US grain prices were mixed Wednesday, but mostly lower.
Corn was the only biggest winner, overcoming overnight losses to climb back into the green by the close.
Kanas City HRW contracts, indeed, found only modest gains.
Chicago SRW contracts, meantime, were down more than 0.6%.
MGEX spring wheat contracts continue to struggle, losing another 1.25%.
Soybeans spilled more than 1% lower, incurring double-digit losses in the process.
On macro markets, oil prices were steady after U.S. inventory data showed a surge in gasoline inventories due to weak fuel demand following U.S. Memorial Day weekend, traditionally the beginning of the peak summer driving season.
Despite a 5 million-barrel draw in crude oil last week, stocks of gasoline and other fuels, indeed, rose sharply due to weak demand, according to Energy Information Administration data for the week that included the long Memorial Day holiday weekend.
Product supplied fell to 17.7 million barrels per day, versus 19.1 million the week before.
Consequentially, Brent crude futures remained unchanged to settle at $72.22 a barrel, having earlier touched $72.83, their highest since May 20, 2019.
U.S. West Texas Intermediate (WTI) crude, meantime, closed 9 cents, or 0.1%, lower at $69.96 a barrel, after reaching $70.62, its highest since Oct. 17, 2018.
On Tuesday, oil had rallied earlier in the session on signs of strong fuel demand in western economies, in add, EIA forecasted U.S. fuel consumption would grow by 1.48 million bpd this year, up from a previous forecast of 1.39 million bpd.
Meantime, the prospect of Iranian supplies returning was faded after the U.S. Secretary of State said sanctions against Tehran were unlikely to be lifted.
Healthcare, technology and communications stocks generally performed well yesterday.
The number of Americans filing new claims for unemployment benefits likely fell last week to the lowest level in nearly 15 months, while consumer prices increased further in May as the pandemic’s easing grip on the economy continues to boost demand.
The Labor Department is likely to report today that initial claims for state unemployment benefits totaled a seasonally adjusted 370,000 for the week ended June 5, compared to 385,000 in the prior week.
Meantime, on Wall St. the S&P carved out only small gains to hover just below record levels, while the Dow slipped 152 points lower.
The U.S. Dollar firmed slightly.
Coming back on grains market, corn prices were mainly aided by hot, dry weather forecasts, which prompted to some technical buying.
After some rains, prices started in the red yesterday.
Meantime, the Renewable Fuels Association (RFA) released its weekly report on the ethanol production data provided by Energy Information Administration (EIA), and corn prices moved steadily higher throughout the session ending into the green.
For the week ending June 4, indeed, ethanol production scaled up by 33,000 barrels per day (b/d), or 3.2%, to 1.067 million b/d, equivalent to 44.81 million gallons daily and the highest level since February 2020, according to the RFA press release.
Production was 27.5% above the same week last year, which was affected by the pandemic, but it was 2.6% below the same week in 2019.
The four-week average ethanol production volume lifted 2.2% to 1.036 million b/d, equivalent to an annualized rate of 15.88 billion gallons (bg).
Ethanol stocks grew to 20.0 million barrels, 1.9% above the prior week and a five-week high.
Stocks were 8.4% below the year-ago level and the same week in 2019, according to the RFA.
Ahead of today’s WASDE report from USDA, analysts expect the agency to show 2020/21 corn ending stocks continue to diminish.
Analysts are also expecting to see downward revisions to 2021/22 corn ending stocks.
Soybean prices, in contrast, slumped after a round of technical selling pushed prices down more than 1% by the close.
Losses from soymeal and soyoil contracts created additional headwinds today.
Prior to Thursday morning’s WASDE report from USDA, analysts think the agency will show a slight increase in its estimates for 2020/21 soybean ending stocks.
Analysts also expect to see a modest rise in 2021/22 ending stocks.
In this context, corn basis bids were mostly steady across the central U.S., but did tilt 3 to 5 cents lower at two ethanol plants.
Soybean basis bids tilted 5 cents lower at an Indiana processor and tumbled 15 cents lower at an Ohio river terminal, while holding steady elsewhere across the central U.S..
Meanwhile, wheat prices, on the other hand, showed some variability after a round of uneven technical maneuvering.
Spring wheat prices continued to deteriorate on yield-friendly rains in Canada, with some rainy weather predicted for the Northern Plains later this week.
Chicago SRW contracts also moved moderately lower, while Kansas City HRW contracts picked up small gains.
Ahead of WASDE report from USDA, analyst expect to see a moderate increase in 2020/21 wheat ending stocks.
Analysts also think 2021/22 ending stocks will increase.
In the afternoon will also out USDA’s grains weekly export report.
From South America, the first shipments of Argentine corn have begun to arrive in Brazil to where a national crop failure, record high prices and high demand from the meat industry has made companies such as BRF Brasil Foods SA and JBS SA turn to imports.
A shipment of about 35,000 tonnes landed at the end of May at the port of Paranaguá and a second shipment of about 30,000 tonnes arrived in Rio Grande in the middle of last week, according to the maritime agency Cargonave.
Another four ships should dock this month, Cargonave said.
Ships have already arrived and they have been unloaded.
There are also imports of wheat, not just corn, for animal feed.
Prices of feed for produce pork and chicken have risen steeply.
JBS, the giant of the meat sector, is receiving a ship with 30,000 tons of Argentine corn in the port of Imbituba.
BRF, the world’s largest poultry exporter, confirmed that it was importing Argentine corn, but declined to provide details.
Cooperativa Central Aurora Alimentos, Brazil’s third-largest meat processor, said it was studying purchases from Argentina but has not done so yet.
All in all, Brazil is expected to import 191,000 tonnes of Argentine corn by ship in June, almost double the 103,000 tonnes purchased last year, according to the Agriculture Ministry.
In the first four months of this year, Brazil already imported 758,000 tons of corn, up almost 70% from the year-ago period, almost entirely bought from Paraguay and shipped across the border by truck.
The imports are expected keep growing during the year, even though the second and largest Brazilian corn crop harvest is about to pick up speed.
On the European market we are witnessing a slight erosion of the bases on the French physical market, following the call for tenders from Algeria, which in view of the price structure, could have favored German and Baltic origins in part.
FranceAgriMer in its monthly report revises upwards its estimate of end-of-season 2020/2021 wheat stocks to 2,693 million tonnes against 2,607 million posted last month.
Wheat exports outside the EU, on the other hand, are left unchanged at 7.55 million tonnes.
The fine barley stock is also revised up slightly to 1.056 million tonnes against 1.019 last month.
Only the fine stock of corn is revised down to 1,802 million tonnes against 1,921 estimated last month.
Rapeseed gave way in the wake of palm oil, especially in Malaysia with an increase in production, which is usual at this time of year.
Canola in Canada was also losing ground following recent rains in the south of the country.
Meantime, non-commercial market participants increased their net long position in Euronext’s milling wheat futures and options in the week to June 4, data published by Euronext on Wednesday showed.
Non-commercial participants, which include investment funds and financial institutions, expanded their net long position to 66,938 contracts from 60,757 a week earlier, the data showed.
Commercial participants lowered their net short position to 110,351 contracts from 116,691 a week earlier.
Commercials’ short positions accounted for 62.9% of the total short position, while commercial long positions accounted for 46.2% of total long positions.
Non-commercial short positions represented 37.1% of total short positions, while non-commercial net long positions accounted for 53.9% of the total longs.
The report covered all of the open short and long positions in the wheat derivatives.
In Euronext’s rapeseed futures and options, non-commercial market participants increased their net short position to 12,119 contracts from 10,594 a week earlier.
Commercial participants extended their net long position in rapeseed to 6,267 contracts from 2,242 a week earlier.
From Black Sea basin, the Kazakh Minister of Agriculture announced the end of sowing work with 22.7 Mha sown, an anecdotal increase of 78,000 ha compared to last year.
The areas for the main crop, namely wheat, are very stable from one year to the next with 12 Mha.
The barley sole is 2.7 Mha.
The conditions in the coming weeks will be closely monitored.
Indeed, the last two months have been particularly dry and temperatures should continue to stay above normal.
Thus, the establishment of crops could be perilous.
According to the operational data of the governing bodies of the agro-industrial complex of the constituent entities of the Russian Federation, as of June 08, 2021, the spring sowing is carried out on the area of 50.1 million hectares or 97.3% of the forecasted area.
Spring grain crops are sown on the area of 29.1 million hectares, or 99.4% of the forecasted area.
Out of that, the spring wheat is sown on the area of 12.9 million hectares or 101.9% of the forecasted area, spring barley – 7.3 million hectares or 95.2% of the forecasted area, corn for grain – 3 million hectares or 105% of the forecasted area, rice – 181.6 thousand hectares or 94.6% of the forecasted area.
Sunflower is sown on the area of 9 million hectares or 105.6% of the forecasted area.
Spring rapeseeds are sown on the area of 1.4 million hectares or 109.8% of the forecasted area.
Soybeans are sown on the area of 2.6 million hectares, or 84.7% of the forecasted area.
From Australia, local markets were quiet as the trade digested the rainfall through the east coast.
Recorded amounts have seemingly filled in the gaps throughout NSW in particular and, with more on the back end of the forecast, growers appear pretty content at the moment.
The cold snap may slow crop growth to a crawl but fingers are crossed that it will also belt the mice population.
Truck freight continues to influence the market, especially in the north.
There is certainly a theory that some of the tightness has been attributed by the lack of grower trucks as they continue to get winter crop in the ground, finish cotton and battle with sorghum harvest.
Since the beginning of May, the WA wheat belt has received between 120-200pc of normal rainfall, SA 60-80pc of normal and NSW between 50-200pc.
The Victorian Mallee is doing it the hardest with between 25-50pc of normal rainfall, although the last month has lifted to 70-80pc giving encouraging signs that in season rainfall can still produce a crop.
On the international trade scenario, Algeria has purchased 480.000 t of milling wheat from optional origins in an international tender that closed Tuesday.
Germany and France are typically the dominant suppliers of wheat to Algeria, but details of this tender were not released.
The grain is for shipment in July and August.
Ethiopia issued an international tender to purchase 400,000 t of milling wheat to shore up domestic supplies as it continues to struggle with drought.
Offers must be submitted by June 14.
Japan is looking to purchase 2.9 million bushels of feed wheat and 4.6 million bushels of feed barley in a simultaneous buy-and-sell auction that will be held a week from yesterday.
The gral by November 25.
Tunisia issued an international tender to purchase 50,000 t of soft wheat from optional origins that closes today.
The grain is for shipment in July.
Tunisia cancelled its last soft wheat tender May 27 due offers that were too costly.
Jordan did not follow up on its initial tender for 120,000 t of milling wheat.
Tonight we will see the data shown in the WASDE report and how the sessions will close.