All grains and oilseeds markets made further strong gains overnight, meanwhile US currency weakened again.
Chicago soft red winter wheat futures rose, mainly on Europe’s weather woes, gaining 18 1/4¢;
Snow on the way in the Southern Plains, later this week, sent Kansas City hard red winter wheat futures prices, jumping by 18 3/4¢;
Minneapolis futures continued their rise on snow delays in the Northern Plains, lifting 12¢.
Corn, on ist part, was up 14¢;
Soybeans was up 20.5¢;
Winnipeg canola was up $10.
Matif wheat was up 3.25€ nearby and +2.5€ new crop.
Matif rapeseed was up 1.75€.
Also energy prices rose, on improving global recovery outlooks.
Consequently crude oil, jumped sharply, up nearly three bucks to $63.2 WTI / $66.6 Brent, after larger than expected US stock draws.
EIA, indeed, has announced a drop of 5.9 million barrels in US stocks last week.
Meantime, US consumer-price index data released Tuesday pointed to rising prices in March.
But markets are still struggling to determine if the higher prices, are duing in large part to temporary factors as the economy attempts to reopen following the pandemic, or are indicative of increasing inflationary pressures in the market.
Data released from the Labor Department saw the consumer-price index rise 2.6% in the year ending March 2021 and a 0.6% monthly increase between February and March 2021.
That marked the largest increase in the index since August 2018.
Comments from the US Fed last night continued to attempt to curb concerns about inflation.
However, the Fed confirmed they’ll be watching figures to see if its need to tighten monetary policy in coming months, despite earlier comments that they did not expect to do so.
Record-setting profits at Goldman Sachs and JP Morgan lifted Dow futures gaining 54 points.
However, the banks’ gains were not enough to support S&P 500 futures.
Markets, indeed, continue to be leery of economic recovery paces after the FDC and CDC pulled Johnson & Johnson’s one-dose COVID-19 vaccine from the market yesterday to investigate anomalous reports of clotting.
Caming back on grains market, old crop corn prices rose over 2% higher yesterday’s trading session as the complex borrowed support from gains in the wheat arena and an optimistic round of ethanol data was released by the U.S. Energy Information Administration.
New crop corn futures also climbed 1.3%-1.8% higher as cool temperatures raise concerns about farmers’ ability to plant crops in the optimal yield window – as well as the likelihood of increasing acreage with rapid planting paces.
Despite some clear market signals encouraging U.S. ethanol production to expand, ethanol output for the week ending April 9 fell 3.5% from the prior reporting period to 39.5 million gallons/day.
It was the lowest weekly production reading in the past month and broke a three-week streak of rising ethanol output.
On the bright side, weekly corn consumption for ethanol has held steady at over 100 million bushels per week for the past six weeks.
Blender demand for ethanol continues to rise, up 1.4% from the past week to 37.4 million gallons/day.
It was the highest volume of ethanol blending since mid-March 2020, matching pre-pandemic volumes.
For the week ending April 9, US consumer demand for gasoline rose 2% to 375.6 million gallons/day.
Gasoline demand flirted with a similar level last October before COVID-19 restrictions were reenacted as cases rose but have not previously seen more than 375 million gallons/day in weekly demand since prior to the pandemic.
Even with a lower weekly ethanol output reading, this morning’s Petroleum Inventory Status report was among the most encouraging outlooks for the ethanol industry since the pandemic’s onset over a year ago.
Soybean futures rose about 1%, with the largest gains awarded to old crop soybean futures due in large part to strong domestic usage rates expected for this morning and rising energy prices in yesterday’s trading session, which underpinned support in the soyoil complex.
New crop futures prices rose on cool weather and planting delays
The National Oilseed Producers’ Association (NOPA) releases its monthly crush estimates for March 2021 this morning.
Market watchers will be watching numbers to see if high prices and dwindling stocks are driving processors to scale back production.
That is an early sign of demand rationing.
Pre-report estimates are all over the board, with analyst guesses ranging between 165.0 million – 189.6 million bushels.
The average trade estimate is 179.2 million bushels for March 2021.
If this figure comes in on the higher end of the trade range, it could be the largest March crush on record.
Despite a thin demand from wheat export buyers, reported in Paris yesterday, as many importers are awaiting a decision from the Russian government, about the next phase of Russia’s wheat export taxes, rumours about Chinese purchases of US winter wheat are back in vogue again during the rally.
There’s talk of 5+ cargoes of US and potentially more European wheat sold.
So, markets will be closely watching tonight’s flashes to see if anything hit reportable levels, transactions of 100k+ tonnes.
Meantime, weather maps are still bringing a solid inch of rain to most of the US HRW belt into the weekend, with the last runs pushing higher totals slightly further to the SW of Kansas, but still light into N Texas.
A weak dollar also supported the gains (and will likely benefit export buyers when they decide to jump back into the market).
From South America, brazilian weather maps turning very dry into the 10-15 day ranges, across both central and southern areas, although cooler temperatures may partially help mitigate the stress.
Otherwise, things are fairly quiet in global grains.
There’s lots of focus on the new season row crop plantings but still feeling a bit quiet in markets.
Old crop is not yet entirely rounded out and new crop demand is limited, the rumoured Chinese wheat buying the exception to prove the rule on that.
Meanwhile in Brazil, ethanol production from corn has jumped 58% higher over the past year as dozens of new corn ethanol plants were brought online.
Brazilian ethanol industry group Unica estimates that ethanol output in the South American country over the next year could rise another 25%.
Ethanol production in Brazil has remained profitable over the past year so, ethanol will remain a competitive buyer of corn in Brazil over the next year, despite as global supplies continue to tighten amid staggering feed demand from China.
At first glance, it may not be clear to see but this shift will undoubtedly have ramifications on all corn markets.
Brazil traditionally harvests two corn crops in its growing season, the first of which tends to be used exclusively for domestic consumption and the second crop, or safrinha, is primarily designated for the export market.
As usage rates soar while the new corn ethanol plants come online, Brazil may grow increasingly reliant on the safrinha crop for domestic supplies rather than export sales.
Brazil is the world’s second largest exporter of corn.
On European market, climate risks and a surge in crude oil prices propelled Euronext up.
Cold temperatures have slammed into south and central France over the past week, wreaking havoc on the European Union’s top wheat producer.
It may be too early to quantify impacts to winter wheat crops, which have suffered frost damage in recent days.
Between 74,000 and 124,000 acres of sugar beets in France have already been decimated, the largest frost damage to the crop on record.
Meantime, the dry climate which is currently developing in Europe also threatens the yield potential of all the crops in place, and in particular motivated a new rise in wheat prices for the 2021 harvest.
Parisian wheat prices up 1.5% in yesterday’s trading session.
Rapeseed and corn prices, on the other hand, were notably supported by a new surge in black gold, in add, rapeseed is based also on very limited 2021 supply prospects.
France and Germany – two of the European Union’s largest grains producers – are not expected to see any rain in the next two weeks, which could further aggravate deteriorating crop conditions.
Yesterday the session was also animated by the publication of the last monthly report of FranceAgriMer, in which corn exports within the Community market were raised by 80 kt, to 3.8 Mt.
Wheat exports to third countries have also increased by 100 kt (7.55 Mt), but intra-community exports were decreased by 180 kt (5.63 Mt).
The fine stock is left unchanged at 2.7 million tonnes. In barley, the fine stock is also left unchanged at 1.1 million tonnes, as is that of maize at 2 million tonnes.
The EU is the second largest exporter of wheat in the world.
From Black Sea basin, the Ukrainian government plans to restrict sunflower oil exports from July 1 to September 30.
A text under discussion proposes both to introduce export licenses and quotas per operator.
Criticism from local market players was not long in coming.
Aussie grains market its fairly quiet locally with the same old stories about logistics and execution still in play.
Stocks are slowly starting to tighten up, but exports are also generally fairly well covered on their existing book and focused on turning that over.
Canola markets have firmed some $10-15/t already this week with support from domestic crush and a few export bids on the east coast.
CBH made headlines yesterday with force majeure claims for parts of the Geraldton/Fremantle zones.
It’s yet to be seen how significant the impacts are.
Internationally, the Philippines is buying about 165,000 t of feed wheat and Jordan for 120,000 t of feed barley.
