US farm markets were mostly lower yesterday.
Indeed, mostly favorable weather forecasts triggered a round of technical selling that pushed all grain prices, with the exception of Kansas City HRW futures, lower.
So, corn prices were 1.25% lower.
Soybeans dropped by 2%.
Chicago and Minneapolis wheat contracts also trended lower, around 0.68% and 0.33% respectivily.
Kansas City HRW future, in contrast, held gains of around 0.5%.
On macro markets, oil prices are felling for a third consecutive day this morning on mounting concerns that the increasing spread of the Delta variant of the coronavirus in top consuming countries will cut fuel demand.
So, Brent crude oil futures slid 22 cents, or 0.3%, to $72.19 a barrel, as of 01.29 GMT and U.S. West Texas Intermediate (WTI) crude fell 33 cents, or 0.5%, to $70.23 a barrel.
Both futures fell yesterday to their lowest since July 21 before regaining some ground by the close.
Wall Street’s main stock indexes were choppy but finished higher with notable gains from Apple Inc, Eli Lilly and Robinhood Markets Inc.
Consequentially, the S&P 500 gained 0.8% to finish at 4,423.15 – another record closing high – while the Dow .DJI rose 0.8% and the Nasdaq added 0.6%.
Consequentially, also Asian shares advanced to one-week highs this morning, led largely by strong U.S. corporate earnings, although the mood remained cautious.
In fact, MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.1% to the highest since July 26.
Japan’s Nikkei, meantime, was in the red as were Chinese shares with the blue-chip index off 0.2%.
Australian shares were a touch firmer but sentiment was marred by an unabating rise in Delta infections in Sydney, the country’s biggest city.
Investors expect volatility to increase in August as more companies report earnings and the market hears from Federal Reserve officials in coming weeks.
U.S. non-farm payroll numbers are due on Friday.
The U.S. dollar, meantime, eased against the Japanese yen and Swiss franc as questions about slowing U.S. economic growth and the Delta variant challenged risk appetite.
Coming back on grains market, Corn Belt weather maps show a storm system building across the northern Corn Belt forecasting more than an inch across much of Minnesota, Iowa, and Wisconsin with slightly less into northern Illinois.
Temperature outlook is still skewing slightly warmer relative to earlier runs.
There is more talk about some extended run improvements in weather outlooks for parts of the northern Plains and southern Canada but so far nothing substantial.
At this point crops are largely beyond redemption, though it would help next year’s potential.
In this context, soybean prices gave up quite a bit of ground yesterday.
Corn gave way yesterday despite a crop rating down 2 points this week, in a context of beneficial rains expected for the days to come.
Wheat is slowing down after the unexpected increase in the crop rating this week on spring wheats, posted at 10% as good to excellent, a figure which nevertheless remains extremely low.
Fears that the Biden administration would call into question its biofuel policy given the rise in food prices pushed more concerns.
Beyond all these considerations, the impact of a new wave of covid is also raising concerns about demand.
In this context, corn basis bids were steady to mixed yesterday, tumbling as much as 30 cents lower at an Iowa river terminal while firming as much as 5 cents higher at a Nebraska processor.
Soybean basis bids were widely variable, jumping as much as 84 cents higher at an Iowa river terminal while eroding as much as 20 cents lower at a Nebraska processor.
From South America, in Argentina, as the sowing of wheat is completed, fears are already emerging about the potential for yields due to a water deficit.
Meantime, AgRural consultancy in Brazil pegged the safrinha crop production at 56.2 million tonnes (Mt), down another 3Mt from their last estimate.
On European market, persistent rains in France raise many concerns on the harvesting sites still to be carried out both from a qualitative and quantitative point of view.
However, wheat prices on Euronext eroded only a litle bit, but remain at their highest levels, testing a resistance zone of € 230 / t.
In fact, they display milling wheat quality.
About this, different ratings are thus to be taken into account according to the qualities displayed, with different scales depending on whether it is the specific weight or the hagberg that are lacking.
The August corn deadline on Euronext, closes tomorrow and it was displayed last night at historic levels at € 295 / t.
Rapeseed for its part continues to consolidate, thus separating itself somewhat from its rivals, soybeans and palm.
Meantime, European Union soft wheat exports during the first month of the 2021/22 marketing year reached 962,949 tonnes, which is a 35% decline from last year’s pace so far.
EU barley exports are also trending moderately lower year-over-year.
In deed, barley exports also started tentatively at 785,644 t against 1.09 million last year.
EU corn exports for the 2021/22 marketing year are trending slightly above last year’s pace, with 42.9 million bushels through August 1.
European Union soybean imports for the 2021/22 marketing year reached 39.3 million bushels through August 1, a year-over-year decline of 25% so far.
EU soymeal imports are also tracking moderately lower from a year ago, as are EU palm oil imports.
From North Africa, following this week’s GASC tender Egypt’s president is calling for an increase in bread prices.
Subsidized bread prices can be a precarious issue in the region, with concerns about political stability there increasing after the announcement.
The last large protests were sparked in no small part by the price of bread at the time.
In the first of August, the EU exported of milling wheat over this campaign, compared to 1.48 million tonnes last year to date.
From the Black Sea basin, crop estimates in Ukraine are starting to trim back slightly.
A few private forecasters took their estimates down into the high 30s Mt range versus near 40Mt prior, based on late heat impact on yield.
Meantime, wheat prices are still increasing, in particular following the gradual revision of yield estimates in Russia.
Despite high prices, close to 260 usd / t fob for 11.5% protein, demand for Black Sea origins is not weakening.
We must also take into account the retention of Russian producers, dissatisfied with the taxes imposed on exports.
From the Middle Kingdom, global oilseed complex is still under pressure by the Delta variant, which once again threatens consumption on the Asian continent, especially China.
Chinese state grain stockpiler Sinograin plans to auction off another 2.0 million bushels of corn that had originally been imported from Ukraine on August 6.
Sinograin has held a handful of similar auctions in June and July in an attempt to bolster supplies and cool high prices.
From Australia, rises in local markets lagged the global moves yesterday.
Wheat bids were up $3-4/t or so new crop, but old crop parcels continued to attract some stronger bids as demand side interest aims to finish filling boats and meet domestic needs.
Some areas of the east coast are starting to see production ideas capped/trimmed slightly with the wet conditions as worries about water-logged crops emerge.
Forecasts are still looking good for WA on this next rain event and there’s a chance of more moisture for southeastern Australia.
Internationally, Vietnam will buy rice into government stockpiles in a bid to balance food security concerns following a spike in COVID cases in recent months in the ASEAN region.
Gasc canceled its latest international vegetable oil tender in order to cover itself in its domestic market, which is more competitive.
Pakistan issued an international tender to purchase 400,000 t of wheat from optional origins that closes August 23.
The grain is for shipment between mid-September and the end of October.
Japan issued a regular tender to purchase 119,000 t of food-quality wheat from the United States, Canada and Australia, which closes later this week.
Of the total, 54% is expected to be sourced from the U.S.
The grain is for shipment in October.
Taiwan issued an international tender to purchase 1.8 million bushels of grade 1 milling wheat from the U.S. that closes on August 6.
The grain is for shipment between late September and early October.
Taiwan purchased 55,000 t of animal feed corn, likely sourced from South Africa, in an international tender that closed yesterday.
The grain is for shipment between late October and early November.
Cash demand has been supporting global wheat in recent weeks, but now it poses the question of how much more demand needs to be filled as EU and Black Sea region values firm.
Markets are looking for the next large directional story to either feed the bulls or encourage the bears to sell into row crop harvest.
However, amid currently mixed weather for the US few are willing to adopt strong row crop yield ideas, given also that the next WASDE report is more than a week away.
Global markets seem to be chasing a new story; we will see how the end will be.
We wish you a good day.
