US farm markets reversed to close higher both for corn and soybean yesterday.
US winter and spring wheat prices, in contrast, continued to creep lower.
Indeed, Chicago wheat September contract fell 1,03%;
Kansas wheat September contract shed by 1.09%;
Minneapolis wheat September contract shifted by 0,54% lower;
Chicago corn September contract gained 0,45%;
Soybeans September contract was up 0,49%.
On macro markets, meantime, oil prices were steady this morning with investors betting tight supply and rising vaccination rates will help offset any impact on demand due to surging COVID-19 cases worldwide.
So, Brent crude futures climbed 13 cents, or 0.2%, to $74.63 a barrel at 01:28 GMT, extending the 0.5% gain took during Monday session.
U.S. West Texas Intermediate (WTI) crude futures, on their part, rose 4 cents to $71.95 a barrel, after losing 16 cents during yesterday session.
Analysts tracking mobility data remain confident about fuel demand, counting on vaccinations to guard against strict new lockdowns.
Consequentially, global oil markets are expected to remain in deficit despite a decision by OPEC+, to raise production through the rest of the year.
Additionally, investors are awaiting inventory data from the American Petroleum Institute industry group this morning and the U.S. Energy Information Administration tomorrow, for further evidence that demand is holding up.
On Wall St. all three major U.S. stock indexes eked out record closing highs for a second straight session on Monday, but S&P 500 futures dropped 0.14%.
The looming Fed meeting kept a dampener on major moves in other asset classes.
Consequentially, also Asian equity markets rose cautiously this morning, after touching year to date lows yesterday.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.26% after touching its lowest level since mid-December on Monday, weighed down by big Chinese stocks.
Japan’s Nikkei rose 0.58%.
Chinese blue chips rose 0.15%, and the Hong Kong benchmark rose 0.31%, though real estate, healthcare, education stocks were still down.
Coming back on grains market, weather maps there are continuing to bring solid rains for western Iowa and central Illinois, though now largely missing southern Minnesota where drought impacts have expanded.
Overnigth, USDA published the weekly US crop conditions report which rated corn 64 per cent (pc) good-to-excellent (-1pc on prior), beans 58pc (-2pc), milo/sorghum 66pc (-2pc), and spring wheat at 9pc (-2pc).
The biggest week-on-week falls were reported among row crops in the western Corn Belt states.
Winter wheat harvest progress was reported 84pc complete, spring wheat 3pc.
US spring wheat crop tour will hit the road in the morning.
Early harvest yields continue to come in with exceptional protein but poor test weight and yields.
Meantime, weekly US export inspections were 1 million tonnes (Mt) corn, 0.24Mt beans, and 0.48Mt wheat.
Questions about the execution of outstanding export sales to China for the old season remain in play, with only a month left in the marketing year and tepid shipping pace.
Milo/Sorghum had 91k loaded, with one boat to China.
From South America, Argentina’s Parana River continues to shrink to historically low levels as La Niña-induced drought plagues the South American country.
The low-water phenomenon observed are prompting the Argentine authorities to declare a state of emergency as Parana River levels dipped below the lowest measured point in 77 years.
The water emergency as outlined by the government will last for 180 days beginning today and will likely result in grain cargoes shedding at least 25% of normal shipping weights to successfully navigate the Parana’s most shallow points.
Residents and businesses along the river will be encouraged to reduce water usage.
Around 80% of Argentine grain, meat, and food shipments traverse along the Parana River. Argentina is the world’s largest exporter of soymeal and the third largest exporter of corn and soybeans
The supply of the port of Rosario is particularly disrupted at present.
Concerns about shallow Parana River levels are supporting upward price movement in the soy complex.
Gains, however, were limited by ongoing uncertainty about future Chinese soy demand in the wake of flooding and slowing import volumes into the country last month.
The world’s largest meatpacker JBS SA has imported 30 ship loads of corn into Brazil from Argentina after a drought and an ill-timed frost caused crop failure in its home market.
JBS, which did not provide an exact figure for total imported corn, noted purchases from suppliers outside Brazil already represent 25% of the corn it is using as feed, with volumes surpassing 1 million tonnes.
JBS said an excellent crop in Argentina had provided an opportunity for imports at more competitive prices.
On average, the price of imported corn is between 15 to 20 reais per bag lower than in the domestic market, JBS said.
The company believes Brazil will export 15 million tonnes less of corn this season, and should import at least 4 million tonnes.
According to the government, Brazil will export 29.5 million tonnes of corn this season.
On European market, harvest progress is now conditional on the management of rainy episodes.
As the wheat is not all ripe, the current rains will not have the same impact, depending on the area.
Meantime, the European Union’s crop monitoring unit MARS made limited changes to its yield forecasts, saying exceptionally high rainfall in several countries was likely to hit grain quality rather than yields.
Indeed, MARS said that, although the wet weather hampered the harvest of winter crops, it had limited impact on yields.
In eastern Romania, the overly wet conditions that continued until the end of June favour the possible spread of pests and diseases which are likely to reduce yield quality.
Meanwhile, heatwaves in central Italy, Hungary, Slovenia and Croatia negatively affected the final growth stages of winter crops, and the development of summer crops, where not sufficiently irrigated.
A rain deficit in some regions of Poland and Slovakia decreased yield forecasts for winter crops, and rain is needed in Bulgaria to sustain the development of summer crops.
In this context, MARS raised its estimate of the average EU soft wheat yield to 6.05 tonnes per hectare (t/ha) from a projected 6.01 t/ha in June.
That would be 6.3% above the average EU soft wheat yield of the past five years, and 6.1% above last year.
Meantime, MARS nudged down its 2021 yield forecast for EU barley, including both winter and spring barley, to 4.96 t/ha from the 4.97 t/ha expected in June, up 4% on the five-year average.
For corn, MARS raised the projected EU yield to 7.88 t/ha, from 7.84 t/ha seen last month, up 1.7% on the average.
The forecast EU rapeseed yield was cut to 3.19 t/ha from 3.23 t/ha in June, still 4.8% above the five-year average.
In this context, Euronext started its week on a rather gloomy note with a pullback in corn and rapeseed and limited gains in wheat.
In oilseeds, the European rapeseed market, however, remains very popular and under the influence of other markets for seeds and oils.
Prices are still recording significant amplitudes of daily variation.
The approach of the end of the August 2021 deadline at the end of the week should also maintain this situation in the short term.
From North Africa, the Moroccan Ministry of Agriculture communicates a soft wheat harvest of 5.6 Mt, which is a marked increase compared to last year.
From South Africa, domestic’s 2020/2021 corn harvest is expected to be 5% higher compared with the previous season, boosted by increased plantings and favourable weather conditions.
South Africa’s Crop Estimates Committee (CEC) is expected to forecast the 2020/2021 staple maize crop at 16.121 million tonnes, up from the 15.300 million tonnes harvested last season.
The forecast is slightly lower than the CEC’s June forecast of 16.233 million tonnes.
The survey expects the crop to consist of around 8.862 million tonnes of white maize, used mainly for human consumption, and around 7.260 million tonnes of yellow maize, used mainly for animal feed.
The CEC will release its sixth production forecast for 2021 summer crops on July 28.
From the Black Sea basin, harvest is work in progress.
The Black Sea region wheat harvest is reported over one-third complete, a government source pegging progress at just over 10 million ha.
Cash cereals markets there have been showing signs of short covering amid competition for near term origination to fill boats that are building on the stem.
Despite good recent field work, earlier harvest delays were still resulting in slow deliveries.
In fact, according to State Custom Service of Ukraine, since the beginning of 2021/22 MY to July 26, Ukraine exported 1.787 mln tonnes of grains and pulses, down by 548 thsd tonnes year-on-year.
In particular, Ukraine exported 424 thsd tonnes of wheat (-766 thsd tonnes y-o-y), 453 thsd tonnes of #barley (-261 thsd tonnes), 4.7 thsd tonnes of rye (+4.5 thsd tonnes) and 895 thsd tonnes of corn (-471 thsd tonnes).
Moreover, Ukraine exported 9.1 thsd tonnes of flour (-7.9 thsd tonnes), including 9 thsd tonnes of wheat flour (-7.9 thsd tonnes).
The producers nevertheless remain vigilant on the evolution of qualities due to the rainy episodes.
Meantime, wheat Russian wheat prices rose for the milling wheat with 12.5% protein, marked a sharp rebound last week in the port area.
For the moment, producers do not seem to be looking to speed up their sales for this type of quality while waiting for a better view of production volumes.
Indeed, despite the Governor of Krasnodar (Southern Russia) being in the news discussing the record wheat yield, markets are more focused now on how the later winter wheat and spring wheat crops will turn out given dry conditions stretching towards the plains of western Siberia.
On the other hand, in Kazakhstan, whose spring crops were also affected by dry conditions, wheat production forecasts are now expected to be lower than the latest estimates.
Due to the reduced stocks at the start of the season, this situation should therefore favor a flow of Russian wheat exports to Kazakhstan over the 2021/2022 season.
From the Middle Kingdom, the rainfall in Henan has been biblical, with floods in the major cities.
It will be hard to get an accurate gauge on the extent of any damage to the Chinese crop or livestock herd.
From Australia, Aussie local markets were still following the global moves, though higher protein grades caught a firmer bid yesterday to start the week as more short covering came into play.
Weather maps are solidifying around that next bout of rain for WA. The latest models predict falls in the 15-20 mm range across the Wheatbelt into the weekend/early next week.
Internationally, GASC yesterday launched a new call for tenders for loads scheduled between September 20 and 30 via a payment within 180 days by letter of credit.
This call for tenders will thus make it possible to gauge the competitiveness of the Black Sea origins.
As a reminder, during the last call for tenders, the Romanian origins were selected.
TMO Turkey announced 2 new tenders:
1) 515 kmt of barley, shipment Sept 1-15;
2) 395 kmt of milling wheat, 11.5p or 12.5p. The shipment is for Sept 16-30.
The feed barley tender to be held on Aug 3rd, milling wheat on Aug 4th.
We wish you a good day.
