US farm markets were mixed yesterday as small moves occurred overnight.
In deed, corn was down 0.18%;
Soybeans gained 0.32%;
Chicago wheat fall 0.38%;
Kansas was up 0.39%;
Minneapolis moved 0.05% lower.
On macro markets, oil prices climbed this morning after industry data showed U.S. crude and product inventories fell more sharply than expected last week, reinforcing expectations that demand will outstrip supply growth even amid a surge in COVID-19 cases.
In fact, data from the American Petroleum Institute industry group showed U.S. crude stocks fell by 4.7 million barrels for the week ended July 23, gasoline inventories dropped by 6.2 million barrels and distillate stocks were down 1.9 million barrels, according to two market sources, who spoke on condition of anonymity.
Consequentially, U.S. West Texas Intermediate (WTI) crude futures rose 43 cents, or 0.6%, to $72.08 a barrel at 01:19 GMT, reversing yesterday’s 0.4% decline.
Brent crude futures also rose 38 cents, or 0.5%, to $74.86 a barrel, after shedding 2 cents on Tuesday in the first decline in six days.
Traders are now awaiting data from the U.S. Energy Information Administration (EIA) that will release today to confirm the drop in stocks.
On the financial side, the statement from the Fed policy meeting, and a press conference from chairman Jerome Powell are due at 2 p.m. EDT (18:00 GMT).
Markets will be watching closely for any hints in relation to inflation, economic growth, interest rates and when the Fed will likely start reducing its purchases of government bonds.
The declines in Asian equities on Tuesday spread to other markets overnight, causing Wall Street to retreat a little from the record highs set earlier in the week.
In fact, the Dow Jones Industrial Average ended yesterday down 0.2%, the S&P 500 shed 0.5% and the Nasdaq Composite slid 1.2%.
Earlier the pan-European STOXX 600 index finished 0.54% lower.
On this morning, Asian shares stayed stuck at seven-month lows, as markets continued to digest a storm in Chinese equity markets
Indeed, MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.35% in early trading, having fallen in each of the three previous sessions as regulatory crackdowns in China roiled stocks in the technology, property and education sectors, leaving international investors bruised.
Japan’s Nikkei slid 1.01%, Chinese bluechips dropped 1.51%, and Australian shares fell 0.43%.
Hong Kong bucked the trend, rising 0.63%, after closing at its lowest level since November the day before.
China and the Fed are the two key things for today.
Coming back on grains market, weather maps for the US Corn Belt are trending slightly drier and cooler into mid-August for the central and eastern Corn Belt.
In the meantime, parts of the western Belt are still experiencing a massive heat wave.
The first day of the US spring wheat tour on the road in North Dakota confirmed plenty of poor yields, but no surprise there.
They’ll be moving through some of the worse-off areas tomorrow and the day after but, as always, the question is how poorly they will see the poor conditions.
Currently, the decline would reach -32% compared to the five-year average.
Despite further confirmation of a drop in production potential, wheat in Chicago showed a slight decline as a large Russian crop is expected to be harvested in the coming weeks.
Variable hard red winter wheat yields, in contrast, pulled up Kansas City futures prices a little bit, as harvest activity shifts into the drought-plagued Northern Plains.
Spring wheat futures continue to move higher on that sentiment as well.
Soybean prices on their part, continued higher after USDA cut 2% from good to excellent crop ratings in the latest Crop Progress report.
However, in spite this and favorable weekly loading volumes reported from USDA on Monday, traders remained concerned about Chinese soybean buying paces as the country’s soybean crush margins grow increasingly tight.
On the other hand, U.S. corn exporters reported the three largest monthly volumes for international corn shipments between March and May 2021.
So it should come as little surprise that ADM saw its second quarter profit rose an astonishing 52% on bullish corn exports and profitable oilseed crushing margins.
Corn prices, however, changed little yesterday, posting a slight decline, while US farmers are showing little inclination to increase sales from the old harvest pending a better definition of the production potential of the 2021 harvest.
From Soth America, the still tense situation in Brazil, with declining production, is pushing to review the potential. of exports from the country and thus offers opportunities for exporters, particularly American ones.
Indeed, Cordonnier cut his Brazilian corn production estimate by another 2 million tonnes, citing the recent frosts and potential for more damage on later crops in southern Brazil this week.
Argentine farmers have sold 25.8 million tonnes of soybeans from the current 2020/21 crop year, after transactions were recorded over the last week for 747,600 tonnes, the Agriculture Ministry said on Tuesday in a report with data through July 21.
The pace of soy crop sales continue to be behind that of the previous season.
With regard to corn, the ministry said sales of the 2020/21 crop, which is currently harvested, have totaled 34.6 million tonnes, about 3 million tonnes more than those registered at this point in the last season.
The exchange expects a 2020/21 corn crop of 48 million tonnes.
As of last week harvesting was 72.2% complete, the exchange said.
On European market, weather conditions are unsurprisingly watched with great interest by operators, as producers have made little progress since last week especially in France.
Rains could cause further delays with harvests spreading more widely over the month of August.
Meantime, European Commission confirmed lower export activity compared to last year.
As of July 1, the volume exported in soft wheat has reached 624,574 t, ie a drop of around -50% compared to last season on the same date.
In barley, the drop in export activity is around -36% with currently 529,465 t exported.
Its expect that European export activity should increase as harvests and the return of availability, progress.
In this context, Euronext evolved in dispersed order yesterday with
wheat which fell again despite a return from international buyers, while rapeseed benefited from the good shape of the Malaysian palm.
The first reports on the 2021 rapeseed harvest in France show better than expected yields.
Despite everything, the need remains strong in Europe and is now leading to see a flow of rapeseed imports greater than last year since the beginning of July.
From the Black Sea basin, some more concerns about Black Sea corn crop weather impacts are popping up, remaining very hot and dry.
Meantime, Russian agriculture consultancy Sovecon on Tuesday said it had cut its forecast for Russia’s wheat exports by 1.3 million tonnes to 37.1 million tonnes in the current 2021/22 marketing season, which started on July 1.
Russia is the world’s largest wheat exporter.
Additionally, Sovecon expects Russian wheat exports to edge lower in the 2021/22 marketing year as a rainy harvest season and farmer hesitancy to sell the freshly harvested wheat crop slows export rates.
Indeed, Sovecon expects Russia will export 1.36 billion bushels of wheat in 2021/22, down nearly 4% from the consultant’s previous estimates.
Russia continues to update its ongoing wheat export tax on a weekly basis.
The added cost has deterred some Russian growers from booking sales in hopes of more lucrative pricing options in the future.
However, given the rise in sea freight prices, the Black Sea origins are also well positioned to meet other ongoing demands from importing countries in search of wheat and barley.
From the Middle Kingdom, livestock carcasses continue to litter the flood waters of Central China’s Henan province.
As the carcasses decompose, fresh batches of pathogens will be created that could potentially spread to other animals – and humans – in the region if disinfectant measures are not quickly taken.
Henan, which is China’s third-largest hog producer, is estimated to have lost thousands of livestock, namely pigs and chickens, in the recent floods that ravaged Central China.
The rains increase the likelihood of another round of African swine fever outbreaks as the virus easily spreads through contaminated wastewater.
Last winter’s ASF outbreak in China is largely believed to have been tied back to flooding that previous summer.
ASF destroyed over half of China’s hog herd following the virus’ onset in 2018.
Hog farmers in the region are scrambling to source disinfectant materials following the recent floods to curb further spread of the virus.
From Australia, local markets still are looking to overseas trade for direction in a quiet start to the week.
New crop ASX east coast wheat picked up a buck yesterday with a hundred contracts traded after no trade on Monday, but general new crop cash markets were quiet.
Weather maps saw a slight pull back to the forecast for WA but otherwise limited changes.
Victoria, partially, was out of COVID lockdown but more discussion emerged that NSW lockdowns may stay in place until Christmas.
Internationally, Egypt finalized its tender yesterday with the purchase of 180,000 t of wheat.
The Ukrainian (120 kt) and Romanian (60 kt) origins were selected for loads announced between September 20 and 30.
The prices are displayed between 279 and 279.91 $ / t FOB Egypt.
The Ukrainian and Romanian proposals were the most numerous and the most aggressive.
The operators also note that the Russian proposals currently mark higher price levels of the order of + 6 to + 15 $ / t compared to the accepted offers.
We wish you a good day.
