Corn, soybean and wheat prices all found solid footing in Wednesday’s session carving out a healthy round of gains.
Brazilian delays to an already slow harvest, helped soybean prices to rise another 1.25%.
Corn followed suit, rising almost 1% higher after a somewhat choppy session.
Some wheat contracts firmed by as much as 2%, with traders still focused on widespread weather challenges both in the U.S. and Black Sea area.
Indeed, soybean prices enjoyed of double-digit gains, on another round of technical buying spurred by news of harvest delays in South America.
Weather maps are shifting slightly wetter again across central Brazilian soybean areas and renewing some concerns about both harvest delays (harvest has been moving but is still behind normal pace) and quality/production risk.
n add, there’s talk doing the rounds about defaults on old origination contracts in Brazil.
Lawsuits are being filed and there are questions about how much of the old sales book will end up arriving, given the large increase in bean prices since planting.
In add, Ukraine soybean stocks was pubblished down by -18% vs last year.
Crushers could turn to Brazilian imports to keep their plants running.
We note that soybean prices are moving higher from four consecutive sessions.
However, all oilseed complex and stock energy’s , are pushing up.
European rapeseed, for its part, jumped forward, in the wake of crude prices, despite the downward correction in Canadian canola.
Rapeseed has been at its highest level since 2013.
Palm oil in Malaysia continue to face difficulties, combined with sustained international demand.
The publication of stocks in Ukraine by the statistical services showed tension in all oilseeds following poor harvests.
Indeed, sunflower stocks available on 1 February are down by -32% vs last year.
Only 4.3Mt of sunflower remained available.
Half of this volume is estimated to be held by the crushers, the other half is in the producers’ stocks.
Sunflower seed has recently soared above 800 $/t, including VAT.
The expanded US stimulus bill is finally coming and despite consistent expectations that it would pass, the news has brought a spike of optimism to the markets so that investors continue to bet on an economic comeback, although worries of potential interest rate hikes and inflation still lurk in the background.
In this context, energy futures notched significant gains, with crude oil climbing 2.5% higher.
Also diesel and gasoline were each up around 2%.
Corn prices followed a broad range of other commodities higher, including soybeans, wheat, livestock, energy and stocks, so that spillover strength prompted operators some technical buying that improved prices.
Operators are also beginning to worry about the delay in corn sowing in Brazil, which cannot be carried out on time because of the delay in the soybean harvest.
US ethanol production dropped sharply in the latest figures, with government estimates down from 911,000 bpd to 658,000bpd after the cold snap the other week temporarily idled some plants, however, they should pick back up fairly quickly.
We note also, that US ethanol stocks were down substantially by 1.5 million to 22.8 million barrels with the lower runs.
Brazilian ethanol production has historically been produced using sugarcane, but the country’s corn-based ethanol plants are seeing some forward momentum, as they are mainly located in the center west of Brazil where the biggest corn producers are located.
That is a very good opportunity for ‘safrinha corn’ as logistically, processing this corn domestically is more profitable than trying to ship it out of the country.
It should be noted, however, that the Rosario Stock Exchange has raised its estimates of Argentina’s corn and soybean harvests by 2.5 Mt (48.5 Mt) and 2 Mt (49 Mt), respectively.
Wheat prices found solid gains on another round of technical buying, moving to the highest level in more than a month.
Traders remain watchful for signs of quality and yield damage in the U.S. and Black Sea region, which both faced widespread subzero temperatures last week.
In add, wheat prices continue to rise also on Euronext, mainly on the March contract that will soon close.
This could encourage some players to take delivery in a context of scarce availability on the physical market.
However, it should also be noted that the 200 €/t level has been crossed for the harvest 2021.
Also new crop cash wheat markets kicking yet again in the Black Sea, with $3-5/t increases being reported across the last few days.
While Aussie markets have remained quiet and fairly steady with some limited cash volumes trading on the cash side.
In the meantime, India could see a record wheat production in 2021/22 that could reach 109 million tonnes (Mt), up over a million tonnes year-on-year, as the country’s government reporting that plantings are up 3.1%, .
The country has seen some struggles with recent hot, dry weather, however.
On international scene, a South Korean corn processing association has purchased 60,000 t of corn, likely sourced from the United States, in a deal that closed earlier today.
The grain is for arrival by May 20.
Jordan purchased 60,000 t of milling wheat and 120,000 t of feed barley from optional origins in a tender that closed yesterday.
The grain is for shipment in late October.
Still no new US export sales flashes, but more Chinese buying interest continues to be reported in global origins.
The US export sales that will be communicated in the early afternoon will be closely monitored to measure the dynamism of export activity.
First notice day for March futures contracts is this Friday.
The dollar is still decreasing a little, trading at 1.2180 against the euro and 73.40 against the rouble.
Tonight we will see how the sessions close.
