As expected, some ag commodity prices are reverting back.
In fact, hogs were the highest since 2014.
Grains were the highest since 2013.
Oilseeds like palm and canola reached record highs.
But now, seems that some prices are reverting back.
And we should not be very surprised to see it.
Indeed, hog futures are down 17% from where June went off the board just two weeks ago.
Nearby soybean futures are now down more than 20% from the high set in May.
Soybean futures sank 4.75% this week on top of a 7.5% decline the previous week.
Soy Meal was down 7% for the week.
Soybean oil was up 2.7%, after a shocking 13.2% decline the previous week.
Canola and palm oil prices firmed.
Prices oil was supportive in this context of course.
Corn futures dropped 2.9% this week.
Meantime wheat futures went their separate ways.
Chicago SRW was down 3.9%.
KC HRW lost 1% as harvest expanded further into Kansas.
Minneapolis spring wheat was boosted by ongoing heat and dry weather in the Dakotas, Montana and Minnesota, up 7.9%.
What does it mean?
We don’t know yet.
What we do know is that fresh bullish inputs will now be needed to get new buyers interested, and dissuade old bulls from taking money off the table before it disappears.
Meantime, on macro markets, oil prices climbed for a third straight session on Friday, signing fifth consecutive weekly gain.
Brent crude futures rose 6 cents, or 0.74%, to $76.12 a barrel, heading for a 3.54% jump for the week.
U.S. West Texas Intermediate (WTI) crude futures were up 7 cents, or 0.95%, at $74 a barrel, headed for a 3.25% weekly gain.
Both benchmark contracts settled at their highest levels since October 2018 on Thursday.
The demand growth, indeed, is expected to outstrip supply on bets that OPEC+ producers will be cautious in returning more output to the market from August.
Oil also got some support on Friday by the approval of U.S. infrastructure bill boosted optimism for energy demand outlook.
All eyes are on OPEC+ – who are due to meet on July 1 to discuss further easing of their output cuts from August.
On the demand side, its to consider are strong growth in the United States, Europe and China, bolstered by vaccine rollouts and economies reopening, offset by rising COVID-19 cases and outbreaks in other locations, analysts said.
The prospect of sanctions being lifted on Iran and more of its oil hitting the market anytime soon has dimmed, meantime.
Meantime, Wall Street notched broad gains on Friday, with the S&P 500 index closing at a record and global shares also finished at an all-time high.
The S&P 500 rose 2.7% for the week, its strongest weekly gain since early February.
The Dow Jones Industrial Average rose 0.71% to end at 34,438.58 points, while the S&P 500 gained 0.34%.
The Nasdaq Composite dropped 0.06% after holding near the previous session’s record high.
Emerging market stocks rose 0.89%.
MSCI’s broadest index of Asia-Pacific shares outside Japan ended about 1% higher, while Japan’s Nikkei rose 0.66%.
MSCI’s gauge of stocks across the globe closed at a record high of 721.91.
The pan-European STOXX 600 rose 0.13%, ending the week with gains of 1% following sharp swings on concerns of higher inflation hitting real income and leading central banks to raise interest rates.
Britain’s FTSE 100 index was up 0.37% and Germany’s DAX edged up 0.12%.
The U.S. dollar eased against a basket of other currencies, in choppy trading.
The Japanese yen strengthened 0.09% versus the greenback and the euro was up 0.07%.
Mexico’s peso extended gains after a surprise interest rate hike, while Latin American currencies were set to outpace their emerging market peers this week on hawkish central bank signals.
Sterling traded at $1.3885, down 0.27% on the day and on track for its worst month versus the dollar since September, after the Bank of England kept the size of its stimulus program unchanged and left its benchmark interest rate at an all-time low of 0.1% on Thursday.
Spot gold added 0.3% to $1,779.74 an ounce.
U.S. gold futures gained 0.61% to $1,776.60 an ounce.
Weaker-than-expected inflation data eased worries about a sudden tapering in stimulus by the Federal Reserve.
Indeed, the latest U.S. personal consumption expenditures (PCE) data showed core PCE rose 3.4% year-over-year, its above the Fed’s 2% flexible target, but weaker-thanexpected.
Meantime, the U.S. President Joe Biden has secured a bipartisan infrastructure agreement with lawmakers gave a boost to stocks.
The plan is valued at $1.2 trillion over eight years, of which $579 billion is new spending.
Monetary and fiscal stimulus around the world in response to the COVID-19 pandemic is boosting financial assets, despite an uneven pace of recovery between regions.
Yields for benchmark 10-year U.S. Treasuries, jumped back above 1.50% to close out a week in which yields notched their largest gains since March.
Germany’s 10-year yield, the benchmark for the euro area, edged up to -0.156%.
Coming back on grains market, several factors combined to fuel the selling, including a spell of wet weather across the southern ¾ of the Corn Belt and some cooler than normal early July temps in the forecasts.
A Supreme Court ruling clarified that EPA can in fact issue hardship waivers for obligated parties, a threat to both the ethanol blending rate and RIN values.
There was also some caution about the June 30 USDA Quarterly Grain Stocks report given some rather large corrections in those numbers over the past 9 months.
Even after weekend rains that may have been observed before Sunday’s reported status of crop conditions, USDA’s weekly Crop Progress report shows corn and soybeans deteriorating, but at the upper end of trade expectations.
In its report, the USDA pegged the U.S. corn good/excellent rating at 65%. The trade expected 63% to 65%.
That’s below last week’s rating of 68% good to excellent and well below the five-year average of 71%.
USDA’s condition estimate for soybean puts 60% of the crop in the good/excellent categories.
That’s slightly above trade forecasts of 58% to 59%. It’s down from last week’s 62% rating and under the 67% five-year average.
Soybean emergence is at 91%, ahead of the 85% five-year average; the percentage of soybeans blooming is 5%, the same as the five year average.
In its report Monday, the USDA rated the U.S. spring crop at only 27% good/excellent, a full 10 points down from 37% last week.
The U.S. winter wheat crop is rated as 49% good/excellent, vs. 48% a week ago.
Cumulative corn export shipments have reached 2.214 billion bushels.
Unshipped old crop sales commitments are both an opportunity and a liability, with more than 13,269 MMT (522 mbu) still on the books.
Advance commitments for next year are record large.
Weekly US wheat export sales through June 17 were 374,147 MT.
That was up 30% from week to week but down from 518,677 MT for the same week last season.
New crop commitments are 25% of the June WASDE estimate for the marketing year.
The 5 year average would be 27% for this date.
USDA’s weekly Export Sales report had 141,669 MT of old crop soybean sales through the week that ended 6/17.
That was at the high end of expectations and 117% higher week to week.
For new crop, USDA’s report showed only 42,274 MT were booked.
World buyers, indeed, are still focused on cheaper South American offerings.
CFTC released Commitment of Traders reports on both Monday and Friday.
The latter, with data as of June 22, showed the large managed money funds cutting 9,265 contracts from their net long in corn.
They were still net long 243,465 contracts of futures and options. It was their least bullish position since October.
The Commitment of Traders report showed the spec funds building a net long in Chicago wheat by 11,411 contracts in the week ending June 22.
That put them net long 3,015 contracts.
They whittled an existing net long in KC HRW down by 2,635 contracts for the week, leaving the big specs net long 14,852.
The CFTC Commitment of Traders report showed the managed money spec funds continuing to abandon soybeans.
They cut their net long by 27,188 contracts for the week, dropping it to 80,304 contracts of futures and options on 6/22.
That was the first time since August that their net long was below 100,000 contracts.
Harvest in the hard red winter (HRW) states has begun.
For the second week in a row no offers were made for HRW 12.5% protein exported from the Gulf.
As harvest advances and more protein content is known, offers for higher protein HRW may change.
New crop soft white (SW) proteins remain unclear at this time.
Hot and dry conditions are raising concerns making grain traders reluctant to guarantee maximum proteins.
For the second week in a row offers for SW 9.5 max remain limited.
Consequentially, in the Gulf basis was flat due to slow export activity.
Farmers and country shippers continue to be reluctant to sell ahead of the start to harvest following dry and hot conditions in wheat growing areas.
Meantime, basis in the Pacific Northwest (PNW) was up this week.
Corn basis bids continued mostly steady to weak Friday, tumbling as much as 35 cents lower at an Indiana ethanol plant.
But another Indiana ethanol facility raised bids by 5 cents, and an Illinois river terminal firmed 4 cents higher, bucking the overall trend.
Also soybean basis bids were mostly steady across the central U.S., but did take a 10-cent spill at an Indiana processor last Friday.
Going inside the grain future prices, CBOT soft red winter (SRW) futures shed 25 cents to close at $6.37/bu.
KCBT hard red winter (HRW) futures were down 6 cents to end at $6.00/bu.
MGE hard red spring (HRS) futures was up 60 cents to close at $8.22/bu.
CBOT corn futures lost 19 cents to end at $6.36/bu.
CBOT soybean futures shed 67 cents to close at $13.29/bu.
ICE canola futures rose, extending their winning streak to six days.
Canola prices were underpinned by dry Canadian Prairie conditions, but some areas have received recent rain.
Most-active November canola gained 70 cents to $738.60 per tonne.
In the Canadian province of Saskatchewan, more rain is needed, but 70% of oilseed crops are at normal stage of development, the provincial government said.
November-January canola spread traded 1,732 times.
From South America, according to the Buenos Aires Grains Exchange, Argentina’s 2020/21 soy harvest has concluded at an estimated 43.5 million tonnes, 10% lower than the 2019/20 crop but in line with forecasts issued earlier in the season by exchange analysts.
The average yield of the crop was 2.67 tonnes per hectare.
Argentina’s 2020/21 corn harvest has been 47.6% collected so for, the exchnage said it its weekly crop report, having advanced 5.3 percentage points over the last seven days.
Corn yields continue to exceed expectations set at the beginning of the season.
For now, the Exchange continue to maintain production estimate at 48 million tonnes for the 2020/21 season.
The pace of corn harvesting is expected to increase now that growers have brought in their 2020/21 soy, the exchange said.
Argentina is the world’s No. 3 corn exporter and No. 1 supplier of soymeal livestock feed used to fatten hogs and poultry from Europe to Southeast Asia.
Argentine wheat exports should reach 12 million tons in the 2021/22 winter harvest, according to a new estimate released by the Buenos Aires Cereals Exchange.
If confirmed, the volume, the highest since 2016/17, will be 26.3% above this season’s production.
The increase is mainly due to the expectation of production growth, projected at 19.15 million tons, compared to 17 million in 2020/21.
In this scenario, the internal wheat milling should also grow in 2021/22, by 8.3%, and reach 6.5 million tons.
This also means the country will have a larger than usual surplus for export.
Also according to the Buenos Aires Cereals Exchange, corn shipments from Argentina totaled 36.26 million tons in the 2019/20 cycle, down 3% compared to the previous crop year. Grain processing for bio-fuel production also contracted, from 1.55 million tons in 2018/19, to 1.1 million tons in the season just ended.
This was mainly because of import tariffs controversies with the EU and the US.
Argentina also destined an additional 1.3 million tons of corn for animal feed, and the total volume reached 11.8 million tons.
Argentina produced 51.5 million tons of corn in the 2019/20 harvest. The market’s initial estimate for Argentine corn exports in 2020/21 is 33 million tons from a harvest of 48 million tons.
Brazil has become a major buyer of Argentine corn to feed its rodeo, pig industry and poultry since the country has been ravaged by drought.
Meantime, the Parana River, the main export waterway for grains in Argentina is facing low water levels for the second consecutive year.
As many as 60 barges have been trapped by impassable water levels, and some vessels may remain stuck until September according to AgriCensus.
Water levels at the Port of Rosario in mid-June were 0.60 meters compared to the historic average of 3.5 meters.
A lack of rainfall in June is expected to draw down water levels even further.
Brazilian farmers will harvest just under 94 million tonnes of corn this season, a Reuters poll of ten forecasters indicated on Tuesday, a fall of 8.5% from the last due to a severe drought.
Crop failure will lead to higher imports and lower exports of the cereal, the forecasters suggested, as Brazil, home to some of the world’s largest meat processors, needs it to make livestock feed.
Daniely Santos, an analyst with agribusiness consultancy Celeres, cut her 2021 corn export forecast to 22.5 million tonnes from 32 million tonnes, and told Reuters she estimates Brazilian corn imports at 4 million tonnes.
If dry weather persists, corn yields may fall further in states such as Mato Grosso, Goias and Minas Gerais, a weather specialist said.
Last year Brazilian farmers collected 102.58 million tonnes of corn, according to government estimates.
In April, a Reuters poll of 11 forecasters showed the possibility of a record corn crop of 107 million tonnes, but poor weather during the development stage hurt that prospect.
Brazil’s second corn crop, which is planted after soybeans are harvested at the end of the country’s summer, was the most hit by a lack of rainfall.
Agribusiness consultancy Safras & Mercado had initially pegged Brazil’s second corn crop at 84 million tonnes, only to slash that forecast to below 71 million tonnes a few weeks into the season.
The main forecaster’s output are:
AgRural 90.9 (mln T), 19.4(mln ha); Celeres 88.84 (mln T), 20.03 (mln ha); Conab 96.39 (mln T), 19.84 (mln ha); Cogo 91.7(mln T), 19.8 (mln ha); Datagro 101.65(mln T), 19.88 (mln ha); IHS Markit 88 (mln T), 19.9 (mln ha); Safras & Mercado 104.138 (mln T), 21.108 (mln ha); StoneX 89.68 (mln T), 19.25 (mln ha); Rabobank 89.5 (mln T), 19.2 (mln ha); USDA 98.5 (mln T).
Average 93.93(mln T), 19.82(mln ha).
Highest estimate 104.138 (mln T), 21.108 (mln ha).
Lowest estimate 88 (mln T), 12.2 (mln ha).
In 2019/20 season brazilian corn production was at 102.58 (mlnT), that means an average of -8.43% for 2020-2021 season.
Brazilian farmers will increase the country’s area planted with soybeans to 40 million hectares (98.8m acres) this season from 37.8 million hectares in the previous crop year, Bartolomeu Braz, who leads farmer group Aprosoja in the state of Goiás, said on Monday.
Speaking at an event hosted by agribusiness leaders and featuring Agriculture Minister Tereza Cristina Dias, he said Brazil intends to keep its lead as the world’s largest producer of the oilseeds.
In this context, as for June 10, Argentina Wheat Grade 2, (Up River) was at $275 at the end of the week, increasing 2$ from prior week.
Also Argentina corn feed fell 9$ for the week, closing at $232.
Brazil corn feed (Paranagua) was at $267, dropping 4$ during the week.
Argentina barley feed, unchanged at $260.
Argentina soybean lost 3$ to close at $503.
Brazil soybean fell 2$ finishing the week at $519.
On European markets an estimated 79% of the French soft wheat crop was in good or excellent condition in the week to June 21, down from 81% the previous week.
Durum condition, was at 67% in good or excellent condition, against 70% of past week, but above 62% of past year.
Winter barley harvesting was under way, with 1% of the crop area cut.
In this context, the European Commission trimmed its forecast of usable common wheat in the European Union slightly to 125.8 MMT, from 126.2 MMT estimated in May.
Despite the revision, the 2021/22 crop is forecast 7% above the 2020/21 crop of 117.2 MMT.
Farmers in the EU were able to expand the area planted with wheat.
Meantime, the European Union has awarded 61,606 tonnes of wheat imports for July under its tariff-rate quota (TRQ) scheme, data published by the European Commission showed.
The EU granted 39,200 tonnes via a duty-free tranche for Ukrainian wheat and 22,406 tonnes under a reduced-tariff tranche open to various origins, the data showed.
The annual wheat quotas have been little used so far in 2021, with less than 2% of the 2.29 million tonnes in the various-origin tranche allocated, and about 18% of the 1 million tonne Ukrainian wheat tranche.
No maize imports were awarded for July in either the any-origin or the Ukrainian tranche, while just 43 tonnes of barley were allocated in a quota for Ukrainian supplies.
The only TRQ to be significantly used this year has been the Ukrainian maize tranche, with nearly three-quarters of the 650,000 tonnes available taken up so far.
Meantime, non-commercial market participants reduced their net long position in Euronext’s milling wheat futures and options in the week to June 18, data published by Euronext on Wednesday showed.
Non-commercial participants, which include investment funds and financial institutions, cut their net long position to 82,774 contracts from 86,661 a week earlier, the data showed.
Commercial participants similarly reduced their net short position to 127,650 contracts from 128,819 a week earlier.
Commercials’ short positions accounted for 62.6% of the total short position, while commercial long positions accounted for 43.5% of total long positions.
Non-commercial short positions represented 37.4% of total short positions, while non-commercial net long positions accounted for 56.5% of the total longs.
The report covered almost all of the open short positions and all of the open long positions in the wheat derivatives.
In Euronext’s rapeseed futures and options, non-commercial market participants increased their net short position to 12,084 contracts from 10,814 a week earlier.
Commercial participants increased their net long position in rapeseed to 6,807 contracts from 5,877 a week earlier.
In this context, Matif September wheat futures was 6,75 euros lower from last week, reaching to €201,50/t.
Matif corn August futures fell 5,75 euros to closing the week at €237,25/t.
Matif rapeseed August futures, rose 18,75 euros ending the week at €507,00/t.
From North Africa, Egypt’s wheat harvest has increased as a result of an increase in the area of agricultural land designated for planting the crop, as well as upgrading operations related to harvesting and storing the grain.
The Ministry of Agriculture and Land Reclamation announced that some 3.4 million feddans of wheat have been planted with wheat to date, up from 3.2 million feddans in 2019.
In the current season, which started in April and extends until the end of June, approximately four million tons of locally produced wheat have been collected from farmers through 450 centres designated for collecting the wheat at a rate of some 991 tons daily, according to the Ministry of Supply and Internal Trade.
The prospects for boosting local production look promising, with the US Department of Agriculture indicating a slight decrease in Egypt’s wheat imports, predicting them to be 13 million tons compared to 13.3 million tons in 2020.
Over the past three years, the prices paid to farmers for wheat have been raised, reaching LE725 per ardeb in the current harvest and up from LE700 last year.
A farmer in the Al-Sinbillawyn area of the Daqahliya governorate, said she had sold her crop to a trader for LE695 per ardeb, as she does every season, preferring to do so in order to save on the cost of transporting the grains to silos run by the Ministry of Supply and Internal Trade as well as the interval before she is paid for the crop.
A farmer and trader in the same region, meantime, that has been collecting wheat from farmers for several years and transporting it to the silos, this year have felt the pace of receiving wheat at the silos quickening.
Meantime he said he pays farmers prices ranging from LE680 to LE700 per ardeb of wheat “depending on the quality of the grain”.
Payment is made on the spot, and he later collects the money for the crop when it is delivered at the silo.
This procedure takes less time than in previous years.
Now, they get paid within two weeks of delivering the wheat to the silos.
South African maize farmers are expected to harvest 7% more of the staple crop during the 2020/2021 season compared with the previous season, with yields boosted by favourable weather.
South Africa’s Crop Estimates Committee (CEC) is expected to forecast the 2020/2021 maize crop at 16.352 million tonnes, up from the 15.300 million tonnes harvested last season, the average estimate of five traders and analysts showed.
The forecast is 1% higher than the CEC’s May forecast of 16.180 million tonnes.
As the harvest season approaches the halfway mark, analysts remain hopeful that the 2020/2021 season will see the second-largest maize crop on record.
This large crop will ensure a large exportable surplus of over 2.5 million tonnes.
The crop to consist of around 9.110 million tonnes of white maize, used mainly for human consumption, and around 7.247 million tonnes of yellow maize, used mainly for animal feed.
Global maize prices have been supported by higher demand from China and dry conditions in some producing areas, with the white maize futures contract due in September closing up 2.28% at 3,095 rand on Friday.
From Black Sea basin, Russia loaded its first cargo bound for Algeria in four years this week.
Russia has lobbied for access to the Algerian market, and the
North African country relaxed terms regarding bug damage last year, making imports from the Black Sea possible.
Algeria, a leading world wheat importer, imports most wheat from neighboring France.
Russia’s agriculture ministry announced it will increase the export duty on wheat again.
The wheat tax will increase by $3.20/mt to $41.30/mt based off of the seven-day average index price published by the Moscow Exchange (MOEX) of $259.10/mt.
The new tax will be for the week of June 30-July 6.
Russian farmers, however, continue planting spring crops, despite the fact they have already reached the planting target for most grains and oilseeds.
According to the operative data, as of June 24, Russian farmers planted spring crops throughout the areas of 51.9 mln ha or 100.8% of the forecast, including 29.7 mln ha (101.3%) planted with spring grains declared the press-service of the Ministry of Agriculture of the Russian Federation.
In particular, farmers planted spring wheat throughout 13.1 mln ha (103.3%), corn for grain – 3 mln ha (106.4%), sunflower seed – 9.2 mln ha (107.1%), spring rapeseed – 1.4 mln ha (111.3%)”, – was stated in the message.
Meantime, Krasnodar Territory has started harvesting early grains, declared the local administration on June 22.
Farmers have started harvesting winter crops throughout the area 1.9 mln ha.
They plan to harvest about 11 mln tonnes of grains excluding corn and rice.
They expect it will be high-quality food grain.
SovEcon, the leading Black Sea agricultural markets research firm, revised Russia’s and Ukraine’s crop forecasts on good weather and area expansion.
Russian wheat crop is seen now at 84.6 mmt (+2.2 mmt), total Russian grains and pulses are at 131.0 mmt (+1.2 mmt).
In this context, Russian export prices for the summer’s new wheat crop fell last week under pressure from approaching good crop in the Black Sea area.
Prices for new-crop Russian wheat with 12.5% protein loading from Black Sea ports and for supply in July were $248 a tonne free on board (FOB), down $7 from the previous week.
Domestic 3rd class wheat was at 13,775 roubles/t -250 rbls ($188.7) from European part of Russia, excludes delivery (Sovecon).
Sunflower seeds 45,925 rbls/t -1,225 rbls (Sovecon).
Domestic sunflower oil was at 106,175 rbls/t -6,500 rbls (Sovecon). Export sunflower oil was at $1,100/t -$170 (Sovecon).
Export sunflower oil was at $1,025/t -$242 (IKAR).
Soybeans was at 49,400 rbls/t -1,200 rbls (Sovecon).
White sugar Russia’s south was at $602.8/t -$8 (IKAR).
Ukraine has exported 16.3 MMT of wheat in 2020/21 according to Reuters, down 20% compared to 2019/2020 when the Black Sea country exported 20.5 MMT of wheat.
Ukraine corn crop is at 38.3 mmt (+1.5 mmt), wheat at 29.2 mmt (+0.3 mmt), total Ukrainian grains and pulses are at 78.1 mmt (+2.1 mmt).
As of June 24, Ukraine planted spring crops throughout 7.5 mln ha or 100% of the forecast, declared the Ministry of Agricultural and Food Policy.
Farmers planted wheat throughout the areas of 176 thsd ha or 100% of the forecast, barley – 1.35 mln ha (97%), corn for grain – 5.35 mln ha (100%), peas – 245.2 thsd ha (104%), oats – 194.3 thsd ha (100%), buckwheat – 78.5 thsd ha (99%), millet – 105.1 thsd ha (90%)
Moreover, agrarians planted sunflower seed throughout the areas of 6.48 mln ha (101%), soybean – 1.34 mln ha (99%).
In this context, the State Food and Grain Corporation of Ukraine says to be ready to load 5 Mt of grain for China in the new season, including 3 Mt of corn and 2 Mt of so-called early grain, mainly barley.
In this context, Ukrainian wheat export bid prices lost $8 a tonne over the past week.
Soft milling wheat with 12.5% protein was traded at $252 to $258 FOB Black Sea while feed wheat, which also lost $8 a tonne stood at $248-$253 FOB.
11.5% protein milling wheat bid prices for the 2021 harvest stood at $244-$252 a tonne FOB Black Sea and $228-$233 FOB Black Sea for feed wheat.
Corn bid export prices declined by $8 over the past week to $282-$292 FOB, while bid prices for Ukrainian-origin barley lost $4 to $240-$246 per tonne FOB Black Sea.
New crop barley traded between $240-$245 a tonne FOB Black Sea with the delivery in July.
From the Middle Kingdom, China will grant 20 billion yuan ($3.1 billion) in subsidies to grain farmers this year to offset soaring fertiliser and diesel costs, the country’s cabinet said on Friday, in the government’s latest attempt to manage the impact of rising commodity prices.
The one-time subsidies will help stabilise incomes, the cabinet was cited as saying by state broadcaster CCTV after a regular meeting, as China looks to ensure its farmers are incentivised to keep producing food for the world’s most populous nation.
“Subsidies should be paid out as soon as possible, so as not to miss the farming season,” the cabinet added after the meeting led by Premier Li Keqiang, pledging to keep farmers keen on growing crops for the summer harvest by calling for increased supply of agricultural raw materials.
The cost of diesel, a refined oil product used as a fuel in farm machinery, has jumped this year as benchmark crude oil prices LCOc1 have rallied some 40% on the back of a recovery in energy demand following the coronavirus outbreak.
Fertiliser prices are also heavily influenced by energy costs and China’s agriculture ministry had earlier on Friday urged regions to strengthen supply of fertiliser during the summer amid record prices and tight stocks. ($1 = 6.4374 Chinese yuan renminbi)
Meantime, China returned to the market for Australian wheat for August-September shipment despite ongoing geopolitical and trade tensions between the two countries, trade sources said on Tuesday.
China was said to be in the market recently and booked around 200,000-250,000 mt of wheat for August-September shipment, according to traders and brokers.
There was no firm idea on the price paid, with sources putting the price in a wide $285/mt-$300/mt FOB East Coast range, saying that it was high protein wheat that was sold.
The trades come after Australia successfully shipped around 1.3 million mt through the December-April period, with the April amount standing at 173,656 mt, according to official data.
Relations between the two countries soured through 2020 and China effectively banned Australian barley imports by slapping a steep import duty on the origin, although wheat remained untouched.
Malaysian domestic Trade and Consumer Affairs Minister, Datuk Seri Alexander Nanta Linggi has denied that the price of wheat flour will increase from July 1.
He said so far, no approval has been given to any manufacturer to
According to Nanta, the price of subsidised wheat flour remained as fixed by the government at RM1.35 per 1 kilogramme (kg) packet.
The COVID-19 pandemic and African swine fever (ASF) continue to hamper the Philippines’ feed demand along with an expected drop in corn production, according to a Global Agricultural Information Network (GAIN) report from the US Department of Agriculture (USDA).
The Philippines’ corn production is anticipated to slip 3.6% in the 2021-22 marketing year to 8 million tonnes compared to 8.3 million in the previous year.
The USDA attributes the decline to anticipated return to normal weather patterns such as typhoons.
Demand for corn feed remains low as poultry production slips due to the spread of COVID-19.
Hog production is not expected to rebound in 2021-22 as ASF continues to take its toll on the domestic hog herd.
The USDA estimates corn imports to total 500,000 tonnes in the 2021-22 marketing year.
Meantiem, prolonged COVID-19 quarantine measures have decreased feed wheat and wheat-based product demand, lowering the USDA’s wheat import forecast by 400,000 tonnes to 6.4 million tonnes in the 2021-22 marketing year.
From Australia, local markets remained fairly quiet, watching overseas boards and weather maps.
New South Wales had fairly widespread rain, with 10-20mm and more across parts of the central west as forecast.
Next week’s maps are taking a turn back to the drier side, with only a few coastal storms forecast, and not much on the 14-day outlook.
Widespread rain across much of the Australian grainbelt and softer offshore markets have seen feedgrain prices weaken in the past week.
However, continued demand from export coupled with steady buying from domestic consumers has provided some support.
The nearby spread between wheat and barley in southern Queensland has narrowed further this week to around $15 per tonne, compared with more than $40/t in southern markets.
Trade sources across eastern Australia say trucks have become easier to get in the past week, following months of painfully tight logistics.
In this context, ASX wheat July contract down A$7/t for the week to close at $290/t.
Eastern Australia Feed Barley closed at $247/ton, down A$5/t.
WA Wheat WK future unchanged at $322/ton.
On the international trade scenario, the Saudi Grains Organization (SAGO) has announced that it has received at King Abdulaziz Port in Dammam the first vessel of wheat weighing 60,000 tons of Australian origin.
This amount represents the first batch of imported wheat produced by the Saudi Agricultural and Livestock Investment Company (SALIC) and falls within the contracted amount of 355,000 tons.
Governor of SAGO Eng. Ahmad Abdulaziz Al-Fares stated that SALIC’s commitment to deliver the first vessel on schedule reflects the success of allocating 10% of the annual purchases of wheat to Saudi investors abroad, adding that this shipment is the second since the organization imported in 2020 the first shipment of Saudi investments abroad via Jeddah Islamic Port.
He also said that in 2021 SAGO will import the 355,000 tons of wheat distributed to six vessels; three to King Abdulaziz Port in Dammam, two to Jeddah Islamic Port and one to Jizan Port.
Eng. Al-Fares noted that this comes within the framework of the government’s direction towards benefiting from the Saudi agricultural investments abroad to meet the Saudi market’s needs.
It also comes within the framework of the Agricultural Investment Program that represents one of the Kingdoms of Saudi Arabia’s Food Security Strategy programs, which aims to diversify and stabilize the sources of imported food supplies.
GASC announced a wheat tender today, to be held on Monday 28th June.
Banca Payment “at sight” for Nave Delivery 25th August – 5th September 2021.
The Pakistan Agricultural Services & Storage Corporation (PASSCO) will be receiving 300,000 metric tons of wheat to supplement its stocks by July 2021 in shape of six tranches of 50,000 metric tons each.
Turkey’s state grain board TMO has provisionally bought around 320,000 tonnes of animal feed barley in an international tender on Thursday.
The lowest offer was thought to be $264.90 a tonne, cost and freight (c&f) included, for a consignment of 25,000 tonnes, they said.
The tender results are still subject to confirmation in coming days.
The total volume purchased, if confirmed, would match the 320,000 tonnes TMO had been seeking to buy in the tender.
The tender had specified rapid shipment between July 2 and July 18 to several Turkish ports.
Coming soon the first 2022 shpts wheat tender for Jordan, 2x60k MT for Jan/Feb.
13%M, 11%Pro (on 12%M bss), 250 FN, 77TW, 1% dockage (deductible).
Bid bond (3%).
Performance bond (10%).
Discharge rate at Aqaba port, 5k PWWD.
Tender closing date: 6th of July 2021, 14:00 Amman Time.
The Ethiopian government has issued an international tender to buy about 400,000 tonnes of optional-origin milling wheat.
The deadline for submission of price offers is July 19, they said, adding that the tender is being undertaken in cooperation with United Nations agencies.
The tender specified that the wheat should be supplied with bags and delivery take place between 70 and 90 days after the signing of the contract, the traders said.
Ethiopia is battling the impact of drought and internal conflict. Crops in Ethiopia and elsewhere in East Africa are also suffering from swarms of locusts.
The country has issued a series of wheat tenders in recent months but purchases have been hampered by a lack of participation by trading houses.
The Taiwan Flour Millers’ Association has issued an international tender to purchase 55,000 tonnes of grade 1 milling wheat to be sourced from the United States.
The deadline for submission of price offers in the tender was June 24.
The tender seeked a range of different wheat types in one consignment for shipment from the U.S. Pacific Northwest coast between Aug. 12 and Aug. 26.
World Grain Overview
Although record global grain production is forecast for the current marketing year, which ends June 30, the International Grains Council (IGC) sees carryover stocks falling to a six-year low due to a strong rise in consumption.
In its most recent Grain Market Report, released on June 24, the IGC pegs 2020-21 total grains production at 2.216 billion tonnes, 3 million tonnes lower than the previous month but higher than last year’s record crop of 2.186 million tonnes.
Carryover stocks for 2020-21 are projected at 595 million tonnes, a decline of 5 million tonnes from the May forecast and down from 621 million tonnes in 2019-20.
Based on revised South American estimates, global soybean output in 2020-21 is slightly higher month on month at 363 million tonnes.
Global soybean output is estimated to have risen by 7% in 2020-21 on sizeable harvests in the US and Brazi.
Nevertheless, due to smaller carry-ins and record demand, inventories are predicted to tighten, including a heavy contraction in the US.
Record trade is anticipated on bigger deliveries to Asia.
For 2021-22, the IGC projects total global grains production to again set a record at 2.301 billion tonnes, which will lead to a very slight increase in carryover stocks at 597 million tonnes.
Larger predicted wheat imports in Near East Asia will help to boost the total grains trade projection in 2021-22 by 3 million tonnes to 418 million tonnes.
For soybeans, the 2021-22 production outlook is maintained at a record of 383 million tonnes for an increase of 20 million tonnes year on year.
With a higher figure for carry-ins adding to supplies, global soybean stocks are predicted to increase 11% month on month to 53 million tonnes.
The projection for trade is unchanged month on month and is up 1% year on year at a new high.
Mainly linked to a recent fall in rowcrop prices, the IGC Grains and Oilseeds Index (GOI), which measures average prices, weakened for a second successive month, easing by 3% to 266.
The GOI reached an all-time high in April at 285, which was a 54% increase year to year and its highest level since 2013.
Freigth grain markets
Slight correction of the Pacific market is observed due the frequent COVID-19 cases detection at the CJK and Indian regions, which resulted in congestion and long waiting at the main ports of the Pacific region.
29k vessel was fixed for TCE USD 30k for the voyage from PG to Singapore, and the backhaul for 33k vessel was fixed at the rate of TCE USD 26k.
According to Arabian officials, ships passing through the Red Sea might be at risk from Yemen rebels again.
Due to specifics of the region, Owners whose fleet opens at the Red Sea area look for the TCE around USD 38k to the CJK and ECI directions.
The Atlantic still remains positive; the voyage from Continent to ECI for Supramax rated for USD 56 pmt with grains.
The grain harvest season starts at the Black Sea, but due to abundance of Handymax/Supramax tonnage in the region, the freight level has corrected.
Voyage from the Black Sea to West Mediterranean was fixed for TCE USD 23k with option for Egypt discharging for TCE USD 21k.
Steel scrap from Continent/Baltic becomes even more popular: the voyage to East Med direction for Supramax was at the rate of USD 47 pmt, which remains one of the lowest level seen.
In general, there are minor fluctuations in freight levels worldwide, and the market still remains positively stable.
Meantime, the Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal and iron ore, lost 2% on the week to end at 3,175.
Watching next week markets, as the Calendar turns to July next week, USDA has an eventful five days planned for us.
Weekly Export Inspections and Crop Progress reports will be released on their normal Monday time slots.
Wednesday is anticipated to be a wild day in the markets, with USDA releasing their Quarterly Grain stocks and June Planting report.
It is also first notice day for July corn, soybean, and wheat futures.
EIA ethanol data will also be out on Wednesday, with USDA weekly Export Sales data out on Thursday.
On the 1st of July, we will get US monthly consumption data via the Grain Crushing, Fats & Oils, and Cotton Systems reports.
And finally on Friday, we will get the US monthly trade data from Census for May.
In Sicily, the durum wheat harvest continues.
The quality is excellent and above average with a percentage of protein higher than 12.50%.
The test wheigt continue to be very good above 80 Kg/Hl.
The average yield per hectare drops slightly from 2.7 to 2.6 tons per hectare.
Good luck everyone and have a good weekend
