US grain prices suffered a bit yesterday after the Wednesday’s rally.
Indeed, we have seen a round of profit-taking ensued, leaving soybeans slightly lower and most wheat contracts dropping by double digits.
Corn prices bucked the overall trend – July futures finished unchanged, while September futures moved around 0.3% higher.
On macro markets, oil prices inched lower on this morning after OPEC+ ministers delayed a meeting on output policy as the United Arab Emirates balked at a plan to add back 2 million barrels per day (bpd) in the second half of the year.
U.S. West Texas Intermediate (WTI) crude futures were down 10 cents at $75.13 a barrel at 05.01 GMT, having jumped 2.4% on Thursday to close at their highest since October 2018.
Brent crude futures inched down 7 cents to $75.77 a barrel, after rising 1.6% on Thursday.
Both benchmark contracts posted strong gains yesterday over a plan backed by Saudi Arabia and Russia for the Organization of Petroleum Countries and allies, together known as OPEC+, that was more cautious than investors had expected. The proposal was for the producer group to add back 400,000 bpd each month from August through December 2021.
Prices retreated, though, after the plan met resistance from the UAE and OPEC+ postponed a ministerial meeting to Friday.
WTI was on track for a 1.6% rise for the week.
Brent, on its hand was heading for a 0.5% fall for the week.
Europe’s financial markets made a solid start to the second half of the year, with stocks brushing off a rapid re-acceleration in coronavirus cases and oil and the dollar extending their H1 rallies.
London, Frankfurt, Paris and Milan overcame a mid-morning wobble to keep the pan-European STOXX 600 reaching for a record high.
Wall Street, which had hit its fifth in a row on Wednesday, was cheered by 21-year low in jobless claims.
Initial claims for state unemployment benefits, indeed, dropped 51,000 to a seasonally adjusted 364,000 for the week ended June 26, the Labor Department said on Thursday, although they are an unreliable guide to this morning’s broader indicators.
In fact, it is U.S. payrolls on Friday that traders think could jolt markets from a slumber that has locked currencies in some of their tightest trading ranges for decades.
Meantime, stocks tied to the reopening of the economy and the energy sector continue to turn in strong performances.
The MSCI ex-Japan index closed out the first half with a gain of 5.8% compared with world stocks’ rise of 11.4% and a gain of 14.4% for the S&P 500, which had logged its fifth consecutive record as it closed out H1 on Wednesday.
The Dow moved another 131 points higher to 34,633.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, hit 92.500, its highest since April.
The yield on benchmark ten-year U.S. Treasuries was up a touch at 1.4747%.
Coming back on grain markets, the US boards will be closed on Friday and Monday, for US Independence Day holidays, and will re-open for next Tuesday’s day session, that is, on Tuesday morning European time.
With the holiday weekend approaching, there’s been a lot of position-squaring and balancing going on.
Participants have been taking some profit and calculating risk over any potential changes to weather maps across the next four days.
We’ll see how the weather outlooks change over the weekend, but the latest extended maps runs have a turn back to drier and cool again for the central corn belt and a bit of moisture for parts of northern Iowa and Minnesota.
There’s still nothing coming for spring wheat areas in the US or Canada.
The model runs that had started to flirt with moisture on the extended maps seem to have pulled back again.
Hot weather there is absolutely cooking some of the earlier crops, those that had so far held on fairly well.
Meantime, yesterday’s regular export sales reports had 1.7 million tonnes (Mt) new crop beans, of which 1.1Mt was to China including some of the flashes from the other week.
There was also 68,000t new crop corn reported sold, noting that China cancelled a boat of old crop corn.
New crop wheat sales reported amounted to 226,000t.
Corn export shipments slumped 36% below the prior four-week average.
China and Japan were the top two destinations.
Soybean export shipments spilled 33% below the prior four-week average.
Mexico accounted for nearly half of that total.
Wheat export shipments only reached 136,000 MT last week.
The top five destinations were Mexico, Nigeria, Japan, Jamaica and Guyana.
In this context, corn basis bids were steady to week Thursday after dropping 3 to 10 cents lower across multiple Midwestern locations.
Soybean basis bids were largely steady across the central U.S. Thursday but did tilt 2 to 6 cents higher at two interior river terminals and 5 cents higher at an Indiana processor.
Canada was on holiday for the Canadian Day.
The current Canadian situation, with very hot weather, is leading canola prices to reach new highs in the new harvest.
This factor thus brings a resurgence of firmness in European rapeseed prices, the drop in availability of the last harvests being offset by import volumes, particularly Canadian ones.
From South America, a judge in Brazil has put a block on an attempt by the government to sell concessions which would have allowed private tolls in exchange for maintenance, on BR-163 the main road north for beans heading to Santarem.
On European market, rapeseed rose 1pc.
The August maturity thus exceeds the level of 537 € / t and thus approaches the highest levels of last June.
Meantime, after the upward movement recorded on Wednesday, the prices of wheat and barley changed little yesterday.
Corn prices gained just 1 euros.
Continue good production prospects both in Europe and in the Black Sea area.
As harvests approach, meteorological conditions are scrutinized due to a possible new wave of precipitation in the coming days, a situation which is not favorable for progress or the start of harvesting work.
On the other hand, these conditions benefit spring crops, particularly corn.
Consequentially, harvest pressure is becoming a reality.
During this period, feed barley prices on the CPT Odessa basis fell by around thirty dollars to now trade on the threshold of 200 dollars.
We have to go back to the end of October 2020 to find such a low spot price for barley.
Early yields are generally good.
The offer of producers, eager to replenish their cash, is important which explains this pressure.
Ukraine’s 2021 grain harvest is likely to rise by around 17% to a record 75.8 million tonnes because of favourable weather, the agriculture ministry data showed on Friday.
The harvest, which has already started, could include 37.1 million tonnes of corn, 28.5 million tonnes of wheat, 8.3 million tonnes of barley, 600,000 tonnes of peas and 500,000 tonnes of oats, the data seen by Reuters showed.
However, to note that Ukrainian government has cut estimates of new season wheat and barley compared Lachstock and USDA forecast (for wheat Lachstock 29.8, USDA 29.5), (for barley Lachstock 8.6, USDA 9.1).
Meantime, Russian consultancy SovEcon raised its estimates for 2021/22 Russian wheat exports by 4.9% to reach 38.4 MMT.
The move is largely due to Russia’s increased production potential, which is now estimated at 84,6 MMT.
From Australia, nice moves lower on the AUD overnight, falling to 74.6¢ which should support grains today despite the choppy boards.
Cash markets kicked up sharply yesterday with buyers taking out any older offers that were sitting around.
Old crop east coast markets saw a fair bit of tonnage trade in the $305-312/t range track, and WA $340-345/t FIS.
New season bids on wheat were also up $7-8/t.
Bid/offer spreads remain wide and there’s been little trading recently.
BOM maps bringing a few more showers later this weekend for WA, with the potential for them to push further inland into next week.
Similarly in NSW, next week forecasts building up some possible thunder showers across parts of the Central West.
On the international trade scenario, Bangladesh issued an international tender to purchase 1.8 million bushels of milling wheat from optional origins with a deadline of July 18.
Yesterday, the country issued a similar tender that expires July 15. It is trying to replenish its reserves of wheat and rice as it battles various weather challenges, including scorching temperatures and widespread floods.
To those in the US, a happy 4th of July this weekend.
