Yesterday was a black day for the markets.
Only macro markets saw some support from a surprise jump in the Philadelphia Fed manufacturing index – coming in at 51.8 vs 23.1 last month and raising some optimism about manufacturing demand.
On the other hand, in contrast, in Wall St., the Dow tilted lower after rising bond yields stoked investors’ fears of inflation.
The latest US jobless claims report was worse than expected, too.
The EPA reported that the United States generated 902 million ethanol blending credits in February, which was moderately below January’s count of 1.1 billion.
The EPA also reported that the United Stated generated 306 million biodiesel blending credits in February, which was only slightly above January’s tally of 300 million.
Energy futures pushed dramatically lower, meantime, as tensions between the U.S. and Russia and larger-than-expected inventories led to a selloff.
Crude oil fell 7.5% to fall back below $60 per barrel.
Diesel dropped more than 6.5%, and gasoline down around 5.5%.
The tumbling energy futures and the fresh news of improved weather conditions in South America that could boost production potential there, tumbled also the other commodities.
South American weather maps, indeed, are adding more rains into the extended runs for Argentina, helping later-planted crops.
When considered in the context of recent drying in Brazil, all in all there are better forecasts across that continent.
In add, the EU vaccination dramas, helped spur an initial sell-off that then saw technical sales pressure kick in.
In this context, corn, soybeans and wheat prices were been from 1.5% to 2% lower, despite grains prices had had some bullish demand fundamentals to consider, especially when it came to corn.
Inside the fact, wheat prices eroded on a round of technical selling spurred by several factors, including a strengthening U.S. Dollar, the spillover weakness from other commodities and better wheather conditions.
Updated US drought monitor figures, indeed, showed a large improvement in drought conditions across the southern Plains – much as expected after the recent storms.
Now, only 17% of the Kansas crops are judged in hydric deficit vs. 45% last week.
Corn prices shifted more than 2% lower, incurring double-digit losses, with traders shrugging off some healthy export news from USDA, as well as another large sale to China.
For the third consecutive day, indeed, private exporters announced to USDA another massive corn sale to China.
Soybeans closed about 2pc lower on better weather conditions and harvest pressure from South America, where Brazilian farmers are still expected to reap a record-breaking soybean crop this season.
Spillover weakness from a broad range of other commodities created additional headwinds.
Canola markets at least were 3pc lower.
Regular US export sales of the week prior reported 0.39Mt wheat, 1Mt corn, 0.2Mt beans.
Almost exclusively destined for China there was also 0.267Mt milo / sorghum.
Corn sales had substantial increase to China (0.6 MMT) but almost all of it was switched from unknown – a process which is likely to continue in coming weeks as trade details are finalized on “unknown” sales.
Combined with this week’s flashes, this takes total confirmed corn China sales / shipments from the US to just under 23Mt.
In particular, corn export shipments saw a new marketing year high after climbing 42% above the prior four-week average.
Japan led all destinations.
Old crop soybean sales spilled 42% lower week-over-week, with no additional new crop sales to report.
Total sales fell to the lower end of trade estimates.
Soybean export shipments also slumped 44% below the prior four-week average.
Indonesia was the No. 1 destination.
Old crop wheat sales improved 18% week-over-week and 40% above the prior four-week average.
Cumulative totals for the 2020/21 marketing year remain slightly behind last year’s pace.
Wheat export shipments jumped 61% above the prior four-week average.
The Philippines topped all destinations.
Also European market suffered heavy losses yesterday.
Cereal prices retreated while oilseeds plunged.
Wheat prices remain weighed down by good production prospects for the next season in the Northern Hemisphere and by a international demand that continues to slow down.
Consultancy Strategie Grains reduced its 2020/21 soft wheat export estimates by 3.4%.
In fact, has reduced its European export target this year (including the United Kingdom) by 900 kt, to 25.2 Mt, citing a drop in demand – particularly from China.
In add, production in the upcoming season is expected to climb 8.6% higher year-over-year meantime.
On a climatic point of view, indeed, conditions are favorable in all Europe.
Also in Ukraine and Russia we note good crop conditions, even if need to be scrutinized in Russia to check crops conditions in this end of winter, especially in the center of the country.
In Ukrainian ports, corn is trading at the same price as feed wheat.
Chinese demand, with already 5 Mt loaded to this destination since the beginning of the campaign, compensates for the weakness of European demand and still offers strong support to the corn.
However, the Chinese government could act to reduce the corn and soybean use in the animal feed sector.
China, indeed, plans to partially replace its uses of corn and soybeans in animal rations in order to limit its dependence on imports!
This announcement caused prices for corn and the oilseed complex to drop.
The Middle Kingdom would particularly like to strengthen the uses of wheat, rice, potatoes, rapeseed and sunflower meal in rations.
Rapeseed prices plummeted yesterday after beneficial rains in Argentina that bring back optimism on the soybean harvest and the palm experienced a sharp decline as well.
All oilseed markets indeed has been hit by the fall of crude oil.
Australia local activity is quiet, relative to recent weeks, only small bits of demand continuing to pop up for near term covering.
This week’s Tunisian barley tender resulted in business getting booked in the $ 275-280 / t candf range.
On the international trade scenario, South Korean flour mills have purchased 50 000 t of milling wheat sourced from the United States, re-entering the market after recent price drops.
The grain is for shipment in June.
Tunisia bought 117 000 t of milling wheat, 42 000 t of durum wheat and 75 000 t of feed barley, from optional origins but that should be sourced by Black Sea countries.
The international tender closed yesterday.
The grain is for shipment in April and May.
Japan purchased 5.0 million bushels offood-quality wheat from the United States, Canada and Australia in a regular tender that closed earlier today.
Of the total, 42% was sourced from the U.S.
The grain is for shipment starting in late April.
Turkey has made provisional purchases of around 4.5 million bushels of corn in an international tender that closed earlier today.
Results will be confirmed over the next several days.
The grain is for shipment between March 25 and April 20.
The Iraqi government announced last night that it will allow direct grain import purchases by the trade ministry.
It discontinues previous requirements to issue import tenders.
