Profit-takings smashes grains prices.
Traders were expecting steeper cuts to ending corn stocks in Tuesday’s World Agricultural Supply and Demand Estimates (WASDE) report from USDA so, they took the opportunity yesterday to engage in plentiful technical selling and profit-taking that sank prices more than 4% lower Wednesday with corn, soybeans and wheat that all faced significant cuts in Chicago.
In fact, corn prices slumped significantly, with cuts of around 4.25%.
Larger-than-expected domestic stocks and a historically large crop predicted in South America were the primary culprits behind today’s moves.
Ethanol production for the week ending February 5 were largely steady from the prior week, moving to a daily average of 937,000 barrels – just 1,000 daily barrels better than a week earlier.
The cancellation of a large corn sale to unknown destinations created additional headwinds.
In export news, indeed, there was a flash cancellation for US 132,000t of current-crop corn.
Market talk is suggesting it was South Korean business, but this rumors it did nothing to calm the market which was already trading off.
No reason was cited for this notice.
Also soybean prices dropped sharply, the spillover weakness from corn, indeed, applied significant downward pressure, with traders still worried about how big this season’s South American crops actually are.
Despite some weather-related challenges, Brazil could still haul in a record-breaking crop at harvest.
Wheat prices followed corn and soybeans lower, with some contracts losing more than 3% in a very rough session.
Ahead of this morning’s weekly export report from USDA, analysts expect the agency to show another healthy round of corn sales, with trade estimates ranging between 39.4 million and 70.9 million bushels for the week ending February 4.
However, that’s still significantly behind the prior week’s pace, which saw a record-breaking volume of 296.1 million bushels.
For soybeans, analysts expect the agency to show soybean sales ranging between 12.9 million and 38.6 million bushels for the week ending February 4.
Actuals will need to move higher than all trade estimates to match the prior week’s volume of 53.6 million bushels
Analysts also expect to see soymeal sales ranging between 150,000 and 350,000 metric tons last week, plus another 5,000 to 30,000 MT of soyoil sales.
About wheat, analysts expect the agency to show wheat sales ranging between 7.3 million and 16.5 million bushels, expressing doubt that sales will be able to match the prior week’s tally of 18.3 million bushels.
Aussie local markets were a tick weaker yesterday after the WASDE pressure, with the ASX giving up Tuesday’s gains, the nearby wheat contract settling at $296.5/t down $3.50/t.
Cash bids were up for some front-end deliveries, but otherwise the market was fairly quiet as bid depth drops off.
New-season area ideas continue to shift around as planting time nears; the stronger Australian dollar has put some pressure on new-crop markets, but there are still generally attractive options with the firming in global commodities.
FranceAgriMer yesterday, in its monthly report, has also brought additional pressure on the markets by raising its French 19/20 wheat collection figure by 130 kt (26.9 Mt).
FranceAgrimer also revised slightly upwards its estimates of third-country wheat exports to 7.45 Mt compared to 7.27 Mt last month, which was nevertheless much lower than last year’s 13.57 Mt.
Carryover stocks are left almost unchanged at around 2.5 Mt.
Barley stocks are revised downwards to 1.0 Mt compared to 1.1 Mt estimated last month.
Corn stocks are left unchanged at 1.9 Mt, the lowest level in 14 years.
More Russian wheat is reported to be hitting the offer side of markets for the next few months as farmers start to sell more grain there and trade longs push to square books.
Ukrainian corn exports during the 2020/21 marketing year are at 480.7 million bushels, according to new data from the country’s economy ministry.
Total grain exports are down about 20% year-over-year so far after Ukraine failed to match a record-breaking harvest in 2019.
Ukraine’s economy ministry reports that the country has exported 483.5 million bushels of wheat so far during the 2020/21 marketing year.
Farmers have also sold 181.9 million bushels of barley this season.
The impact of all these events on markets, has shookked also Euronext prices where wheat, corn and rapeseed ended sharply lower.
The MPOB also issued a bearish report and thus increased pressure on all oil-rich seeds.
Malaysian palm stocks notably rebounded above expectations last month (1.32 Mt), due to a drop in national exports.
On the international scene, Japan has bought just over 86,000 t of milling wheat from the USA and Canada.
The grain will be shipped between March 21 and April 20.
Japan is also planning a simultaneous buy-and-sell auction on February 16 to acquire another 2.9 million bushels of feed wheat.
Jordan bought 60,000.
The fundamentals still plead for a moderate decline in prices.
With the lower closes, we’re also starting to push against some traditional technical levels, leading to plenty of debate about how much more sales pressure there is to come, and what levels we need to hit to stop the haemorrhaging.
With the collapse in futures values, there’s renewed debate about the area pie, and shift for new-crop corn and soybeans.
Baseline figures from the USDA are due out later this month and are always watched as a precursor to the March planting intentions report.
As always, the weather will be a key factor at the end of the winter, and the corn planting conditions in the USA and Brazil will be closely watched.
At thi time, the South American weather forecast keeps holding a drier edge into next week, with good harvest weather prospects are expanding across the Brazilian soybean belt.
It should also be noted that the arrival of snowfall over a good part of the Black Sea until the end of the week eliminates the production risks for the next harvest.
Chinese markets are going into holiday mode with New Year on Friday.
The dollar stabilised at 1.2120 against the euro and 73.80 against the rouble. The same for crude oil posted this morning at 58.40 $/b in New York.
Yesterday in Chicago, funds were selling massively for 55,000 lots of corn, 30,000 lots of soybeans and 13,500 lots of wheat.
We will see tonigth how the sessions close.
