US farm markets settled lower overnight.
Corn prices tumbled 2.5% lower.
Soybeans were down around 1%.
Wheat fell from 0.5% to 1.5%.
On macro markets, oil prices fell on Tuesday in a widespread commodity selloff as the U.S. dollar jumped on worries that rising COVID-19 cases in the United States and Asia will potentially lead to slower growth.
However, a slow production restart in the U.S. Gulf of Mexico that has provided some support.
In fact, about 79% of U.S. Gulf production remained offline yesterday, with 79 production platforms still unoccupied.
About 17.5 million barrels of oil has been lost to the market so far.
The Gulf’s offshore wells make up about 17% of U.S. output.
Thus, on this morning U.S. West Texas Intermediate (WTI) crude futures rose 11 cents, or 0.2%, to $68.46 a barrel at 04:29 GMT, after sliding 1.4% on Tuesday.
Brent crude futures fell 2 cents to $71.67 a barrel after falling 0.7% on Tuesday.
Meantime, traders will be closely watching inventory data from the American Petroleum Institute industry group due on Wednesday and the U.S. Energy Information Administration on Thursday to have a clearer picture.
On the financial side, yesterday U.S. shares had slipped, on concerns that the U.S. economy may be starting to slow following the weaker-than-expected jobs data seen last week.
Thus the Dow Jones Industrial Average and S&P 500 fell 0.76% and 0.34% respectively, while the Nasdaq Composite climbed 0.07% to another record close as investors switched out of cyclicals into blue-chip tech stocks.
Meantime, in Europe markets are focused on whether the European Central Bank will begin to scale back its bond purchase programme.
Consequentially, in early European trades of this morning, FTSE futures were down 0.36%, pan-region Euro Stoxx 50 futures dropped 0.09%.
About Asian shares, fresh worries about slowing global growth prompted investors to reduce their exposure to riskier assets in a boost to safe-havens such as the U.S. dollar.
Thus, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.50%, Australia slipped 0.35%, Hong Kong shed 0.24% and Chinese blue chips dropped 0.58%, also weighed down by recent soft data in the world’s second-biggest economy.
Bucking the regional trend, Japan’s Nikkei gained 0.79% to a five-month high helped by revised gross domestic product growth figures beating expectations.
Coming back on grains market, traders assessed the latest weather forecasts and a mostly lackluster set of export inspection data from USDA.
Indeed, some light rains could fall on the eastern Corn Belt between today and Saturday, but large portions of the Midwest and Plains won’t see any measurable moisture during this time, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts a return to seasonally wet weather for the eastern Corn Belt between September 14 and September 20, while the Plains will continue to see drier-than-normal patterns.
Most of the country will experience seasonally warm weather next week.
Meantime, the crop conditions reports were released during the night with corn ratings slipped another 1pc to be pegged at 59pc good to excellent, beans were up 1pc at 57pc good-to-excellent.
Sorgo was down 1pc at 57pc and new crop winter wheat was 5pc planted.
The spring wheat harvests are 95% achieved against 83% to date on the average of the last 5 years.
On the other hand, corn export inspections reached roughly half of the prior week’s tally, falling to 275.799 t.
That was also toward the lower end of trade estimates,
Mexico accounted for more than half of last week’s total.
Soybean export inspections tumbled to 68.059 t last week, spilling 82% below the prior weeks’ tally.
That was also near the low end of trade guesses.
Mexico topped all destinations.
Wheat export inspections saw slight week-over-week improvements, moving to 381.551 t.
That was also on the higher end of trade guesses.
Mexico was the No. 1 destination.
Additionally, wheat have seen a flash sale of 327,000t of HRW to Nigeria yesterday, annunced by private exporters to USDA.
In this context, corn basis bids were steady to mixed, moving as much as 5 cents higher at an Iowa processor while tumbled as much as 25 cents lower at an Indiana ethanol plant.
Soybean basis bids dropped 5 to 6 cents lower at three Midwestern locations while holded steady elsewhere across the central U.S..
Now, the focus will soon turn to the next World Agricultural Supply and Demand Estimates (WASDE) report, out Friday morning.
From Canada Statistics Canada will release crop stocks data on this morning.
Ahead of that report, analysts expect to see wheat stocks through July 31, with a year-over-year decline of nearly 13%.
Canadian barley stocks are also expected to face moderate declines from a year ago.
Meantime, Canadian wheat exports during week 4 were quite good at 413,000 mt, but YTD numbers are already lagging last years by almost 400,000 mt.
The milling wheat market remains strong; good quality CWRS 13.5 are bid $10.50 – $11.00/bu delivered plant.
Final 2020/’21 wheat export numbers for the 2020/21 crop: During the ‘20/21 crop year, Canada exported 20.4 million mt, up 5% from 19.4 million mt the previous year.
The biggest destinations were China (3.4 million mt), Indonesia (2.3 million mt), and Peru (1.8 million mt).
Canadian durum remains extraordinarily strong, with $22/bu bid for N1, $21.25/bu for N3 CWAD.
These are extraordinarily high premiums over spring wheat.
The hail in the Regina area last Thursday took a few more acres away, which is not helping.
Statistics Canada (STC) estimated the durum wheat crop at 3.99 million mt based on an average yield of only 27.2 bu/acre.
Last year’s crop was 6.6 million mt, or 2.4 million mt bigger than expected for this year if acreage and the yield will be 5.58 million acres and 27.64 bu/acre respectvely, if realized.
Canadian durum exports for week4 were moderate at 20,000 mt, for a YTD total of 279,000 mt. Exports this year will be much smaller than last years.
Final 2020/’21 durum export numbers for the 2020/21 crop have seen Canada to export 5.8 million of durum wheat, compared to 5.6 million mt the previous year.
The single biggest buyer was Italy (1.4 million mt), followed by Algeria (1.1 million mt) and by Morocco (1.08 million mt).
From South America, according to the Ministry of Agriculture, Argentine farmers have sold a total 28.9 million tonnes of soybeans from the 2020/21 crop, after registering sales over a seven-day period of 462,300 tonnes.
The sales volume lagged that of the previous season.
Meantime, the ministry also said sales of 2020/21 corn had reached 39.2 million tonnes, 3 million tonnes more than sales registered at the same time last year.
Argentine farmers have also sold a total of 6 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, we have seen a slight erosion on grains, while rapeseed showed a very slight increase, consolidating on price levels close to the highest of the year.
Euronext wheat, however, settled on a stable upward trend after the European Commission raised the cumulative European export since the start of the season by nearly one million tonnes.
Indeed, according to the European Commission, EU soft wheat exports stand at 4.66 million tonnes as of September 5 against 3.60 million last year to date.
That is a year-over-year increase of more than 29%.
Barley exports stand at 2.18 million tonnes against 1.71 million last year.
In contrast, EU imports are down year-over-year.
Indeed, corn imports stand at 2.90 million tonnes against 3.23 last year.
Canola imports stood at 692,309 t on September 5 against 1.01 million tonnes last year.
Soybean imports during the 2021/22 marketing season have reached 90.4 million bushels, trending 17% below last year’s pace so far.
EU soymeal imports are also down moderately year-over-year.
Meantime, Turkey has reduced to zero the import customs duty for wheat, rye, barley, oats and maize, chick peas and lentils until year-end, the country’s Official Gazette said on Wednesday.
It said import duties were also reduced for coffee, with the duty for coffee from European Union countries lowered to 6% from 11%.
From the Black Sea basin, according to the Ukrainian Ministry of Agriculture, winter wheat areas should reach 6.68 million hectares this year against 6.1 million last year.
Winter barley areas are estimated at 1.02 million hectares against 954,700 ha last year.
Planting is starting in better conditions than last year when the water deficit penalized emergence.
Wheat prices are slightly lower in the Black Sea basin, while corn prices in Ukraine have firmed up slightly.
Kazakh President Kassym-Jomart Tokayev said on Tuesday it was premature to impose export duties on grain as the country prepares for a more modest harvest.
Indeed, central Asia’s top grain producer expects its 2021 grain crop to fall by 24% to 15.3 million tonnes after drought hit its main growing regions.
Kazakhstan banned exports of rye and limited exports of barley and wheat used for animal feed for six months from Aug. 15.
From the Middle Kingdom, China demand is a unknown piece of the puzzle.
USDA forecast China’s corn import total for the year October 2020 to September 2021, will be at 26Mt from all sources.
Ditto for the 2021/22 forecast.
However, with ASF still ripping through the China hog herd, the focus will be on the question of whether these commitments will be shipped, in other words is the demand still strong.
Therefore, this is becoming the debate that will shape the next 6 months’ pricing.
One of the interesting things is the price action in Dalian Hog futures.
Values have been trending lower since March with Nov futures trading from over ¥28000 in mid-March to ¥14725 yesterday.
If this is purely herd liquidation it is also interesting that the entire pricing curve is also suffering extensive selling.
Meantime, China’s state stockpiler Sinograin plans to sell 5.3 million bushels of corn originally imported from the U.S. in an upcoming auction on Friday.
Sinograin has offered a series of similar auctions earlier this summer in an attempt to replenish local supplies and push down red-hot prices.
Additionally, China imported approximately 349 million bushels of soybeans in August, which was trending slightly lower year-over-year as the country struggles with higher prices and lower crushing margins.
To note, however, August soybean imports were still around 9.5% higher than July’s tally.
From Australia, weather maps for precipitation remain on the drier side for the next 8 days with some scattered showers for southern WA and western Victoria.
Longer term forecasts still remain positive for an above average rainfall for the end of September early October.
More talk around frost damage in WA and the full extent over damage or yield penalty is still unknown, but temps did get down to minus 3 to minus 5 in some isolated areas last weekend.
Meantime, the 2021/22 season grain harvest is underway, with the first load of wheat delivered.
This kicks off the harvest up in the Central Queensland region.
In this context, markets remained largely unchanged yesterday on both new and old season.
Grower inquiry started to pick up and new season barley found a bid behind it along the east coast.
Local futures markets finished the day at $340/t Jan east coast ASX and barley $263.50/t.
On the international scene, Egypt is launching a new wheat tender for loading October 25 / November 3 payment at 180 days.
Last Friday, South Korean flour mills purchased 73.481 t of milling wheat from the United States plus another 50.000 from Australia.
The grain is for shipment starting in November.
Nigeria bought 327,300 t of hard quality wheat from USA.
Turkey is said to have bought 245,000 t of optional feed barley.
Algeria is buying feed barley.
Pakistan received multiple offers in its tender to purchase 550.000 t of wheat from optional origins.
The grain is for shipment in October and November once the sales have been finalized.
The Philippines issued an international tender to purchase 111.582 t of animal feed wheat that closes on Thursday.
The grain is for shipment in September and October.
We wish you a good day.
Author: Sandro F. Puglisi
