US farm market, were firmly in the red on Thursday, despite has come some generally optimistic data from Weekly Export Sales report released by USDA with some grain prices furthered below multiyear highs captured earlier this year.
Thus corn prices dropped 2%.
Soybean prices eroded 2.5% lower.
Most wheat contracts were down around 1.25%.
On macro markets, energy futures also tilted significantly lower on worries of a global economic slowdown with crude oil dropped 3% to fall below $64 per barrel.
Gasoline and diesel were also down around 3%.
On the financial side, on Wall Street, stocks ended the day mixed, with defensive and tech-heavy stocks regaining ground after two days of losses.
The Dow Jones Industrial Average (.DJI) fell 0.19%, while the S&P 500 (.SPX) climbed 0.13% and the Nasdaq Composite (.IXIC) added 0.11%.
Asian shares extended losses on this morning from the 2021 low set a day earlier, while the dollar held onto its recent gains sitting at a nine-month high.
Thus, MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) dropped 0.75%, with Chinese blue chips (.CSI300) down 1.22% and Hong Kong (.HSI) down 0.53%.
Japan’s Nikkei (.N225) fell 0.53%.
The dollar index , which measures the currency against six rivals, was little changed from the previous day at 93.517 on Friday.
Coming back on grains market, Chicago market posted a sharp decline yesterday with a drop observed for all products.
However, the decline was particularly marked both for corn and soybeans, with a return to the levels at the beginning of August.
Rainfall forecast for the coming days also weighed on prices and operators were very active in selling.
The latest echoes of the potential for corn yields in the states of Minnesota and Iowa, released as part of the Pro Farmer Tour, still point to strong differences.
Minnesota shows a decline in yield potential, estimated at 177.44 b / acre.
This is a decrease both compared to last year and compared to the average for recent years.
In contrast, potential in Iowa is improving significantly over the past few years with counts anticipating a yield of 190.76 b / acre.
Thus the evolution of the meteorological situation will remain important to monitor in the coming weeks.
Meantime, the current appreciation of the dollar, linked to fears that the Fed will reduce its support conditions for the financial market by the end of the year, is modifying the outlook for US export activity.
Indeed, weekly export sales results were broadly within range yesterday.
Wheat exports were 306,700 metric tons, which was up 5% week-over-week but 23% below the prior four-week average.
Wheat export shipments slipped 6% lower week-over-week but stayed 29% above the prior four-week average.
Japan was the No. 1 destination.
Corn exports saw old crop sales climb noticeably above the prior four-week average, to 216,500 MT.
New crop sales added another 510,000 MT.
Corn export shipments fell 22% lower week-over-week and moved 31% below the prior four-week average.
Mexico was the No. 1 destination.
Soybean exports found 67,700 MT in old crop sales.
Nevertheless, sales volumes of soybeans in the new season show high levels with 2,142,100 MT.
In this context, soybean export shipments jumped 99% higher week-over-week and 37% above the prior four-week average.
China accounted for more than half of that total.
Meantime, private exporters reported to the U.S. Department of Agriculture, export sales of 263,000 metric tons of soybeans for delivery to China during the 2021/2022 marketing year; and export sales of 148,590 metric tons of soybeans for delivery to Mexico during the 2021/2022 marketing year.
The marketing year for soybeans began Sept. 1.
Consequentially, corn basis bids were steady to mixed on Thursday after firming 2 to 5 cents at two Midwestern ethanol plants while dropping 5 cents at an Illinois processor and 17 cents at an Iowa river terminal.
Soybean basis bids were steady to weak across the central U.S. – particular at three Midwestern processing locations, where dropped from 5 to 30 cents lower.
On European market, Euronext fell sharply into the red yesterday in the evening, on the wake of international prices.
Wheat, however, stood out on its September 2021 deadline with a very strong increase mainly due to the tension on the French ports which is increasing because of harvest delays and the very poor qualities harvested this year.
As a reminder, however, the September contract expires on September 10 and now has an open position that has fallen sharply compared to the last few weeks.
A good number of operators are now taking the following deadline of December 2021 as a reference in the negotiations.
The context of volatility is high and there are few transactions on the physical market.
Faced with the movement observed in wheat, variations in corn prices are less significant.
The prices for the new harvest in fact include the availability which is now expected to be greater in feed grains this season. This situation naturally leads to the adjustment of the price differential between feed wheat and corn.
In oilseeds, nervousness is still observed with a rapeseed market still driven by tight fundamentals both in Europe and in Canada.
However, the recent highest traded at the start of the week, after already a continuous upward phase, implies that prices are looking to consolidate.
The November maturity thus returns to its level of the previous weekend, moving above 560 € / t.
From the Black Sea basin, latest figures from the Bulgarian Ministry of Agriculture confirm the increase in production volumes for wheat and barley.
With the approach of the end of the harvests, Bulgarian wheat production has now reached 7.1 Mt, an increase of more than + 50% compared to last season which had been severely affected by the weather conditions.
The improvement in barley production volume is of the order of + 25% with a harvest which nevertheless does not exceed 700,000 t.
Meantime, Russian domestic prices are a focus.
The tax system has done nothing to quell the support and food inflation is hitting the headlines.
In fact, faced with the decline in prices observed yesterday on the financial centers of Chicago and Euronext, wheat prices in Fob from Russia or Ukraine have not followed the downward movement.
Prices thus stabilized or even showed a slight increase.
Really, the current wheat price levels still imply a significant price differential between Black Sea origins and European origins in order to remain well positioned in the face of export demands.
Thus, the next step will be the next big data point for the market.
From the Middle Kingdom, People’s Bank of China will make their interest rate decision today.
China demand and subsequent pricing has been falling since mid-July and most China price indices are now testing calendar-year lows made at the start of the year.
There are more questions than answers when viewing China commodity demand as a whole.
The rampant corn buying pace we saw a few short months ago has slowed to a walk.
Did they over buy?
Are they dealing with their own Delta issues?
Is this simply the result of a crackdown on commodity speculation they flagged back in June?
From Australia, prices for wheat and barley have climbed in the past week to reflect strengthening offshore values, and tightened logistics as caused by the New South Wales COVID lockdown.
While lockdown restrictions are not affecting grain movements within NSW, Queensland consumers are bidding up the local market to avoid bringing grain across the border this week.
Escalating cereal prices are making cottonseed and faba beans increasingly attractive for domestic stockfeed millers who are now accumulating for October-November.
However, with both commodity markets and the $A weakening overnight the local trade will only adjust price slightly.
Export margins remain robust on paper but the logistic impacts on back-to-back trades suffered last year will be fresh in the mind of the trade.
Global shipping rates are still very firm in the front end. While it is great for Australia’s competitive advantage into Asia but not helping container availability or pricing.
With an extremely wet finish to the French harvest it is logical to assume Australian protein wheat will be sought after, however, given that a decent percentage of this demand has historically been serviced by the box market, crystalizing this margin may be harder than it looks.
Old crop markets remain firm on the east coast with pockets of spot demand skewing the old crop inverse.
Internationally, Japan purchased 5.3 million bushels of food-quality wheat from the United States, Canada and Australia in a regular tender that closed yesterday.
Of the total, 44% was sourced from the U.S.
The grain is for shipment in October.
Bangladesh issued an international tender to purchase 50,000 tonnes of milling wheat from optional origins.
Offers must be submitted by September 1, and the grain is for shipment 40 days after a contract is signed.
Jordan issued a new international tender to purchase 120,000 tonnes of milling wheat from optional origins that closes August 25.
The grain is for shipment between December and February.
South Korea purchased 65,000 tonnes of animal feed corn in a private deal that closed yesterday.
The grain was likely sourced from South America or South Africa and is for arrival by November 20.
GASC is believed not to have received any offers in an international tender to buy at least 30,000 tonnes of soyoil which closed yestrday.
Only one trading house submitted offers for 10,000 tonnes of sunflower oil also sought in the tender, with the lowest price assessed at $1,336 a tonne c&f for immediate, on sight payment.
It was believed to have been submitted by trading house Belluno for the full 10,000 tonnes.
Belluno also offered $1,345 a tonne c&f for 10,000 tonnes of sunflower oil with payment in 180 days.
No purchase has been made.
GASC also holded a parallel tender for 3,000 tonnes of Egyptian-produced soyoil and 1,000 tonnes of Egyptian- produced sunflower oil.
The lowest offer in the local soyoil tender was said to be 21,500 Egyptian pounds a tonne, which traders calculated equated to about $1,369 a tonne.
The price was offered separately by two companies for 12,000 tonnes and 10,000 tonnes.
No offers were reported for Egyptian sunflower oil.
We wish you a good day.
