Grains were mixed but mostly higher yesterday, anchored by double-digit gains from soybeans as traders remain focused on the sluggish South American harvest and dwindling U.S. stocks.
Soybean prices, indeed, moved substantially higher on a wave of technical buying prompted by fresh news of a sluggish Brazilian harvest, which is off to its more slowest start in a decade, so much that prices closed back above $14 per bushel for the first time in two weeks and remain close to multi-year highs.
In Brazil, indeed, the rains are delaying the harvest, as only 15% was harvested last week compared to 31% in normal times.
This is combined with very sustained demand, particularly come from China.
This is appenening in spite the Brazil’s Anec predicted that the country’s soybean exports will come in between 183.7 million and 223.5 million bushels this month and Brazilian consultancy Agroconsult still has a very bullish projection for the 2020/21 soybean production potential, offering a new estimate of 4.924 billion bushels.
That’s 1.2% higher than prior forecasts and would be a record-breaking harvest, if realized.
Rapeseed and canola futures also hiked 2-3 per cent, with the prospects for the rapeseed harvest for the next season remain gloomy in Europe, and in Ukraine, where autumn sowing was carried out under very difficult conditions, while corn tracked about 0.5% higher mainly thanks to the ensuing spillover strength from soybeans.
In fact, Brazil’s Anec estimates that the country’s corn exports will reach 21.8 million bushels in February, which would be a month-over-month increase of 33%, if realized.
Meantime, a poll of 11 analysts shows revealed that Brazil’s corn production for 2020/21 could reach record levels, with an average trade guess of 4.260 billion bushels across approximately 48 million acres.
About one-fourth of the country’s second corn crop could be planted outside the ideal window, however, due to delays caused by recent rains.
In add, ethanol production fell to multi-month lows last week, with a daily average of 911,000 barrels per day.
Prior to that, production had mostly stabilized at around 935,000 to 940,000 barrels per day.
The U.S. Energy Information Administration will release its next batch of numbers today.
And more, China’s farm ministry said the herd hogs will be “fully recovered” by the middle of 2021, as China’s current hog population has reached 90% of its normal levels this past fall.
On the contrary, wheat prices were mixed but mostly lower in an uneven round of technical maneuvering, despite the risks linked with the winter wheat condition in the USA, particularly in Texas, following the low temperatures of recent days, that have seen also an updated on crop conditions in Kansas with winter wheat rated to 40pc good-to-excellent, down 3pc from January.
Quality ratings also declined in Oklahoma last week but improved in South Dakota, Colorado and Montana.
Frigid temperatures in the U.S. and Black Sea region may prove problematic for crop quality and yields, but frosty weather in the European Union may have only caused minimal trouble for the EU wheat crop, according to crop monitoring service MARS.
That’s because adequate snow cover sheltered most of the acres affected, although MARS admits some limited frost damage likely occurred in western Germany and eastern France.
However, it is extremely hard to judge winter kill this close to the event, and prior to emergence from dormancy.
Regular weekly US crop-condition reports will be starting again on 5 April, and until then, only a few states report estimates.
On the international scene, Jordan has bought 60,000 t of feed barley, optional origins.
The tender saw a cargo purchased at US$265/t cost and freight for early September, which looks to be about $5/t up from its previous purchase which was for August loading.
As for the Philippines, issued a tender to purchase 145,000 t of wheat.
Offers must be made by today, February 24, and the grain is for delivery between April and June.
Energy futures were mostly higher yesterday.
Crude oil was trading near even, holding at around $61 per barrel.
Diesel rose 0.5%, with gasoline climbing nearly 1%.
The dollar remained slightly down yesterday at 1.2150 against the euro and 74.10 against the rouble.
In this context freight prices in the Black Sea basin are strengthening also in the wake of the Baltic Dry Index.
Indeed, they have reached their highest level since the beginning of the season.
In addition to the rise in crude oil prices, this situation is also fuelled by strong Russian demand, as evidenced by last week’s wheat shipments posted at nearly 1.5Mt.
Recently we have seen a freight increase by +4-5 $/t, even for nearby destinations, has recently been recorded, corresponding to an increase of +25%-30% in delivery costs.
And in fact, Black Sea cash markets have seen some quick strength overnight, with wheat offers reportedly pulling up $5/t or so from late last week.
On the contrary, Australian cash markets remained fairly quiet yesterday, with the higher dollar keeping some pressure on grains.
