US grain prices were mixed but mostly lower yesterday.
Traders are finishing to square their positions ahead of the August World Agricultural Supply and Demand Estimates (WASDE) report from USDA, out tonigth.
Meantime, corn moved around 1% higher by the close.
The nearby soybean contracts which will expire this week, spilled 3% lower, while November’s contracts took fractionally gains.
Wheat, from its part, saw moderate losses.
On macro markets, oil prices were steady on Thursday following two days of gains, as U.S. President Joe Biden’s administration yesterday urged the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, to boost oil output to tackle rising gasoline prices that they see as a threat to the global economic recovery.
Just to remember, OPEC had agreed in July to boost output each month by 400,000 bpd over the previous month, starting in August, until the rest of their record cuts of 10 million bpd, about 10% of world demand, made in 2020 are phased out.
Meantime, data from the U.S. Energy Information Administration on Wednesday showed that fuel demand in the top global crude user is averaging 20.6 million barrels per day (bpd) over the past four weeks, roughly in line with 2019 levels, and U.S. refiners slightly increased the amount of crude they processed last week.
In this context, Brent crude futures this morning, by 02:16 GMT, edged higher 5 cents to $71.49 a barrel by while U.S. West Texas Intermediate (WTI) crude futures gained by 4 cents to $69.29.
On the financial side, the Dow Jones Industrial Average and S&P 500 closed at record levels on Wednesday, after the U.S. Labor Department reported the largest drop in month-to-month inflation in 15 months, easing concerns about the potential for runaway inflation.
Asian shares failed to follow the strong close on Wall Street as fears about the spread of the Delta variant of the coronavirus weighing on sentiment.
Consequentially, MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.25% in early trading, dragged by a 0.24% decline in Chinese bluchips.
The Hong Kong benchmark fell 0.2% while Australian shares were largely flat and Japan’s Nikkei rose 0.35%.
Data showed by U.S. Labor Department, also caused dollar to retreat against most major currencies and U.S. Treasury yields to edge down overnight though both were steadier in Asian hours.
Coming back on grains market, there is a big sospance for the August US crop production and WASDE reports which will be published tonight.
Climatic conditions in the Midwest also remain critical with temperatures still very high, while severe thunderstorms are now expected in the South and East of the Corn Belt.
Outlook for corn production will be very tight in the USA where yields could be adjusted compared to the current estimate of 179.5 b / acre.
This level indeed seems, for many analysts, too optimistic in relation to current crop conditions and in relation to the yields of past years.
The expected revision of soybean yield for the upcoming crop, has just pusheed for some positional adjustments ahead of today’s release.
The soybean balance sheet is extremely sensitive to any yield changes and a good-to-excellent rating of 60 per cent (pc) raises more questions than answers.
The 5-yr average for this time of the year sits at 63pc but this time last year we were printing 73pc.
The adjustments on the yield potential especially for wheat production in the USA likly will be the stars of the report, and will have to be watched with particular attention.
Meantime, wheat markets were mixed in the day session around the globe with Chicago ended up unchanged, Kanas down -4cents, Minny down 2.5cents and Matif wheat +€2/t and Russian cash values that were a fraction higher again.
Corn markets were firmer throughout the day and gained 7cents in the Sep contract.
Soybeans were up 3.25cents in the Nov even if August futures tumbled 44.5 cents to $14.03.
Soybean complex was pulled up by a new sale of US bean to China (132 kt) confirmed by the USDA during the session.
So, its seems the calm before the storm.
Really the pre-report markets saw some position trimming ahead of a report that could really do anything.
Every report is important and tonight’s will be no exception.
Meantime, US ethanol production trended lower for the third consecutive week, falling to a daily average of 986,000 barrels for the week ending August 6, per the latest data from the U.S. Energy Information Administration.
It was also the first time since early May that the daily average failed to reach 1 million barrels.
Production remains a bit below pre-pandemic levels but is trending about 7.5% higher year-over-year.
In this context, corn basis bids were mostly steady to soft across the Midwest yesterday – particularly at multiple interior river terminals, which fell 5 to 17 cents.
An Indiana ethanol plant bucked the overall trend after firming 10 cents.
Soybean basis bids spilled lower across a handful of Midwestern locations, dropping as much as 22 cents at an Iowa river terminal.
On European market, Euronext confirmed its good energy on Wednesday evening on all agricultural commodities.
Wheat September contract futures, marks a new maturity high, approaching the level of 239 € / ton.
In corn, prices are also increasing.
On Euronext, the November 2021 maturity now exceeds the level of € 215 / t and is thus back to its highest level since mid-May.
Rapeseed was in particular in the spotlight, posting an increase at the end of the day of around + € 7 / t, by coming to build new maturity records in the wake of the Malaysian palm.
The November maturity is thus approaching its highest maturity and for the first time displays a compensation price above € 550 / t.
So, as we can understand, the restart of harvests in France did not slow down the rise in grain prices.
On the yealds side, the disappointments should be confirmed compared to the high hopes of late spring, with returns more in line with averages.
Additionally, there are obviously many quality concerns due the impact of recent rains on the now ripe crops.
From the Black Sea basin, further revisions of production potential in Russia are announced.
The two main Russian agriculture consultancies – IKAR and SovEcon – cut again their estimates for Russia’s 2021 wheat crop yesterday.
IKAR cut its forecast wheat crop to 77 million tonnes from 78.5 million.
Sovecon has yet to release details of its new forecast to the media, but said on social media that it has cut its forecast for the harvest of wheat and corn in Russia.
Previously the consultancy expected the wheat crop at 76.4 million tonnes.
Meanwhile, IKAR has also reduced the barley forecast by 500,000 tons to 18 million tons.
Last month, the USDA forecast a volume of 85 Mt of wheat in Russia against a consensus now below 80 Mt.
The rise in prices that began last week is still being confirmed.
Meantime, in Ukraine, FOB prices are increasing both for quality wheat and for feed wheat.
Barley prices are also rising.
Prices also increase in cultivation.
Business volumes nevertheless remain contained in the face of a fairly limited enthusiasm on the part of producers to increase sales at present.
Producers, despite regularly revised upward prices, are awaiting the finalization of harvests in Ukraine and especially to see the work progressing further in Russia.
From Australia, local new crop wheat markets firmed across the board as we saw delivered and track markets up A$5/t yesterday.
Kwinana zone finished the day bid $355/t FIS APWMG, and over on the east coast, we saw track APW values push upwards to $340/t through Victorian sites.
Barley also showed signs of strength with bids up a couple of bucks.
WA got to $290/t FIS in the Kwinana zone.
Old crop liquidity continues to leak out through the market, with barley continuing to find a bid through the east coast.
The drawing arc for Vic wheat and barley tonnes continues to flow into South Australia to fill domestic demand through Aug-Sep slots.
Canola continues its tear with bids for new crop unchanged to slightly firmer into the domestic crushers.
With offshore values up overnight $10-15/t through Winnipeg and Matif support, there is a more strength coming into Aussie local market today.
However, there are concerns of crop damage from waterlogging through parts of western Victoria and southern WA.
While prospects up in the northern parts of NSW and Southern Queensland are on track for a bumper crop, some of these big bulky wheat and barley crops will need another drink in the near future to maintain potential for what is being reported as the best crops some have seen in a very long time.
Internationally, South Korea issued an international tender to purchase 8.3 million bushels of animal feed corn from optional origins that closed yesterday.
The grain is for arrival in November.
Thailand issued an international tender to purchase as much as 5.1 million bushels of animal feed wheat that closed yesterday.
The grain is for shipment between October and December.
The Philippines passed on all offers for its tender to purchase 4.4 million bushels of animal feed wheat and 5.5 million bushels of feed barley that closed earlier today, with prices regarded as being too high.
The grain was for shipment in October and November.
Jordan also passed on all offers in its international tender to purchase 4.4 million bushels of milling wheat that closed yesterday.
A new tender is expected to be issued that closes August 18.
We wish you a good day.
