After a fairly quiet start, US grain prices rebounded sharply yesterday when the USDA figures were released at the end of the day.
Indeed, corn prices hit limit up within the minute of the data release.
Soybeans contracts raced more than 6% higher, gaining 67 1/2 cents to 90 1/2 cents of the $1 limit.
Soymeal prices were up $27.10 to $27.30/ton.
Soy oil prices gained 101 to 130 points.
Also front month wheat futures ended the session with sharp double digit gains.
In fact, CBT SRW prices closed 4.19% to 5.1% in the black.
KC HRW wheat futures were 4.2% to 5.1% in the black on the day.
MGE spring wheat futures rallied 4.1% to 4.3% on the day, as July gained 48 3/4 cents with no limits.
The U.S. Agriculture Department, U.S. showed soybean and corn plantings smaller than expected on this spring.
Thus, there were raising concerns about global supplies as in a separate report USDA showed that US domestic stockpiles were already at multi-year lows.
The data shocked the market, sparking a rally in Chicago Board of Trade corn and soybean futures, both of which had been trading sharply lower ahead of the reports.
In particular, corn plantings totaled 92.692 million acres while soybean plantings came in at 87.555 million.
That compares, however, with the government’s March pre-planting forecast for 91.144 million acres of corn and 87.600 million acres.
Analysts had been expecting the report to show corn acres at 93.787 million and soybean acres at 88.955 million.
In its quarterly stocks report, USDA said that US domestic corn supplies as of June 1 stood at 4.122 billion bushels, the lowest for the time period since 2014.
Soybean stocks came in at a six-year low of 767 million.
Wheat stocks were 844 million, also the lowest in six years.
Analysts had predicted corn stocks of 4.144 billion, soybean stocks of 787 million and wheat stocks of 859 million.
On macro markets, oil prices edged higher on Thursday, supported by lower U.S. inventories, as investors waited for a decision from key producers on whether they would maintain or reduce supply cuts in the second half of the year.
Consequentially, Brent crude for September gained 15 cents, or 0.2%, to $74.77 a barrel by 06.29 GMT while the U.S. West Texas Intermediate crude for August was at $73.69 a barrel, up 22 cents, or 0.3%.
WTI rose more than 10% in June while Brent added over 8%, touching their highest levels since October 2018.
On Wall St., the Dow trended 210 points higher to 34,502 as the index closes out a successful first half of 2021, with gains of around 12% since January 1.
Top-performing individual stocks so far this year include Goldman Sachs, American Express, JPMorgan Chase, Microsoft and Walgreens.
The U.S. Dollar firmed moderately, meantime.
Coming back on grains market as we said the quarterly Grain Stocks report showed 2020/21 wheat carryout was 843.8 mbu.
That was within the range of pre-report estimates, but below the average trade expectation of 861 mbu.
The USDA did trim just less than 4 mbu from the March stock pile.
New crop acres were up from March intentions, as NASS saw more winter wheat area at 33.683 million acres compared to 30.1 in March and 33 million expected.
Spring wheat acres were cut by less than the trade had expected with 11.58m acres planted compared to the 11.74 intended in March and 11.46m expected.
Corn stocks were reported at 4.112 bbu as of June 1st.
That was slightly below the average of pre report estimates and implied a Q3 use of 3.7 bbu after revising March stocks 4 mbu lighter.
On farm corn stocks were seen at 1.744 bbu, which was 39.2% below 2020 compared to a 17.8% drop for all corn stocks.
Corn planted for all purposes was below the average pre report estimate for 93.78m acres, and at the low end of the expected range.
Compared to the March Intentions report ND, SD, IL, and MN saw the largest increases, where IA, NE, WI and PA saw the largest decreases.
NASS’s Quarterly Grain Stocks report showed 766.8 mbu of soybeans on hand as of June 1.
That was very close to the average pre-report estimate for 773 mbu.
Soybeans specifically on farms were 219.9 mbu, which is down 65.3% yr/yr compared to the full stocks drop of 44.5%.
USDA cut just over 2 mbu from the March stocks.
With that Q3 use is implied at of 794.6 mbu.
Also bean acres were down, compared to the average guess of 89.1 million and the lowest estimate of 88 million.
USDA also sees no change in double crop acres vs. year ago, at 5%.
By state, South Dakota, Nebraska, Kansas, and Ohio saw the largest bean acre trims from the Prospective Planting estimates, while ND, MI, IA, MO, and AR saw the largest March to June increases.
Meantime, ethanol production improved slightly, moving to a daily average of 1.058 million barrels for the week ending June 25.
That was also the second-highest weekly total so far this year and the seventh consecutive week the daily average has exceeded 1 million barrels.
Stocks, however, grew 2% to reach a 14-week high, meantime.
In this context, corn basis bids fell 3 to 10 cents lower at three interior river terminals and dropped five cents at an Indiana ethanol plant while firming 5 cents at an Indiana elevator.
Other locations across the central U.S. remained steady today.
Soybean basis bids held mostly steady across the central U.S. but did tilt 4 cents higher at an Illinois river terminal and an Ohio elevator while dropping 5 cents lower at an Indiana processor.
From Canada, temperatures recorded in many Canadian production areas are setting records and worrying about crop conditions.
From South America, it should be noted that the climatic conditions in southern Brazil remain very worrying due to a drop in temperatures which have already caused significant damage.
Last night was cool again and could lead to further cuts in the country’s production estimates.
On European market, the rebound observed in the USA offered a real element of support for prices on Euronext, which closed higher.
European exporters are following the prices offered in the international tenders with interest, especially as the outlook for the moment of production is on the rise in Europe compared to last year, and in particular for soft wheat.
In corn, the current weather conditions are also a reassuring factor in Europe.
The oilseed market marked a further rise, supported by the sharp rebound in the prices of the soybean complex in the United States and also the firmness of canola prices in Canada.
Against this backdrop, the prices of rapeseed in the new harvest progressed by adjusting out of sympathy both on the physical market and on Euronext.
From the Black Sea basin, IKAR estimates Russia’s wheat output at 83.6 MMT, up from their previous 82 MMT forecast citing timely rains.
The Russian Ag Ministry is at 80.7 MMT of wheat, and USDA was at 86 MMT from June’s estimate.
This July 1 marks the opening of the land market in Ukraine. Until now a moratorium blocked any land transaction. From now on, Ukrainian natural persons can buy up to 100 ha of land.
From January 1, 2024, it will be the turn of legal persons to have access to this market within the limit of 10,000 ha per company.
From Australia, local markets were quiet again yesterday.
New and old crop wheat/barley grower bid prices were relatively unchanged.
Canola continued to gain strength.
New crop WA and east coast grower bids were up $15-20/t. We also saw GM spreads crunch into -$5-10/t under non-GM through the SA port zones, Victoria and Port Kembla.
Northern NSW and southern QLD the forecasts are still calling for 25-50mm.
With a lot of the country through those areas already having a full profile, we could see some water logging and some more issues to the balance of the sorghum crop to be harvested which potentially gets abandoned due to this next weather event.
Later wheat planting is continuing in northern NSW.
Summer crops are harvesting late and growers are seeing opportunity to use their full moisture profile to plant a small percentage of extra wheat area.
On the international trade scenario, some countries have avoided being subjected to the upward movement at the end of the day.
Turkey has purchased approximately 14.5 million bushels of wheat from optional origins.
The grain is for shipment starting in mid-July.
South Korean flour mills have purchased 2.8 million bushels of milling wheat from the United States in a tender that closed yesterday.
The purchase is comprised of several wheat types that are all for shipment in September.
Tunisia issued an international tender to purchase 3.7 million bushels of soft wheat and 4.6 million bushels of animal feed barley that closes yesterday.
Thailand passed on all offers in its international tender to purchase 7.3 million bushels of animal feed wheat that closed yesterday, with prices regarded as too high.
Bangladesh issued a new international tender to purchase 1.8 million bushels of milling wheat that closes July 15.
The grain is for shipment 40 days after a contract is signed.
The market reaction to the stocks report both for corn and soybean, tells that there is little to no wiggle room on yield.
The major producing states have had less than an ideal start to the season and maybe market will see a rationing in the demand.
However, we must note that the report was actually a little bearish for wheat.
But the potential increasing in feed use, both in US and internationally due to a lower corn crop will keep wheat in step with the corn market.
Another input to note was the breakdown of acres with the main gainers being the states in which conditions are under the pump.
Minnesota, North and South Dakota were the big gainers over the March print and are, on average, running around 30-70pc of normal rainfall for the growing season.
Thus every weather update and every crop condition report just will got always a little more important and “Volatility” will be the name of Ag markets for the coming days.
Good luck everyone.
