USDA released its July World Agricultural Supply and Demand Estimates report, yesterday, which supportive data pushed grain prices substantially higher.
September corn futures jumped more than 2.5% higher.
Soybeans added 1.75% to 2%.
But the real surprise was wheat with all contracts climbed as much as 5.3% higher.
On macro markets, oil prices climbed on this morning, reversing some of yesterday’s losses, as tight supply and expectations of a further draw in U.S. crude inventories provided support, although fears over the spreading COVID-19 variant capped gains.
In fact, Brent crude for September rose 19 cents, or 0.3%, to $75.35 a barrel by 04.21 GMT, after losing 0.5% on Monday.
U.S. West Texas Intermediate crude for August was at $74.34 a barrel, up 24 cents, or 0.3%, having fallen 0.6% yesterday.
Investors are awaiting the second-quarter earnings season and a batch of economic data, including key U.S. inflation figures that come out later in the day and later this week.
Meantime, overnight, Wall Street’s main indexes closed at their highest levels ever, lifted by Tesla and bank stocks.
CEO Elon Musk insisted in court on Monday he does not control Tesla, and he said he did not enjoy being the electric vehicle company’s chief executive as he took the stand to defend the company’s 2016 acquisition of SolarCity.
Consequentially, Tesla rallied over 4% and was the top contributor to gains in the S&P 500 and Nasdaq.
On this wake, the S&P 500 banks index climbed 1.3% ahead of quarterly earnings reports this week from major banks.
JPMorgan Chase rose over 1% and Goldman Sachs rallied more than 2%, fuelling the Dow’s gains.
The Dow, indeed, moved 126 points higher trading to 34,996 as investors await
After Wall Street hit record highs overnight, also Asian shares climbed in early trade on this morning.
In fact, MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5%.
The index is down 3.1% so far this month.
Australian shares were up 0.49%, while Japan’s Nikkei stock index rose 0.79%.
China’s blue-chip CSI300 index was down 0.1%, while Hong Kong’s Hang Seng index rose 0.65%.
Meantime, the regular weekly export inspections report had corn at 0.99Mt, beans 0.2Mt and wheat at 0.4Mt, all about as expected/needed, although there’s still a large volume of old crop Chinese business to execute.
Coming back on grains market, wheat prices rebounded strongly after the release of a buoyant USDA report.
The US Department of Agriculture has in fact cut its estimated US harvest by 4 Mt (47.5 Mt), due in particular to a loss of potential in spring wheat.
The Russian harvest was also reduced by one million tonnes, to 85 Mt (in line with last year).
World production certainly remains at a new historical record (792.4 Mt), but the increase in consumption and a carryover stock which has also been lowered leaves world reserves at the end of the 21/22 season at a level close to this year ( 291 Mt).
The US corn harvest, on the other hand, was increased by 4.5 Mt, to 385.2 Mt, a jump of 25 Mt compared to 2020!
USDA left corn and bean yields both unchanged at 179.5 bu/acre / 50.8 bu/acre, respectively.
With the higher corn acres that saw carry out stocks there up 74 mbu despite higher exports and domestic use.
Brazilian production, on the other hand, was reduced by 5.5 Mt to 93 Mt (102 Mt last year).
The USDA report was also positive for the oilseed complex with a cut of 500 kt of Argentine soybean production (46.5 Mt) and an increase of 150 kt of Indian palm oil imports (8.55 Mt).
Canadian canola exports were reduced by 300 kt (10.1 Mt) due to insufficient supplies.
Post last night’s market close, USDA released the weekly crop conditions report.
Corn was rated 65pc good-to-excellent (+1pc).
Soybeans were 59pc (-1%).
Spring wheat was at 16pc (unchanged week on week on a national level).
Milo/sorghum was rated 70pc G/E, down from 72% week prior.
Winter wheat harvest progress was pegged at 59pc complete, still slightly “behind” normal.
They also released this year’s first formal “by class” wheat balance sheets, pegging HRS production at 305mbu (345 mbu all spring), down from 530mbu last year and the lowest production in over a decade.
This pulled down overall wheat carryout to 665mbu, the lowest in years despite a higher winter wheat crop.
In this context, corn basis bids were mostly steady across the central U.S. to start the week but did tilt 5 cents lower at an Indiana ethanol plant.
Soybean basis bids, on the other hand, held steady across all Midwestern locations.
From South America, Brazilian consultancy AgRural reports that 20% of the country’s center-south corn crop has now been harvested, up from 12% a week ago but well behind last year’s pace of 35%.
This season’s second corn crop has battled a variety of weather problems, including widespread drought and a frost event in late June and early July.
AgRural’s latest production estimate is for 2.327 billion bushels.
On European market, wheat prices rose yesterday on Euronext at the end of the day on the wake of USDA’s data released, but with still the psychological threshold of 200 € / t on the September maturity tested.
In fact, prices are struggling to progress significantly in view of the lack of competitiveness vis-à-vis the Black Sea origins, whose prices are continuing to decline under the effect of harvest pressure.
New rains are still disrupting harvesting sites in France with the hope for farmers to see the high pressure come to settle in France at the end of the week.
Rapeseed is still showing strong momentum, driven upward by Canadian canola while the drought is largely compromising production in this country, the world’s main exporter.
Thus the, Canadian stock market once again increases its daily variation limit, going from 45 usd / t per day to 60 usd.
From Black Sea basin, on the occasion of its monthly USDA report, the USDA revised slightly down the cumulative wheat production in the Black Sea basin.
Indeed, if the Ukrainian production is now estimated at 30 Mt against 29.5 Mt in the previous report, the Kazakh and Russian productions are both revised downwards by -1 Mt, respectively to 13 and 85 Mt.
These adjustments clearly reflect the current fears about the potential for spring wheat.
In fact, in Siberia as in Kazakhstan, more and more operators fear a drop in yields of 30% compared to last year.
From the Middle Kingdom, China’s state stockpiler, Sinograin, announced it will build 120 new grain storage facilities across 18 provinces that will add a total capacity of nearly 11 million metric tons.
From Australia, local markets started the week with limited liquidity and slightly weaker cereal bids (off a buck or two on wheat) though canola did firm again following the global boards.
Late winter and early spring rainfall are likely to be above average for most of Australia, according to the latest climate outlook overview released by the Bureau of Meteorology (BOM) late last week.
When coupled with a favourable temperature outlook, it only reinforces the prospect of above-average winter-crop production for Australia in 2021.
Internationally, Saudi Arabia purchased 505,000 t of wheat from optional origins in an international tender that closed earlier today.
SAGO, indeed, booked eight wheat boats at around a $285/t candf Red Sea ports / $295/t Gulf ports for October delivery.
The last large wheat purchase was on May 31, when Saudi Arabia purchased 20.6 million bushels.
South Korea passed on all offers in its tender to purchase 2.7 million bushels of corn that closed yesterday.
Prices were regarded as too high.
The grain would have been for arrival in November.
But another South Korean group did purchase an identical amount of feed corn in a separate tender that also closed today.
TMO’s Turkish barley tender reportedly traded about 440,000t around $236/t candf.
These are quoted in 25,000t lots.
We wish you all a good day.
