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Daily International Grain Market View

U.S. winter wheat futures rose for the sixth day in a row yesterday as adverse weather in key exporting countries raised global supply concerns.

But other grain prices struggled to find forward traction.

Spring wheat prices, indeed, tumbled 2% lower.

Soybean prices shifted around 0.25% lower.

Corn prices finished the session narrowly mixed.

On macro markets, oil prices on this morning are helding on to most of their gains from yesterday’s session on expectations that supplies will remain tight through year-end.

In fact, Brent crude fell 32 cents, or 0.4%, to $71.91 a barrel at 03.47 GMT, after rising 4.2% in the previous session.

U.S. West Texas Intermediate (WTI) crude fell 27 cents, or 0.4%, to $70.03 a barrel, after rising 4.6% yesterday.

Volatility in energy remains elevated.

Crude inventories in the United States, the world’s top oil consumer, rose unexpectedly by 2.1 million barrels last week to 439.7 million barrels, up for the first time since May, U.S. Energy Information Administration data showed.

US ethanol production this week was 1.03 million bpd, down nominally from prior.

Stocks were up sharply by 1.4 million to 22.5 million barrels.

Still, gasoline and distillate inventories posted draws of 121,000 barrels and 1.3 million barrels, respectively, indicating higher demand due to the summer driving season.

Additionally, following yesterday’s proposal to the US Senate to eliminate the US ethanol mandate, reports have come in about the US White House delaying the existing Renewable Fuel Standard quotas, hoping to find some sort of magical compromise.

Meantime, there’s been an agreement reached to allow completion of the Nord Stream 2 gas pipeline, intended to transfer Russian gas into Germany, though many are questioning if Germany will follow through on related commitments to defend Ukraine that are part of the agreement.

On the financial side, the Dow continued to recover from Monday’s sharp selloff, picking up another 286 points to reach 34,798, anchored by support from rising 10-year Treasury yields.

S&P 500 futures, meantime, was up 0.2% and Nasdaq composite was 0,32% higer.

Asian stocks rallied this morning.

MSCI’s broadest index of Asia-Pacific shares outside Japan followed Wall Street higher and rose 1% with broad gains from Sydney to Seoul and Hong Kong.

Japanese markets are closed until next Monday.

Investors seemed to set aside virus jitters for now and looked ahead to the European Central Bank for reassurance that policy support will continue for some time.

The dollar index sat at 92.812, off a three-month peak of 93.194 and the euro was steady just above recent lows at $1.1791.

Coming back on grains market, Corn Belt weather is still in the market’s focus.

The latest weather runs have added a little to moisture forecasts into the month end for the south western Corn Belt across southern Iowa/Missouri/eastern Kansas though temperature forecasts are still very hot.

In Chicago, the prices of the SRW wheat contract thus closed on a new high yesterday for more than 2 months.

Faced with the continuous increase observed and the levels reached, a movement of relaxation has however been observed since this morning.

The situation is quite similar in corn, with conditions still hot and dry.

However, despite the sharp rebound in recent sessions, prices do not manage to break resistance zones for the moment.

In oilseeds, the upward movement marks the first signs of a consolidation movement after the recent upward momentum.

Canola prices in Winnipeg or soybeans in Chicago were down yesterday.

The conditions for crop development remain unchanged.

The weather forecast models are therefore followed with great interest, knowing that of course the level of rainfall is expected to be limited.

Additionally, operators will be attentive today to the publication of US weekly export sales figures.

In this context corn basis bids showed plenty of variability across the central U.S. on Wednesday, moving as much as 15 cents higher at an Ohio elevator while tumbling as much as 25 cents lower at an Illinois processor.

Soybean basis bids were steady to weak – particularly among Midwestern processors, where bids dropped 5 to 10 cents at four locations.

Bids at most other facilities remained unchanged.

From South America, Brazilian marketing firm Pátria Agronegócios expects to see 2021/22 planted soybean acres increase another 6.7% to reach 100.943 million acres, with a production potential of 5.317 billion bushels – easily a new record, if realized.

Argentine farmers sold large volumes of corn in the week to July 14 as harvest works gathered steam and reached 62.4% of the estimated crop.

Soybean weekly forward sales edged lower on the week but were significantly higher on the year while wheat sales declined for both crops.

Accumulated sales in the marketing year represented a larger share of the estimated crops for all three commodities compared to year-ago levels and farmers applied for fresh export licenses amounting to 14 cargoes of corn and one of beans.

In particular, weekly old corn crop forward sales in the week to July 14 amounted to 1.3 million mt, over 40% higher on the week and on the year, while new crop sales also lifted steeply to 240,100 mt.

Forward sales gathered steam in tandem with harvest works that picked up and lifted 6.4 percentage points over the week, to now stand at 62.4% complete, according to the Buenos Aires Grains Exchange (BAGE).

This brought total 2020/21 sales up to 33.6 million mt, 9% higher on the year, while forward sales now represent 70% of the estimated crop, up by 10 percentage points from the level registered a year ago.

There were also 816,000 mt of fresh old crop export license applications, bringing the marketing year total up to 31.2 million mt, 15% higher on the year.

Farmers sold 85,100 mt of new crop soybeans in the week to July 14, 80% and 95% higher on the week and on the year, respectively.

Meanwhile, old crop forward sales edged 20% lower on the week to 660,400 mt but were significantly above volumes sold at the same point last year.

Total old crop sales reached 25.1 million mt, still 8% lower on the year but represent a marginally higher share of the estimated crop at 57.7%.

Farmers applied for export licenses of equivalent to one bean cargo over the week, lifting total 2020/21 export license applications to 3.6 million mt, still way below the 5.9 million mt registered a year ago.

Fresh weekly wheat sales edged lower for both crops in the week to July 14 with new crop down by 48% on the week to 48,700 mt and old crop 34% lower to 106,200 mt.

Total new crop forward sales lifted to 4.1 million mt, 22% higher on the year, representing 21.8% of the estimated crop, 1.9 points higher on the year.

On European market, harvest sites are progressing, helped by more favorable weather conditions.

Yields are currently showing heterogeneity depending on the areas and growing conditions observed in the spring.

The progress of harvests thus brings about a return in the availability of straw cereals.

Consequentially, on the Euronext market, wheat prices eased yesterday after the test of the resistance zone of € 220 / t the day before on the September 2021 deadline.

In corn, the situation between the old and the new harvest is always very different.

In the old harvest, prices remain firm in the face of reduced availability which also leads to shun corn when substitutions with other cereals are possible.

Conversely in the new harvest, prices stabilize and show a more usual gap with wheat.

Rapeseed harvests also made strong progress with some good returns even if the balance of the European rapeseed is nevertheless fragile.

Meantime, there was an easing in rapeseed prices on wake of canola prices.

Indeed, on Euronext, the August 2021 deadline, recorded a decline to close above € 523 / t, after a significant amplitude of daily variation.

Black Sea grain markets reportedly saw some very spot short covering with the earlier harvest delays squeezing a few loads.

It should be resolved fairly promptly though with the quick push in recent days of harvest and large tons arriving.

There’s the prospect of a few localised delays because weather maps of the Black Sea region have some variable showers forecast across parts of the south and Ukraine.

In this context, Russian producers have already harvested 23.5 Mt of wheat from 6.8 Mha, ie a quarter of the area allocated to wheat.

Average performance continues to disappoint.

Indeed, it is displayed at 3.45 t / ha, the lowest of the last 5 years for equivalent areas harvested.

In particular yields in the central district of the country, namely in the area marked by severe frost damage, continue to disappoint.

From the Middle Kingdom, according to the country’s grain stockpiler Sinograin, China will auction 23,488 tonnes of corn imported from Ukraine at an auction on July 23.

The imported grain, stored at warehouses in Shandong and Guangdong provinces, was produced in 2020, according to a notice published on Sinograin’s website.

China started selling imported corn from state reserves in June, to replenish tightening supplies and cool prices.

Sales during the auctions have fallen, however, amid weak appetite for this corn ahead of a bumper domestic harvest.

From Australia, local markets firmed a fraction yesterday, with wheat up some $3-4/t.

Track/delivered spreads remain fairly wide for new crop with the tight freight market and ideas of another large crop coming.

Weather maps are starting to predict arrival of another storm system in WA and the southeast into the start of August.

It is still early days for models that far out but gaining confidence in recent runs.

Internationally, Thailand likely made no purchases in its latest international tender to buy 5.1 million bushels of animal feed wheat, which closed yesterday.

Prices were regarded as being too high.

The grain was sought for shipment between October and December.

We wish you a good day.

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