Traders are squaring positions ahead of USDA’s quarterly grain stocks and acreage reports, out Wednesday morning.
In fact, despite they were well aware of rains this past week, some bargain buyers entered in action on grain markets yesterday, helping corn, soybean and wheat contracts achieve solid gains.
Consequentially, corn prices surged 5% higher;
soybeans saw gains of more than 2%;
wheat contracts were more variable but rose between 1% and 3.3%.
On macro markets, oil prices dropped for a second day on Tuesday on worries about slower fuel demand growth as outbreaks of the highly contagious COVID-19 variant Delta sparked new mobility restrictions around the world.
In this context, Brent crude futures fell 35 cents, or 0.5%, to $74.33 a barrel by 0706 GMT, after slumping 2% on Monday.
U.S. West Texas Intermediate (WTI) crude futures fell 34 cents, or 0.5%, to $72.57 a barrel, extending a 1.5% loss on Monday.
The flare-up in cases of the Delta variant just comes as the OPEC+, are set to meet on July 1 to discuss easing their supply curbs.
OPEC’s demand forecasts show that in the fourth quarter global oil supply will fall short of demand by 2.2 million barrels per day (bpd), giving the producers some room to agree to add output.
Despite thoughts they may further increase production there are reports that the UAE will cut production.
On Wall St., the Dow dropped 150 points to 34,283 as investors eyed declining yields for the benchmark 10-year Treasury rates.
The U.S. Dollar firmed slightly.
Coming back on grains market, USDA’s upcoming quarterly stocks and acreage reports will publish on June 30th.
Pre-report estimates of stocks figures are fairly wide-ranging with averages about 4.1 bbu corn and 780 mbu beans.
Acrage figures forecast averaging around 93.8 million acres corn and 88.9 million acres beans.
Markets all agree on some increase, but the question is how much of one and the differences there can be several million acres.
The regular weekly US crop progress report had corn condition rated at 64pc good-to-excellent, beans 60pc, milo/sorghum 70pc, and spring wheat down to 20pc rated good-to-excellent.
The progress of harvest for winter wheat harvest came in at 33%.
US corn export inspections fell to 1 million tonnes (Mt) for the week ending June 24.
That was below all trade estimates.
China was the No. 1 destination.
Cumulative totals for the 2020/21 marketing year remain well ahead of last year’s pace, reaching an impressive 2.237 billion bushels.
Soybean export inspections were almost cut in half compared to a week earlier, falling to 0.104Mt.
That was also on the very low end of trade estimates.
Mexico accounted for nearly half of the total.
Cumulative totals for the 2020/21 marketing year still hold a commanding lead over last year’s pace.
Wheat exports spilled lower from a week ago, moving to 0.3 Mt.
That was also below the entire range of trade guesses.
Mexico was the No. 1 destination.
Cumulative totals for the first three and a half weeks of the 2021/22 marketing year are down 23%.
There was 37,000t of milo/sorghum exported to Sudan, but no more of the outstanding Chinese sales.
No more flash US sales were reported, although there’s ongoing speculation about Chinese buyers having bought in the dip.
In this context, corn basis bids ticked 2 cents higher at two interior river terminals and gained 5 cents at two other Midwestern locations, while holding steady elsewhere across the central U.S..
Soybean basis bids, meantime, fell 4 to 5 cents lower at three Midwestern processors and firmed a penny higher at an Illinois river terminal while holding steady elsewhere across the central U.S..
From South America, USDA lowered its corn production forecast for market year (MY) 2020/21 (March 2021 – February 2022) to 94 million metric tons (MMT), a reduction of 11 MMT from April projection.
The change is based on the deteriorating yield outlook for second-crop “safrinha” corn after widespread delayed planting and persistent dry conditions in the major production regions.
USDA, meantime, maintained its forecast for MY 2021/22 (October 2021 – September 2022) wheat area at 2.6 MHa, as record prices continue to incentivize expansion.
However, given the short delay in planting in Rio Grande do Sul due to dry conditions, USDA lowered its projection for MY 2021/22 Brazilian wheat production by 200,000 MT, to 6.85 MMT, which would still set a new record for the crop.
On European markets, the prices of close maturities return to negotiate close to the levels of last April, evolving in sympathy with North American prices.
The upward trend in oilseeds, recorded in particular for Canadian canola harvested in 2021, which is back to its highest levels, has led rapeseeds to continue their rebound.
The August 2021 deadline on Euronext returned to display, during the session, at more than 520 € / t, pulling in its wake all the following deadlines.
Farm office FranceAgriMer estimates that 79% of this year’s French soft wheat crop is rated in good-to-excellent condition through June 21, dropping two points lower from the prior week.
Current weather conditions in Europe are beneficial to the spring crops as the winter barley crop harvest begins slowly in late June, however.
Latest weekly data on European Union cereal exports and imports was not available on the European Commission’s website at the usual publication time of 4 p.m. (1400 GMT) on Monday.
The Commission did not immediately give a reason for the delay.
Meantime, latest weekly EU oilseed export and import figures were published at the usual time.
European Union soybean imports during the 2020/21 marketing year have reached 552.3 million bushels through June 27, which is slightly below last year’s pace so far.
EU soymeal imports remain down moderately from a year ago, with 16.52 million metric tons.
EU canola imports are still moderately higher year-over-year.
As a reminder, over the current season, rapeseed imports are increasing in Europe with now, according to European Union figures, 6.30 Mt imported so far, the volume necessary to compensate for the lower European production and meet needs.
From the Black Sea basin, Russian consultancy Sovecon estimates the country’s June wheat exports will reach 84.5 million bushels, which would be the highest monthly total since February, if realized.
Russia is the world’s No. 1 wheat exporter.
Ukrainian wheat production is now close to exceeding 30 million tonnes, in a context of increasing cultivated areas and favorable weather conditions.
Recall that the 2020 production stood at 25.3 Mt.
Thus, for the 30 years of its independence, Ukraine is on the way to producing more than 30 Mt, a figure never reached in the past.
From Australia, new lockdowns are throwing a damper as the financial year comes to an end.
The big question is how long they will last and whether we’ll see them keep extending like prior lockdowns.
BOM maps still fleshing out slightly better rains for northern NSW/Qld later this week, bringing expectations of a widespread half an inch to an inch for most of the Downs and northern NSW.
In this context, the International Grains Council upped its forecast for global 2021/22 corn production by 7 million metric tons (approximately 275 million bushels) to 1.201 billion metric tons – a new record, if realized.
Meanwhile, the International Grains Council slightly lowered its estimates for global 2021/22 wheat production but is still expecting a record haul of 28.991 billion bushels this season.
IGC does not expect to see significant carryovers in grain stocks, however, due to “food, feed and industrial uses all predicted at records.”
Internationally, Egypt, through the GASC concluded its tender yesterday with the purchase of 180,000 t of Romanian wheat at a ~US$271/t C&F .
This volume was negotiated at $ 242.93 / t FOB for loads scheduled for late August / early September.
Other Romanian origin cargoes were offered in the low $240s per tonne FOB, Ukrainian in the high $240s and Russian in the low $250s FOB.
The country’s supply minister now says its state wheat reserves are sufficient for 6.3 months.
Taiwan purchased just over 2.0 million bushels of milling wheat from a tender that closed last Thursday.
The grain is for shipment in August.
