The sell off continued across futures boards, approaching WASDE-day.
Net decline in prices was seen in all products yesterday on Chicago with funds’ profit-taking, both because of the end of the year and of improving weather conditions.
In addition, tomorrow’s USDA report is expected to display the increase in wheat production in Australia and increased export targets from Russia.
Generally, this is a normally quiet report, and few in the market are expecting any kind of fireworks as the USDA normally leaves domestic figures largely unchanged prior to the Jan stocks and production reports.
Infact, average surveyed ending stocks estimates were around 1.7 billion bushels (bbu) for corn, 170 million bushels (mbu) for beans (down 20 mbu from prior) and unchanged for wheat.
However, soybean prices are decreasing amid fears about the dynamics of Chinese imports in the coming months and the prospect of record Brazilian production.
Consequently, the decline was significant in vegetable oils, on both rapeseed and sunflower.
Canola is also decreasing too in Canada after reaching a 7-year high last week.
Vegetable oil prices are under pressure due too to higher than expected US crude oil stocks this week.
US/China political tension once again flared as China announced it was looking at “reciprocal” actions after the recent sanctions.
On that vein, China announced the other day it had added meat processor Meramist to its ban list for meat imports.
That is the sixth plant on the list now.
In Old Continent, UK citizens began to receive COVID vaccine last night.
In addition, the situation with water deficit has improved in Brazil and winter has set in Russia, without raising any additional fears for the moment.
Michael Cordonnier (crop Scout and expert on the Brazilian territory) forecast the Brazilian bean crop at 130 million tonnes (Mt), and Argentina at 49Mt – though noting that this is rain dependent.
On this way, chatter about more Brazilian soybean cargoes being booked has run around the market, and we note that there have been no new USDA flashes to China in a month now.
According to Reuters, Russian wheat export prices fell slightly last week amid healthy supply from domestic farmers, analysts said on Monday.
Russian wheat with 12.5% protein loading from Black Sea ports for supply in December was at $252 a tonne on a free-on-board (FOB) basis at the end of last week, down $2 from the week before.
Demand from exporters and the livestock industry in the domestic wheat market was muted last week, while demand from flour millers remains strong, Soviet Ag said.
Aussie cash markets moved lower again yesterday with wheat being down $5-7/t across the board.
Barley was also down again another $3-4/t and canola was down in line with east coast track values ($587-590/t range).
ASX wheat contracts were active throughout the day with Jan trade down to $269/t on a spread to March which finished the day settling at $273/t.
Impressive weather models are now predicting good rains through Qld and Northern NSW.
This will help bolster summer crops and restore soil moisture.
So, markets are getting more and more happier with South American rain, increased in wheat production in Canada and Australia, and increased Russia export targets.
On the international scene, South Korea purchased 78,000 t of milling wheat from the USA and 69,000 t of corn from the Americas.
In this context, funds were net sellers yesterday in Chicago for 21,500 lots of corn, 10,000 lots of soybeans and 6,000 lots of wheat.
On the financial markets, the dollar is still posted this morning at 1.2120 against the euro and 73.30 against the ruble.
