After Monday’s rally on US grain prices due to supportive data relasead by USDA in its monthly WASDE report, yesterday operators kept enough focus on those fundamentals as to engage in a follow-up round of technical buying that led to gains of around 1% for both corn and soybeans.
Meantime wheat prices were mixed.
Spring wheat continued to push moderately higher on crop quality concerns.
In contrast, winter wheat contracts shifted lower due a bumper crop forecast.
On macro markets, China’s crude imports dropped by 3% from January to June compared with a year earlier.
It is the first such contraction since 2013, mainly due to import quota shortages, refinery maintenance and rising global prices curbed buying.
Consequentially, on this morning oil prices fell, even if were still holding near a one-week high, amid concerns about supplies as the world recovers from the coronavirus pandemic.
Therefore, Brent crude was down 8 cents, or 0.1%, at $76.41 a barrel by 01.41 GMT, after gaining 1.8% on Tuesday.
West Texas Intermediate was off by 13 cents, or 0.2%, at $75.12 a barrel, having jumped 1.6% in the previous session.
On the financial side, the U.S. consumer price index jumped 0.9% in June, the Labor Department said on Tuesday.
That was above market expectations and the largest gain since June 2008.
Meantime, investors are keeping a close eye on the semi-annual testimony of Fed Chair Jerome Powell to Congress on Wednesday and Thursday for more clues on whether the Fed will take more aggressive steps to halt rising inflation.
Powell’s testimony comes as the Biden administration continues to push for fiscal stimulus to boost the U.S. economy.
Consequentially, the Dow Jones Industrial Average fell 0.31% to 34,888.79, the S&P 500 lost 0.35% to 4,369.21 and the Nasdaq Composite dropped 0.38% to 14,677.65.
In the currency market, the safe-haven yen strengthened, with the dollar dropping 0.13% against the Japanese unit to 110.47.
The euro rose 0.08% to $1.1783 after the greenback earlier touched a three-month high against the single currency.
The dollar index, which tracks the greenback against a basket of currencies of other major trading partners, nudged down to 92.747 after earlier rising as high as 92.832 – just below the 92.844 level reached last week for the first time since April 5.
On this morning also Asian shares fell after data showed the biggest jump in U.S. inflation in 13 years.
So, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.33%, as Chinese blue-chips dipped 1%, Hong Kong’s Hang Seng slipped 0.66% and Seoul’s Kospi lost 0.29%.
Japan’s Nikkei was down 0.2%.
Australian shares, on the other hand, were 0.34% higher on a boost from miners and energy firms.
Coming back on grains market, US Corn Belt weather forecasts still are bringing the nice widespread 1-2″ of rain for later this week, but extended maps have been swinging around a bit more.
Last runs show still a little follow up moisture east but some models adding more heat back in.
This return of a dry and hot climate in the Northwest of the Corn Belt, part of the Midwest and in the Canadian Great Plains is reviving fears on crop conditions..
Therefore, US corn prices continued to trend higher, on tightening domestic supplies and strong exports throughout much of the 2020/21 marketing year, which is slowly winding down.
Soybean prices grabbed moderate gains, after a round of technical buying partly supported by rising corn and soyoil prices.
Wheat prices were more mixed with winter wheat prices faded into the red, while spring wheat prices continued to firm on worries over eroding crop quality.
As we said just yesterday US spring wheats are still disastrous conditions, with only 16% of “good to excellent” according to the USDA, against 68% last year and 65% on average five years.
Corn ratings stand at 65%, slightly below last year (69%), while soybean ratings remain at 59% (68% last year).
In this context, corn basis bids were steady to mixed after dropping 10 cents at a Nebraska processor and firming 1 to 6 cents higher at three other Midwestern locations.
Soybean basis bids slid a penny lower at an Ohio elevator and dropped 2 cents at an Illinois river terminal while holding steady elsewhere across the central U.S..
From South America, Brazilian corn exports are expected to ramp up this month.
The country’s Anec is now estimating July exports will reach 119.5 million bushels, a 28% increase from its estimate a week ago.
Brazil’s July soybean exports are now forecast at 329 million bushels.
Argentine farmers have sold 24.5 million tonnes of soybeans grown in the 2020/21 season, after transactions were registered over the last week for 831,300 tonnes, the Agriculture Ministry said on Tuesday in a report with data updated through July 7.
The rhythm of Argentine soybean sales is slower than the previous year’s, when by this point in the season 26.9 million tonnes of the oilseed had been sold, according to official data.
Argentina’s 2020/21 soybean harvest came in at an estimated 43.5 million tonnes, according to the Buenos Aires Grains Exchange, versus 49 million tonnes in the 2019/20 crop year.
Argentine growers are also harvesting 2020/21 corn.
The ministry said in the report that sales of 32.7 million tonnes of this season’s corn crop have been registered so far, 2.3 million tonnes more than had been done at this point last season.
On European market, in spite a difficult harvest progress due to the weather, Agreste expects a 2021 harvest up 11.2% compared to the 2015-2020 average.
According to figures from 1 st July the harvest of small grains (wheat, barley, rye, oats …) should generally exceed 53 million tonnes, almost 10 million tonnes more than in 2020 difficult year .
The yield of common wheat is estimated at 75.1 quintals per hectare against 68.5 quintals per hectare in 2020.
It exceeds the 2016-2020 average. Surfaces increased by 16% in one year.
The durum wheat harvest is expected to increase by 24%, under the combined effect of an increase in acreage and an increase in yields.
And barley production would increase to 11.3 million tonnes (+ 0.9 million tonnes over one year) thanks to the sharp increase in yields and despite the decline in spring barley areas, notes the ministry.
For the first time since 2010, the production of protein crops (peas, field beans, alfalfa, etc.) should exceed 1.1 million tonnes, a jump of 46.7% over one year, with a clear increase in yields.
On the other hand, rapeseed areas are falling, falling below one million hectares.
Production is estimated at just under 3 million tonnes, the lowest since 2001.
Meantime, European Corn imports from July 1-11 reached 278.209 t, per the latest data from the European Commission.
That’s a year-over-year decline of 34% to start the 2021/22 marketing year.
The European Union started its 2021/22 marketing year for soybeans on July 1, and through July 11, imports have reached 10.6 million bushels, a year-over-year decline of 48% so far.
EU soymeal imports have also started the new marketing year sluggishly, with 304,751 metric tons so far this month.
EU soft wheat exports for the young 2021/22 marketing year notched 199.274 t during the first 11 days of July.
Last marketing year got off to a much hotter start, with wheat exports totaling 485.459 t over the same period.
In this context, Euronext confirmed its attempted recovery Thursday evening in the wake of Chicago.
Rapeseed for its part continues its new outbreak and returns to flirt with its historical records.
The absence of precipitation and the rise in temperatures indeed pose a significant risk to Canadian canola crops, which already have low potential.
Black gold prices were also supportive of rapeseed prices on the rise after the publication of an International Energy Agency report highlighting strong demand in June.
Indeed, a large part of the oils extracted from oilseed crops is used in the production of biofuels .
From Black Sea basin, markets are looking to see how aggressive Russian offers will be after the last go round.
Black Sea harvest is continuing, with some increasing amounts of wheat coming off and more yield/quality reports as harvest picks up steam.
Quality generally is improving, after some poor/off grade earlier harvests, and yields still generally performing quite well.
Weather maps do remain fairly dry and warm across the eastern EU and Black Sea region bringing good harvest weather.
Ukraine’s ag ministry forecast a 29.5 million tonnes (Mt) wheat crop, up from 28.8Mt earlier and compares with USDA 30Mt.
SovEcon cut their crop estimate the other day though, down 2.3Mt to 82.3Mt, citing their expectations for poorer yields, relatively, as harvest moves up into more northern parts of the south and into the Volga.
From the Middle Kingdom, Chinese soybean imports were up nearly 12% between May and June, according to the latest available customs data.
The country imported a total of 393.9 million bushels of soybeans last month, which was the third-highest monthly amount on record.
Meantime, Chinese state grain stockpiler Sinograin plans to auction around 925,000 bushels of corn on Friday that was originally imported from Ukraine.
Sinograin has offered a scattering of similar auctions this past month in an attempt to cool prices and ease red-hot domestic demand.
From Australia, ausie local markets were firming yesterday after the WASDE report, but again it was still quiet locally with many already fairly well sold on new crop and evaluating how much forward coverage they want on their books.
Canola was seeing a spike upwards in bids with the Winnipeg board exploding overnight.
The day session there pulled back off the intraday highs but we’re still pushing towards new settlement highs as the squeeze continues.
Weather maps are still turning drier into the end of the month, although this weekend storm for the east coast continues to solidify with 10-20 mm now forecast for a wide part of the cropping area.
Internationally, Egypt’s GASC reported back again tonight for another wheat tender (mid-Sept).
Turkey purchased 395,000 tonnes of milling wheat from optional origins in an international tender that closed yesterday.
A large percentage is expected to be sourced from Ukraine.
The grain is for shipment in the second half of August.
Delivery port, suppliers and prices as following:
Derince-25k(11,5p) – Ldc – 254,80
Derince-25k(12,5p) – Orsett – 256,80
Iskenderun-25k(11,5p) – Rolweg – 263,40
Iskenderun-25k (11,5p) – Yayla – 259,55
Japan issued a regular tender to purchase 4.4 million bushels of food-quality wheat from the United States and Canada that closes later this week.
Of the total, 52% is expected to be sourced from the U.S.
The grain is for shipment in September.
Taiwan issued an international tender to purchase 2.0 million bushels of grade 1 milling wheat from the United States, which closes on Friday.
The grain is for shipment between the end of August and mid-September.
Iran purchased 2.2 million bushels of milling wheat from optional origins in an international tender that closed yesterday, although the country sometimes ends up buying more than the nominal amount listed.
The grain is for shipment in August and September.
A group of importers in the Philippines is believed to have rejected all offers and made no purchase in a tender for up to 200,000 tonnes of animal feed wheat which closed last Thursday.
South Korea’s government-based company Agro-Fisheries & Food Trade Corp (AT) has issued an international tender to secure 7,600 mt of non-GMO soybeans.
The Trading Corporation of Pakistan (TCP) has entered into a Memorandum of Understanding (MoU) with the Pakistan Agriculture Storage and Services Corporation (PASSCO) under which the TCP will import 1.5 million metric tons of wheat to replenish the buffer stocks held by PASSCO.
Saudi Arabia’s SAGO continues on its privatization drive, announcing last night that they’d completed the sale of two more mills to private investor groups.
We wish you a good day.
