All US grain prices were down this week as harvest accelerated in some states and welcome rain fell in the Northern Plains states.
Corn futures were back down 10.56% in September this week.
Wheat futures followed suit with the rest of the grain market this week, with Chicago leading the three exchanges, down 5.78%.
KC slipped 4.08%.
Meantime, MPLS holded better than the other two, felling only 2.92% lower.
Soybeans tagged along also for the bearish spin this week, albeit prices came back from Tuesday’s $1.00+ plunge, to post only a 3.77% loss for the full week.
Soy Meal sank 7.2% for the week.
Soybean oil was 1.8% lower despite also has rallying late in the week.
On macro markets, oil prices rose for a second day on Friday as the market reacted to falling U.S. inventories, and signs of strong Asian demand from both China and India added support.
Brent crude oil futures were up $1.43, 1.93%, at $75.55.
U.S. West Texas Intermediate futures were up $1.62, or 2.2%, at $74.56.
However, still, prices on both sides of the Atlantic ended the week little changed, despite significant daily fluctuations.
Prices were weighed down early in the week by the collapse of output talks between the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together known as OPEC+.
U.S. crude and gasoline stocks fell and gasoline demand reached its highest since 2019, the U.S. Energy Information Administration said on Thursday, signalling increasing strength in the economy.
US crude inventories, in fact, fell by 6.9 million barrels in the week to July 2 to 445.5 million barrels, the lowest since February 2020, and more than the expected 4 million-barrel drop estimated in a Reuters poll.
Gasoline stocks fell by 6.1 million barrels, exceeding expectations for a 2.2 million-barrel drop.
However, Brent crude oil futures were down 47 cents for the week and U.S. West Texas Intermediate futures CLc1 were down 41 cents for the week.
Fresh COVID-19 lockdowns could slow a recovery in air travel and demand for jet fuels.
Japan has banned all spectators from Olympics, scheduled to start on July 23, as a resurgent coronavirus forced it to declare a state of emergency in the host city Tokyo.
U.S. production peaked near 13 million bpd in late 2019, and then fell amid COVID-19. Output rebounded to about 11 million in mid-2020, but has stagnated since.
The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal, and iron ore, increased slightly on the week to end at 3,300.
On the financial side, the three major U.S. stock indexes rallied to record closing highs on Friday as financials and other economically focused sectors rebounded from a selloff sparked by growth worries earlier in the week.
The rally allowed the indexes to notch slight gains for the week, which also saw a sharp rally in U.S. Treasuries as investors worried the U.S. economic recovery might be losing steam as the Delta variant of the coronavirus spread globally.
U.S. 10-year Treasury notes US10YT=RR fell on Friday, halting an eight-day price rise, while the S&P 500 financials sector .SPSY jumped 2.9% in the sector’s biggest daily percentage gain since March 1.
Financials led sector advances followed by energy .SPNY, materials .SPLRCM and industrials .SPLRCI.
Big banks including JPMorgan Chase & Co JPM.N will kick off the second-quarter earnings season next week when they report results.
Meantime, on Friday the Dow Jones Industrial Average .DJI rose 448.23 points, or 1.3%, to 34,870.16, the S&P 500 .SPX gained 48.73 points, or 1.13%, to 4,369.55 and the Nasdaq Composite .IXIC added 142.13 points, or 0.98%, to 14,701.92.
For the week, the Dow is up 0.2%, and the S&P 500 and Nasdaq each added 0.4%.
The U.S. Dollar Index increased from last week’s 92.18 to close at 92.25.
A big jump in quarterly earnings is expected to mark a peak for U.S. profit growth in the recovery from last year’s pandemic-induced collapse.
Investors are looking to U.S. companies’ upcoming quarterly results and forecasts about the recovery in the second half of 2021 as some worry that the recent economic surge is already waning.
Coming back on grains market, the U.S. Department of Agriculture rated 64% of the U.S. corn crop in good-to-excellent condition in its weekly crop progress report on Tuesday, steady with the previous week and in line with analyst expectations.
Soybean ratings fell by 1 percentage point, with 59% of the U.S. crop rated good to excellent, down from 60% a week ago, while analysts on average had expected no change.
Ratings for the drought-hit U.S. spring wheat crop fell more than expected.
The USDA rated 16% of the crop as good to excellent, down from 20% a week ago.
Analysts on average had expected a 1-point decline.
Before stabilizing this week following late June rains, corn ratings had declined in each report since the USDA initially rated 76% of the 2021 crop as good to excellent on June 1.
Drought persists in the northern Plains and portions of the northwest Corn Belt.
But forecasts called for cooler temperatures and timely showers as corn enters its key pollination phase this month.
For winter wheat, the USDA said the harvest was 45% complete by Sunday, up from 33% a week earlier but behind the average analyst expectation of 47% and the five-year average of 53%.
The government rated 47% of the crop as good to excellent, down from 48% the previous week, while analysts on average had expected no change.
Analizyng each single wheat class, about Hard Red Whinter, harvest progress was slow this week with scattered rains and high humidity; 28% of the sampling area is harvested.
Remaining acres in Texas and Oklahoma will likely go to feed channels due to potential quality issues.
By state: Texas 92%; Oklahoma 95%; and Kansas 73%; Colorado 11%; Nebraska 16%; South Dakota 8%; and Oregon and Idaho are 5% or less harvested.
USDA’s HRW crop condition ratings held steady this past week with 36% of the crop rated good to excellent.
The lack of moisture and heat continues to stress the crop in the northern and PNW growing regions.
The Great Plains are experiencing scattered precipitation and high humidity, while high temperatures, no precipitation, and wildfires are trending in the PNW.
Thus far, moisture is lower than last year while 1000 kernel weight is higher.
Test weights are strong but trending lower due to precipitation.
About the Soft Red Whinter, harvest progressed rapidly through the region with approximately 20% of the sampled crop remaining.
This week’s NASS report indicated the crop ranged from 48% good to excellent in North Carolina to 78% in Indiana.
Overall, the 2021 SRW crop is expected to be high yielding and average to good quality.
Much of the growing region experienced favorable weather this past week though significant amounts of rain fell in Missouri and Indiana.
Falling number value is slightly lower than 2020 but is recovering with samples from drier areas.
Very early flour data has shown a decrease in lab milling yield for North Carolina and Tennessee compared to last year, but higher for Kentucky.
Thus far, farinograph absorption is slightly lower than last year with equal to slightly lower bake volumes; internal bread scores are slightly lower; and the cookie W/T has been equal to slightly higher.
About the Soft White, the entire SW crop is headed out in Oregon and Washington while 78% is in Idaho.
In the drier areas, winter wheat harvest is underway with Oregon at 5%, Idaho 4% and Washington 1%.
Only 17% of the PNW soft white crop is rated good to excellent, down from last week.
With compounding pressures from drought and heat, producers expect below average yields and above average protein.
Last week’s historic heat wave further stressed the crop as temperatures are expected to remain above average with no precipitation forecast.
There are an increasing number of wildfires reported as drought continues in the region.
About the Hard Red Spring, HRS crop continues to head out (70%) at a faster pace than normal.
The major HRS producing states saw another decline in crop condition ratings this past week – from 20% to 16% in good to excellent condition – the lowest in decades, raising abandonment, yield and quality concerns.
That is the lowest rating for any week since 1988.
Producers report some fields look good, depending on planting date and moisture received.
Grasshoppers and sawfly have been noted and are being monitored.
This week’s rain and cooler weather will help stabilize crop conditions.
Average temperatures with little to no precipitation are forecast.
About the Northern Durum, the North Dakota crop is 47% headed out and Montana’s is 28%.
Crop conditions declined this week with North Dakota 47% good to excellent and Montana 40%.
Overall, the durum growing region continues to fare better than HRS because the crop was planted later and has seen more favorable moisture patterns.
Farmers are expecting lower yields.
Most of the growing region continues to experience above average temperatures and minimal precipitation.
All that likely will improve by next Monday’s report.
Weekly US export sales data showed old corn crop bookings picking back up slightly with 173,177 MT sold for the week of July 1.
New crop sales were just 198,218 MT, though full year forward sales are more than triple what they were last year.
About wheat, weekly US wheat export sales through July 1 were 290,836 MT, up 28.5% from the previous week, but still 10.82% below that week in 2020.
New crop commitments are now 28% of the June WASDE estimate for the marketing year, vs. the 5 year average of 31% for this date.
About soybean, USDA’s weekly Export Sales report had 63,308 MT of old crop soybean sales through the week that ended 7/1.
For new crop, USDA’s report showed 118,500 MT were booked.
Export shipments have reached 94% of the full year USDA forecast.
The marketing year ends August 31.
Unshipped old crop commitments on the books are down 59% from last year at this time, at 3.41 MMT.
As we just said before, a bright spot for the week on corn’s use was EIA showing record gasoline demand for the week of 7/2, with ethanol production matching the post-COVID high 1.067 million barrels/day.
Commitment of Traders data release on Friday showed managed money funds trimming their net long in corn futures and options by 26,063 contracts as of 7/6. They were still net long 219,371 contracts on Tuesday.
The peak net long for the funds (in April) was 401,993 contracts.
Friday’s CFTC report also showed the spec funds in Chicago wheat continuing to flip back and forth between net long and net short.
They went back to the short side by a total of 14,391 contracts in the week ending July 6, taking them to a net short 13,617 contracts.
In KC HRW, they backed off their net long position by just 1,843 contracts for the week, to net long 20,880 contracts.
Finally, the weekly Commitment of Traders report indicated managed money spec funds on soybean added 5,923 contracts to their net long position between June 29 and July 6.
They were net long 82,180 contracts of futures and options on Tuesday night.
Going inside the numbers, CBOT soft red winter (SRW) futures shed 37 cents to close at $6.08/bu.
KCBT hard red winter (HRW) futures were down 12 cents to end at $5.99/bu.
MGE hard red spring (HRS) futures lost 50 cents to close at $8.13/bu.
CBOT corn futures fell 68 cents to end at $6.29/bu.
CBOT soybean futures shed 47 cents to close at $14.04/bu.
Meantime, corn basis bids were steady to firm after rising 3 to 10 cents higher across a handful of Midwestern locations on Friday.
Soybean basis bids were also steady to mixed Friday, moving as much as 10 cents higher at an Iowa processor while dropping as much as 10 cents lower at an Indiana elevator.
Soft white (SW) basis softened in the Pacific Northwest as grain trader’s confidence in the crop grew, but demand remained light.
Basis rose for hard red winter (HRW) and hard red spring (HRS) in the PNW as supply remained tight and farmer selling was slow.
In the Gulf, basis was also up as farmer selling remained light due to lower futures prices.
For the fourth 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.
From Canada, Glacier FarmMedia, based in Manitoba, a Canadian province, reports that, while conditions range widely across the Prairies, overall, Canadian crops may be millions of tons smaller than it appeared a few weeks ago.
One wheat farmer noted that “wheat fields are wavier than usual, evidence of uneven growth.”
He described wheat plants that are short and rows that are thin with only a main stem, no secondary shoots that add to a decent harvest.
As of the end of June, the latest durum crop condition for Saskatchewan is shown at 45% good to excellent, which compares to the five-year average for this week of 65%, while the lowest since 2015.
As of June 28, the Alberta government rated its crop at 48.2% G/E.
Further deterioration has been seen since, with a record-setting heat wave hitting the Prairies during the week of June 28.
Continued above-average temperatures and lack of rainfall will lead to ongoing pressure on the ratings and overall North American durum prices are on the move higher.
DTN’s National Durum Index reached a high of $8.04/bushel USD this week, while reported at $8.02/bushels (bu) on July 8.
This follows a steady climb from a low of $5.24/bu in September 2020, while is at the highest levels seen since July 2017 when a high of $8.17/bu was reached.
Bids across the southern Prairies reported by pdqinfo on July 8 were shown to range from $328.62/metric ton CAD in southern Alberta to $338.30/mt in western Manitoba, after a jump as much as $5.85/mt was seen in southeast Saskatchewan.
Bids by region shows the southern Alberta bid $7.97/mt from reaching its highest pdqinfo bid since data was started in September 2015, while the western Manitoba is $2.85/mt away from its high.
Bids for southeast and southwest Saskatchewan have reached their highest level reported since September 2015 when this data was first released.
However for Canada, data showed that the link between Canada’s stocks/use ratio and price received is a weak one.
When stocks/use ratio was valued at 46.3% (in 2008-09) resulted in the second-highest average price seen over this period at $373/mt.
As well, the highest average price during this period of $510/mt in 2007-08 was achieved when the stocks/use ratio was much higher than it is today at 19.6%.
For now, with stocks/use at 9.7%, the lowest seen over this period, the average price is at $300/mt.
Therefore, the average price received by Saskatchewan farmers in 2021-22 is forecasted to fall by $30/mt to $270/mt.
Meantime, this week Canadian grain handler Richardson International Limited has agreed to buy Italgrani USA, North America’s largest durum miller, as it increases its food -processing operations.
Italgrani’s assets include a mill in St. Louis, Missouri specializing in semolina and durum flour, storage and crop input facilities in North Dakota and a commodity trading office in Minneapolis, Minnesota.
Winnipeg, Manitoba-based Richardson, a private company, did not disclose the deal value.
The U.S. acquisition is a step toward Richardson’s goals to expand geographically and its food-processing operations, which include canola crushing and oat milling.
From South America, the Parana River, a grains “superhighway” in Argentina, that moves around 80% of agricultural goods bound for export to the Port of Rosario on the Atlantic coast, is giving some concerns.
Indeed, according to the Rosario Grains Exchange, the shallow water level could cost grain farmers and exporters $315 million over six months through August.
The low water level means that ships are unable to load to capacity.
Consequently, Handymax vessels are forced to load 8.0 TMT less than they normally would, while Panamax size vessels are loading 10.0 TMT less.
According to the U.S. Department of Agriculture’s Foreign Agricultural Service post in Buenos Aires, with the MY 2020/2021 harvest season almost complete, Post lowers its soybean production estimate 500,000 tons, to 44.5 million metric tons (MMT), 2.5 MMT below USDA Official.
Soybean exports are lowered 500,000 tons to 5.0 MMT.
Sunflowerseed production is left unchanged at 2.65 MMT, 0.25 MMT below USDA Official, exports are raised to 180,000 MT matching USDA Official.
Corn harvesting in Argentina advanced by 3.4 percentage points over the last week to reach 56% of plated area, the Buenos Aires Grains Exchange said in a report on Thursday, keeping its crop estimate unchanged at 48 million tonnes for the 2020/21 season.
Meantime, Argentine grains farmers and cattle ranchers protested on Friday in the town of San Nicolas in Buenos Aires province to voice complaints about export taxes and limits placed on beef shipments that critics say are bad for investment in the farm sector.
Brazilian farmers have harvested about 12% of their second corn crop area in the Center-South region even as frosts are causing crop failure and output estimates are slashed.
According to AgRural, indee, bad weather led it to cut its forecast for second corn production in the Center South to 54.6 million tonnes, down from 60 million tonnes estimated in May.
The consultancy also said harvesting is lagging last year’s pace as Brazilian second corn was planted later than in the previous season.
Total corn production in Brazil is now seen at 85.3 million tonnes, almost 17% below last year’s level.
Safras & Mercado, another agribusiness consultancy, said in a separate report on Monday that Brazilian farmers sold 49% of their estimated second corn production so far in the season, in line with the level of sales from 2020.
Safras projects production of 61.5 million tonnes of second corn and estimated almost 8% of the second corn crop had been harvested in the Center South, less than half the area harvested at this time last year.
Brazil’s grain output should grow to an estimated 333 million tonnes in 10 years’ time, a 27% rise, as farmers expand plantings and demand for the country’s agricultural products holds strong, government research showed.
In projections released on Wednesday, the agriculture ministry also estimated overall meat production will rise to 34 million tonnes in ten years, up from 27.4 million tonnes now.
The forecasts suggest the country’s farm economy will continue to boom, competing with the likes of the United States on global agriculture commodities markets to supply large importers, mainly China.
Brazil is the world’s top beef exporter, and home to large meat processors including JBS SA, Marfrig SA and BRF SA.
It is also the planet’s biggest coffee, sugar and soybean producer, and the largest chicken meat exporter.
According to the government projections, Brazil will grow the area planted with soybeans, corn and cotton to almost 81 million hectares (200.1 million acres) in 2030/2031, up from 68.7 million hectares.
In this context, as for July 08, Argentina Wheat Grade 2 export price, (Up River) was at $273, down 3$ from prior week.
Argentina corn feed stumbled 28$ for the week, closing at $216.
Brazil corn feed (Paranagua) was at $272, down 8$ during the week.
Argentina barley feed, was at $255.
Argentina soybean fell 12$ to close at $517.
Brazil soybean tumbled 15$ finishing the week at $535.
On European market, the Association of German Farmers (DBV) said they expect Germany’s wheat harvest to increase in 2021 as rain helped crops recover from an initially hot and dry summer.
The DBV estimates Germany, the EU’s second-largest wheat producer, will harvest around 22.82 MMT of winter wheat in 2021, up five percent compared to last year.
Germany’s total wheat harvest is forecast at 23.13 MMT when spring and hard wheat are included, up 4.5% overall.
French corn quality ratings are holding steady from a week ago, with 89% rated in good-to-excellent condition through July 5, per farm office FranceAgriMer.
French farm office FranceAgriMer also estimates that 79% of the country’s soft wheat crop is in good-to-excellent condition through July 5, holding steady from a week ago.
Harvest has begun but is just 1% complete versus 2020’s pace of 10%.
This year’s soft wheat harvest in France, is expected to reach 7.4 tonnes per hectare, up 8% from 2020 and 4% above the 10-year average, crop institute Arvalis said on Friday.
Wheat crops in the northern half of France benefited from adequate rainfall and cool temperatures during spring, whereas in the south a wet winter followed by drought from late February to late April curbed yield potential, Arvalis said in a joint statement with industry group Intercereales.
Taking the farm ministry’s current soft wheat area estimate of 4.9 million hectares, Arvalis’ yield projection would suggest potential output of 36.3 million tonnes, up from 29.1 million last year.
Some traders and analysts see production reaching 38 million tonnes, reflecting higher expectations of both area and yield.
The farm ministry will issue its first 2021 soft wheat production forecast on Tuesday.
Average protein content in the French harvest was expected at 11.6%, stable compared with last year and the 10-year mean, Arvalis said.
Meantime, soft wheat exports from the European Union in the 2020/21 season that ended on June 30 reached 25.53 million tonnes, data published by the European Commission showed on Tuesday.
That was down from 34.76 million tonnes in the previous 2019/20 season, the data showed.
EU 2020/21 barley exports totalled 7.20 million tonnes, against 7.62 million in 2019/20, while EU 2020/21 maize imports fell to 14.56 million tonnes, down from 19.65 million.
Britain’s wheat area is expected to expand to 1.74 million hectares for this year’s harvest, up 26% from 2020, according to a survey issued by the Agriculture and Horticulture Development Board (AHDB) on Thursday.
The increase was largely at the expense of spring barley, which was expected to be 28% lower at 769,000 hectares.
Winter barley area was seen 15% higher, year-on-year, at 350,000 hectares.
Rapeseed area was forecast at 322,000 hectares, down 15% year-on-year.
Wheat production in the European Union and Britain is set to rebound this year as the crop area and yields recover from weather woes the previous growing season.
The 27-country EU is expected to harvest 130.4 million tonnes of common wheat – or soft wheat – in 2021, up 11% from last year, according to an average of 10 forecasts in the poll.
For the EU plus Britain, output will rise 15% to 146.2 million tonnes, an average of eight estimates showed.
Britain’s production is seen rebounding by about 50% from last year’s crop that suffered from bouts of heavy rain.
The EU, collectively one of the world’s largest wheat growers and exporters, could see high harvest volume but with quality issues.
A shortfall in high-protein spring wheat from drought-hit North American and Central Asian growing belts could also bolster demand for European wheat, if harvest quality is satisfactory.
But soaring shipping costs could keep EU wheat exports focused on closer destinations, including main outlet Algeria.
Non-commercial market participants increased their net long position in Euronext’s milling wheat futures and options in the week to July 2, data published by Euronext on Wednesday showed.
Non-commercial participants, which include investment funds and financial institutions, expanded their net long position to 111,736 contracts from 81,600 a week earlier, the data showed.
Commercial participants extended their net short position to 142,106 contracts from 125,442 a week earlier.
Commercials’ short positions accounted for 61.9% of the total short position, while commercial long positions accounted for 38.3% of total long positions.
Non-commercial short positions represented 38% of total short positions, while non-commercial net long positions accounted for 61.7% of the total longs.
The report covered almost all of the open short positions and 99.9% of the open long positions in the wheat derivatives.
In Euronext’s rapeseed futures and options, non-commercial market participants reduced their net short position to 4,682 contracts from 7,328 a week earlier.
Commercial participants similarly cut their net long position in rapeseed to 481 contracts from 3,024 a week earlier.
Harvest pressure is weighing on European grain prices, fell back into negative for the week.
Wheat prices are particularly weighed down by harvest pressure and Black Sea competition, which is gaining in intensity at the start of the season.
Also rapeseed prices were lower for the week, despite on Friday afternoon there was a rebound that began in the middle of the week in the wake of oils, supported by a combination of factors.
Prices for canola (transgenic Canadian rapeseed) in Canada, Malaysian palm oil and, to a lesser extent, soybeans, were firm this weekend.
“The specter of a disappointing harvest in Canada supports a market which is already showing a tight balance sheet for the next campaign”.
“In Malaysia, it is the lack of manpower given the resumption of the epidemic linked to Covid which supports the courses”.
In this context, Matif September wheat futures was 7,75 euros lower from last week, closing to €197,25/t.
Matif corn August futures fell 4,00 euros to closing the week at €234,50/t.
Matif rapeseed August futures, sheded 9,25 euros ending the week at €527,25/t.
Nov-21 UK feed wheat futures made small gains yesterday, closing up £0.90/t at £167.00/t.
On June 24, the European Commission estimated its durum crop at 7.817 mmt for 2021, its up from 7.223 mmt in 2020.
However, this is still below its reported trimmed five-year average of 8.350 mmt (calculated by removing the year with the highest and lowest production and averaging the remaining three years).
When a simple average is calculated, this volume is 6.8% below the five-year average and 5.9% below the EU’s 10-year average level of production.
While harvest is taking place in southern areas of Europe, weekly price data reported by the EU shows the price for durum in Bologna, Italy increasing by EUR 6/mt as of July 8 to EUR 299, which matches the level reached in May, while weekly highs over the past year show prices reaching EUR 299/mt to EUR 301/mt in late November/early December.
From North Africa, a June 28 USDA Grain and Feed attache report for Morocco estimates that country’s wheat and barley production up 206% from last year, while at 9.8 mmt, is 26.3% above its 10-year average.
The estimate includes 4.8 million tonnes of common wheat, 2.4 million of durum wheat, and 2.6 million tonnes of barley.
Morocco produced just 640,000 tonnes of barley last year and was forced to import 1 million tonnes.
The report projects imports to decline to 300,000 tonnes in 2021-22.
The government must feel confident in its supplies, with this report showing a hike in the country’s import duty on common durum wheat from 0 percent to 170% as of May 15.
From Black Sea basin, Ukraine’s leading grain regions have started the 2021 harvest, threshing 1.37 million tonnes of grain as of July 9, the agriculture ministry said on Friday.
The volume includes 1.04 million tonnes of barley and 325,600 tonnes of wheat, the ministry said.
The barley yield averaged 3.93 tonnes per hectare and 3.15 tonnes per hectare for wheat.
Favourable weather could help Ukraine to harvest about 76 million tonnes of grain this year, up from 65 million tonnes in 2020, the ministry has said.
However, analyst APK-Inform this week said that adverse weather conditions in key grain regions could lead to significant losses in Ukraine’s barley and wheat harvests.
Meantime, Ukraine’s grain exports have jumped to 518,000 tonnes in the first 9 days of new 2021/22 July-June season from 216,000 tonnes in the same period in 2020/21, agriculture ministry data showed on Friday.
The volume included 178,000 tonnes of wheat and 333,000 tonnes of corn, the data showed.
The government expects grain exports could rise to 56 million tonnes in 2021/22 season and the volume could include 20.7 million tonnes of wheat, 30.7 million tonnes of corn and 4.1 million tonnes of barley.
The ministry said this week it did not expect grain export restrictions in the next two months of the 2021/2022 season that began on July 1 and that the volumes of grain exports would be determined by the ministry, traders and domestic consumers by Aug. 30.
Meantime, Ukrainian wheat export bid prices fell by $6 a tonne over the past week.
According to the APK-Inform agriculture consultancy, indeed, the 2021 harvest’s soft milling wheat with 12.5% protein was traded at $230 to $239 FOB Black Sea, while feed wheat, which lost $5 a tonne stood at $223-$232 FOB.
Corn bid export prices rose by $7 over the past week to $278-$287 FOB, while bid prices for Ukrainian – origin new crop ‘s barley fell sharply by $21 to $212-$220 per tonne FOB Black Sea.
According to Sovecon, yields in Russia’s south, where harvesting has started, were close to a record, while in the Volga and Saratov regions they were slightly below average.
Russian wheat output projections for this year have been revised up considerably, with production now expected to be the third highest to date amid a recovery in crop yields and higher spring wheat acreage.
In deed, Russia’s July 2021-June 2022 winter and spring wheat production — excluding from the disputed region of Crimea, annexed from Ukraine in 2014 — is projected at 82.3mn t, against 78.1mn t and 78.3mn t expected in April and November last year, respectively.
And in Crimea, wheat output is now forecast at around 800,000t for new crop, up from a previous projection of 500,000t and an estimated 540,200t in 2020-21.
Russian output this year will be around 2.5mn t below 2020-21 but 5pc above the five-year average.
And overall wheat acreage is estimated at 28.25mn hectares (ha) this year, with 15.2mn ha of winter crop and a record 13.05mn ha of spring wheat.
The latter would be up by around 1mn ha on the year.
Winter wheat crop yields are projected at 3.87 t/ha, up by 5pc from the five-year average and from 3.77 t/ha last year.
And spring wheat yields are estimated at 1.8 t/ha, compared with a 10-year average of 1.73 t/ha and 1.88 t/ha last year.
In this context, Russian wheat export prices fell last week.
According to IKAR, new- crop Russian wheat with 12.5% protein loading from Black Sea ports and for supply in July was $242 a tonne free on board (FOB) at the end of last week, down $7 from the previous week.
Sovecon, meantime, recorded for the same product a decline of $4.5 to $246 a tonne FOB for the week.
Domestic 3rd class wheat European part of Russia, was at 13,175 rbls/t -350 rbls ($179), excludes delivery (Sovecon);
Sunflower seeds was at 40,925 rbls/t -3,750 rbls (Sovecon);
Domestic sunflower oil unchanged at 100,000 rbls/t (Sovecon);
Export’s sunflower oil unchanged at $1,115/t (Sovecon);
Soybeans was at 48,800 rbls/t -500 rbls (Sovecon);
White sugar, Russia’s south, was at $571.94/t -$25.66 (IKAR).
($1 = 73.4607 roubles).
Russia’s wheat export tax, which Moscow introduced on June 2 and is changing each week, will drop to $39.30 per tonne from July 14-20, according to data from the agriculture ministry.
For barley also decrease from $37 of past week, to $36,90, while for corn will increase to $52,20 from 50.6 of prior week.
Indicative prices are $256,20 for wheat, $237,8 for barley and $259,7 for corn respectvely.
Meantime, Russia’s agriculture ministry has proposed setting a floor for its grain reserve at 3 million tonnes for 2022-2023, according to government documents published on Friday.
A document from the ministry said it also planned to introduce a white sugar reserve of 250,000 tonnes to ensure uninterrupted supplies and stabilize prices.
The agriculture ministry had previously said it would start buying grain for its state stockpile in 2022.
From Pakistan, an increase in planted area and government support for an increase in minimum support price is expected to push Pakistan’s wheat production to a new record, according to a Global Agricultural Information Network (GAIN) report from the US Department of Agriculture (USDA).
Wheat production is expected to be 27 million tonnes in the 2021-22 marketing year, an 8% increase over the 25 million tonnes produced in the previous year.
The Pakistani government has approved the import of up to three million tonnes duty free wheat during the 2021-22 marketing year in an effort to increase domestic reserves.
The country decided to prioritize maintaining a large wheat reserve following the COVID-19 induced demand and threat of locust attacks in 2020, the USDA noted.
From the Middle Kingdom, large numbers of pigs are dying from African swine fever in China’s top hog-producing province, say farmers and analysts, raising concerns it could spread further across the south and slow China’s pork production recovery.
In Southwestern Sichuan province, which produced 48.5 million hogs for slaughter last year, about 9% of the country’s total, is also seeing a resurgence of the virus.
It’s estimated losses at around 10% to 15% of the herd.
The Sichuan Provincial Department of Agriculture and Rural Affairs did not respond to a request for comment.
China’s Ministry of Agriculture and Rural Affairs reported two cases of swine fever in Sichuan in March, one in the east in Huaying city, and another in the far west.
But it did not respond to a fax seeking comment on recent cases.
Sichuan’s government said this week it was introducing measures to stabilize hog production and pork prices, including “deepening prevention and control of African swine fever and other major diseases”.
It is targetting output of 58 million pigs this year.
The latest outbreaks have created additional supply as farmers panic and send pigs to slaughter.
Sichuan’s hog price, usually higher than most regions because of its large population and high consumption levels, has fallen below the national average to 15.6 yuan ($2.40) per kg this week.
($1 = 6.4895 Chinese yuan renminbi).
In this context, China will buy 13,000 tonnes of frozen pork for its state reserves on July 14, a notice posted by the China Merchandise Reserve Management Center showed on Friday.
China’s state planner said late last month that the central and local governments would start purchasing pork for state reserves for the first time since 2019 after a sharp drop in hog prices from January to early June.
A previous notice from the reserve management centre said China would buy 20,000 tonnes of frozen pork on July 7.
Meantime, Chinese farmers have sharply increased corn planting this year to cash in on demand-fuelled record prices, a trend that is likely to cool the country’s recent rampant appetite for imports heading into 2022.
The expansion, which comes mainly at the expense of soybeans and other crops including sorghum and edible beans, would boost China’s maize output in 2021/22 by at least 6%, according to market participants.
JCI has forecast a 6.2% rise, around 14.9 million tonnes, in corn output in 2021/22 to 253.9 million tonnes, the highest in four years.
Based on surveys among farmers and other industry players like seed sellers, JCI estimates corn acreage expanding by 3.9% to 42.0 million hectares.
While the JCI projections are on par with and slightly above the 3.96% and 4.9% rises in acreage and output respectively by China National Grains & Oils Information Center, a government think tank, other forecasters – and farmers themselves – say they are too conservative.
Huatai Futures, a major futures brokerage that conducts farmer planting surveys in China, forecasts a 14.5% rise in output and a 6.2% rise in acreage.
In the northeastern province of Heilongjiang, the country’s top corn and soy grower, farmers have planted 27% more corn than a year ago.
JCI estimates corn output in Heilongjiang will soar 20% from a year ago to 36.65 million tonnes in 2021/22.
The resulting corn acreage increase should weigh on prices and reduce China’s need to import a bit so, its expects 2021/22 corn imports to fall to 15 million tonnes.
The U.S. Department of Agriculture’s China attache expects 2020/21 imports to slip to 20 million tonnes, versus the USDA official estimate of 26 million tonnes.
According to JCI, corn imports could hit 27 million tonnes, down from its estimate of 30 million tonnes last season.
Corn’s gains come mainly at the expense of soybeans, which could have the converse effect of increasing imports of the legume, which comes primarily from the United States and Brazil.
The U.S. Department of Agriculture is projecting China’s soybean imports at 103 million tonnes in the 2021/22 season, up from 100 million tonnes in 2020/21.
The increase in corn planting acreage by 25%, maybe means a 25% fall in soybean acreage.
Despite the ongoing spat, Australia shipped at least 265,000 mt of wheat to China in June, taking the country’s total exports to China to about 1.68 million mt for the current 2020-21 marketing year spanning October 2020-September 2021, according to shipping data from Advance Trading and Australian customs data.
This was 22% higher than the volume China took for the full 2019-20 marketing year at 1.4 million mt.
China, indeed, was the second-largest destination for Australian wheat in June, just behind Indonesia that took 370,000 mt, or 13% of the total 2.77 million mt exported in June, based on shipping data from Advance Trading.
China booked four to six ships for August-loading cargoes, S&P Global Platts reported earlier in May. In recent weeks, another 200,000-250,000 mt was sold to China-based buyers from the East Coast Australia for September-October shipment.
Chinese feed producers have increased the proportion of wheat in their feed mix since 2020, following recommendations from the government to reduce reliance on expensive corn and soymeal by diversifying into cheaper alternative feeds, thereby driving demand for wheat imports.
China’s persistently strong Australian wheat import demand relative to previous years took the market by surprise this season, given escalating tensions between the two countries.
Australia’s wheat export pace to China, coupled with market talks of China’s latest purchases, has also encouraged a few buyers in Asia to cover open demand sooner rather than later amid risks of supply tightness going forward, especially since Australia nears the end of its current marketing year.
South Korean flour millers decided to cover the remaining old crop demand from Australia June 30, booking a total of three ships, or about 136,800 mt, for September-October shipment.
From Australia, a slide in global grain values has prompted an increase in grower selling as yield prospects consolidate in most of Australia’s growing regions.
On the logistics front, the driest week seen since mid-June in all but north-central New South Wales has enabled traders to pick up grain for delivery to consumers without interruption.
Some clear and windy days have improved access to grain stored on farm in many areas, and consumers are now taking delivery of grain they were expecting as far back as May.
Delivery of wheat and barley from northern NSW and southern Queensland to domestic consumers has ramped up this week also due to increased availability of trucks.
Trade sources say the northern market is steady but has a softer feel related to the easing of the logistics squeeze.
In the southern market, export accumulators are looking further afield to accumulate grain for the last cargoes booked for the 2020-21 (Oct-Sep) marketing year.
On the production front, wheat and barley crops across southern Queensland are powering ahead on recent rain, and feedlots are expecting new-crop deliveries to start perhaps a fortnight earlier than normal.
It means the new-crop Downs market is finding some additional liquidity in November-December, instead of the normal January-plus-carry slot.
In the south, the widening inverse to new-crop has brought growers to the market as wheat and barley continues to find export and domestic homes.
In this context barley nearby contract was steady to $310 while new crop for January was down $10 at $270.
Wheat nearby contract was steady to $325, while new crop for January was down by $10 to $290.
Nearby sorghum was down $2 to $310, while new crop Mar-Apr, stumbled by $15 to $260.
Barley Melbourne nearby was down $5 at $275, while new crop for January delivery tumbled down $15 at $260.
Wheat Melbourne nearby was down $2 at $327, while new crop with January delivery was at $310, down $5.
From Japan, Japanese weather bureau said on Friday there was a 70% chance of no El Nino or La Nina occurring from now through the northern hemisphere autumn.
Last month, it predicted the prospect for normal weather conditions continuing through autumn at 60%.
An El Nino phenomenon is a warming of ocean surface temperatures in the eastern and central Pacific that typically happens every few years, sometimes causing crop damage, flash floods or fires.
A La Nina brings unusually cool ocean temperatures to the equatorial Pacific Ocean region and is also linked with floods and drought.
Internationally, according to the United Nations food agency FAO, world food prices fell in June for the first time in 12 months, pushed lower by declines in vegetable oils, cereals and dairy products.
In deed, the Food and Agriculture Organization’s food price index, averaged 124.6 points last month versus a revised 127.8 in May.
In particular, FAO’s vegetable oil price index plunged 9.8%.
The cereal price index dropped 2.6% in June month-on-month, but was still up 33.8% year-on-year.
Corn prices fell 5.0%, partly because of higher-than-expected yields in Argentina and improved crop conditions in the United States.
To note, however, that on a year-on-year basis, all prices were up 33.9% compared to June of last year.
FAO also said that worldwide cereal harvests would come in at nearly 2.817 billion tonnes in 2021, slightly down on its previous estimate, due the sharp cut to the Brazilian corn production forecast, but still on course to hit an annual record.
Global wheat production prospects also retreated this month, as dry weather in the Near East hurt yield prospects there.
However, the forecast for world cereal utilization in 2021/22 was cut by 15 million tonnes from the previous month to 2.810 billion tonnes, still 1.5% higher than in 2020/21.
Consequentially, world cereal stocks by the close of seasons in 2021/22 are now expected to rise above their opening levels for the first time since 2017/18.
Higher corn stocks foreseen in China account for the bulk of this month’s upward revision to world cereal inventories.
On the international trade scenario, GASC bought 240,000 tonnes of wheat.
The purchase is made up of:
3X60K tonnes of Romanian wheat supplied by Viterra, CHS, Ameropa ($270,54 C&F);
60K tonnes of Russian wheat sold by GTCS who offered their own freight ($267,70 C&F).
Iranian state agency the Government Trading Corporation (GTC) purchased an unknown volume of milling wheat in an international seeking about 60,000 tonnes of milling wheat which closed last week.
Meantime, this week, the GTC has issued a new tender to buy 60,000 tonnes of milling wheat seeking shipment in July, August and September that closed on July 7.
A group of importers in Thailand has issued an international tender to purchase up to 230,700 tonnes of animal feed wheat.
The deadline for submission of price offers in the tender was Wednesday, July 7.
Turkey’s state grain board TMO has issued an international tender to purchase a total of about 395,000 tonnes of milling wheat.
The deadline for submission of price offers in the tender is July 13.
Shipment is requested between Aug. 16 and Aug. 30.
Red milling wheat is sought in a series of consignments of between 20,000 and 50,000 tonnes.
The wheat is for unloading in the Turkish ports of Derince, Iskenderun, Mersin, Izmir, Bandirma, Tekirdag, Samsun, Trabzon and Karasu.
The TMO last Tuesday also issued an international tender to purchase around 440,000 tonnes of animal feed barley closing on July 12.
Jordan’s state grains buyer purchased 60,000 tonnes of hard milling wheat to be sourced from optional origins in a tender which closed on Tuesday.
It was bought from trading house Ameropa at an estimated $279.95 a tonne c&f for shipment in the second half of February 2022, they said.
Traders said two other trading houses participated in the tender: CHS offered $283.90 a tonne c&f and Viterra $289.00 a tonne c&f.
Jordan’s state grain buyer has purchased also 60,000 tonnes of animal feed barley to be sourced from optional origins in an international tender which closed on Wednesday.
It was bought at an estimated $271.95 a tonne c&f for shipment in the first half of November.
The seller was believed to be trading house Cargill.
Two other trading houses participated in the tender: Trading house Al Dahra was believed to have offered $290.50 a tonne c&f and Viterra offered $285.00 a tonne c&f.
Meantime, Jordan’s state grain buyer is tendering back to buy 120,000 tonnes of milling wheat which can be sourced from optional origins.
The tender closes on July 27.
Shipment is sought in January and February 2022.
Algeria’s state grains agency OAIC, has purchased on Thursday only 30,000 tonnes of milling wheat at $288 a tonne c&f.
The origins are optional, while the shipment is to two ports only: Mostaganem and/or Tenes.
The wheat was sought for shipment in three periods from the main supply regions including Europe: Aug. 1-10, Aug. 11-20 and Aug. 21-31.
If sourced from SouthAmerica or Australia, shipment is between July 1-10, July 11-20 and July 21-31.
South Korea’s largest feedmaker Nonghyup Feed Inc. (NOFI) has issued an international tender to purchase up to 138,000 tonnes of corn and up to 65,000 tonnes of animal feed wheat.
The deadline for submission of price offers in the tender was Wednesday, July 7.
The corn was sought for November/December arrival in South Korea, the feed wheat for November arrival.
Importers in the Philippines are tendering to purchase up to 200,000 tonnes of animal feed wheat and milling wheat.
The deadline for price submissions was Thursday, July 8.
The group is seeking 150,000 tonnes of feed wheat in three consignments and a single consignment of 50,000 tonnes of milling wheat.
Shipment from optional origins is sought in September, October and November.
𝗣𝗮𝗸𝗶𝘀𝘁𝗮𝗻 𝗧𝗖𝗣 𝗶𝘀𝘀𝘂𝗲𝘀 𝘁𝗲𝗻𝗱𝗲𝗿 𝘁𝗼 𝗯𝘂𝘆 𝟱𝟬𝟬,𝟬𝟬𝟬 𝘁𝗼𝗻𝗻𝗲𝘀 𝗼𝗳 𝘄𝗵𝗲𝗮𝘁, some 200K for August and some 300K for Sept shipment.
The deadline is July 27.
Saudi Sago is tendering to buy 360000 tonnes wheat for October arrival in 6 consignments:
(2) cargos for Jeddah Islamic Port;
(2) cargos for the port Yanbu Commercial;
(2) cargos for King Abdulaziz Port in Dammam.
Watching next week market, as per usual, Export Inspections data will be released in the morning and the Crop Progress report in the afternoon.
In addition to both of those, USDA will give the market a look a fresh supply and demand tables at 11:00 am CDT via the WASDE.
However, Monday’s USDA report will only give part the picture.
The report will give more insight into the global outlooks. But, it is unlikely to answer the key questions about US maize and soyabean supply in the 2021/22 season.
The report will incorporate the larger US areas reported on 30 June.
For maize, this could add around 4.5Mt to the total crop.
However, in July the USDA normally still uses the trend yield for both maize and soyabeans.
In ten years, the USDA changed the yield used in July once.
This happened in 2012, because of “persistent and extreme June and early July dryness and heat across the central and eastern Corn Belt.”
As this year’s weather is not extreme, it is likely the USDA will leave the US maize yield unchanged from June.
The USDA usually waits until August to build current conditions into the yield.
As such, the market will have to wait another month to get a fuller picture of US maize and soyabean production.
Polls by Refinitiv shows the market is expecting to USDA to:
Increase US maize production by around 3Mt from the June report.
Leave the US soyabean crop virtually unchanged.
Reduce US wheat crop by nearly 1.5Mt, despite increasing winter wheat output. This will be the first forecast of spring wheat output.
Cut over 6Mt from the Brazilian maize crop to 92.2Mt
Trim the Brazilian and Argentinian soyabean crops estimates by less than 0.5Mt each.
Make small cuts to global end of season stocks for maize in 2020/21 and wheat in 2021/22, but little change to soyabean stocks.
Need to look also at the Chinese maize import figures.
The USDA Foreign Agricultural Service in Beijing forecast Chinese maize supply higher than the USDA.
Therefore, this could soften import demand in 2021/22.
The size of the Black Sea wheat and barley crops will also be important.
Good crops are expected in the region and these are weighing on wheat prices currently.
In add, July futures expire for corn, the soybean complex, and wheat on Wednesday, with lean hog July futures and options expiring on Thursday.
Outside of that, we will have a somewhat normal schedule with the EIA report back on the schedule for Wednesday.
We also have the Export Sales report scheduled for Thursday, as well as a NOPA update.
In Sicily, the durum wheat harvest and other grains continues.
Durum quality is excellent and above average with a percentage of protein higher than 12.50%.
Moisture is below 9%.
The test wheigt continue to be very good above 80 Kg/Hl.
The average yield dropped slightly to at 2.5 tons per hectare.
To note that on June 24, the European Commission estimated its durum crop at 7.817 mmt for 2021, up from 7.223 mmt in 2020.
However, this is still below its reported trimmed five-year average of 8.350 mmt (calculated by removing the year with the highest and lowest production and averaging the remaining three years).
When a simple average is calculated, this volume is 6.8% below the five-year average and 5.9% below the EU’s 10-year average level of production.
Meantime, global durum ending stocks are forecast to grow by 400,000 metric tons to 8.5 million metric tons.
Good luck everyone and have a good weekend.
