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Daily International Grain Market View

Fears of dwindling US and global grain supplies continue to be at the forefront of market discussion.
That helped grain prices move even more higher, in yesterday sessions.

Corn prices, indeed, firmed another 1.5% higher.

Soybean prices found similar gains.

Soybean meal and oil finished USD$2.9/st and 0.89usc/lb higher respectively.

Canola continued its rocket shot – adding another CAD$30/mt.

Wheat prices were more variable, however, some contracts climbed as much as 1.75% by in the close.

On macro markets, US jobless claims fell to their lowest level of the pandemic era, which boosted investor confidence.

So, on Wall St., the Dow reached a new record highs after climbing another 318 points, trading to 34,548.

Its expect an other strong performance for today.

Energy prices, in contrast, tilted lower, with crude oil down 1.25%.

Gasoline was also down around 1.25%.

Diesel falling 0.5%.

Indeed, despite falling U.S. inventories, there are more worries that India’s surge in coronavirus cases will curb demand.

The U.S. Dollar softened moderately.

The Fao posted yesterday a food price index which increased for the 11th consecutive month, at its highest since mid-2014.

That is sure to come to the media this morning.

The FAO food price index, in deed, has increased by 26% in one year.

Prices that continue to rise will have an impact on demand of course.

Coming back on grains market, always the FAO cut global wheat production by 6 million tonnes (Mt), mainly attributed to cuts in Europe, meantime, they also increased their utilization of global cereals with a big kick in corn feeding in China and the US.

The latest U.S. Drought Monitor updates, out yesterday, showed a few problematic areas scattered across the Midwest and Plains.

The Dakotas continue to struggle with overly dry conditions, as does much of Iowa and parts of Illinois and Indiana.

Nationwide, 65.6% of the country is affected by some level of drought through May 4, down from 68.3% a week ago.

NOAA’s 8-to-14-day outlook predicts widespread seasonally wet weather for much of the central U.S. between May 13 and May 19.

In this context, of course, corn prices have been on a clear upward trajectory on a blend of bullish supply, demand and weather fundamentals, moving even morehigher.

Also soybean prices saw plenty of positive forward momentum, lifted prices more than 1.5% higher in a sometimes-choppy session.

Wheat prices continued to find positive traction, on healthy demand fundamentals and some weather concerns across the US Great Plains.

In add, the spillover strength from corn and soybeans applied additional tailwinds.

Meantime, US old crop corn export sales slumped 72% below the prior four-week average, to 5.4 million bushels.

New crop export sales only contributed another 4.2 million bushels, for a tepid total of 9.6 million bushels.

Soybean export sales saw old crop sales tumble 86% below the prior four-week average, to 6.1 million bushels.

New crop export sales added 7.1 million bushels, for a total of 13.2 million bushels.

Corn export shipments were more robust, climbing 19% above the prior four-week average.

China was the No. 1 destination.

Soybean export shipments were down 22% week-over-week and 20% below the prior four-week average.

Mexico was the No. 1 destination.

Consequentially, yesterday soybean basis bids trended 5 cents higher at an Indiana processor and slid a penny lower at an Illinois river terminal, while holding steady elsewhere across the central U.S..

Corn basis bids, in contrast, fell 5 to 8 cents lower at three interior river terminals and also dropped 3 cents at an Ohio elevator while holding steady across other Midwestern locations.

On the hother hand, US old crop wheat export sales, fell to a marketing-year low last week.

New crop sales fared much better.

Wheat export shipments were more robust, staying 6% above the prior four-week average.

China was the No. 1 destination.

In Canada the current water deficit raises concerns for the emergence of future canola crops.

Seedlings are currently displayed around 10%.

Statcan will publish its end-of-March inventory estimates today.

From South America, the dry and hot climate affecting Brazil and particularly worrying weather maps are indeed keeping the seed prices at record highs.

Analysts now evoke a Brazilian corn harvest under 95 Mt, against 109 Mt recorded last year!

The water deficit is also penalizing for Argentina from a logistical point of view, with now difficulties of navigation on the rivers because of the low water.

On European market the surge in prices affects almost all products, with corn as the engine for cereals, and all vegetable oils for rapeseed.

In rapeseed, if the daily rise in prices is spectacular, it is due to the double effect of the prospects for weak harvests in Europe combined with an oil that is competitive with respect to its main competitors, namely palm oil and soybean oil.

The Malaysian palm, indeed, has soared 4% to reach its highest level since 2008 due to a return of Chinese buyers on the international market.

European wheat continues to take full advantage of the surge in corn with new season prices exceeding 230 € / t!

The arrival of rains over a large part of Europe, even if allay many fears about the coming harvest, do not limit the daily gains for the moment.

Morocco is reintroducing import taxes as of June 1, a usual element in this country at the start of the campaign, in order to protect its local agriculture.

In addition, the country expects a very good harvest this year.

From Black Sea basin, Russian crop continues to look good and the EU has been filling in some of the problem areas.

But, for the moment at least, this doesn’t matter – its all about corn and the risk that the US has an issue throughout their growing season so, risk premium remains.

The rise recorded on the world market, indeed, is also having repercussions on the Black Sea origins.

All products combined, indeed, have recorded a further significant rise in prices since the beginning of the week.

For the 2021 harvest, wheat and corn are standing shoulder to shoulder for harvest delivery at price levels now above the psychological threshold of $ 250, in Odessa rendering.

On the cereals side, only barley is not showing at its highest levels, for lack of a Chinese appetite which seems to be satisfied for this crop in the medium term.

The rapeseed, still for harvest 21 delivery, is now at price levels nearly $ 200 higher than those offered last December on the CPT-Odessa basis.

The sunflower seed, still harvesting 21, is approaching the threshold of $ 600 / t, delivered to the factory, 14% VAT included.

China’s state economic planner has pulled the plug on any economic talk between Australia, sighting Australia’s cold war mindset and ideological discrimination.

Australia’s Trade Minister Dan Tehan indicated the decision was disappointing as the economic dialogue was an important forum for Australia and China to work through issues relevant of economic partnership.

Aussie local current crop values were again relatively unchanged across the boards and we saw a spike in liquidity being traded with the focus still being execution and delivered into the ports.

Delivered Geelong/Melbourne ASW1 for last half May/June finished the day at A$340/t.

New crop canola markets continue to fire higer!

KWI port zone finished the day with bids over $800 FIS and is set to keep firing today with last night boards moves higher again.

Australian weather maps have built some more precipitation in the models for SA with the 8-day outlook increasing to a widespread 10mm across the cropping areas.

Favourable conditions for western and north eastern Victoria while the Wimmera/Mallee regions still look tough again for rainfall over the next 10-15 days.

On international trade scenario, South Korean feed makers have purchased around 276,000 t of animal feed corn from optional origins in an international tender that closed yesterday.

The grain is for arrival beginning in September.

Bangladesh has received multiple offers in its international tender to purchase 1.8 million bushels of wheat from optional origins that recently closed.

Offers are still being considered, and the grain is for shipment 40 days after a contract is signed.

Tonight we will see how the sessions close.

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