US farm market, were mixed once again on Wednesday.
Some wheat contracts lifted more than 0.75% higher.
Soybeans suffered moderate cuts, in contrast.
Corn finished the session with narrowly mixed results.
On macro markets, oil prices fell for a sixth day, the longest losing streak since February 2020, as a spike in COVID-19 cases worldwide fuelled fears over slower fuel demand while a surprise build in U.S. gasoline inventories added more pressure.
Indeed, gasoline stockpiles rose by 696,000 barrels to 228.2 million, the Energy Information Administration said on Wednesday, against analysts’ expectations for a 1.7 million-barrel drop.
However, U.S. crude inventories fell 3.2 million barrels last week to 435.5 million, their lowest since January 2020, the EIA said.
In this context, Brent crude was down 87 cents, or 1.3%, at $67.36 a barrel by 04:47 GMT, after touching the lowest since May 24 at $67.10 earlier in the session.
U.S. West Intermediate crude (WTI) fell $1.05, or 1.6%, to $64.41 a barrel after falling to as low as $64.24, also the lowest since May 24.
WTI has dropped over 7% while Brent has slumped more than 5% during the six-day losing streak, the longest since a six-day decline for both contracts that ended on Feb. 28, 2020.
On the financial side, Wall Street closed lower after the latest meeting minutes of the Federal Reserve according that it may “start reducing the pace of asset purchases this year”.
Currently the Fed are purchasing $120 billion of treasury and mortgage securities every month but, with clear signs of a recovery the Central Bank is planning to reverse its easy-money policy.
Thus, the Dow Jones Industrial Average ending the day down 1.07%, while the S&P 500 lost 1.07% and the Nasdaq Composite fell 0.89%.
Consequentially, Asian shares also fell on Thursday while the dollar reached multi-month highs against peers.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.63%, heading back towards 2021 lows set last month, with Chinese blue chips down 0.21%, Australia falling 0.54% and Hong Kong 0.45% off 0.45%.
Japan’s Nikkei dropped 0.37%.
Coming back on grains market, wheat prices moved modestly higher after attracting some bargain buying on Wednesday as traders await more export data from USDA this morning.
Meantime, the US trade has all eyes on the anticipated rain event through the Northern Plains and Canadian Prairies.
Rainfall is desperately needed to stop the slide in corn and bean conditions.
Minnesota’s corn crop is rated 35pc good-to-excellent versus the 5-yr average 77pc.
Ethanol production has faded lower for the fifth consecutive week, per the latest data from the U.S. Energy Information Administration.
For the week ending August 13, daily production only averaged 973,000 barrels, dropping to the lowest level since late April.
Stocks are also at a five-week low after trending another 3% lower this past week.
Consequentially, the National Corn Growers Association, along with the Renewable Fuels Association and Growth Energy, is appealing the decision to grant waivers against the EPA’s biofuel mandates.
Ethanol demand, indeed, makes up around 45pc of the domestic corn consumption and is clearly important to the US corn producer.
On Wednesday, private exporters reported to the USDA export sales of 131,000 metric tons of soybeans for delivery to China during the 2021/2022 marketing year.
The marketing year for soybeans began Sept. 1.
In this context, corn basis bids were steady to mixed across the central U.S., moving as much as 4 cents higher at an Illinois river terminal while tumbling as much as 15 cents lower at an Ohio river terminal.
Soybean basis bids fell 5 to 10 cents at three Midwestern processors and dropped 15 cents at an Ohio river terminal, while holding steady elsewhere across the central U.S..
From Canada, analysis from Refinitiv Commodities Research indicates that Canada’s 2021/22 wheat production potential shifted 7% lower from prior estimates, falling to 988.4 million bushels.
Hot, dry conditions remain prevalent across the country.
Official governmental production estimates will be released later this month.
From South America, Brazil’s Conab estimates that the country will produce 3.3 billion bushels of corn this season, including 2.3 billion from its safrinha crop.
This means a drop of 25.7% in yield estimated for this season.
Meantime, Brazil’s grains exporters association, or ANEC, pegged the country’s soybean meal exports for August at 1.60 million mt, slightly below 1.61 million mt recorded by this month last year.
Argentine growers have sold 27.3 million tonnes of soybeans from the recently harvested 2020/21 crop year, the Agriculture Ministry said on Tuesday in a report with data updated through Aug. 11.
The rhythm of sales of one of Argentina’s main crops was behind that of the previous season, when by this point some 29.4 million tonne of the oilseed had been sold, the ministry said.
The 2020/21 soy harvest in Argentina ended in June at 43.5 million tonnes, according to the Buenos Aires Grains Exchange, down from 49 million tonnes in the 2019/20 season.
The ministry said sales of 2020/21 corn had reached 37.2 million tonnes, about 3 million tonnes more than sales registered at this time last year.
The exchange says about 95% of the 48 million tonnes of corn expected to be harvested this season has been brought in so far.
On European market, volatility is still the order of the day for European wheat, with a rebound about € 9 / t still observed on the nearby September contract.
The market reacted in particular to the Algerian purchase of a minimum of 250 kt of milling wheat at $ 348-351 / t C&F with the OAIC that has also decided to relax its specifications in order to adjust to the disappointing quality of the French harvest this year!
Egypt has also returned to business by contracting 180 kt of Black Sea wheat at $ 296.65 / t Fob, a jump of nearly $ 40 / t compared to its previous tender!
These two transactions thus came to confirm on the physical side the recent surge in the futures markets.
Durum wheat prices also have maintained their bullish pace this week to reach their highest level recorded in six years!
The market is indeed marked by a lower supply than initially anticipated.
Agreste, however, still anticipates a national harvest of 1.59 Mt, an increase of 300 kt compared to last year (but down 100 kt compared to the five-year average).
However, the quality problems observed in the field could quickly reduce the exploitable volume this year.
Operators also anticipate a rationing of the Canadian supply in 21/22 because of a harvest which promises to be extremely disappointing. The weak American potential should also motivate the United States to import a large quantity of Canadian durum wheat, thus further reducing North American supplies abroad.
Despite a more limited flow of information, corn was able to take advantage of this surge in wheat to also reap some gains.
Meantime, Non-commercial market participants expanded their net long position for the fifth week in a row in Euronext’s milling wheat futures and options in the week to Aug. 13, increasing their net long position to 159,950 contracts from 147,128 a week earlier.
Commercial participants similarly upped their net short position to 186,470 contracts from 174,451 a week earlier.
In Euronext’s rapeseed futures and options, non-commercial market participants increased their net long position to 6,029 contracts from 4,804 a week earlier.
Commercial participants extended their net short position in rapeseed to 9,840 contracts from 8,799 a week earlier.
Bulgarian veterinary authorities on Wednesday reported an outbreak of African swine fever at an industrial farm with 13,000 pigs in the central village of Apriltsi.
Bulgaria’s Food Safety Agency said it would cull all pigs that had been in contact with the infected animals.
It set up a three-km quarantine zone around the farm to stop the spread of the disease, which is incurable in pigs, but harmless to humans.
From the Black Sea basin, Russia’s agriculture ministry, which usually discloses grain harvesting data daily, has delayed its publication, as its website showed on Wednesday.
Meantime, Romania has so far reaped a bumper 11.3 million tonnes of wheat, agriculture ministry partial data showed on Wednesday, due to an expected sharp recovery in yields after a drought-driven crop fall to 6.4 million in 2020.
The ministry, which said the average yield had risen to 5.35 tonnes per hectare from 2.99 last year, said data reflected output on Aug. 16 and 98.54% of the overall acreage under wheat.
That could help potentially create a surplus of about 7.0 million tonnes for exports, as Romania’s domestic consumption traditionally ranges from 2.5 to about 3 million tonnes.
Ukrainian grain traders union UGA has asked Algerian grain authorities to ease conditions of its wheat tenders in a move that could boost supplies of Black Sea wheat to the country, the union said on Wednesday.
Ukraine, one of the leading global grain exporters, shipped a total of 200,000 tonnes of wheat to Algeria in the 2020/21 July-June season, accounting for 1.2% of its overall wheat exports.
UGA said the Algerian side had “expressed readiness to discuss possible changes to the tender procedures”.
Ukraine is likely to increase its grain exports to 57 million tonnes in the 2021/22 July-June season from 45.5 million tonnes in 2020/21 thanks to a bigger harvest, analyst APK-Inform said on Wednesday.
The exports are likely to include 21.1 million tonnes of wheat.
On the other hand, Kazakhstan expects its 2021 grain crop to fall by 24% to 15.3 million tonnes after drought hit main producing regions of the Central Asian nation, acting Agriculture Minister Yerbol Karashokeyev told a government meeting on Wednesday.
From Australia, rain forecast maps have turned somewhat dry for the northern belt with only 5-10 mm forecast north of Wagga for the next 15 days.
Meanwhile the Western Districts of Victoria are expecting over 35mm on already saturated country.
Amazing starts need a decent finish and reports that northern NSW and Qld are looking for a drink may actually support the differential to other competitors in the international market.
In this context, Aussie wheat price basis for this coming harvest is sitting around minus A$33/t, historically low for any time of the year let alone leading into the all-important spring window.
Grower selling, meantime, has been a little slow on the east coast the exporter is getting active with large slot commitments reflecting the attractive paper margins.
Chicago moves are still driving new crop price changes.
Traders lowered bids by around $6-8/t yesterday.
With the Australian dollar showing signs of further weakness we expect values to snap back today.
Internationally, Jordan got three Participants yesterday in its wheat tender.
Cargill , Cerealcom & Ameropa.
However, MIT cancelled the tender after opening the envelopes.
We wish you a good day.
Author: Sandro F. Puglisi
