US farm markets, finished yesterday’s session with mixed but mostly lower results.
Corn prices were marginally down.
Soybeans were only able to move around 0.25% higher.
Wheat prices spilled moderately lower, with some contracts were down as much as 1.75% by the close.
The Stat Can reports of unexpectedly large Canadian stocks weighened on all wheat contracts a lot.
On macro markets, oil prices rose for the second consecutive session on this morning.
The decline in U.S. Gulf of Mexico output following damages from Hurricane Ida underpinned the market.
Indeed, according to the U.S. Energy Information Administration (EIA), U.S. crude oil production is expected to fall by 200,000 barrels per day in 2021 to 11.08 million bpd, noting that Hurricane Ida should force a bigger decline than its previous forecast for a drop of 160,000 bpd.
On Wednesday, likely oil was also supported as its believed that some protesters in Libya blocked oil exports at Es Sider and Ras Lanuf.
Thus, Brent added 26 cents, or 0.36% to $72.86 a barrel at 06:16 GMT and West Texas Intermediate (WTI) crude rose 12 cents, or 0.17%, to $69.42 a barrel.
Meantime, American Petroleum Institute (API) data showed that crude drawdown for the week ended Sept. 3 was smaller than expected, but gasoline and distillate drawdowns were bigger than expected.
In fact, API data showed U.S. gasoline stocks fell by 6.4 million barrels for the week ended Sept. 3, while crude stocks dropped by 2.9 million barrels.
U.S. distillate stocks fell by 3.7 million barrels over the same week, API data showed.
On the financial side, earlier this week, investors had bet the lower-than-expected payroll reading from Friday would mean the Federal Reserve would delay trimming its massive asset purchases, sending MSCI’s world equity index to a new all time on Tuesday.
However, the mood has turned more cautious since then, and several Fed policymakers on Wednesday signalled the U.S. central bank remains on track to reduce asset purchases this year.
Thus, on Wall Street on Wednesday, the Dow Jones Industrial Average fell 0.2%, the S&P 500 lost 0.13% and the Nasdaq Composite dropped 0.57%.
In Europe, following its meeting on Thursday, analysts expect the ECB to announce a cut to the pace of its emergency bond purchases from next quarter but will keep buying bonds at least until 2024 under its main programme, and possibly much longer.
Consequentially, the euro slipped to $1.1814, a little off Friday’s two-month high of $1.1909, while the dollar was steady against a basket of its peers, having gained in the previous three sessions.
Asian shares, meantime, dropped this morning, in line with a cautious global mood as investors are worried about the combination of slowing global growth and the potential tapering of central banks stimulus.
Thus, MSCI’s broadest index of Asia-Pacific shares outside Japan lost 1.04% while Japan’s Nikkei dropped 0.38%.
There were also losses in Australia down 1.01%, Korea off 0.74%, and in Hong Kong which shed 1.17%, with tech names leading the declines there.
The Hang Seng Tech Index fell 2.44% in early trading, weighed by declines in Tencent Holdings down 3.7% and Netease Inc down over 7% after China’s government on Wednesday summoned gaming firms to ensure they implement new rules for the sector.
Chinese blue chips were also down 0.41% just after the bell, and U.S. stock futures, the S&P 500 e-minis, were down 0.16%.
According to some analysts, the bearish global turn is likely due to strong U.S. job openings data overnight, which “means the job market is still strong, and that could mean tapering may still start in (the fourth quarter) despite the poor non-farm payroll in August”.
Coming back on grains market, little to no additional rainfall is expected across the entire central U.S. until Saturday, per the latest 72-hour cumulative precipitation map from NOAA.
Seasonally dry weather could extend into next week, especially across the Great Plains, per NOAA’s 8-to-14-day outlook, which covers September 15 through September 21.
Warmer-than-normal conditions are also likely for most of the country during this time.
Meantime, as we have seen yesterday, corn quality eroded a point lower this past week, with 59% of the crop now rated in good-to-excellent condition
At this time, nearly all (95%) of this year’s corn crop has reached dough stage, which is slightly ahead of the prior five-year average of 94%.
Seventy-four percent is now dented, versus the prior five-year average of 69%.
And 21% is now fully mature, up from 9% a week ago and favorable to the prior five-year average of 19%.
Matching analyst expectations, USDA raised soybean quality ratings by a point, with 57% of the crop now rated in good-to-excellent condition.
Another 29% is rated fair (unchanged from last week), with the remaining 14% rated poor or very poor (down a point from last week).
Physiologically, 96% of the crop is now setting pods, up from 93% the prior week and mirroring the prior five-year average.
And 18% of the crop is now dropping leaves, versus 9% a week earlier and the prior five-year average of 15%.
Harvest of the U.S. spring wheat crop is nearing the finish line with 95 percent of the U.S. crop in the bin according to the latest USDA Crop Progress report.
The majority of the crop that remains to be harvested is in Montana and North Dakota.
Rain over the past couple of weeks has caused harvest delays for some producers.
Quality of the crop appears fairly consistent compared to previous weeks.
At the NDSU Wheat Quality Lab, nearly 80 percent of the expected samples have been analyzed for kernel quality and grading characteristics.
Average protein on the samples inched up a bit this week to 15.4 percent (12% moisture basis) and test weight is similar to last week at 61.6 pounds per bushel (81.0 kg/hl).
Falling number values are high with an average of 433 seconds.
Total defects are similar to last year at 0.9 percent, with most being shrunken and broken kernels.
The crop currently grades a No. 1 Dark Northern Spring.
Harvest of the North Dakota durum crop continues at an above average pace.
Some areas report that durum harvest is complete, while other areas are around 70 percent or so.
The USDA Crop Progress Report shows statewide harvest nearing 90 percent complete.
Producers continue to report variable yields with fairly strong test weights, high protein and good color.
There are areas with lower test weights and with the recent rains, some color loss.
However, it appears this is in a fairly small portion of the crop.
The Wheat Quality Lab at NDSU has analyzed 40 percent of the expected durum quality samples.
Protein on the samples is averaging 15.7 percent (12 percent moisture basis), test weight is slightly lower than last year’s final value at 60.1 pounds per bushel (78.3 kg/hl) and falling numbers are high with an average of 415 seconds.
Total defects are at 1.3 percent and average vitreous kernel content is 93 percent, giving the crop a current grade of No. 1 Hard Amber Durum.
On the other hand, private exporters annunced to USDA yesterday a sold 106,000 t of soybeans to China.
In this context, corn basis bids were highly variable again after jumping as much as 30 cents higher at an Ohio elevator while slumping as much as 20 cents lower at an Indiana ethanol plant.
Soybean basis bids were steady to weak after falling 5 to 10 cents lower at three Midwestern locations today.
Meantime, USDA’s Farm Service Agency accidentally released the September acreage registration data this morning.
It was supposed to come out shortly after the reports on Friday.
In corn, the areas stand at 91,218 million acres against 90,309 estimated last month.
Soybean areas also increased to 86,184 million acres against 85,287 last month, and those of wheat to 49,323 million acres against 48,808 posted last month and 45,947 last year.
Consequnetially, these increases in surface area are causing a slight drop in prices this morning in Chicago.
Traders had just began squaring positions ahead of Friday’s WASDE report from USDA.
Additionally, with the EPA submission sitting in front of government, investors now are looking at the potential impact of the electric car goals in the US.
Indeed, with around one third of corn consumption heading to ethanol production the impact to the price could be very significant.
From Canada, According to the Stat Can, stocks of wheat, oats, dry peas and lentils were all up as of July 31, compared with the same date a year earlier, while canola and barley stocks were down.
Indeed, wheat stocks were higher despite increased exports.
Particularly, total stocks of wheat increased 3.7% year on year to 5.7 million tonnes as of July 31, largely on higher opening supplies (+4.6% to 40.8 mmt).
The increase was led by higher commercial stocks (+7.1% to 3.5 mmt), which more than offset lower on-farm stocks (-1.3% to 2.2 mmt).
The increase in total wheat stocks was driven by wheat excluding durum (+4.0% to 5.0 mmt).
Durum wheat stocks, on their part, rose 2.0% to 751.500 t.
These unexpectedly large Canadian stocks weighened on all wheat prices a lot yesterday.
On the other hand, deliveries of wheat rose 5.8% year over year to a record high 31.7 million tonnes as of July 31, contributing to the decrease in on-farm stocks.
Exports increased 10.1% to 26.4 mmt on strong global demand, particularly from China.
Oat stocks also up as domestic use falls.
Total stocks of oats were up 54.7% year over year to 658 500 t as of July 31, driven by higher commercial (+41.3% to 307 900 tonnes) and on-farm (+68.8% to 350 600 t) stocks.
Lower domestic use coupled with higher opening supplies resulted in an increase in total oat stocks compared with the same date a year earlier.
Oat exports rose 12.2% to 2.9 million tonnes, surpassing 2008 as the highest year on record.
In contrast, barley stocks reach record low while exports climb.
Barley stocks were at their lowest level on record as of July 31, down 25.7% from the previous crop year to 711.100 tonnes.
The decrease was attributable to both lower on-farm (-19.9% to 551 300 tonnes) and commercial (-40.5% to 159 800 tonnes) stocks.
Deliveries of barley off-farm increased 17.4% to 5.1 million tonnes, contributing to the decrease in on-farm stocks.
Barley exports were up 54.8% year over year to 4.6 million tonnes, with more than 90% destined for China.
Barley used for feed fell 10.6% year over year to 6.1 million tonnes as of July 31.
Canola stocks also lower as crushing hits record high.
Total stocks of canola decreased 48.6% to 1.8 million tonnes, their lowest level since July 2017.
The decrease was a result of lower on-farm stocks, which fell 50.3% to 1.1 million tonnes.
Moreover, commercial stocks fell 45.6% to 704 000 t.
Lower supply of canola for the 2020/2021 crop year (-6.0% to 23.0 million tonnes), coupled with high demand, drove stocks lower. Deliveries of canola fell 2.3% to 20.2 mmt, but remained above the average of the last five years.
Canola crushing increased 2.8% to a record 10.4 mmt as world demand for vegetable oils remained high.
Exports of canola rose 4.9% to 10.5 million tonnes, as a result of strong global demand.
This increase was largely due to higher exports to China, which rose by approximately one-third year over year.
From South America, Brazilian truckers have staged demonstrations and partially blocked key routes in several states, according to a federal highway police bulletin, though grains exporters said shipments have not been affected.
Meantime, soy farmers in Brazil’s top farm state, Mato Grosso, which grows a fourth of the country’s soybean crop, plan to take advantage of late-September rain forecasts to plant soybeans earlier than last year.
On European market Euronext again traded in dispersed order.
Wheat failed to escape its bearish inertia, corn prices recovered by yesterday’s lossess, while rapeseed, stood out by fetching a new record on its November 2021 deadline after StatCan announced a drop in Canadian canola stocks compared to last year.
Farm office FranceAgriMer lowered its estimates of several key milling criteria of France’s soft wheat harvest in its second quality results published on Wednesday.
For test weights only 30% of the crop was estimated to surpass the 76 kg per hectolitre (kg/hl) minimum commonly applied for milling in France, down from 39% estimated last week, according to preliminary data published on its website.
Last year, 98% of the crop exceeded the 76 kg/hl level.
For Hagberg numbers, 67% of the crop was exceeding the 220 threshold often applied in France, down from 72% last week while 51% of the crop was exceeding the 240 level required in some export markets, down from 57% last week.
For protein content the survey reported slightly better results this week with 95% of the soft wheat harvest showing a basic protein content of 11% or above against 94% last week.
However, the survey showed a lower share exceeding the 11.5% protein threshold, at 74% compared to 77% last week.
The results on these three criteria were based on samples analysed on Sept. 7, amounting to about 84% of the final samples due to be surveyed.
A final report on the 2021 soft wheat crop’s quality is expected later this month.
Meantime, French soft wheat shipments outside the European Union rose to their highest in three years, as exports to Algeria ramped up following a slow start in July.
Soft wheat exports to destinations outside the 27-country bloc totalled 834,600 tonnes in August, the second month of the 2021/22 season.
Algeria was the largest non-EU destination for French soft wheat last month, with an initial estimate of 335,900 tonnes, followed by Ivory Coast with 122,100 tonnes.
Total barley exports outside the EU reached 909,900 tonnes last month, the highest for August in at least a decade.
That was dominated by 712,980 tonnes of feed barley and 104,200 tonnes of malting barley shipped to China.
Another 88,520 tonnes of feed barley was sent to Mexico and 4,200 tonnes of malting barley was shipped to Sweden.
Two ships expecting to carry 60,000 tonnes of barley to Mexico and 30,000 tonnes of soft wheat to Ivory Coast were cancelled in mid-August.
Soft wheat exports to China are expected to ramp up in the coming month as two ships totalling an expected 136,300 tonnes are waiting to load.
French soft wheat exports outside the EU over the full July-June 2021/22 season are expected to be 3 million tonnes higher than last season at 10.5 million tonnes, according to farming agency FranceAgriMer.
For sea exports within the EU, soft wheat shipments last month were 100,000 tonnes, while all-grain shipments totalled 172,200 tonnes.
Most French grain exported inside the EU is transported via non-maritime routes.
Total grain shipments to all destinations from French ports in August – including barley, malting barley, maize, waxy maize, malt and durum wheat – were at the highest on record stretching back to the 2009/10 season at 1.96 million tonnes.
On the other hand, non-commercial market participants cut their net long position in Euronext’s milling wheat futures and options in the week to Sep. 3, data published by Euronext on Wednesday showed.
Non-commercial participants, which include investment funds and financial institutions, lowered their net long position to 150,206 contracts from 169,831 a week earlier, the data showed.
Commercial participants similarly reduced their net short position to 163,785 contracts from 180,132 a week earlier.
Commercials’ short positions accounted for 69.3% of the total short position, while commercial long positions accounted for 41.5% of total long positions.
Non-commercial short positions represented 30.7% of total short positions, while non-commercial net long positions accounted for 58.5% of the total longs.
In Euronext’s rapeseed futures and options, non-commercial market participants trimmed their net long position to 2,536 contracts from 4,800 a week earlier.
Commercial participants dropped their net short position in rapeseed to 8,761 contracts from 11,341 a week earlier.
From the Black Sea basin, little change yesterday on wheat prices in Ukraine, while in Russia firmness remained.
Remains nevertheless the competitiveness of the Black Sea origins in general.
Corn prices, meantime, gave up a little ground in Ukraine, in particular under the effect of harvest pressure.
Indeed, Ukraine grain exports are just under 8pc ahead of this time last year, well on the way to achieve their 23.8 million tonnes wheat export estimate.
Ukraine has exported 9.53 million tonnes of grain so far in the 2021/22 July-June season versus 8.86 million at the same point a year earlier, agriculture ministry data showed on Wednesday.
That included 5.33 million tonnes of wheat, 2.88 million tonnes of barley and 1.28 million tonnes of corn, the data showed.
Ukraine plans to thresh a record 80.6 million tonnes of grain in 2021, up from 65 million tonnes in 2020.
Exports may jump to 60.7 million tonnes in 2021/22 from 44.7 million in 2020/21.
Meantime, the ministry has said farms have completed the 2021 wheat harvest, threshing 32.8 million tonnes with a yield of 4.64 tonnes per hectare.
The government has said grain exports could include 23.8 million tonnes of wheat, 30.9 million tonnes of corn and 5.2 million tonnes of barley.
From India, Indian farmers, who have been protesting for months against three new agricultural laws, said on Wednesday the government’s move to raise state-mandated price for new season wheat is not enough to cover the cost of cultivation.
In fact, on Wednesday, the government of Prime Minister Narendra Modi raised the price it will pay to buy new-season wheat from local farmers by 2% to 2,015 rupees ($27.39) per 100 kg.
Consequentially, thousands of angry farmers continued to protest at the central government office in the Karnal district of Haryana in India’s north.
Meantime, India is also reportedly considering further cuts in its import taxes on vegetable oils, which has prompted a further upturn in the Malaysian palm and the entire oilseed complex.
Tariff On Crude Veg-oil Is Expected To Be Reduced by 5-6% & The Tariff On Refined Veg-oil Is Expected To Be Reduced By 9-10% points.
From Australia, Aussie wheat and barley markets both remained largely unchanged across the board yesterday in both track and delivered.
ASX Jan east coast wheat was softer by a couple bucks to settle the day out at A$338/t.
Reports of more interest through NSW zone on new crop selling by the grower.
While other zones are on the quiet side with growers wanting to see another rainfall event at the end of the month.
Hand to mouth buying continues on old crop filling holes into the ports and domestic consumers for LH Sep and October slots.
Old crop wheat bids have come off $5/t this week.
Barley still holds a bid behind for Sep-Oct, with appx 375,000t of east coast barley shipments on the lineups for September.
We have also seen an additional handy vessel confirmed of canola headed to Japan.
Internationally, GASC bought 300,000t wheat, 240,000t from Ukraine and 60,000t from Russia.
Rough and dirty the prices equate to $310-317/t FOB.
The prices charged were higher than those of the last tender of the order of + 4.50 usd / t.
Note that freight costs remain very high around 33 usd / t for Ukraine origins.
Japan hopes to purchase 2.9 million bushels of feed wheat and 4.6 million bushels of feed barley in a simultaneous buy-and-sell auction to be held on Sept. 15.
The grain would be for arrival in late February.
Sago just launched a tender, for wheat with 76 tw min (instead of 77).
So demand is adapting to current situation.
The tender is for 360k tm for november arrival.
Jordan believed to make no purchase in tender for 120,000T wheat –trade.
Three trading houses participated: CHS, Ameropa, Cerealcom.
A new tender is expected to be issued closing next Wednesday.
We wish you a good day.
Author: Sandro F. Puglisi
