An eye-opening round of export data from USDA full of bullish news for grain sales wasn’t enough to prop up corn prices, which slid 0.5% lower Thursday.
Wheat took an even harder tumble, with some contracts dropping nearly 2% lower yesterday.
On the contrary, soybeans salvaged some fractional gains after battling through a choppy session.
Indeed, despite we have seen the US weekly export sales reported 7.4Mt corn, 0.8Mt beans and 0.6Mt wheat, which included White wheat and Hard Red Spring wheat sold to China, this large corn sales figure was no surprise given the export sales flashes of last week.
Only the beans were slightly better than expected with two new boats of Chinese sales noted, plus the expected shifts from unknown.
There was also a nice chunk, 0.6Mt new crop bean sales, which included some flashes over the week.
And yesterday, was another day without new export flashes reported.
The demand bulls are writing it off as exports for own-account type business, that is, not yet sold to China, but originated with the intention of shipping it there.
The bears on the other hand contend that the program is finally slowing down.
Meantime, traders have already begun squaring positions ahead of the next World Agricultural Supply and Demand Estimates (WASDE) report from USDA, out early next week.
Operators are waiting whether the USDA will correct its export figures, particularly for corn, to take into account the reality.
In the meantime, Brazil’s corn production could be revised downwards because of the late sowing taking place after soybean harvest.
Indeed, Brazilian weather concerns remain.
It looks like another couple inches forecast for main soybean areas into next week, certainly not helping harvest.
So, USDA local office in Brazil could pegged Brazilian corn production at 105Mt, compared with 109Mt in the last WASDE, on the back of delayed planting and associated yield drags.
In contrast, weather in Argentina is forecast dry across the two-week outlook.
Crops there have benefited from the January moisture, but the forecasts are raising longer-term concerns.
However, Argentinean corn production has been revised downwards to 46 Mt by the Buenos Aires exchange.
Macro markets still waiting for the new US stimulus package, but in the ongoing debates there we note that the President Joe Biden has expressed support for a higher federal minimum wage – almost certain to ignite new controversy.
However, the strengthening U.S. Dollar has created some concerns that U.S. wheat exports will face an uphill battle with stiff overseas competition.
This morning, the dollar remains firm at 1.1950 against the euro and 75.40 against the rouble.
In fact, there are some concerns about Russian farmer decisions as Russia’s new season export tax has been formally announced – the same 70% over a FOB threshold calculation that has been discussed in recent days.
Wheat and corn threshold was set at US$200/t and barley at $185/t.
As expected it’s based on a government benchmark not individual contract prices.
Indeed, starting April 1, Russian grain exporters will have to declare the price of their contracts at the Moscow Exchange, which will then calculate the tax duty to be published weekly.
However, the timing of this is slightly different from that previously rumoured/expected, but the overall impact looks to be unchanged.
Argentina witnesses numerous strikes, with truckers currently blocking access to the ports.
Canadian statistical agency StatsCan is due to report year-end grain stocks estimates today.
While not the most accurate surveys historically, they’re getting more interest this year with the ongoing canola squeeze.
Surveyed estimates were around 12.3Mt on canola.
We will be keeping an eye out for any old crop revisions there too.
Canola exports from Canada were 239,100t reported this week.
Up from 96,000t last week.
We are forecasting average weekly pace of 230,000t in Jan/Feb, before it drops off further in Mar/Apr.
So it’s a neutral number this week.
Internationally, South Korea bought 137,000 tonnes of South American corn and Japan bought just over 87,000 tonnes of milling wheat sourced from the USA and Canada.
Tunisia purchased around 36,000 metric tons of soyoil in a tender that closed yesterday.
Delivery is sought between late February and late April.
Egypt also purchased 58,000 MT of soyoil in an international tender that closed yesterday.
A South Korean milling group has purchased 1.2 million bushels of milling wheat from the United States in a tender that closed earlier yesterday.
The grain is for arrival in June.
Turkey issued an international tender to purchase 9.3 million bushels of animal feed corn from optional origins.
Offers must be submitted by February 11, with shipment sought between February 19 and March 15.
Jordan issued a new international tender to purchase 4.4 million bushels of milling wheat from optional origins, which closes February 10.
The country made no purchases in a similar tender that closed earlier today.
The grain is for shipment in September and October.
The physical trade is slowing down, but main North African importers should come back on the market before the end of the marketing year.
Indeed, their purchases are still lagging compared to last year.
In add, the arrival of a cold snap on US plains in coming days will be monitored, while on central Europe on waterlogged plots it’s forecasted for next week.
So, markets could remain mixed until the publication of the next USDA report on Tuesday and more than ever, China remains the keystone of export activity and so of the markets destin’s.
