US farm markets closed stronger, yesterday.
Chicago wheat moved 2.11 higher%;
Kansas wheat gained 2,8%;
Minneapolis wheat jumped 2,9%;
Corn was marginally up 0,09%;
Soybean took a 0,24%.
On macro markets, crude inventories fell by 4.1 million barrels in the week to July 23, the U.S. Energy Information Administration (EIA) said, helped by lower imports and a decline in weekly production.
Gasoline stocks also dropped, bringing them largely in line with pre-pandemic levels.
Consequentially, yesterday Brent crude oil futures gained 0,48% and WTI crude oil futures was up 1,03%.
However, on this morning oil prices slipped even if remained near $75 per barrel.
Indeed, Brent crude oil futures fell 5 cents, or 0.1%, to $74.69 a barrel by 01.08 GMT while U.S. West Texas Intermediate (WTI) crude oil futures slipped by 4 cents, or 0.1%, to $72.35 a barrel.
The U.S. economic recovery is on track, but a rise in coronavirus infections give still some concerns.
So, some worries on fuel demand still remain even if gasoline demand in the United States and Europe beginning to plateau.
Meantime, COVID-19 continues to inflict a devastating toll on the Americas, with Argentina, Colombia, Cuba, Ecuador and Paraguay among the countries with the world’s highest weekly death rates, the Pan American Health Organization said.
Consequentially, analysts note that globally, pre-pandemic demand levels may not be seen until beyond next year.
Meantime, the Federal Reserve said yesterday in a new policy statement that remaine upbeat for recovery and flagged ongoing talks around the eventual withdrawal of monetary policy support.
Consequentially markets had see-sawed overnight, as seemed to bring nearer the day when it might start tapering its massive asset buying campaign.
In this context, the Dow Jones fell 0,36%;
S&P 500 futures eased 0.1%, as did EUROSTOXX 50 futures;
Nasdaq futures, meantime, dipped 0.3% perhaps weighed by a retreat in Facebook stock which shed 3.5% after the company warned revenue growth would “decelerate significantly”.
For now, however, the central bank left interest rates at 0%, and bond purchase programs unchanged and said it would wait for job increases before making any changes.
That left the euro up at $1.1855, and some way from its recent four-month trough of $1.1750.
The next Fed meeting is not until late September, offering the market a break from tapering talk.
Consequentially, Asian shares managed a modest bounce this morning.
Investors, indeed, are waiting to see if Beijing could stem the recent rout in Chinese shares.
For now, gains were tentative with blue-chip shares up 1.6%, but still down 5% for the week so far, while the Shanghai Composite Index added 1.2%.
MSCI’s broadest index of Asia-Pacific shares outside Japan bounced 1.9%, having slid to its lowest since early December on Wednesday.
Japan’s Nikkei edged up 0.6%, while South Korea was flat.
Coming back on grains market, Corn Belt weather maps mostly were unchanged, forecasting moisture for western areas of Iowa and Missouri but not southern Minnesota and the Dakota corn areas.
So, crop conditions are naturally still to be followed both for corn and soybeans.
The second day on the road for the US spring wheat crop tour – continued to report plenty of damaged/stressed crops as expected, though noted a few better than expected areas.
No real conclusion yet, but markets are watching how they finish up with the last travel day tomorrow.
To note that this year the tour is not covering any part of the Montana crops where early harvest yields to date have seen ranges from the mid 20 bu/acre down sub-5.
Meantime, US ethanol production this week was 1.01m bpd, down about 14,000 bpd from the week prior and a multi-week low.
Stocks continued to build though, up to 22.7 million.
From South America, Brazilian weather forecast is predicting a cold front again next week.
Frost warnings forecast in Brazil’s southern and southeastern regions threatened to damage wheat crops in the flowering stages of development.
Brazilian wheat yields are already expected to be lower than average due to drought conditions in the country’s southern states.
On European market, wheat bounced back strongly in the face of concerns about the 2021 supply.
The slight rebound of the euro against the dollar observed since the beginning of the week seems inconsequential for the moment on the evolution of prices.
The current issue remains above all linked to the progress of harvesting work, in particular for soft wheats.
Indeed in France, harvesting work is still disrupted by incessant rains which continue to degrade the qualities of the winter crops still in place.
The delays also affect other European countries and thus lead to renewed firmness.
Helped by the rise in wheat prices and the new announcement of frost in the southern zone of Brazil, corn, both in the old and in the new season, also advanced yesterday.
In spite of everything, growing conditions in France are still reassuring, helped by the rainy episodes.
Rapeseed relied on its fundamentals to resist the technical withdrawal of the palm and canola.
European rapeseed, indeed, accelerated in the green despite profit taking which drove Canadian canola and Malaysian palm into the red.
However, buyers now less present due to the price levels now reached.
From South Africa, South Africa likely harvested 7% more corn in 2020/21 than a year ago.
Higher acreage, timely rains, and favorable growing conditions drove the yield increase.
South Africa’s government-led Crop Estimates Committee (CEC) pegs the 2020/21 crop at 647 million bushels, over half of which is expected to be processed and sold for human consumption.
USDA estimates the crop slightly higher at 669 million bushels.
South Africa is the world’s ninth largest corn producer.
From the Black Sea basin, wheat prices both in Russia and in Ukraine rose yesterday in the port area, even if in proportions contained compared to the American and European markets.
Operators continued to see wheat crop ideas are still consolidating even if into the high 70s million tonnes (Mt) range for Russia.
Russia will produce about 124 mln tonnes of grains, down by almost 8% year-on-year on drought, declared the General Director of ProZerno agency, Vladimir Petrichenko.
Indeed, he see grain crop at 123-124 mln tonnes this year and cut sizably expectations for wheat crop to 77-78 mln tonnes due to drought that began in some regions as far back as April and still hurts our fields.
Meantime he pointed out that he had cut his forecast of barley production from 20.94 mln tonnes to 18.49 mln tonnes on smaller planted area.
Corn crop he set at 14.6 mln tonnes (13.88 mln tonnes in 2020) amid the extension of planted area from 8.25 mln ha to 3 mln ha.
On the other hand, the Ministry of Agriculture of Russia forecasts the grain production at more than 127 mln tonnes in 2021, including more than 81 mln tonnes of wheat.
Meantime, Russia has already harvested 47.9 million tonnes of grain before drying and cleaning with an average yield of 3.32 tonnes per hectare, data from the agriculture ministry showed on Wednesday.
Grain harvests are progressing also in Ukraine with still the idea of a significant harvest volume in soft wheat and in progression compared to last year.
This observation is also observed in barley.
The recent episodes of rains have nevertheless slowed the speed of the construction sites.
On the other hand, such conditions still favor corn crops, which are expected to have great potential this year after the disappointment of last year.
Black sea grain prices, however, are still very favorable.
From the Middle Kingdom, the Chinese government will introduce emergency measures to stabilize hog prices as high hog weights and the recovery of China’s hog herd from African swine fever (ASF) increase domestic pork supplies and weigh prices lower.
China’s hog market has seen high volatility after floodwaters swept away thousands of pigs and chickens in the central Henan province in recent weeks.
High feed costs have weighed on farmers and crushers alike amid tight global supplies.
Soy processing margins have tightened in the country as a result, slowing soybean trade flows into China from Brazil.
Meantime, Chinese State reserves on July 27 sold 60k of soybeans 2018 crop and on July 29 will offer another 20k at avg price 5.269 yuan.
From Australia, local markets trading mixed yesterday with a little firmness in delivered bids but nothing exciting on the track side for grains.
Prospects for SA and parts of Vic are starting to catch up to the rest of the country after the recent weather.
There are heading into spring with improving crop conditions albeit slightly delayed where the break was late.
Weather maps remain steady for the rain forecasts in WA, in addition to the 5-20 mm falls received across the wheat belt yesterday.
Internationally, Jordan’s MIT cancelled their barley tender again, citing not enough participants offering.
