The US markets remained under pressure yesterday, despite USDA reporting lower-than-expected quality ratings late Monday.
September corn contracts faded more than 1.3% lower by the close.
Some wheat contracts losing more than 2.5%.
Soybean prices were also on the ropes, dropping 1.25%.
On macro markets, top commodity traders expect oil to return to $100 per barrel as a lack of production response from OPEC+ group has left output running well below consumption, resulting in an increase in prices.
On Tuesday, oil prices rose nearly 2 percent to their highest in more than two years.
Brent crude was up 69 cents at $74.68 a barrel on this morning owing to a drop in inventories and recovery in demand.
Prices will continue to rise.
Coronavirus restrictions continue to lift across US states, with New York and California both removing their restrictions last night.
The UK extended its restrictions over concerns about the Indian variant.
However post corona demand continues to support market optimism on the macro side, even if still a bumpy road heading up.
Investors are still awaiting more news – especially regarding interest rates and inflation trends – from a two-day policy meeting from the Federal Reserve that began yesterday.
The US Federal Reserve, Federal Open Market Committee (FOMC) meeting results will be reported late tonight, tomorrow US time.
Few people expect FOMC to change interest rates yet but there are some ideas that they may update their outlooks given inflationary concerns.
Options expiry will occur next Friday and is one to watch given the recent large price moves and outstanding positions.
Meantime on Wall St., the Dow was on its heels again after losing 94 points trading to 34,299.
The U.S. Dollar firmed slightly.
Coming back on grains market, corn prices were mixed after traders struggled to balance lower-than-expected quality ratings with the prospect of better weather forecasts likely to spread across the central U.S. later in June.
For the first time in several years, China plans to sell a modest amount of imported corn this Friday to replenish depleted stocks and cool off domestic prices.
The grain – totaling nearly 1.5 million bushels – was originally purchased from Ukraine.
Soybean prices eroded steadily throughout Tuesday’s session after a round of weather-related technical selling.
A relatively disappointing crush report from NOPA created additional headwinds.
In deed, US NOPA soybean crush in May was 163.5 mbu slightly below most estimates, with correspondingly tighter oil stocks reported.
NOPA also reports that domestic soyoil stocks continue to decline, moving from 1.702 billion pounds in April down to 1.671 billion pounds through the end of May.
Soymeal exports improved to 714,377 metric tons in May versus a 22-month low of 689,441 MT in April.
In this context, corn basis bids were mixed at two Midwestern processors Tuesday but held steady elsewhere across the central U.S..
Soybean basis bids tilted 5 cents lower at an Indiana processor on but held steady across other Midwestern locations.
Wheat prices declined in tandem with corn and soybean prices, with yield friendly forecasts for both the United States and Europe creating additional downward pressure, especially for winter wheat contracts.
No substantial rain is forecast for the southern Plains and HRW areas.
Harvest is pushing into southern Kansas and more yield reports are expected later this week.
Canola lost ground yesterday in Canada, which weighed on rapeseed prices on Euronext.
Also on European market, indeed, grain prices remained oriented in the red on Tuesday.
Conditions remain favorable for crops for the time being.
In France, the heatwave should end today with a return of thunderstorms, which will be beneficial provided that they are not too violent.
In Germany, the Federation of German Cooperatives (DRV) has estimated an all-wheat harvest to come at 22.98 million tonnes, up 3.8% compared to last year.
It is a jump of 900 kt compared to last year.
Rapeseed production is expected at 3.67 million tonnes, up + 4.6% compared to last year.
Germany is Europe’s No. 2 wheat producer, trailing only France.
From North Africa, Egypt’s GASC cancelled their wheat tender after a weak showing on the freight side, so it’s assumed GASC will retender later this week or early next.
Offers of French wheat were in the US$260s per tonne free on board (fob), Ukraine low $250s/t fob and Russia offers were in the low-to-high $250s per tonne fob.
From Black Sea basin, markets still reportedly were under pressure with harvest rapidly approaching, though after recent weather there are some ideas of a slow start.
Yield ideas are still fairly optimistic after the recent moisture, and with a little more on the forecasts.
Meantime, Russian wheat exports accelerated at the end of the 2020/21 season thanks to the floating tax introduced on June 2.
This tax replaced the previous one which was 50 € / t.
Thus, the floating right amounted to $ 28.10 / t from June 2 to 8, to $ 29.40 / t from June 9 to 15 and to $ 33.3 / t from June 17 to 22.
Thus, as of June 10, total wheat exports from Russia since the start of the season amount to 37.3 Mt.
Unlike wheat, the export duties on corn are higher than the tax of 25 € / t from March 1 to June 1.
Indeed, the floating taxes on corn were set at $ 52.20 / t for June 2-8, $ 50 / t for June 9-15 and at $ 48.2 / t for June 17-22.
Unsurprisingly, corn exports fell to zero in the second week of June, with total exports since the start of the season amounting to 3.8 Mt.
From South East Asia, this morning in Kuala Lumpur, the palm continues to decline in the wake of other vegetable oils.
From Australia, local markets were slightly weaker yesterday with some pressure from the weaker boards, but in general the bid/ask spreads were wide, and the volume traded was limited.
Crops in the South East continue to benefit from the recent rains, though coverage is still patchy.
Central Victoria received 10-15mm rain yesterday, and scattered showers are forecast to fall over the next few days.
Meantime, Aussie’s Reserve Bank left the interest rate unchanged, at 0.1pc, as expected.
They continued to focus on hopes for a return to full employment as an indicator for future policy.
Internationally, the Philippines issued a tender to purchase 204.000 t of milling and animal feed wheat that closes today.
The grain is for shipment in August and September.
Japan issued a regular tender to purchase 207.000 t of food-quality wheat from the United States, Canada and Australia that closes later this week.
Of the total, 53% is expected to be sourced from the U.S..
The grain is for shipment in August.
South Korea purchased 75,000 t of animal feed wheat from optional origins in an international tender that closed earlier today.
The grain is for arrival by the end of October.
Tonigth we will see how the sessions close.
