US grain prices were mixed but mostly higer yesterday.
Operators returned to observe the hot and dry weather forecasted in the central U.S. for the rest of July.
Consequentially, corn prices jumped more than 2.5% higher.
Soybeans closing with double-digit gains.
CBOT wheat contracts firmed 0.5%.
Kansas City HRW contracts rose more than 1.25% higher.
MGEX spring wheat contracts, in contrast, bucked the overall trend, sliding nearly 1% lower mainly due to some technical selling and profit-taking.
On macro markets, oil prices fell this morning after an industry report showed an unexpected build-up in U.S. oil inventories last week.
In fact, U.S. crude stocks rose by 806,000 barrels for the week that ended July 16, according to two market sources, citing American Petroleum Institute figures.
That added to the worries about a resurgence in COVID-19 infections potentially dampening fuel demand.
So, Brent crude futures fell 52 cents, or 0.8%, to $68.83 a barrel at 03.54 GMT, giving up yesterday’s 1.1% gain.
Also U.S. West Texas Intermediate (WTI) crude futures dropped 50 cents, or 0.7%, to $66.70 a barrel, after rising 35 cents yesterday.
Investors, however, are awaiting data from the U.S. Energy Information Administration to see whether it confirms there was an increase in crude inventories, which would end an eight-week streak of inventory drawdowns.
On the financial side, rising COVID-19 infections have rocked global markets this week as investors dumped risk assets, seeking stability in safe haven assets like bonds.
That sent stocks tumbling and pushed the benchmark U.S. 10-year yield to five-month lows on Tuesday.
Yesterday, however, we have seen a partially recover, with the Dow Jones Industrial Average rose 1.62% to 34,511.99 points, the S&P 500 gained 1.52% to 4,323.06 and the Nasdaq Composite which added 1.57% to 14,498.88.
On this wake, Asian shares rose this morning, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.17%, trimming its losses for the week to around 2%, while Japan’s Nikkei rose 0.90% after touching six-month lows a day earlier.
Australian shares were up 1.21%, Chinese blue-chips added 0.76% and Taiwan shares rose 0.27%.
Seoul’s KOSPI, in contrast, slipped 0.14% as South Korea reported a daily record of novel coronavirus cases.
The rise in share market gauges in Asia was matched by a fall in U.S. Treasuries prices, with the 10-year yield rising to 1.2202% from the previous day’s close of 1.209%.
The 2-year yield was at 0.2036%, up from a close of 0.194%.
The dollar, meantime, was firm near three-month highs.
Coming back on grains market, US prices remains higer in the face of the weather conditions affecting the plains and especially the northern area of the country.
High temperatures maintain in an very degraded state of spring wheat crops and thus accentuate fears about the drop in production volumes.
USDA, indeed, has cut its ratings from “good to excellent” by five additional points on spring wheat, to only 11%.
This is the lowest ratio recorded since 1988!
Consequentially, SRW wheat prices marked yesterday on the September 2021 deadline, a new high by 2 months, negotiating at $ 7.18 / b, to finally close slightly below above $ 7.00 / b.
USDA also reported that 65% of this year’s corn crop is rated in good-to-excellent condition, unchanged from a week ago.
Corn crop maturity is advancing a bit more quickly versus recent years, with 56% now at the silking stage.
That’s a big jump from the prior week’s mark of 26%.
It’s also ahead of 2020’s pace of 55% and the prior five-year average of 52%.
Eight percent of the crop has reached the dough stage, up from 3% a week ago and slightly ahead of the prior five-year average of 7%.
Consequentially, corn prices had a choppy session, but finally jontled, gradually approaching the level of $ 5.75 / b on the December expiry date and partially filling the gap opened after the weekend of July 4.
Operators, meantime, are following with attention the evolution of the American legislator who seeks to change the mandate for the incorporation of ethanol and other biofuels.
About soybean, quality ratings improved a point last week, with 60% of the crop now in good-to-excellent condition through July 18, mirroring analyst estimates.
Another 29% of the crop is rated fair (down a point from last week), with the remaining 11% rated poor or very poor (unchanged from a week ago).
Physiologically, 63% of this year’s crop is now blooming, up from 46% last week and moderately ahead of the prior five-year average of 57%.
And 23% is now setting pods, jumping from last week’s mark of 10% and a bit ahead of the prior five-year average of 21%.
In this context corn basis bids were slightly mixed at two interior river terminals but held steady in most Midwestern locations.
Soybean basis bids fell 5 cents at three Midwestern processors but tilted 3 cents higher at an Illinois river terminal.
Most other locations across the central U.S. held steady.
From South America, Argentinian Ministry of Agriculture communicated the soybean volumes sold by producers to the tune of 25.1 Mt now, or more than 55% of the country’s production for the current campaign.
Since the finalization of the harvests, Argentinian farmers are seeking to take advantage of the high prices of soybeans on the international scene to secure their marketing.
In Brazil, meantime, a new cold wave has damaged crops in the south of the country at the start of the week.
On European market, harvest is unsurprisingly late compared to last year.
But, more favorable conditions now allow the harvesting sites to progress.
Meantime, the first reports seem satisfactory for the moment on the qualities of the cereals harvested despite some local disappointments.
In this context, European Union soft wheat exports for the 2021/22 marketing year reached 403.241 t (incl. durum) through July 18, dropping 53% below last year’s pace.
EU barley exports are also down sharply from a year ago, with 280.121 t over the first two and a half weeks of July.
On the other hand, corn imports are down moderately reaching 461.449 t through July 18.
European Union soybean imports in the 2021/22 marketing year are at 508.340 t through July 18, trending 37% below last year’s pace so far.
EU soymeal imports are at nearly half of last year’s pace, meantime, as are EU palm oil imports.
Canola import reached 154.174 t, meantime.
French operators are obviously very attentive to this point because the 2021/2022 campaign should lead, with the production volumes expected in Europe, to review an activity to progress in exports.
Germany’s Raiffeisen Association (DRV) cut its overall grain production forecast to 43.8 million mt last week, while wheat production was set at 22.82 million mt.
The harvesting campaign was also delayed by about two weeks in southern Germany, with fears rising over wheat quality and potential fungal damage – although it remains too soon to tell at this stage if the damage can be reversed – while the north-eastern part of the country is still suffering from dryness.
After France, Germany is Europe’s largest wheat producer, as well as a big rapeseed producer and consumer.
Alongside the near 23 million tonnes of wheat, Germany is expected to produce 3.7 million mt of rapeseed in the 2021/22 marketing year.
Meantime, on Euronext, prices rose yesterday for both wheat and corn.
Also rapeseed prices rose yesterday, but without for the moment being able to compensate for the decline recorded at the beginning of the week for the moment.
From the Black Sea basin, following the strong heat of the past week, the rain is now inviting in Ukraine.
The first rains recorded at the end of the afternoon yesterday sometimes caused damage to the crops in place.
Thus, in the Odessa region for example some sunflowers are now lying down after 50 mm have been recorded in the space of half an hour.
Rain is on the program for the next two days over almost the entire country, causing the harvests to stop.
These rains should revive the question of quality when the proportion of milling wheat in the crop is already threatened by the dilution of the protein in the yield.
Indeed, the risks of grain germination in coated wheat will now be exacerbated.
From the Middle Kingdom, extreme weather and heavy rain in Gongyi, Henan.
According to official statistics, the heavy rainfall in the past few days in Henan has caused more than 140,000 people to be affected, and the affected area of crop has reached more than 9,200 hectares.
The Central Meteorological Observatory of the Mainland China issued an orange rainstorm warning at 10:00 on July 20.
It is expected that from 14:00 on July 20 to 14:00 on July 21, there will be torrential rain to heavy rain in parts of Henan, Hebei, Shanxi, and extremely heavy rain in northern Henan.
Meantime, China purchased more than 385 million bushels of soybeans from Brazil last month, moving 14% higher than May totals but still trending slightly lower year-over-year as soybean crushing margins have degraded and pinched demand.
Chinese imports of U.S. soybeans plummeted 80% year-over-year, in contrast, to just 2 million bushels, although the country has been a more aggressive buyer of U.S. corn and wheat this spring and summer.
From Australia, local bids on both old and new crop boards had a firm start yesterday.
Some grades were bid up A$5-6/t.
Canola is pushing over $800/t site for some parts of the east coast already with the board rally.
Weather maps are holding steady, with the rains still forecast for WA and a fairly widespread forecast later for southern NSW and Victoria.
We wish you a good day.