Grain prices were mixed on the end of the week, however, this week closed with a positive note for all grains and oilseed complex, in spite extreme volatily, with wheat emerging as the biggest winner of the week, mainly thanks historically low temperatures across the Great Plains.
This week, indeed, winter storms brought much-needed precipitation to western Nebraska and eastern Colorado, reducing extreme drought in those regions, however, freezing temperatures and continued dryness elsewhere in the High and Southern Plains could challenge winter wheat emergence from dormancy implying some concerns.
So, May CBOT soft red winter (SRW) futures gained 14 cents to end at $6.55/bu.
May KCBT hard red winter (HRW) futures added 16 cents to close at $6.38/bu.
May MGE hard red spring (HRS) added 14 cents to end at $6.40/bu.
CBOT corn futures gained 5 cents to close at $5.42/bu.
CBOT soybean futures added 9 cents to end at $13.80/bu.
Soymeal was the weaker of the products, with a $2.90 drop.
Soybean oil continued to rise, up another 151 points.
Canola futures posted new all time highs, and palm oil futures are within striking distance.
Also European markets ended its week in the green with more linear mode rather than US market, that was more mixed.
In wheat, especially, sustained international demand and particularly low availability, first of all for France, prompted a rapid rise in the closest contracts.
In fact, the latest Tunisia’s purchases around 100.696 MT of soft wheat, 92.532 MT of durum wheat and 100.152 MT of feed barley from optional origins in an international tender that closed earlier yesterday, pushed european futures prices higer while average prices really applied dropped.
The grain is for shipment between mid-March and late April.
Algeria bought a small volume (30.000 MT) of milling wheat in her last tender with a average price $321 c&f earlier in the week.
There was a new tender from Pakistan for 300,000 t of common wheat.
Offers must be communicated no later than March 2.
In add, a Russian agriculture consultancy, reduced its 2021 Russian wheat production forecast from 77.7 MMT in January to 76.2 MMT in February due to unfavorable dryness.
Russia could produce a substantially lower wheat crop in 2021.
The main issue is that plants entered the current winter in the worst shape in a decade after an abnormally dry autumn.
January was generally favorable for the new winter wheat crop but February weather is not and this are implying some concerns.
European corn has also accelerated in the green, mainly due to increase in feed use, seen wheat price jumping, while harvests in Brazil continue to lag and imports from Ukraine remain limited by freez and snow’s storm.
In add, the Buenos Aires Stock Exchange also estimates that Argentina’s “good to excellent” rate is only 24%, a drop of 37 points compared to last year.
Rapeseed also made some additional gains, in the wake of the Canadian canola.
So, March Matif wheat futures closed to (€/t) 238.75 gained 15 €/t on the week.
March Matif corn futures closed to (€/t) 228.00 jumping 9 €/t on the week.
May Matif rapeseed futures closed to (€/t) 461,50 added 12 €/t on the week.
While export prices for BlackSea wheat ease due to slow foreign demand.
In add, russian exporters are busy obtaining licenses to quickly ship grain until the next important date – 1 March, 2021, when the wheat export duty is set to double.
This week was signed also by other events, not for last, the USDA Chief Economist Seth Meyer that opened USDA’s 97th Annual Agricultural Outlook Forum with an economic and foreign trade outlook for the agriculture industry, highlighting the opportunities and challenges facing the farm and food community for the year to come.
The top headline from the opening session was USDA’s 2021 acreage estimations.
At this time, USDA forecasts U.S. farmers will plant 92 million acres of corn in 2021 and 90 million acres of soybeans – the largest ever combined acreage for both crops.
With a average 179.5 bpa yield, the initial ending stocks projection for corn is at 1.552 billion bushels, only 50 million above the current WASDE figure for old crop.
With trendline yield at 50.8 bpa, the initial ending stocks projection for soybean is only 145 million bushels (up 25 from this year) despite a nearly 7 million acre increase in plantings.
USDA also forecasted U.S. farmers will plant 45.0 million acres (18.2 million hectares) of wheat for harvest in 2021/22, up slightly from last year.
USDA’s initial stab at 2021/22 balance sheet shows more winter wheat but less spring wheat and durum acreage.
They put harvested area 500,000 acres above last year, but tightened expected ending stocks to 698 million form 836 million in the current campaign.
So, in the next marketing year, USDA expects U.S. wheat production will be stable with 2020/21 output at 49.7 million metric tons (MMT).
The agency also predicts wheat ending stocks for 2021/22 will drop to the tightest levels in eight years, moving to 19 MMT, citing an increase in livestock use.
We must pay attention, however, that these prewiews aren’t survey based even if intended to give both producers and end users some type of basis for decision making.
USDA, indeed, will begin surveying on that subject only in a week or so and we have to wait until the end of March for the results.
In the mean time a funny thing happened on the way to the Forum, as Export Sales report was released just Friday due the Monday’s holiday.
It indicated bookings for corn were down 31% from the previous week, to 999,200 MT.
New corn crop sales totaled 182,600 MT.
The USDA total of shipped and unshipped export sales (i.e. commitments) for corn is 134% of year ago at 58.554 MMT.
Commitments are 89% of the full year WASDE forecast. They would typically be 66% by now.
It also showed total wheat sales slipping 33% from the week prior to 399,100 MT.
That brought the total wheat export commitments to 23.606 MMT, 5% above last year at this time.
Compared to the USDA projected 20/21 export total of 985 mbu, that would put shipped and unshipped sales at 88% compared to the average pace of 90% for this date.
While soybean Export Sales were at 445,900 MT, showing a 45% week over week decline, .
There was another 168,000 MT for new bean crop bookings.
Total soybean export commitments for the MY now total 59.861 MMT, or 2.2 bbu.
That is 98% of the USDA full year forecast, compared to the 5-year average pace of 81% for this date.
Shipments are moving along, at 83% of that projection vs. the 64% average.
This would suggest that either a) buyers are front loading purchases compared to an average year and things will be unusually slow later, or b) USDA is too low on their full year forecast.
Just for exemple, USDA forecasted total U.S. wheat exports will reach 26.8 MMT in 2020/21, 2% ahead of last year, if realized.
However, with this export trend, U.S. wheat exports are expected to fall to 25.2 MMT, down 5% from 2020/21, if realized.
European Commission (EC) data confirmed the European Union (EU) has now exported 16.4 MMT of soft (non-durum) wheat outside the bloc so far in 2020/21, down 16% on the year due to lower production.
USDA forecasts the EU will export 27.0 MMT of wheat in 2020/21, down 30% on the year and 8% less than the 5-year average.
Total Ukrainian grain exports for 2020/21 now total 30.1 MMT, down 20% on the year due to reduced production.
So far, the country has exported 13.2 MMT of wheat. USDA predicts total Ukrainian wheat exports will reach 17.5 MMT this year, down 17% from 2019/20.
Energy prices were mixed but mostly lower.
Crude oil lost more than 1.75% yesterday to fall back below $60 per barrel on reduced US domestic refinery demand.
Diesel dropped more than 0.5% lower, while gasoline rose nearly 1% higher.
The U.S. Dollar softened moderately.
The Baltic Dry Index jumped 32% from last week to end at 1,770.
U.S. Dollar Index fell slightly from last week to close at 90.35.
In this context, all wheat export basis levels remained stable this week for April and May deliveries.
Watching market, grain traders will start the week reacting to the March options expirations on next Friday and any surprise futures positions thus acquired.
The weekly Export Inspections report is expected on Monday.
We will back to a full five day schedule of export and shipment during next week.
The weekly EIA report will be out on Wednesday, and USDA’s weekly Export Sales data will be released on Thursday morning at 7:30 am CST.
Being month end, we’ll also likely see some asset allocation moves between commodities.
