Poor US exports put rally on pause so, a round of profit-taking pushed corn, soybeans and wheat lower yesterday.
Wheat contracts suffered the steepest cuts, with some contracts falling nearly 2% lower.
Also soybean prices saw double-digit losses that erased nearly all of the gains captured on Wednesday.
While, even if corn prices dropped sharply but managed to recover some of those losses as the session wore on, closing only around 1% lower.
On Wall St., also the Dow crumbled 378 points lower in afternoon trading to 31,583 , amid rising bond yields, which many investors see as a sign of future rising interest rates and inflation.
Energy futures were lightly mixed, with crude oil firming nearly 0.5%, while gasoline and diesel slid about 0.3% lower.
Disappointing weekly export sales in the US have pushed grains prices to retreat significantly yesterday while funds took a part of their profits on long positions.
Regular weekly export sales disappointed across the board with 0.17Mt wheat, 0.45Mt corn, 0.17Mt beans, a near zero milo sales figures and only a few small negative adjustments to old Chinese sales.
While 238 700 t of soybean, 599 100 t of corn and 182 600 t of wheat have been shipped.
In add, two boats of existing sales were reported switched to Vietnam, one switched out of China, and the other switched out of unknown/likely China.
Perhaps it was spot demand or part of a washout agreement on Chinese sales, but it spurred speculation either way.
Even though these data relate to sales for the week ending 18 February, over the Chinese New Year window, really, markets had hoped to see something better.
The US export activity is therefore reducing but a confirmation of these figures will be needed next week to conclude to a lasting slowdown of the world demand.
In the mean time, the IGC said that the next world wheat production could amount to 790 Mt vs. 773 Mt for the current crop.
The increase is based on better production potential in Australia, Kazakhstan and Russia.
Australia, as we know, is expecting a possible record-breaking harvest this season.
Kazakhstan’s agriculture ministry reports that the country’s 2020 wheat harvest there was a year-over-year improvement of 24.5%.
The country’s total grains production moved 15% higher than 2019.
The Council also moved its projections for 2020/21 global corn production fractionally higher, to 1.134 billion metric tons.
Thanks to generally favorable weather, South African corn farmers are expecting a 4% larger crop for the 2020/21 season.
The country’s Crop Estimates Committee reported today that total production could reach 623.9 million bushels.
A poll of five traders and analysts showed even bigger expectations for this year’s crop, with an average trade guess of 664.2 million bushels.
In add, China’s ministry of agriculture reported today that the country plans to increase its corn footprint by more than 1.6 million acres this year in an attempt to capture more domestic supplies amid rising prices.
About soybean, the International Grains Council also slightly increased its forecast for 2020/21 global production, now at 13.228 billion bushels.
On the other hand, the European Commission has revised upward its estimation of wheat exports to third countries to 27 Mt vs. 26 Mt seen last month, that’s still a steep decline from the prior year’s total of 36 Mt, however.
The carry over stock is then revised down to 9.5 Mt vs. 9.9 Mt last month.
Rapeseed imports are revised up to 6 Mt vs. 5.5 Mt estimated last month.
Corn imports have, on the other hand, been cut from 2 Mt to 16.5 Mt, which leads to a reduction of the end of season stock of 1.1 Mt, to 17.9 Mt, a drop of 4 Mt compared to last year!
So, ending stocks are still expected to rise to 19.09 MT, due to an increase in “usable production” and a reduction in animal feed use.
From Black Sea area, until yesterday, Ukraine has shipped 31.7 Mt of cereals from the start of the season.
This is 7.8 Mt less than last year to date. So far, 13.6 Mt of wheat (-2.7 Mt), 4 Mt of barley (-0.03 Mt) and 13.6 Mt of corn (-5 Mt) have been exported.
On a monthly basis, Ukraine wheat exports are stable and corn sales have gained a slight momentum.
Barley supplies are now exhausted.
On oilseeds, the divergence between nearby deliveries and those of the future crop has widened.
For exemple, on the rapeseed, the May contract has earned some more ground while 2021’s deliveries retreated.
Rapeseed, indeed, has resisted the soybean complex as well as Canadian canola, which continues to experience significant profit taking.
On the contrary, the Malaysian palm has initiated a sharp rebound on the Kuala Lumpur Stock Exchange.
Volatility remains high on veg oils.
On the other hand, Aussie local markets still holding quiet with a little bid interest.
The only real interest in buying wheat is where specific coverage is needed.
Barley exporters this week mostly finished coverage for near-term vessels with the result that markets now are nearly dead across the east coast.
On the international market, Japan bought about 57 000 t of milling wheat sourced from Australia, in a regular tender that closed earlier yesterday.
The grain is for shipment in May.
Taiwan issued an international tender to purchase 100 000 t of US milling wheat, that closes March 4.
The grain is for shipment between late April and late May.
Jordan issued a new tender to purchase 119.747 t of milling wheat from optional origins that closes March 3.
The grain is for shipment in October and November.
The Philippines declined all offers in its tender to purchase 144.241 t of milling wheat that closed Wednesday.
Importers also passed on all offers in a similar tender issued last week.
This morning, in preopening, the market is losing ground again, in deed, more profit takings could occur before the weekend.
Tonight we will see how the sessions close.
