US grains market continued going back and forth during the week.
In spite the volatile action and wide prices swings, we had only minimal (Friday/Friday) changes.
Really, markets has been very undecided on where it is headed, as in several cases, broke support, but rallied back just after.
In fact, corn prices has seen the roller coaster.
July contract (down just 2 ¾ cents on the week) averaged a 29 ¾ cent daily range in 5 days.
Also December contract, down just a penny from last Friday, averaged a 23 cent daily range this week.
Also soybean prices seen a very volatile market, however, only managed to claw back 4 ¼ cents per bushel in nearby July this week.
November contract, meantime, was up 12 cents since last Friday.
Soy Meal was down 0.85% for the week.
Soybean oil was up 0.46%.
Wheat prices, on the hoder hand, were more mixed.
Chicago SRW was down 1.59% for the week.
KC HRW fell 1.72%.
MPLS, in contrast, rose 3.85% in the July contract.
On macro markets, energy futures jumped week on the week, with crude oil up more than 4.3% to track above $66 per barrel.
Gasoline gained more 3% on the week, and diesel was up 2.55%.
The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal and iron ore, dropped 4% on the week to end at 2,688.
USDA’s recently released quarterly agricultural trade forecast is now predicting 2021 farm exports will be valued at $164 billion – a year-over-year rise of 21% and rewriting the record books, if realized.
The prior export record was set in 2014, at $152.3 billion.
USDA cited a record outlook for China, reduced foreign competition and sharply higher commodity prices as among the drivers for this year’s success.
Investors, however, remained wary that key inflation indicators continue to move higher.
Consumer spending increased 0.5%, which was in line with analyst estimates.
Meantime, on Wall St., the Dow added 360 points during the week trading to reach 34,513.
S&P 500 futures, gained 50 point during the week to reach 4.202.
Nasdaq futures, recovered 281 points from last week, to close at $13.686.
The U.S. Dollar Index increased slightly from last week’s 90.01 to close at 90.02.
Coming back on grains market, the International Grains Council (IGC) raised its forecast for global grain production in 2021/22.
The IGC noted that high grain prices have led to increases in planting area and a projected 6% increase in output.
The growing season is just beginning in the northen hemisphere, but there is still a long summer to go, but, corn crop progress data showed planting 10% above normal pace at 90% complete, with emergence at 64%.
We will get conditions on Tuesday.
Soybean planting pace across the US has moved right along with 75% of the crop in the ground as of last Sunday, 19% above normal.
Winter wheat ratings on Monday were down 1% to 47% gd/ex, but the more inclusive Brugler500 rating was up 2 points to 332.
Rains across most of wheat areas over the course of last week may help to improve those conditions, though we are starting to get to the time where less rain is needed.
The USDA also reported 67% of the winter wheat crop headed.
The U.S. spring wheat crop is 94% planted, far ahead of last year on this date.
The spring wheat crop is 66% emerged.
Meantime, initial spring wheat ratings were seen at 45% gd/ex, or 333 on the Brugler500, the lowest initial rating since 1986.
Corn export sales commitments for new crop bested last week’s record large total at 5.691 MMT (224 million bushels!).
Old crop bookings were a little larger than expected at 555,918 MT, taking the total old crop commitments to 97.3% of the full year WASDE estimate, vs. 94% average for this date.
Unshipped old crop sales commitments are both an opportunity and a liability, with more than 19.4 MMT still on the books.
Soybean weekly export sales during the week of 5/6 were only 55,930 MT for old crop soybeans.
That brought commitments (shipped and unshipped sales) to 99.14% of the USDA forecast, with exports 92.25% complete, both ahead of normal pace.
New soybean crop sales were 248,304 MT, bringing the total forward bookings to 7.27 MMT.
Wheat weekly export sales report showed old crop wheat commitments are 97.7% of the full year forecast, lagging the 5-year average.
Shipments are 91.8% of the full year forecast as of May 20.
The marketing year ends May 31.
Friday’s Commitment of Traders report showed spec funds trimming their net long in corn futures and options by 22,934 contracts as of 5/25 to 268,0291 contracts.
The net short commercial position stood at 594,313 contracts, a drop of another 33,625 on the week.
Spec traders in CBT wheat futures and options cut 9,506 contracts from their CFTC net long position as of Tuesday, taking it to 4,534 contracts.
In KC wheat, they cut another 2,599 contracts from their net long in the week ending 5/25 to bring it down to 23,501 contracts.
Weekly Commitment of Traders data showed managed money spec funds in soybean futures and options trimming their net long position by 13,194 contracts in the week ending May 25.
They were still net long 139,390 contracts at that time.
Specs in soy meal cut another 25,613 contracts from their net long, the third largest Tuesday/Tuesday bear move since 2006.
They were net long only 25,232 contracts on the 25th.
In this context, CBOT soft red winter (SRW) futures shed 11 cents to close at $6.63/bu.
KCBT hard red winter (HRW) futures were also down 11 cents to end at $6.13/bu.
MGE hard red spring (HRS), futures, in contrast, rose 27 cents to close at $7.27/bu.
CBOT corn futures dropped 3 cents to end at $6.56/bu.
CBOT soybean futures gained 4 cents to close at $15.30/bu.
Meantime, wheat basis bids in the Gulf reacted to weather this week as HRS basis went up slightly as dry weather continues.
However, HRW basis went down slightly as moisture levels have improved.
In the Pacific Northwest (PNW), basis dropped despite weather concerns.
Farmer selling remains light and dry weather is making farmers hesitant to guarantee protein levels.
Corn basis bids were steady to weak after falling 1 to 5 cents lower across a handful of Midwestern locations.
Soybean basis bids were steady at many Midwestern locations, but tumbled significantly lower at others after waning demand in some areas.
Indeed, soybean bids fell by as much as 54 cents at an Illinois river terminal only Friday and also crumbled 35 cents lower at an Illinois processor.
From South America, dryness in Brazil hasn’t changed much, with private estimates of the crop still shrinking, as Safras & Mercado dropped their estimate by 8.94 to 95.2 MMT.
If realized, that will represent a year-over-year decline of around 11%.
Brazil’s government is worried about overly dry weather later this year, with the country’s agriculture ministry issuing an “emergency drought alert” that stretches between June and September, stating rains could be scarce during that time.
Brazil could face everything from lower crop yields to lower hydro-electric power generation from its Paraná river basin, depending on the potential severity.
Harvest delays in Argentina and the low potential of Brazilian production are limiting grains availability before the arrival of harvests in the northern hemisphere.
Meantime, China and Brazil have established a new agreement prompted between the Brazilian unit of a Chinese seed company, LongPing High-Tech, and a Chinese university.
The end goal is to develop improved soybean seed varieties.
As part of the venture, Brazilian soybean genetics will be sent to Chinese researchers for additional testing and studies.
Brazilian soybean exports by far are sold to China.
Also the European market ended the week mainly bearish, with exception of corn.
The European Commission increased its forecast for common wheat in the European Union for 2021/22 to 126.2 MMT, nearly a 2.0
MMT increase from last month.
MARS, the EU crop monitoring service, also raised the yield forecast by 3.6% compared to 2020/21.
Soft wheat yields for the 2021/22 harvest are forecast at 5.91 tons per hectare (t/ha).
France farm office FranceAgriMer reports that corn plantings moved from 97% a week ago up to 98% through May 24.
Crop quality eased two points lower, but 91% of the crop is still rated in good-to-excellent condition.
France’s current soft wheat crop is 80% rated in good-to-excellent condition through May 24, inching a point higher compared to a week ago, according to farm office FranceAgriMer.
The country’s winter barley crop conditions firmed two points, moving to 77% rated in good-to-excellent condition.
In this context, Matif September wheat futures was 1,50 euros lower from last week, tumbled at €211,25/t.
Matif corn June futures had gained 13,00 euros to closing the week at €267,75/t.
Matif rapeseed August futures, fell 5,00 euros ending the week at €519,75/t.
From Black Sea basin, after seeing smaller winter wheat acres and less-than-ideal weather for spring wheat, Russian consultancy Sovecon has slightly downgraded its forecast for 2021 crop.
The SovEcon analysis indeed, has reduced its estimate of the Russian wheat harvest by 800 kt this year, to 80.9 Mt.
Harvest will begin in about a month for the world’s No. 1 wheat exporter.
Meantime Russia’s formula-based grain export tax will be set to $28.10/MT beginning June 2 to June 8, said the agriculture ministry, a sharp
decrease from the current $61.00/MT.
The tax is determined each week by the agriculture ministry.
Corn and barley taxes are set to increase significantly.
Near-perfect growing conditions in Australia boosted potential for a second consecutive bumper wheat harvest this season.
Australia’s Bureau of Meteorology predicts an 80% chance of above-average rainfall this growing season.
Australia produced 33.0 MMT of wheat in 2020/21.
The latest USDA WASDE report forecasts Australia to produce 27.0 MMT of wheat in 2021/22.
Watching next week market, there will be a holiday in the USA with Memorial Day on Monday.
The weekly Export Inspections and Crop Progress reports will be pushed back to Tuesday.
Since it is the first of the month, we will also get the monthly Grain Crushing, Fats and Oils, and Cotton Systems reports from NASS showing domestic use for April.
EIA ethanol data will be out on Thursday.
On Friday, USDA will release Export Sales data.
Dear all, have a good weekend.
