Yesterday was a very eventful session in Chicago.
Grain prices, indeed, evolved alternately between significant rises and falls.
During morning session they tested by small to big gains, before eroding back into the red by the close.
The downward pressure from a round of technical selling and profit-taking, indeed, was very hard.
So, corn prices faded 2% lower.
Some wheat contracted cratering as much as 2.75%.
Soybean prices were up double digits until at one point, however, finished the session down around 0.75%.
On macro markets, investors expressed optimism over the Federal Reserve’s decision to keep interest rates unchanged.
However, they acknowledged that inflation is on the rise even if they maintaining that “longer‑term inflation expectations remain well anchored at 2%”.
The FOMC will meet again in June.
OPEC+ this week decided to stick to plans for a phased easing of oil production restrictions from May to July, an indication that the group is confident that global demand will recovery.
The market is supported by the general belief that the COVID endgame is in sight.
US bank Goldman Sachs said on Wednesday it expected “the biggest jump in oil demand ever,” at 5.2 million barrels per day (bpd) over the next six months, as vaccination campaigns accelerate in Europe and travel demand climbs.
Goldman also said easing international travel restrictions in May would hike jet fuel demand by 1.5 million bpd.
US crude inventories rose by 90,000 barrels last week to 493.1 million barrels, the Energy Information Administration said on Wednesday. Analysts had expected a 659,000-barrel rise.
Distillate stockpiles fell by 3.3 million barrels in the week, and refining capacity use rose to 85.4% on the week.
Weekly EIA ethanol figures, indeed, had production up very slightly to 945k bpd while stocks continued to drop (off 711k) as east coast and Gulf stocks draw down, which signals likely more exports loading from the Gulf.
Consequently, energy prices rose higher, with crude oil up more than 1.25%.
Gasoline firmed more than 2% higher.
Diesel was up around 1.5%.
On Wall St., however, the Dow slid another 164 points lower to 33,820 on some disappointing corporate earnings report.
The U.S. Dollar softened moderately.
Coming back on grains market, Rain outlooks have improved yet again for the US eastern corn belt, a widespread 2-3″ event now forecast.
It should cover almost all SRW growing areas there too.
There’s still nothing on the maps for Hard Red Spring wheat areas in the US and Canada.
Meantime, soybean and corn planting is accelerating in the USA in a context of favorable climate for these cropping operations.
The rise in temperatures is restoring morale to farmers with favorable sowing conditions, but emergence will of course be subject to the rainfall in May.
In the current context of volatility, the Chicago Stock Exchange is increasing its security deposits to USD 1,900 / lot of corn against USD 1,700 previously.
Ditto in wheat at 2 300 usd / lot against 2 100 usd.
The markets are dictated by the close of the May deadline with therefore erratic movements.
Operators are now focusing on the next harvest, the September deadlines.
Meantime, soybean basis bids held steady across most Midwestern locations Wednesday, even if did tip a penny higher at an Illinois river terminal.
Corn basis bids, on the other hand, were steady to mixed across the central U.S. Wednesday, jumping as much as 15 cents higher at a Nebraska elevator while sliding as much as 5 cents lower at an Iowa river terminal.
Really, US farmer sales have been generally slow this week so far.
From South America, below-average rains in Brazil over the past few weeks is causing some speculation that corn yield potential is on the downward trend there.
However, maps for Brazilian safrinha areas remain very dry with the latest 2-week runs taking off some of the chances of moisture that had been flirting out on the curve.
Meantime, one estimate from Refinitiv Commodities Research pegs the country’s total corn production at 4.123 billion bushels, which is 3.9% below estimates from CONAB earlier this month.
In Argentina, corn exports for the 2020/21 marketing year are now at 891 million bushels, according to the country’s ministry of agriculture. According to the latest estimates from the Rosario Grains Exchange, total production could reach 1.968 billion bushels this year.
In Argentina, 2020/21 soybean exports have reached 570.6 million bushels so far, according to the country’s ministry of agriculture, representing a 23% year-over-year decline.
Argentina’s 2020/21 wheat exports have reached 446 million bushels, which is a roughly 30% decline from the same time a year ago.
Argentinian farmers will kick off planting their 2021/22 crop in May.
Farmers have been reluctant to sell their grain in some instces as a hedge against the weak local currency.
On European market, Euronext recorded a mixed performance on Wednesday against a still volatile US market.
Profit-taking has indeed weighed down the quotations for the new harvest, while the old rapeseed and wheat contracts have remained in the green.
For 2021 harvest, indeed, prices fell back on all products combined, yesterday.
This illustrates the uncertainty affecting traders as to a weather situation which seems to be improving slightly in the USA, but which remains very worrying in Brazil.
Corn remains the cornerstone of price formation on the international scene and volatility therefore remains very relevant.
Meantime, Euronext has announced that it will remove its January maturity from 2023 due to the lack of liquidity on it.
The Soufflet/Invivo merger is looking like a done deal with comments from the InVivo CEO making the news that they expected to finalize the terms of the acquisition in the next two weeks.
From Black Sea basin, according to the APK-Inform consultancy, Ukraine’s 2020/21 corn ending stocks are 70% higher year-over-year, at a record level of 106.3 million bushels.
Exports this marketing year are expected to reach 913.3 million bushels.
According to operational data from the customs service, as of April 28, Ukraine has exported 38.4 million tons of grains and pulses since the start of the 2020/21 season.
This total appears to be 11.6 Mt lower than the activity recorded last season on the same date.
In detail were exported:
15 Mt of wheat (down 3.9 Mt vs N-1);
4.1 Mt of barley (down 0.5 Mt);
18.8 Mt of corn (down 7 Mt).
From Australia, this rain event continues to build only on the forecast maps, with the latest runs expanding the chances across WA to cover the more northern wheat belt too and improving outlooks on the east coast for a fairly widespread inch on the forecasts for the Wimmera and Mallee districts in Victoria and for central NSW.
On the international scene, after the abandonment of its call for tenders by Egypt, Algeria would have bought around 200,000 t of wheat loaded in June.
If the origins are optional, it seems that Germany is competitive.
Indications reported, however, have seen traded levels around US$316/t candf (old crop).
If it’s confirmed it could mean there’s some non-EU wheat in the mix.
A South Korean feedmill group purchased 8.0 million bushels of corn from optional origins in an international tender that closed earlier today.
The grain is for arrival in August and September. In a separate private deal, South Korea also purchased another 2.7 million bushels of corn, which is for arrival by August 10.
Taiwan purchased 2.6 million bushels of animal feed corn, likely sourced from Argentina, in an international tender that closed earlier today.
The grain is for shipment in July.
Algeria issued an international tender to purchase 30,000 metric tons of soymeal from optional origins, which closes on Thursday.
The grain is for shipment by June 15.
Egypt purchased 30,000 metric tons of soyoil in an international tender that closed earlier today, which is for arrival no later than July.
Tonight we will see how the sessions close.
