US grain prices were mixed but mostly lower yesterday.
Corn prices dropped 0.5% lower.
Some wheat contracts down nearly 0.75%.
Soybeans were the lone market bright spot, with gains around 0.25% higher by the close.
On macro markets, oil prices rose this morning, recovering only partially from the previous day’s losses.
Investors, indeed, are in sought bargains, on the expectations that major producers will not boost supply soon.
However, fears of weaker global demand amid surging pandemic are capping gains.
So, brent crude was up only 13 cents, or 0.2%, at $69.64 a barrel by 00:55 GMT, after falling 1.5% on Monday.
U.S. oil climbed by 14 cents, or 0.2%, to $67.43 a barrel, having lost 1.7% the previous day.
Wall Street rebounded on Monday, pushing up two of its three major indices, with the benchmark S&P 500 and the Dow industrials hitting record highs, as investors moved into defensive sectors and stocks recovered from initial losses.
Indeed, the Dow Jones Industrial Average and the S&P 500 rose 0.31% and 0.26%, respectively.
The tech-heavy Nasdaq Composite slipped 0.2%.
Meantime, however, a raft of Chinese data on Monday showed a surprisingly sharp slowdown in the world’s second-largest economy, and the New York Federal Reserve’s Empire State barometer of manufacturing business activity fell more than expected with
investors that now are focused on when the Federal Reserve will rein in its easy money policies, with minutes from the central bank’s latest meeting due on Wednesday.
Meantime, growing anxiety over the spike in the Delta variant of COVID-19 infections and turmoil in Afghanistan, pushed Asian shares down in early trade of this morning and eclipsed strength on Wall Street overnight .
Consequentially, early in the Asian trading day, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4% while U.S. stock futures, the S&P 500 e-minis, were down 0.18%.
Australian shares fell 0.75%.
Japan’s Nikkei stock index edged up 0.22%.
China’s blue-chip index dipped 0.18% in early trade, while Hong Kong’s Hang Seng index opened down 0.4%.
Coming back on grains market, yesterday was a pretty boring session given the fireworks that have become the norm.
Weather forecast are for some rain is returning to the Plains later this week, with areas farther east likely to be much drier between today and Friday, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts mostly warmer-than-normal conditions for the Midwest and Plains between August 23 and August 29, with seasonally wet weather probable in a band following the Mississippi River.
Meantime, corn export inspections (754,929 t) inched 1.3% higher week-over-week, in the week through August 12.
China was the No. 1 destination.
Soybean export inspections (277,637 t) more than doubled its volume from a week ago.
Also for soybean, China was the No. 1 destination.
Wheat export inspections moderately trailed the prior week’s tally but still came in at a respectable 440.567 t.
Japan was the No. 1.
On the other hand, for the second consecutive month, the National Oilseed Processors Association (NOPA) showed a soybean crush that fell below the entire range of trade guesses, with 155.105 million bushels in July.
That was a 1.8% improvement from June but still the second-smallest monthly crush over the past two years.
NOPA’s official crush numbers have slid below the average trade guess for six consecutive months now.
In this context, soyoil supplies are up from 1.537 billion pounds at the end of June to 1.617 billion bushels as of July 31.
After the market closed the USDA progress and conditions report published.
The corn good-to-excellent rating fell 2pc to 62pc compared with the trade guess of 64pc.
Around 73pc of the corn crop is dough stage, up from 54pc last week and only just behind last year’s 74pc at this time.
Soybeans good-to-excellent rating fell 3pc, now pegged at 57pc, 94pc of the bean crop is blooming, up from 91pc last week and is smack on the 5-year average.
Spring wheat good-to-excellent rating was unchanged at 11pc.
The poor-to-very-poor rating increased 2pc to 64pc.
Spring wheat harvests are now over 58%, confirming disappointing yields.
The first results of the Pro Farmer Tour in the state of Ohio and South Dakota show mixed results.
The corn yield potential is estimated to be up + 10% in Ohio compared to last year.
In contrast, observations in South Dakota, a state more affected by dry conditions, show less potential.
This is down about -15% compared to last year.
In this context, corn basis bids were largely steady across the central U.S. on Monday but did tilt 5 cents higher at an Ohio elevator.
Soybean basis bids were steady to soft, falling 10 to 11 cents lower at two Midwestern elevators and dropping 5 to 10 cents lower at four Midwestern processors.
From Canada, in Canadian province of Alberta local government estimates canola (rapeseed) yield at just 1.38t/ha.
This would be 40% below the five-year average.
Alberta typically produces 29% of the Canadian crop but has been badly affected by the hot, dry weather this season.
From South America, Brazilian farmers made some much-needed progress harvesting their second corn crop in the country’s center-south region, with 70% now complete according to the AgRural consultancy.
That’s still behind last year’s pace of 77%.
Last month, AgRural cut its second corn production estimate to 51.6 million tonnes in the center south, with a drop of almost 26 million tonnes compared with the initial estimate made last October.
As a result, Brazil’s total production estimate for corn this season was reduced to 82.2 million tonnes from 102.6 million tons in 2019/2020.
On the other hand, Safras & Mercado said they expect Brazilian soybean exports to total 90 MMT in 2022 – potential new record if realized.
Meanwhile, Argentine Parana River at its lowest level in 77 years due to the severe drought and ships from main grain port Rosario continue to load 18-25% less cargo
On European market, the French harvest is struggling to progress with constant rain delays.
This comes on the back of an exceptionally hot start to the grainfill stage and it is logical to realise that quality would be extremely mixed.
FranceAgriMer, indeed, confirms a heterogeneity in the qualities harvested, especially after the rains.
The PS criterion remains important to follow.
Consequentially, the price differential between the qualities sets in with a significant discount between milling wheat and for feed.
The rise in prices for milling wheat is currently causing some restraint on the part of buyers, especially on the domestic market.
In this context, following the continuous upward movement observed last week, wheat prices recorded a slight decline yesterday.
On this wake, the other grain prices are also easing.
The oilseed market, in contrast, is growing again with rapeseed prices on Euronext mark a new high, on the November 2021 contract, now trading around € 575 / t.
Palm oil prices still provide an element of support to the ongoing bullish momentum.
From the Black Sea basin, Sovecon again revised russian wheat production forecast to 76.2mmt from 76.4mmt few weeks earlier.
Meanwhile, wheat prices in the port area continuing to rise in both Russia and Ukraine.
Particularly, Russian pricing seems a mess with domestic values keep increasing daily while FOB values were quoted by IKAR (Institute for Agricultural Market Studies) US$20/t higher over the week.
Given the Russians introduced a new tax calculation model to address domestic price inflation it would seem something is not working there.
Clearly the reports of disappointing yields are being validated by the price movement.
The rise in wheat prices also provides an element of support for maize prices, both during the lean season and at later dates.
Export availabilities from Ukraine should increase strongly over the coming season.
Activity in the port area should therefore include strong activity in the coming months.
However, since the start of the campaign, the volumes exported have not shown a particularly sustained rate compared to past campaigns.
From Australia, on the east coast as we move into spring, total production prospects are keeping a lid on domestic markets and margins available for traders to build positions destined for the export corridor are very healthy.
Domestic consumers are patiently sitting on their hands waiting for harvest selling pressure, but their nerve is being tested by the recent rally pushing local silo prices above drought-type levels for wheat.
Many consumers will be forced to increase barley in the ration at current spreads to wheat.
Indeed, with rallying international prices, export demand and stem capacity are actively being priced in WA.
WA cereal prices trading some A$40/t above east coast prices (FIS/Track).
Meanwhile some in the domestic market have turned their attention to 2022/23 crop with prices on offer well above long term averages driven by international strength.
Internationally, Algeria is looking for some wheat for the second half of September, which will be an interesting source of price discovery.
The Philippines issued a tender to purchase up to 280,000 tonnes of animal feed wheat from optional origins that expires on Thursday.
The grain is for shipment in October and November.
Private exporters announced to USDA the sale of 132,000 metric tons of soybeans for delivery during the 2021/22 marketing year, which begins September 1.
South Korea’s largest feedmaker, Nonghyup Feed Inc. (NOFI), has issued an international tender to purchase up to 207,000 tonnes of animal feed corn sourced from optional origins.
Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley.
Possible shipment combinations are Oct 16-31, Nov. 1-15, Nov. 16-30 and December 1-15, the same as in last.
Deadline is Aug. 19, 2021.
Jordan has also issued separate tender for 120 KMT of milling wheat with deadline for 18 Aug.
A state agency in North Cyprus has purchased about 30,000 tonnes of animal feed barley in a tender which closed last Thursday.
We wish you a good day.
