Grain prices were mostly lower Wednesday, anchored by a double-digit drop in winter wheat prices that erased a good chunk of Tuesday’s gains.
Traders await confirmation on the amount of winterkill damage from this month’s frigid weather, but remain concerned about large US and global stocks in the meantime.
USDA baseline acreage figures are expected to be released at the Outlook Forum tonight.
Pre-release guesses centre on the high 80s (million acres) range on beans and the low 90s on corn but there’s plenty of outlying viewpoints too.
In function of this, corn prices failed to gather much traction in either direction in a sometimes choppy session, finishing with slim gains, while soybean prices slid slightly lower, on some technical selling and on South American harvest that moves along slowly.
In Brazil, indeed, the rains persist in Mato Grosso, delaying the soybean harvest and therefore the sowing of corn.
However, current prices will encourage Brazilian farmers to sow their corn, even late.
Brazil’s Anec estimates that the country’s corn exports will reach 895.833 t in February, which would represent a 31% year-over-year increase, if realized.
In the meantime, they estimates soybean exports for February will range between 8,16 million ton and 10,87 million ton.
The upper end of that range would represent a 21% year-over-year increase, if realized.
So, these strong supply fundamentals, helped to minimize losses on corn and soybean.
Wheat prices, instead, tumbled significantly as traders assessed warmer weather that is expected starting next week and they are not supporting by other strong fundamentals at this moment.
Preliminary estimates suggest 10% of the U.S. soft red winter wheat crop and 15% of the U.S. hard red winter wheat crop could suffer winterkill damage from this month’s subzero weather.
However, thanks the increase in winter wheat acreage this fall, even if yields could been considered at risk of falling for the last cold snapshock, the damnage should be limited.
EU crop estimate remaining fairly positive for winter crops, with reports the last few days suggesting no immediate concerns across the western EU countries and good snow cover protecting from cold weather!
In France, work in the fields is resuming thanks to the warming of temperatures and the winter crops are mostly in satisfactory condition.
Ukrstat, the Ukrainian statistical body, published earlier this week the areas sown to winter crops, which was significantly higher than the situation presented in December.
And it is in wheat that the adjustment is the most significant, with the areas sown now being posted at 6.71 Mha, up + 10% compared to the previous publication of + 5% compared to last year.
The winter barley and winter rapeseed areas are also revised upwards by +125 Kha and +130 Kha, respectively, to 1.080 and 1.011 Mha.
In this context, European rapeseed gave some ground yesterday also in the wake of oil, as canola continued to advance.
The balance sheet in Canada will show an extremely tense end of the season and prices could encourage Canadian farmers to increase their canola acreage in the spring.
The cold snap has also caused a bit of chaos for the U.S. energy sector, knocking about 4 million barrels per day offline, which is more than 20% of the nation’s total refining capacity.
Experts say it will take weeks to fully restore production.
The U.S. Energy Information Administration typically releases its weekly ethanol production data on Wednesdays, but this week’s report is delayed a day.
Meantime, energy futures were up again, with crude oil moving above $61 per barrel on gains of nearly 2%.
Diesel and gasoline rose by similar amounts.
Also global freight markets have been firming with the increased charter demand and higher fuel program.
Some private estimates have put trans Pacific routes up $2-5/t over the last month, though as always, that depends on routes and backhaul.
On the international scene, Jordan purchased 60,000 t of hard milling wheat from optional origins in a tender that closed earlier yesterday.
The grain is for shipment in late September.
The Philippines rejected all offers for its tender to purchase 196.000 t of milling wheat, which closed earlier yesterday, citing overly high prices.
The grain would have been for delivery between April and June.
Algeria purchased between 30.000 and 60,000t of milling wheat from optional origins in an international tender that closed Tuesrday, at around a US$320/t cost and freight.
The grain is likely sourced from France and is for shipment between March and April.
A South Korean feedmill group purchased 100.000 t of corn from optional origins (likely sourced from the United States) in an international tender that closed earlier yesterday.
The grain is for arrival by June 21.
We will see tonight how the sessions close.
