US grain prices were mixed but mostly firm to start the week.
For corn we have seen double-digit gains yesterday as demand fundamentals are bullish.
Indeed, corn prices were pushed prices more than 2% higher by the close.
Soybeans also managed modest gains, thanks to support from another large sale to China reported during the morning.
Wheat prices were narrowly mixed, meantime.
CBOT futures faded slightly, while HRW and spring wheat prices moved modestly higher, with Minneapolis up around 0,6%.
On macro markets, oil markets rose on this morning, reversing earlier losses and extending their rally into a sixth session, amid continued concerns over tight supply at a time when demand is picking up with the easing of COVID-19 pandemic restrictions.
Thus, Brent crude futures gained 42 cents, or 0.5%, to $79.95 a barrel at 02:48 GMT, reaching its highest since October 2018.
It surged 1.8% on Monday.
U.S. West Texas Intermediate (WTI) crude CLc1 futures climbed 41 cents, or 0.5%, to $75.86 a barrel, hitting its highest since July.
It jumped 2% the previous day.
On Wall Street, the Dow Jones Industrial Average rose 71.37 points, or 0.21%, to 34,869.37, the S&P 500 lost 12.37 points, or 0.28%, to 4,443.11 and the Nasdaq Composite dropped 22.86 points, or 0.80%, to 14,969.97.
Meantime, Asian shares mainly drifted lower on this morning as investors continued to fret over China Evergrande Group’s unsolved debt crisis and eyed the potential impact of a widening power shortage in China.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.13% lower, following a mixed session on Wall Street
In early trade Tuesday, Australia’s benchmark S&P/ASX200 index was down nearly 1%, while Japan’s Nikkei was off 0.6%.
China’s blue chip index CSI300 edged up 0.1% at the open, as Hong Kong’s Hang Seng Index gained 0.44%.
Coming back on grains market, U.S. port activity has driven corn and soybean prices, but has blocked the rise of wheat.
Indeed, wheat weekly export inspections were 0.3Mt, beans 0.4Mt, corn 0.5Mt and two milo boats were shipped to China.
Corn export inspections improved 28% week-over-week.
Soybean export inspections improved last week, versus the prior week’s.
China was by far the No. 1 destination.
Wheat export inspections were lackluster, falling to about half of the prior week’s.
Meantime, an export sales flash had 0.334Mt beans sold to China.
US weekly crop progress figures have corn 18 per cent (pc) harvested, beans 16pc and sorghum/milo 31pc.
US row crop yields remain mixed.
There are more disappointing results from drought stressed areas but few are any real surprise.
General sentiment appears to be starting to swing back towards a lower corn yield, but that can change quickly as more fields come off.
Winter wheat sowing, meantime, is carried out at 34% against 21% last week.
Three days away from the 30 September stocks report and the annual small grains reports being released markets, albeit with some choppiness on limited volume, are still looking to be very quiet.
Reuters surveyed guesses for this week’s reports.
The average of wheat numbers was 1.68 billion bushels (bbu), slightly below the USDA’s last update and reflecting a lower spring wheat idea.
Stocks ideas were 1.15bbu corn and 175 million bushels beans, both about WASDE level.
The only real unknown there is the feed/residual value.
In this context, corn basis bids continued to show plenty of variability across Midwestern locations, moving as much as 18 cents higher at an Iowa processor while tumbling as much as 25 cents lower at an Iowa ethanol plant.
Soybean basis bids dropped 25 cents lower at an Indiana processor while firming 2 to 6 cents higher at three interior river terminals.
Bids at other Midwestern locations held steady.
On European market Euronext started its week with a new bullish surge, except for wheat, which stood out by stalling.
Corn prices, indeed, rose slightly in a context of delayed harvesting sites and competitiveness of The French origin.
Rapeseed was still up yesterday, with a new record, in a context of firm biodiesel prices.
From the Black Sea basin, dry weather has been helping winter wheat planting and corn harvest push along.
Next to no rain is forecast even on the 2-week model runs.
Meantime, wheat prices in Russia are around 304 usd/t FOB for 12.5% protein.
Russia’s agriculture ministry reports that the country’s grain exports so far in the 2021/22 marketing year are down 22.4% from a year ago, citing increased global competition.
However export activity remains still strong despite taxes that will increase from 50.9 usd/t currently to 53.50 usd/t from 29 September until 5 October.
On the other hand, according to the Ministry of Agriculture, 10.3 million hectares of winter crops were sown on 2 4 September compared to 11 million last year.
On Ukraine, wheat prices were declining a little ground in a context of increased competitiveness with other European origins. Wheat with 11.5% protein is back below the 300 usd/fob mark.
From Pakistan, wheat tenders have been a regular occurrence in recent months, but its government’s international procurement campaign has gone up a notch in September, despite the country’s farmers harvesting a record crop earlier in the year.
Wheat is one of Pakistan’s four main agricultural crops and is the largest crop by area, taking up around 40 per cent of the country’s total cultivated land.
The other main crops are rice, cotton and sugarcane. Wheat is grown in the “rabi” or winter season, with planting in the October to December period and harvest from March through to late May.
The area planted to wheat late last year increased by 4.2pc compared to 2019 to 9.2 million hectares, and weather conditions throughout the growing season were generally favourable.
In-crop fertiliser applications were higher than usual, with urea sales increasing 17pc year on year.
Damage due to disease was relatively limited, and there were no reports of locusts.
As a result, production increased by 9.6pc from 24.9 million tonnes (Mt) to a record 27.3Mt.
Around 60pc of the wheat produced is retained by farmers for their household consumption and seed for the next crop. The government buys 23-25 per cent of the crop, with private traders lifting the rest of the output.
The government increased the wheat support price for this year’s production to 1800 rupees per 40-kilogram bag (US$271/t) from 1400 rupees per bag (US$209/t) last year.
The Pakistan Government has approved the import of up to 3Mt of duty-free wheat during the 2021-22 marketing year to fill the gap between production and consumption.
The latest USDA forecast has Pakistan pencilled in for 2.5Mt after more than 3.6Mt was imported in the previous year. The government also plans to increase domestic reserves to 4Mt in the current year in a bid to contain inflationary pressure caused by higher domestic prices.
From the Middle Kingdom, energy rationing in China also continues to disrupt the Middle Kingdom’s crushing plants, which could quickly cause a shortage of soybean meal in the country.
From Australia, trade was quiet yesterday in Australian cereals. Domestic buying interest was limited amid global markets only slightly firmer.
Canola continued to new highs and attracted some grower selling. All eyes are on the east coast storm system appearing on weather maps.
On the international scene, Algeria holds its wheat tender that will end tomorrow September 29.
France could be retained for a good part of the volume following more tolerance on the part of Algeria on qualitative criteria.
Special focus on fertiliser market
The fertiliser market has been facing some big headwinds in recent times in the form of unanticipated events, aka black swan events.
Rising European gas prices have resulted in some plants closing their production (see here).
China has discussed curtailing exports (see here) along with their rapidly rising coal cost.
Hurricane Ida has caused issues with logistics (see here and here).
All this has combined to cause fertilizer prices to increase to levels not seen since the 2008 boom period.
Pricing levels are liable to remain high due to these recent incidents.
At the moment, US Gulf urea converted to A$ has averaged A$756 for September; the peak price was A$977 back in September 2008.
It is important to note that these prices are pricing levels in countries producer and do not include freight to the final destination.
We wish you a good day.
