season maintenance shutdowns at some ports.
As exporters scramble to get grain to ports to load on the last boats of the season, traders report trucks have become very difficult to book to cart from on-farm storages to up-country consumers, and this has buoyed domestic pricing.
Weather forecasts continue to fill some gaps in northern NSW.
Widespread falls of 15-20+ mm are forecast across almost all of the state.
Internationally, Algeria’s OAIC tender results are now estimated to have booked potentially up to 500,000t, unofficial results as always.
India seals deals to import 250,000 T soymeal, buys back exported cargoes.
India has contracted to import 250,000 tonnes of soymeal, including 15,000 tonnes that Indian dealers had shipped out only two months ago.
Jordan makes no purchase, in a tender for 120,000 tonnes wheat.
A new tender is expected to be issued closing next week.
The lowest price in the first round of offers in the tender from Turkey’s state grain board TMO to purchase 300,000 tonnes of milling wheat on was believed to be $328.00 a tonne c&f.
The offer was believed to have been made for 25,000 tonnes of wheat already in warehouses in Turkey by trading house Erser.
Lowest prices for imported wheat were assessed at $329.27 a tonne c&f and $329.89 a tonne c&f.
No purchase has yet been made and talks continue.
Rapid wheat shipment is sought between Sept. 10 and Oct. 10 to a series of Turkish ports.
We wish you a good day.
