This week, all US grain futures trended up.
Corn futures ended the week 1,46% higher than they were the previous Friday.
Soybean August contract was inched around 0,54% higer, even if soybean September futures were down around 0,83% for the week, spending most of the week trying to undo the sharp drop on Tuesday.
Soy Meal August deadline was up around 1,76%, while September was up 1.3% for the week.
Soybean oil was down more than 4% in September contract while by around 3.66% in August deadline.
Wheat futures, meantime, were higher in all three markets with KC wheat futures which led the bulls for the second consecutive week, took a gain of 4.8%.
CBOT SRW was up 2.2%.
MPLS advanced 1.3%, even if hobbling due the advancing in harvest and new cash supplies in the pipeline.
On macro markets, oil prices closed the week for their biggest weekly decline since March as travel restrictions to curb the spread of the COVID-19 Delta variant are raising concerns about fuel demand.
Indeed, Brent crude oil futures were down $4,84 for the week closing at $70.30 a barrel.
U.S. West Texas Intermediate (WTI) crude futures tumbled by $5,83 from last Friday closing the week to $67.89 a barrel.
So, Brent have given up 6% this week while WTI lost around 8%.
Its the most loss since March.
However, worries over rising tensions between Israel and Iran limited the decline in prices.
Additionally, investors at the end of the week, were also encouraged by a better-than-expected jobs report from the U.S. Labor Department.
In deed, the Dow Jones closed at 35.208,51 gaining for the week +239,95 points or 0,69%, the S&P 500 reached 4.436,52 up +29,66 or 0,67%, the NASDAQ Composite closed the week at 14.835,76, registering a gain by +77,16 points or 0,52%.
The U.S. Dollar Index increased slightly from last week’s 92.11 to close at 92.80.
The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal, and iron ore, increased 2% on the week to end at 3,371.
Coming back on grains market, areas of persistent dryness, including the Dakotas and Pacific Northwest, continued to deteriorate further this week.
Areas of eastern Washington, central Oregon, and parts of Montana are experiencing exceptional drought.
Conditions in the Plains states stretching from Minnesota west to Colorado and encompassing the states in between continued to experience dry conditions that added to drought ratings.
The agency’s 8-to-14-day outlook predicts seasonally dry, hot weather for much of the central U.S. between August 13 and August 19.
Meantime, rainier weather is heading to parts of the Midwest over the next several days, with 1” or more anticipated across large portions of Iowa, Wisconsin and northern Illinois between Saturday and Tuesday, per the latest 72-hour cumulative precipitation map from NOAA.
In this context, the weekly Crop Progress report showed the US corn crop was 91% silking, with 38% in the dough stage (33% average for that date).
Corn condition ratings slipped 2% point to 62% gd/ex meantime.
Regarding the soybean NASS Crop Progress data showed 86% of the US soybean crop was blooming, with 58% setting pods (both ahead of the normal pace).
Condition ratings as of August 1, however, improved a little bit.
About the wheat complex, on August 2, USDA reported that 91% of the U.S. winter wheat crop harvested, five points ahead of the 5-year average of 86%.
In particular, the HRW harvest is winding down with less than 10% remaining.
The SW crop is progressing quickly with more than 50% harvested.
Testing data are reflective of a stressed crop.
The U.S. spring wheat crop conditions improved this week, with 10% rated good to excellent, up from 9% last week and compared to 73% last year.
The USDA also reported 17% of the U.S. spring wheat crop harvested, 9 points ahead of the 5-year average.
In particular, HRS harvest is nearly 30% complete while durum harvest is just underway.
About durum conditions, are slightly better than HRS but remain stressed by drought and heat.
USDA estimates 56% of the North Dakota crop and only 6% of Montana’s is in fair to excellent condition.
Warm, dry conditions are expected to continue over the next 10 days.
Meantime, the 2021/22 durum harvest is underway in Montana (5% per USDA).
No official numbers for North Dakota, but industry sources report harvest has begun on early planted fields.
Weekly corn export sales for the week of July 29 totaled 68,200 MT for old crop and a healthy 830,200 MT for 2021/22 shipment.
Export commitments are 96% of the full year USDA estimate.
They would typically be 103% with a month left in the marketing year.
That said, unshipped sales on the books are 22% larger than last year at this time, and Brazil expects to only ship about 3 MMT this month.
Markets are discussing the destination China cancellations of two boats of old crop corn and one of beans.
They do not appear to have rolled to new crop.
Old crop soybean export sales, totaled 11,400 MT.
New crop sales were 424,800 MT for that week.
USDA also reported two sales, one to “unknown” and one to China under the daily reporting system.
Total soybean export commitments for 20/21 are still 100% of the USDA projection, vs. the 104% average for this date.
Old crop sales still to be shipped are down 63% from year ago at 2.8 MMT.
This week’s U.S. wheat commercial sales of 308,300 metric tons (MT) were down 40% from last week’s 515,200 MT and on the low end of trade expectations of 250,000 MT to 700,000 MT.
Year-to-date commercial sales for delivery in 2021/22 total 10.2 million metric tons (MMT), 18% lower than last year at the same time.
Commitments of shipped and unshipped sales are now 36% of USDA’s projected number, vs. 38% average.
USDA expects total 2021/22 U.S. wheat exports will reach 23.8 MMT, 12% lower than last year if realized.
Census June exports, released on Thursday, were the slowest since 2018.
In this context, Friday’s CFTC report indicated spec funds adding another 18,492 contracts to their net long in corn futures and options as of Tuesday.
That took them to a net long 246,500 contracts on 8/3.
Regarding soybean, data indicated managed money spec funds were exiting soybeans in the week ending August 3.
The net long position shrank 15,765 contracts on the week.
That took them to a net long 78,286 contracts of futures and options on Tuesday afternoon.
Meantime, about the wheat complex, report showed managed money spec funds in CBT wheat expanding their net long to 15,308 contracts by Tuesday, a rise of 12,241 contracts from their net position the week prior.
For KC HRW, they increased the net long another 6,401 contracts to their net long position for the week, to 38,166 contracts.
Going inside the numbers, CBOT soft red winter (SRW) futures rose 16 cents to close at $7.19/bu.
KCBT hard red winter (HRW) futures were up 32 cents to end at $7.05/bu.
MGE hard red spring (HRS) futures gained 12 cents to close at $9.16/bu.
CBOT corn futures rose 8 cents to $5.55/bu.
CBOT soybean futures were up 67 cents to close at $14.22/bu.
Corn basis bids were largely unchanged across the central U.S. on Friday but did move as much as 10 cents higher at an Iowa processor and as much as 6 cents lower at an Ohio elevator.
Soybean basis bids fell 5 to 10 cents lower at three Midwestern processors, but held steady at most other locations in the central U.S..
Wheat basis bids were mixed this week in the Pacific Northwest (PNW) and Gulf.
HRS was flat in the PNW while HRW was up as harvest in Montana advances.
Production is advancing rapidly, but weather conditions have left many unknown factors making farmers cautious about production prospects, supporting basis prices.
Prices for soft white (SW) were up this week and basis for SRW out of the Gulf for nearby delivery was up slightly, while HRW and HRS were slightly down due to sluggish export demand.
From Canada, last week, Saskatchewan Agency dropped the Good to Excellent ratings for spring wheat by another 9 points on July 29th to 16% Gd./Exc., while increasing the Poor/ V. Poor rating by a big 17 points to 44%.
Alberta Agency also reduced crop ratings (-17 points) to 22% Gd. /Exc.
A 20% reduction from the 5-year average yield for Canadian spring wheat would drop yields to 34 bu/acre, while a 30% reduction would bring yields down to 29.8 bu/acre.
Canadian durum wheat ratings by Saskatchewan Agency dropped by 1 point to 11% Gd/Exc., with 44% rated Poor/ V. Poor.
Alberta Agency also lowered durum ratings by 12 points to 21.5% Gd/ Exc.
Consequentially analysts expects durum wheat yields to be down significantly and are currently penciling in a 25% yield reduction.
Meantime, Canadian wheat exports for week 51 were 279k mt for a season total of 19.4 Million mt.
This is 10% (1.8 Million mt) more than last year year-to-date.
Durum exports for week 51 were small at 60 mt, for a year-to-date total of 6 Million mt, compared to 5.2 Million mt last year-to-date.
This is 16% ahead of last year’s pace.
As of August 03, Canadian FOB wheat prices were (Cdn$/mt):
– for the N1 CWRS 13.5% – $474,29;
– for the N2 CWRS 13.0% – $468,07;
– for the N3 CWRS – $388,21;
– for the N1 CWAD – $646,25.
(1USD=Cnd$1.254).
In the Canadian province of Saskatchewan, canola harvesting has begun after a week of minimal rain, the provincial government said.
January-March canola spread traded 1,372 times.
With a smaller Canadian crop expected due to drought, speculators and funds following technical indicators on down days are among the only sellers in the market.
In this context, November canola added $6.60 closing the week at $879.40 per tonne.
From South America, with Brazil’s 2021/22 soybean planting expected to begin in around six weeks, farmers are likely to be to expand area for the 15th consecutive season, encouraged by high local and international prices.
According to agribusiness consultancy Safras & Mercado, indeed, Brazil’s next soybean harvest at 142.24 million tonnes.
Brazilian exporting agency Anec estimated 2021/22 soybean production at 144 MMT, with exports at 94.3 MMT (up from 85.5 MMT this season) .
However, should must to note forward sales of Brazil’s 2021/2022 soybean crop, which farmers will start planting around September, are lagging last year even if above the five-year average.
Indeed, growers have pre-sold an estimated 23.7% of the expected soybean crop, or just below 34 million tonnes.
In June, forward sales of the next soybean crop were estimated at 21.5%.
In 2020, farmers had pre-sold a whopping 43.3% of their estimated produce so, more than double the historical average of 20.6%.
The current crop, which farmers finished harvesting in the first quarter of the year, was just below 82% sold, representing some 112 million tonnes.
By this time last year, Brazilian farmers had sold just below 96% of that season’s crop.
Farmers this year, are waiting to get better deals.
Meantime, Brazilian firm Agroconsult estimated the country’s 2020/21 safrinha corn crop at 60.9 MMT, down from 65.3 MMT in their previous forecast.
In this context, some analysts see now corn exports at 17 MMT in 2020/21, down from 34.8 MMT in 2019/20.
Indeed, Brazilian corn exports are expected to plunge in August to around 3 million tonnes, according to ship line-up data from maritime agency Cargonave and projections by grain exporters association Anec on Tuesday.
Shipping schedules showed corn exports at 6.7 million tonnes in August of 2020, data from Cargonave showed.
Anec said corn shipments this August would be at best only as high as 4 million tonnes amid severe crop failure.
In the first six months of 2021, Brazil sold most of its exported corn to Egypt, with Vietnam, Taiwan and Iran also key destinations, Anec data showed.
Bad weather over the past 2 weeks has damaged the Argentine wheat crop, according to the Buenos Aires Grains Exchange.
But damage was not enough to prompt a cut to its 19 MMT crop estimate for 2021-22.
Farmers have sown nearly all the 6.5 million hectares (16 million acres) to be planted with wheat in the South American grains powerhouse this year.
Meantime, the Exchange also said 89.2% of Argentina’s 2020/21 corn crop had been harvested so far, leaving its crop forecast unchanged at 48 million tonnes.
Argentina is the world’s No. 3 corn exporter.
In this context, as of August 05, Argentina Wheat Grade 2 export price, (Up River) was at $283, up 4$ from prior week.
Argentina corn feed was unchanged for the week, closing at $240.
Brazil corn feed (Paranagua) was at $268, up 9$ during the week.
Argentina barley feed, was unchanged at $255.
Argentina soybean fell 2$ to close at $529.
Brazil soybean lost 5$ finishing the week at $548.
On European market, France’s farm ministry on Tuesday lowered its estimate of 2021 soft wheat production.
This year’s soft wheat crop, now being harvested, is expected to reach 36.69 million tonnes, down from 37.10 million initially projected last month, the ministry said.
The reduced forecast would nonetheless be 25.8% above the volume last year, when France reaped one of its smallest wheat crops in decades, and 10% higher than the average of the past five years.
Projected barley production was revised upwards to 11.69 million tonnes from 11.29 million forecast in July, putting output 12.2% above last year and 1% above the five-year average.
In its first production forecast for this year’s grain maize crop, the ministry projected output, excluding crops grown for seeds, at 12.88 million tonnes, down 3.2% from last year.
For rapeseed, France’s main oilseed crop, forecast production was revised up to 3.22 million tonnes from 3.00 million last month but was 2.1% below last year’s weak volume due to a sharp drop in planted area.
On the other hand, Strategie Grains has kept almost unchanged its monthly forecast for this year’s European Union rapeseed harvest at 17.03 million tonnes.
That would be 2.5% above estimated 2020 output of 16.61 million tonnes, it said.
However, despite the forecast increase in harvest production, EU rapeseed stocks by the end of the 2021/22 season were expected to tighten further.
In this context, the European Union will retain its tariffs on U.S. biodiesel for a further five years after concluding that removing them would likely lead to a surge of imports at artificially low prices.
The tariffs, dating back to 2009, will be extended until 2026, the EU official journal said on Monday.
The 2021/22 trade year, which began in July, is off to a slow start.
According to Refinitiv data, French soft wheat shipments outside the European Union fell to their lowest level in over a decade in July.
Wheat exports are 74.0 TMT less than the same month last year, and the lowest since Refinitiv started tracking export data.
More generally, European Union soft wheat exports during the first month of the 2021/22 marketing year reached 962,949 tonnes, which is a 35% decline from last year’s pace so far.
EU barley exports are also trending moderately lower year-over-year.
In deed, barley exports also started tentatively at 785,644 t against 1.09 million last year.
EU corn exports for the 2021/22 marketing year are trending slightly above last year’s pace, with 42.9 million bushels through August 1.
European Union soybean imports for the 2021/22 marketing year reached 39.3 million bushels through August 1, a year-over-year decline of 25% so far.
EU soymeal imports are also tracking moderately lower from a year ago, as are EU palm oil imports.
Non-commercial market participants increased their net long position for the third week in a row in Euronext’s milling wheat futures and options in the week to July 30, data published by Euronext on Wednesday showed.
Non-commercial participants, which include investment funds and financial institutions, upped their net long position to 140,587 contracts from 126,251 a week earlier, the data showed.
Commercial participants similarly increased their net short position to 155,397 contracts from 149,986 a week earlier.
Commercials’ short positions accounted for 65.6% of the total short position, while commercial long positions accounted for 38.4% of total long positions.
Non-commercial short positions represented 34.4% of total short positions, while non-commercial net long positions accounted for 61.5% of the total longs.
The report covered nearly 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 decreased their net long position to 5,494 contracts from 5,976 a week earlier.
Commercial participants similarly lowered their net short position in rapeseed to 5,930 contracts from 6,920 a week earlier.
In this context, Matif September wheat futures was 6 euros higer from last week, closing to €229,5/t.
Matif corn November futures gained 2.25 euros to closing the week at €213,50/t.
Matif rapeseed November futures, jumped 20 euros ending the week at €542.5/t.
Nov-21 UK feed wheat futures made small gains, closing up £1.15/t at £183.65/t.
From North Africa, Egypt’s President Abdel Fattah al-Sisi announced plans to raise the price of Egypt’s subsidized bread loaves.
Prices were last adjusted in 1977 and were met with substantial opposition.
More than 60 million Egyptians benefit from the subsidized program.
From the Black sea basin, two private Russian consultants cut their outlook for Russian wheat production this week.
IKAR cut its Russian wheat forecast by 3.0 MMT, settling on 78.5 MMT of wheat production.
SovEcon revised its forecast by 4.0 MMT, settling on 82.3 MMT of wheat production.
The revisions were based on low yields reported in the Central and Volga region and a reduction to the winter wheat area made by the Russian statistics service.
In reaction to the reduced production, Russian wheat prices rose as much as $7.00/MT compared to the week before.
Internationally, the Food and Agriculture Organization (FAO) food price index, which tracks international prices of various food commodities, averaged 123.0 points in July, down from 124.6 points in June. Year-on-year prices are up 31%.
June was the first month in a year that showed a decline in the index. Cereal prices fell 3%, but wheat prices increased 1.8%, their highest level since mid-2014.
The increase was blamed on dry conditions in North America, heavy rain in Europe and lower-than-expected yields in Russia.
Watching next market week, Monday the USDA will feature Export Inspections report in the morning. In the afternoon, NASS will release their weekly Crop Progress data.
On Wednesday, EIA will give us an update on the weekly ethanol production and stocks.
Thursday is the day for exports, as FAS will release Export Sales data in the morning.
That will also be Report Day, with USDA releasing the first Crop Production estimates for 2021 corn and soybeans, along with the WASDE supply/demand updates.
Friday will mark the expiration of the August soy complex and August hog futures/options.
