US farm markets surged yesterday as hot and dry weather persists in the U.S. MIdwest.
Indeed, Chicago wheat jumped 2,39%;
Kansas wheat gained 2,27%;
Minneapolis moved 1,63% higer;
Corn was up1,59%;
Soybeans took 1,09%.
On macro markets, oil prices dropped this morning but remained on track to post steep weekly gains.
In fact, Brent crude futures for September, which expires on Friday, fell 45 cents, or 0.6%, to $75.60 a barrel by 05.06 GMT, following a 1.75% jump of yesterday.
The more active Brent contract for October was down 48 cents, or 0.6% to $74.62 per barrel.
Also U.S. West Texas Intermediate (WTI) crude futures fell 43 cents, or 0.6%, to $73.19 a barrel, whittling down a 1.7% rise from Thursday.
Oil prices pulled back slightly amid cautious sentiment across the Asia Pacific markets as investors weighed virus concerns and weaker-than-expected U.S. GDP and jobs data, but both benchmark contracts were headed for gains of around 2% for the week, buoyed by indications of tight crude supplies and strong demand in the United States, the world’s biggest oil consumer.
This week, oil prices were buoyed also by a weaker U.S. dollar and strong U.S. corporate earnings.
On the financial side, robust U.S. earnings and forecasts certanly helped to lift Wall Street to record intraday highs on Thursday, however at the last the Dow Jones was only up 0,44%, Nasdaq e-mini futures lifted by 0.11%, the S&P 500 e-minis were up 0.87%.
Reassurances from Chinese regulators and official media have helped to soothe investors’ nerves, as have statements from the U.S. Federal Reserve that its bond-buying programme will remain unchanged for now.
The U.S. posted strong second-quarter growth helped by rising vaccinations and government aid, but the expansion fell short of expectations.
Consequentially on this morning stock market are losing even if more moderately, compared with sharp falls earlier in the week that had been sparked by investor fears over the impact of regulatory actions in China against the education, property and tech sectors.
Indeed, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.84%, taking its losses for the week to more than 6.5%.
Japan’s Nikkei dipped 1.71%, set for an 11th straight month of falls on the last trading day in the month.
Chinese blue-chips fell 0.96%, and Hong Kong’s Hang Seng fell 1.27%, with tech stocks once again dragging.
The Hang Seng Tech index deepened its losses for the week to more than 17%.
Seoul’s Kospi was last down 0.94% on the day.
The Dow Jones fell 0,39%, Nasdaq e-mini futures slid 1.35% and S&P 500 e-minis were down 0.82%.
Coming back on grains market, the North Dakota spring wheat crop tour yield estimate came in at 29.1 bu/acre, down from prior year averages of 43.6bu/ac and the lowest level in nearly 30 years.
So, North Dakota, the leading US spring wheat producing state, should experience a drop of around -33% in yields compared to recent years.
The speakers nevertheless note that the field observations are in line with the USDA estimates which expects a yield of 28 b / acre for this state.
Additionally, there is a slightly better situation in the last zones observed compared to the previous days.
Implied production levels for Hard Red Spring wheat, from this result and mixed with other appraisals of Minnesota/Montana crops and abandonment ideas, work into the range 290-300 million bushels (mbu), versus USDA recent forecast 305mbu.
Consequentially, forecasts for a smaller 2021 US wheat crop, steady export demand from China and Mexico, and a weakening dollar supported gains in all wheat complex.
Dry conditions has been to now also a factor supporting soybean and corn prices.
However, the upward movement is less strong compared to the wheat, against the new weather forecast and backdrop of weekly export sales figures which confirm cancellations for the 2020/2021 campaign.
US Corn Belt weather maps, indeed, are adding forecast rain across the eastern Belt into mid-August, boosting some thoughts on bean potentials there, although more northern and generally western areas are not as well off in the latest weather runs.
According to the U.S. Department of Agriculture, for the week ended July 22, U.S. exporters sold 515,200 tonnes of wheat for export, up 9% from last week and 46% more than the prior four-week average.
Exports of 345,000 MT were down 27 percent from the previous week, but up 2 percent from the prior 4-week average.
The destinations were primarily to Mexico (84,600 MT), China (65,300 MT), the Philippines (57,200 MT), Nigeria (51,000 MT), and #Taiwan (44,600 MT).
About corn, U.S. exporters sold 414,100 tonnes of corn for export, including a net reduction in old-crop sales of 115,200 tonnes.
Exports of 1,361,000 MT were up 36 percent from the previous week and 21 percent from the prior 4-week average.
The destinations were primarily to China (698,700 MT).
About soybean, U.S. exporters sold 233,500 tonnes of soybeans, including net reductions in old-crop soybeans of 79,300 tonnes.
Exports of 244,200 MT were up 49 percent from the previous week and 34 percent from the prior 4-week average.
The destinations were primarily to Mexico (106,700 MT).
In this context, basis for wheat was largely unchanged elsewhere in the Southern Plains.
An Oklahoma merchandiser estimates half of the 2021 hard red winter wheat crop has already been sold to processors, feeders, and exporters as harvest activity comes to a close in the Southern Plains.
Cash bids were mixed for corn across the Midwest, with gains reported at processors and ethanol plants.
An Eastern Corn Belt elevator lowered its cash offering for spot corn bids.
Cash prices for soybeans were largely unchanged.
An elevator near Cincinnati, Ohio lowered its cash soybean bids.
An Indiana merchandiser reported increasing countryside grain movement in the Eastern Corn Belt, particularly as farmers begin to clean out bins ahead of harvest.
From Canada, Canadian crop ideas also continue to slide lower, with talk into the low 20s on wheat and further cuts on canola.
From South America, some analist are registering frost damage to Argentina’s corn crop, which is 81% harvested for now.
Recent frosts in South America threatened Brazilian wheat crops in the flowering stages, but a report issued by Argentina’s Buenos Aires Grains Exchange today points out that Argentine wheat acres could have been impacted as well.
Argentina’s wheat crop was just recently planted, and the frost did not cause any immediate or lasting damage to the young crop, leaving the Buenos Aires Grains Exchange to leave its 2021/22 wheat forecast unchanged at 698 million bushels.
But early frosts and lingering dryness could limit the country’s exportable wheat supplies down the road if such weather patterns continue.
A La Niña weather pattern is expected to plague the Western Hemisphere again this fall, which partially explains the unseasonably early cold snap recently experienced by Argentina and Brazil.
On European market, harvest progress are increasing the availability of goods just to meet only short-term demand.
The market is nervous both in relation to the European situation where delays in harvests are observed in several regions and for some question relating to qualitie’s crops.
In this context, wheat on Euronext for the first time since mid-May, has risen above € 220 / t on the September deadline, pulling in its wake also corn.
Rapeseed August 2021 deadline is scheduled for tonight on Euronext.
The amplitudes of daily variation remain significant although lower than last week, nevertheless prices did not change much yesterday.
In fact, rapeseed fell by three euros on the August deadline to 532 euros, and by one euro on the November deadline to 536 euros, for just over 4,600 lots traded .
The North American situation remains an important element to monitor at this time, given that canola prices, after the strong tension in early July, have been entering a phase of consolidation in recent days.
From the Black Sea basin, wheat prices in both Russia and Ukraine marked a further rise yesterday.
Prices are now catching up with the upward movement already visible in Europe and North America since the start of the week. However, despite the upward adjustment movement, the price differential remains largely favorable to Black Sea exporters, particularly to Asian destinations, also taking advantage of the tense sea freight situation.
The Russian market is also driven by questions about the country’s production volume.
The dry conditions in the Volga and Urals areas are thus prompting several local analysts to revise their estimates downwards for 2021.
On this wake, Russian state weather forecaster Roman Vilfand, has cut its estimate for the country’s 2021 grain crop by 3 million tonnes to 121 million tonnes.
For wheat its talk about of more consolidation sub-78 million tonnes.
Despite everything, the 2020/2021 end of season stocks should nevertheless compensate for the situation and thus leave significant availabilities for the export outlet.
From Australia, local grains markets traded a fiver firmer yesterday, with liquidity continuing to dribble out and a little more new crop selling reported in WA.
WA rains continued to add moisture across the wheat belt yesterday, with another 5-15 mm reported across most of the area.
Internationally, yesterday US flash export sales had 132,000t of beans sold to unknown destination.
Most are expecting it was Chinese business.
The African Swine Fever virus was reported in the Dominican Republic, raising concerns about a possible jump into North American pigs.
This is the first case reported in the North American area in fifty-plus years.
The International Grains Council (IGC) this morning trimmed its forecast for the 2021/22 global wheat crop outlook by 1 million tonnes to 788 million as the diminished outlook for North America are only partially offset by improved prospects in the European Union.
In fact, the IGC cut its forecast for this year’s U.S. wheat crop to 47.5 million tonnes, from a previous projection of 51.1 million, while it put Canada ‘s crop at 28.5 million, down from 32.3 million seen last month.
In the European Union, however, production was upwardly revised to 137.7 million tonnes from 136.0 million, driven by improved outlooks for crops in France, Hungary and Romania.
Other upward revisions included #Pakistan (27.0 million from 25.5 million) and Australia (28.9 million from 28.0 million).
The IGC also raised its forecast for global corn production in the 2021/22 season by 1 million tonnes to 1.202 billion tonnes.
We wish you a good day.
