US farm markets were mixed but mostly lower in the midweek trading.
Corn prices faded around 0.5% lower.
Chicago wheat September contract was down around 07%;
Kansas fell around 1,87%;
Minneapolis shed 1,82%;
Soybeans were the lone bright spot, firming by more than 0.6%.
On macro markets, energy futures also spilled into the red yesterday.
Coronavirus cases, and the associated economic recovery worries, continue to surge globally with the bounce in the US the latest to spook markets.
New lockdowns in Israel and China plus calls for more restrictions elsewhere are not helping market worries.
Prices also fell steeply in yesterday’s session after the U.S. Energy Information Administration (EIA) said crude stockpiles rose by an unexpected 3.6 million barrels last week.
Consequentially, crude oil dropped more than 3% to fall below $69 per barrel.
Diesel was down around 2.25%, with gasoline falling 1%.
Meantime, on this morning, oil prices edged higher, supported by tensions in the Middle East (a Israeli aircraft struck a rocket launch sites in south Lebanon early on this morning in response to earlier projectile fire towards Israel from Lebanese territory), but failed to regain most of yesterday’s losses.
Indeed, brent crude oil futures rose by 14 cents, or 0.2%, to $70.52 a barrel by 01:32 GMT, while U.S. West Texas Intermediate (WTI) crude futures increased by 18 cents, or 0.3%, to $68.33 a barrel.
Both benchmarks fell by more than $2 a barrel yesterday.
On Wall St., a disappointing round of jobs data from ADP pushed the Dow down 324 points to 34,792.
ADP noted a gain of 330,000 jobs for July, which was well below analyst estimates of 653,000.
S&P 500 receded 0.46% from a record high.
Nasdaq eked out only small gains with investors there attached greater weight to positive data from the services sector than to negative jobs figures.
Asian shares held on to recent gains in today morning trading, despite hawkish remarks from a senior official at the U.S. Federal Reserve, that boosted the dollar while weighing on risk appetite, and uncertainty about Chinese policy.
Indeed, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.22%, and Japan’s Nikkei climbed 0.32%.
Australia gained 0.18%, Chinese blue chips fell 0.28% and Hong Kong advanced 0.45%.
Coming back on grains market, USDA WASDE and crop production reports will publish 12 August, a week from today.
Meantime, corn a wheat prices were down yesterday after a round of technical selling partly spurred by spillover weakness from the energy sector amid some lingering global demand concerns.
However, the decline has limited by StoneX’s crop estimate on US corn and soybean yields has been attracting attention from both bulls and bears.
Indeed, they posted a corn yield of 176.9 bushels per acre against 179.5 posted by the USDA in its July report.
Ditto in soybeans with a yield estimate of 50.0 bushels / acre against 50.8 by the USDA.
In this context, soybean prices, moved moderately higher after a round of technical buying as lingering questions about production potential are still being asked, and as exports are closing out the 2020/21 marketing year with huge year-over-year gains.
Plenty of disagreement in the market about individual state and national yield chances though.
From a climatic point of view, temperatures are expected to be still high in the coming days, but accompanied by precipitation.
In fact, US Corn Belt weather maps have expanded the forecast moisture for the northern Corn Belt later this weekend, with latest runs forecasting a widespread inch to inch and a half plus across Iowa and southern MN/WI/northern IL.
From another point of view, ethanol production eased slightly for the week ending July 30, moving to a daily average of 1.013 million barrels, per the latest data from the U.S. Energy Information Administration.
Daily production has now stayed above the one-million-barrel mark for the past 11 weeks, hovering just below pre-pandemic levels.
Meantime, ethanol stocks broke off 84k barrels.
In this context, corn basis bids were mostly steady across the central U.S., but did drop 5 to 25 cents lower at two Midwestern elevators, while firming 15 cents higher at an Indiana ethanol plant.
Soybean basis bids were steady to soft after falling 5 to 6 cents lower at three Midwestern locations.
From South America, a trucker strike in Argentina has delayed export load outs there with grain receivals dropping to a crawl and port lineups building.
Meantime, Brazil’s Anec expects the country’s 2021/22 soybean production to carve out new records, with an estimated 5.291 billion bushels.
Brazilian soybean exports are also expected to rise in the upcoming marketing year, jumping to 3.465 billion bushels.
Brazil’s Anec also expects the country’s corn exports to be slashed in half versus a year ago after struggling with drought that has left the second corn crop in shambles.
Indeed, Anec predicts corn exports will fall to 669.3 million bushels – the lowest level since 2015/16, if realized.
On European market, wheat has declined despite still difficult weather conditions in Western Europe, while rapeseed is relying on its fundamentals.
Wheat prices fell at the end of the session, particularly on profit taking as the resistance threshold of € 230 / t approaches.
Euronext corn August contract which expired yesterday, closed at a record level of 320€/ton.
Rapeseed is still finding support on the market with canola was on the rise again yesterday in Canada amid severe weather conditions.
Export activity remained weak in July as some concerns on production are rising.
In fact, Germany’s farmer association has cut their wheat crop estimate by nearly 2 million tonnes (Mt) against 22.82 million posted last month, after the late July rains and associated losses.
France’s Ag Ministry has also recently cut their wheat crop estimate, down about 0.5Mt to 36.7Mt against 37.10 estimated last month for similar reasons.
Barley production is however revised up to 11.69 million tonnes against 11.29 estimated last month.
Rapeseed production is estimated at 3.22 million tonnes against 3.00 estimated last month.
For its first estimate of grain corn production, the ministry posted it at 12.88 million tonnes, down from last year.
However, the returns from the field seem reassuring across the Rhine,
even if major fears relate to the weeks to come in a context of degraded quality by recent rains.
It is the specific weight criterion that gives rise to the most concerns.
From the Black Sea basin, harvest continuing to plug along, although some rains coming in for the eastern EU/western UKR will bring a few delays.
Russian government estimates pegged wheat harvest at 14.3 million ha completed, up nearly 1.5 million ha from the start of the week in the hot/dry weather.
On the other hand, tightening the shortage of natural gas in the EU, Gazprom reduced its gas shipments through the Yamal pipeline to Poland by 50% and stopped pumping gas to underground storage facilities in Austria, Germany and the Netherlands.
With storage in the EU at just 57.5% of normal midsummer levels, unmet demand for gas stands at 16 billion cubic meters, Interfax reports from Moscow, citing data from the Gas Infrastructure Europe portal.
From the Middle Kingdom, Chinese government interference in commodity markets is drawing new attention again after more reports the other day about investigations into “Abnormal Trading behaviour” as they try to stamp down the rally in commodity prices there.
From Australia, unflagging export demand for wheat has lifted current-crop and new-crop values this week, while barley has traded mostly steady on subdued demand from feedlotters.
Extremely competitive basis for Australian wheat in comparison to Black Sea, Europe and North American origins is driving the demand.
Meantime, wheat in the northern market for prompt delivery has firmed by at least $5/tonne in the past week, nearby barley values have stayed put.
Barley’s discount to wheat has kept it as the preferred grain for feedlots, and it is still factoring into poultry, pig and pellet mixes.
On the production front, southern Australia could do with a week of dry weather to allow growers to catch up on weed and fungicide spraying, and spread urea in time for crops’ spring growth surge.
Southern Queensland and northern NSW have had an unusually wet winter which has curbed the appetites of cattle on feed.
The weekend rains in WA still forecast at a general 10-15 mm across the wheat belt.
Meantime, most of northern NSW and southern Queensland has had its driest week since early June, and this has enabled consumers to catch up on deliveries booked earlier.
The RBA statement on monetary policy will be released on Friday at 1130.
Internationally, the activity remain sustained.
Algeria purchased between 300 and 360 thousand tons of milling wheat from optional origins in an international tender that closed on Monday.
The grain is for shipment in August and September.
The orientative prices were between 320 and 323 usd / t Cif.
The origins are probably European.
Turkey has provisionally purchased only 245,000 t of wheat from optional origins in an international tender that closed yesterday.
The grain is for shipment in late September.
Jordan passed on all offers for its international tender to purchase 4.4 million bushels of milling wheat that closed yesterday.
The country will likely issue a new tender on August 11.
Japan is looking to purchase 2.9 million bushels of feed wheat and 4.6 million bushels of feed barley from optional origins in a simultaneous buy-and-sell auction to be held on August 18.
We wish you a good day.
