After some bearish data released by USDA’s World Agricultural Supply and Demand Estimates (WASDE) report, technicals selling and profit-taking plagued grain prices, yesterday.
The planting progress, is creating additionals short-term headwinds, as is the strengthening U.S. Dollar.
Chicago corn prices were hit the hardest, with July contract finishing the session limit down.
July soybean prices dropped 3.5%, and some wheat contracts lost more than 4%.
Wheat prices shifted significantly lower, falling back below multiyear highs but remaining in relatively good shape overall (despite yesterday’s selloff).
Spillover weakness from corn and soybeans applied additional headwinds.
On macro markets, also energy prices saw significant cuts.
Crude oil fell 3.5% lower on worries over soaring coronavirus cases in India and resolution some supply chain disruptions in the United States.
Diesel dropped 3.25%.
Gasoline down nearly 3%.
On financial markets, investors remain leery of inflation trends and the possibility for higher interest rates.
However, some sectors tied to the reopening economy (e.g. airlines) led the way, making to rebound of 433 points on Wall St. the Dow, to climb back above 34,021, after suffering heavy losses in Wedsneday session.
The U.S. Dollar firmed slightly.
Coming back on grains market, it is difficult to know if the broad-brush clean-out was due to the increased talk around US and global inflation or simply that, with USDA’s WASDE report out of the way, the market was taking some risk off the table.
The new sales of US corn to China announced yesterday for a volume of 680,000 t for the next season has not stopped the downward movement observed since the publication of the USDA monthly report.
However, rainfall deficits in the northern plains and into Canada are easy to forget, even if forecasters with the U.S. Climate Prediction Center indicated yesterday that La Niña conditions have shifted back to ENSO-neutral conditions, which will likely continue throughout the summer for the Northern Hemisphere.
La Niña has a 50% to 55% chance of returning in late fall or winter.
Meantime, corn exports saw just 4.5 million bushels in old crop sales last week, even if new crop sales came in at 82.0 million bushels, leading to a total tally of 86.5 million bushels.
Old crop soybean sales fell 43% lower week-over-week to 3.5 million bushels.
New crop sales added another 3.8 million bushels, for a total of 7.3 million bushels.
Old crop wheat export sales tumbled 61% below the prior four-week average to 1.1 million bushels.
New crop sales added another 9.8 million bushels, bringing the total to 10.9 million bushels.
Corn export shipments fell 30% week-over-week and 18% below the prior four-week average to 60.8 million bushels.
China was the No. 1 destination.
Soybean export shipments improved 8% week-over-week but stayed 8% below the prior four-week average, with 10.5 million bushels. Mexico was the No. 1 destination.
Wheat export shipments slipped 3% below the prior four-week average, to 19.2 million bushels.
China was the No. 1 destination.
In this context, corn basis bids were steady to soft after falling 2 to 9 cents lower across a handful of Midwestern locations on Thursday after many end-users are facing pressure from recent boosts to commodity prices and barge traffic disruptions on the Mississippi River .
Soybean basis bids saw some significant erosion, after facing double-digit losses at five Midwestern locations.
From South America, the USDA, took note of the decline in Brazilian production for the 2020/2021 season by revising its production estimate from -7 Mt to 102 Mt now in the face of dry conditions.
This elements relating to the decline in production in Brazil nevertheless remain to be monitored.
From european market, the new rainfall observed in recent days and the still expected is reassuring without compensating for the deficit of recent months in many production areas.
However, the rains are obviously beneficial to the crops in place and beneficial to the areas recently sown.
The improvement in the condition of crops should thus be confirmed in the coming days and reassure operators.
Meantime, an estimated production increase of + 4.2% is to be noted compared to the 2020 harvest.
Consultancy Strategie Grains, indeed, fractionally raised its estimates for this year’s European Union corn crop to 2.567 billion bushels.
That would be a year-over-year increase of around 3%, if realized.
Strategie Grains also held its forecast steady for 2020/21 European Union soft wheat production, keeping it at 4.762 billion bushels.
That would be a year-over-year increase of 8.5%, if realized.
Export estimates moved slightly higher, to 1.010 billion bushels.
Whit the reassuring estimates by USDA, led to see also on Euronext a sharp drop in prices.
Faced with the declines in soybean and canola prices observed, also rapeseed prices are adjusting by erasing Wednesday’s performance alone on yesterday’s session when new highs had been hit.
The oil market is currently resisting the downturn, knowing however that the palm oil market in Kuala Lumpur will only open on Monday due to successive Malaysian public holidays (Thursday May 13 and Friday May 14). this weekend.
From Black Sea basin, russian consultancy SovEcon has raised its forecast for the country’s 2021 wheat production by 36.7 million bushels to reach 3.002 billion bushels, based on a larger than previously expected harvest area.
“The weather has been favorable for the new wheat crop prospects in recent weeks,” the consultancy added in a note.
“We see good moisture reserves in almost all wheat regions.”
On the occasion of the publication of its first report covering the 2021/22 crop year, the USDA placed Russian wheat production in 2021 at 85 Mt, a few hundred thousand tonnes near the record of the previous summer. .
The same day ahead of the official release, the USDA attaché in Russia produced an estimate of 77.5 Mt, which seems more in line with the production estimates made by local analysts which appear in the range 78- 80Mt.
Aussie new-crop wheat markets lost ground yesterday.
Values along the east coast fell AU$2-$3/t, but new-crop canola was up $10-$15/t, and barley was relatively unchanged over the course of the day.
Current-crop barley continues to catch a bid around the country.
Spot loads for next week continue to trade for ASW1 and APW1 wheat delivered Geelong and Melbourne at around $335-$340/t.
Hopes of rainfall remain subdued for the next eight to 10 days across Australia.
Light rain has been forecast for Western Australia, South Australia, and parts of Victoria.
In SA and Victoria’s Wimmera and Mallee, this takes us to the end of May, which further pushes out the winter-cropping program waiting for that next rainfall event to avoid false germination.
Reports are that Mallee growers are up to 75-per-cent through their planting program, with dry sowing happening, and hopes abounding for a better outlook for June.
Tonigth we will see how the session and the week will close.
