This week, all grain prices were up again.
The market had to digest especially data from the monthly USDA supply and demand report, having showed a large reductions in wheat supply in Canada and Russia fueling all wheat complex.
So, CBT posted gains by 6.02%.
KC took a 5.17% gains.
MPLS was up 3.06%.
Corn futures was up 2.39%.
Soybean futures were up 2.1%.
Soy Meal was up 0.5%.
Soybean oil shot up 3.1%.
On macro markets, oil prices, after registered a big weekly decline during past week, closed this week substantially unchanged, despite U.S. President Joe Biden’s administration on Wednesday urged the Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, to boost output to tackle rising gasoline prices that they see as a threat to the global economic recovery.
Meantime, U.S. investment bank Goldman Sachs said the recent call by the United States to OPEC+ to boost oil output is unlikely to result in higher production over the short-term given the threat to demand from the coronavirus Delta variant.
International Energy Agency, on this wake had warned that demand growth for crude and its products had slowed sharply as surging COVID-19 cases worldwide forced governments to revive movement restrictions.
Consequentially, Brent crude oil futures closed at $70.24 a barrel vs. $70.30 from last week.
U.S. West Texas Intermediate (WTI) crude futures closed to $68.03 a barrel vs. $67.89 of past week.
On the financial side, MSCI’s gauge of stocks across the globe hit another record high with the Dow Jones Industrial Average and S&P 500 both closed at record highs.
In fact, the Dow Jones closed at 35.515 gaining for the week +285 points or 0,81%, the S&P 500 reached 4.468 up +30 or 0,68%.
The NASDAQ Composite index, in contrast, closed the week at 14.822, registering a little loss by -33 points or 0,22%.
The U.S. Dollar Index decreased slightly from last week’s 92.80 to close at 92.59.
The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal, and iron ore, increased 6% on the week to end at 3,566.
Coming back on grains market, prior August’s USDA reports release – WASDE & Crop Production -, on Monday regular US crop progress figures had seen winter wheat harvest up to 95pc completed, mostly remaining only in Idaho and Montana.
Spring wheat progress was reported 38pc complete, up 21% week on week, as hot/dry weather leads to fast fieldwork.
Crop ratings showed a slight increase in spring wheat to 11% judged as good to excellent, compared to 10% last week.
However, this remains very low.
The northern durum crop is just under 10% harvested with variable yields reported.
Montana is now 12% harvested and North Dakota 5%.
Industry sources report variable yields, similar to HRS.
This week’s durum crop condition ratings continue to reflect prolonged heat and drought stress.
USDA estimates only 22% of the North Dakota crop and 4% of Montana’s is in good to excellent condition.
Warm, dry conditions are expected to continue over the next 10 days.
Corn conditions were pegged up 2pc to 64pc good-to-excellent, a slightly unusual jump for this point in the year.
Beans conditions were unchanged 60pc good-to-excellent.
Milo/sorghum was rated 1pc better, at 63pc.
The Pacific Northwest is experiencing another heatwave with temperatures in some areas exceeding 105°F (41°C).
The hot temperatures and dry conditions are a concern for soil moisture.
In Montana, Washington and Oregon, soil moisture is currently rated over 90% poor to very poor.
Conditions in the Plains states saw little improvement as hot and dry weather is expected to continue into next week.
As growers prepare for seasonal planting, concern is growing over soil moisture conditions which are in bad shape following prolonged dry conditions.
A wetter weather pattern in the 7-day QPF shows 1-2 inches expected in parts of the Corn Belt over the next week.
Meantime, US ethanol production trended lower for the third consecutive week, falling to a daily average of 986,000 barrels for the week ending August 6, per the latest data from the U.S. Energy Information Administration.
It was also the first time since early May that the daily average failed to reach 1 million barrels.
Production remains a bit below pre-pandemic levels but is trending about 7.5% higher year-over-year.
On the other hand, Weekly Export Sales Report showed on Thursday decent demand figures for corn as export sales were at 979,400 metric tons (mt.) vs. the trade’s expectation of 200,000 to 900,000 mt.
Corn export shipments, meantime, slipped 12% below the prior four-week average.
China and Mexico were the top two destinations.
Soybeans export sales were at 1.21 mmt, vs. the trade’s expectation of 100,000 to 900,000 mt.
Soybean export shipments tumbled to a marketing-year low, in contrast.
Mexico was the No. 1 destination,
Soybean meal export sales were at 384,600 mt, vs. the trade’s expectation of 50,000 to 200,000 mt.
Wheat export sales were at 416,900 mt, vs. the trade’s expectation of 250,000 to 700,000 mt.
Wheat export shipments moved 62% higher week-over-week to a new marketing-year high.
Japan was the No. 1 destination.
Thursday, in the afternoon, USDA also released its August estimates with a few twists and turns pushed all grain prices up, particularly moving all three wheat contracts up, to post multiyear highs.
In fact, USDA cut a massive 12.5 million tonnes (Mt) off the Russia wheat crop.
Secondly the USDA took the axe to corn production, cutting yield from 179.5bu/ac to 174.6bu/ac.
After a few demand-side adjustments, that put ending stocks at 1.2bbu.
Here are the numbers:
Wheat
US 21/22 total wheat ending stocks were down 38mbu, to 627mbu (644mbu expected).
HRW 369mbu, HRS 119mbu, SRW 105mbu, SWW 51mbu, Durum 20mbu.
US 21/22 Production is now seen to 1.697bbu (1.723bbu expected).
HRW 777mbu (806), HRS 305mbu (325), SRW 366mbu (363), SWW 214mbu (194), Durum 35mbu (35).
Global 21/22 wheat ending stocks were cut by 12.6Mt to 279.06Mt (288Mt expected).
Global 21/22 wheat production was down 15.5Mt to 776.91Mt.
Argentina 20.5Mt (unch), Aust 30.0Mt (+1.5), Canada 24.00Mt (-7.5), EU 138.6Mt (+0.4), Russia 72.5Mt (-12.5), USA -4.134Mt to 46.18Mt & Ukraine 33Mt (+3.0).
Corn
US 21/22 Corn ending stocks are seen now to 1.242bbu (1.297bbu expected).
US 21/22 Production is indicated to 14.750bbu (15.004bbu expected).
US 21/22 Yield are now to 174.6bu/ac (177.6bu/ac expected).
Brazil’s 20/21 production was cut by 6.0 to 87Mt (88.72Mt expected). Brazil exports were down 5Mt to 23Mt.
Soybeans
US 21/22 ending stocks are seen to 155mbu (159mbu expected).
US 21/22 Area is unchanged.
Production is seen to 4.399bbu (4.375bbu expected), Yield to 50.0bu/ac (50.4bu/ac expected).
Global 21/22 bean ending stocks +1.6Mt to 96.15Mt.
China 21/22 bean imports were cut by 1Mt to 101Mt.
Consequentially, this report has created massive sensitivity to any future problems and highlights that timing is everything.
To close the week, the Friday CFTC Commitment of Traders report indicated that spec funds added 7,544 contracts to their net long position in corn futures and options, placing bullish bets ahead of the crop reports.
On August 10 they held a net position of 254,044 contracts.
Commercials trimmed their large net short to 486,460 contracts by that date.
Commitment of Traders data from CFTC showed managed money spec funds in soybean futures and options raising their net long position by 13,362 contracts as of Tuesday.
That took the position to net long 91,648 contracts on the 10th.
The weekly Commitment of Traders report out of CFTC showed money managers in CBT wheat futures and options had added another 3,819 contracts to their net long position by Tuesday.
That is now the largest since early March at 19,127 contracts.
In KC wheat, they added another 6,597 contracts to their net long position at 44,763 contracts by August 10.
In this context, . CBOT soft red winter (SRW) futures rose 43 cents to close at $7.62/bu.
KCBT hard red winter (HRW) futures were up 37 cents to end at $7.42/bu.
MGE hard red spring (HRS) futures gained 28cents to close at $9.44/bu.
CBOT corn futures rose 13 cents to $5.68/bu.
CBOT soybean futures were up 29 cents to close at $13.73/bu.
On the other hand, corn basis bids were wildly mixed Friday, tumbling as much as 42 cents lower at an Ohio elevator while firming as much as 20 cents at an Indiana ethanol plant.
Also soybean basis bids were steady to soft, especially at multiple interior river terminals (down 15 to 30 cents at three locations) and five Midwestern processors, where bids tumbled as much as 40 cents lower.
Farmer sales picked up after WASDE report from USDA boosted grain prices.
Meantime, wheat basis out of the Gulf was mostly flat.
In the Pacific Northwest (PNW), basis was slightly softer in the nearby while it strengthened later into the fall.
Soft white (SW) prices were stronger as weather stresses wheat yields.
New crop PNW SW protein average is expected to be higher, but crop quality data is just starting to come in.
This week’s Harvest Report shared that SW protein averaged at 11.3%, slightly above last week and above the 5-year average of 9.8%.
Consequentially, for the ninth week in a row, total U.S. SW 9.5% max protein offers were limited.
On the other hand, for the ninth week in a row, no offers were made for HRW 12.5% protein exported from the Gulf as grain traders remain reluctant to guarantee maximum proteins.
From Canada, this week there were some showers in the Canadian forecast, however there now is little hope of any significant improvement to the wheat crop.
Most all-wheat production estimates for Canada, indeed, have been lowered to 20 from 25 million mt.
Durum wheat production in Canada also has clearly been impacted by the dryness and heat.
The most recent Saskatchewan Ag report has Saskatchewan durum at 16% Gd/Exc., while Alberta Ag had durum at 22% Gd/ Exc.
Meantime, Canadian wheat exports (excluding durum) with only 258,000 mt, were relatively modest last week (week 52), advancing the 2020/21 wheat exports to 19.6 million mt.
That was 1.6 million mt higher (+9%) than last crop year however.
Durum exports for week 52 were came in at 81,000 mt, for a year-to-date total of 6.1 million mt, compared to 5.3 million mt last crop year.
This is 15% ahead of last year’s exports.
Meantime, StatCan published June exports by destination last week.
1.8 million mt of wheat (excluding durum) were exported during June, with 290,000 mt going to Indonesia, 246,000 mt to China, and 180 mt to Peru.
Year-to-date (Aug. 20 to June ’21), Canada exported 19.3 million mt of wheat, 12% more than last year-to-date.
Canadian June durum wheat exports by destination showed that 232,000 mt of durum was exported during June, with 91,000 mt going to Italy, 37,000 mt to the US, and 29,000 mt to Japan.
Year-to-date (Aug. 20 to June ’21), Canada exported 5.4 million mt of durum, 15% more than last crop year.
To note that Canadian biggest gains in this year’s durum sales were to Algeria, Italy and to Morocco.
Indeed, Canadian growers did lose significant export volume to Turkey and to Spain.
For this week, started August 09, Canadian wheat prices for FOB delivery were (Cdn$/mt):
– for the N1 class CWRS 13.5% – $483,61;
– for the N2 class CWRS 13.0% – $476,68;
– for the N3 CWRS – $396,31;
– for the N1 CWAD – $646,66.
(1USD=Cnd$1.258).
ICE canola futures had fell on Monday, with November contract lost $9.60 to $882.20 per tonne, as rain reached parts of the parched Canadian Prairies.
The rains will boost yields modestly of course, but smoke from widespread forest fires may affect quality.
Additionally, US soy oil futures had led the way down for global vegetable oils, tracking the drop in crude oil.
Meanwhile, with the release of WASDE report, also Canadian canola rebounded, to close the week at $894.30 and recovering all losses.
From South America, Argentine growers have sold 26.8 million tonnes of soy from the recently harvested 2020/21 season, the Ministry of Agriculture said in a report that was issued on Tuesday and included data updated through Aug. 4.
The pace of sales of the oilseed was behind that of last year, when sales of 28.9 million tonnes had been registered by the same date, according to official data.
Harvest of the 2020/21 crop ended in June at 43.5 million tonnes, down from 49 million tonnes collected in the 2019/20 season, according to the Buenos Aires Grains Exchange.
Argentine farmers have sold 36.4 million tonnes of their 2020/21 corn crop so far, the ministry said in the report, about 3 million tonnes more than had been sold by this time last year.
On the other hand Argentina’s 2021/22 soy harvest is expected at 49 million tonnes, the Rosario grains exchange said in its monthly report on Thursday, after a drought on the Pampas farm belt reduced the previous season’s crop to 45 million tonnes.
Brazilian corn exports fall 52% in first week of August after crop failure.
Indeed, the daily average of corn exports from Brazil reached 143,650 tons in the first week of August, a drop of 51.7% compared to the pace of shipments seen in the same full month of 2020, data from the Secretariat of Foreign Trade (Secex) showed on Monday, amid the break in the second harvest of the cereal.
However, there was a significant improvement over the daily average of July when the country exported only 90,150 tons of corn per day.
Soybean exports from Brazil are expected to total 90 million tonnes in 2022, a potential new record from a projected historical high this year, agribusiness consultancy Safras & Mercado said on Friday.
In its first projection for Brazilian shipments next year, Safras said it would keep the estimate for 2021 soybean exports at 86 million tonnes, unchanged from a forecast made in June.
Soy imports next year are forecast at 400,000 tonnes, a drop of 53%, as local supplies suffice to cater to demand, Safras data indicated.
Brazilian farmers are poised to harvest a 147.41 million tonne-crop next year, a 5% rise from 2021, as growers will expand acreage to take advantage of attractive prices.
Meantime, Brazilian food company BRF SA , which processes poultry and pork and makes most of its sales in home market Brazil, struggled to pass on higher grain costs to product prices in the second quarter, CEO Lorival Luz told analysts.
BRF on Thursday had reported a net loss of 240 million reais ($46 million), driven by higher feed costs and financial expenses.
($1 = 5.2506 reais).
The company’s shares fell by about 3% in early trading.
The world’s largest chicken exporter pointed to high product inventories in certain markets as a reason for not being able to raise prices in its home market, citing Japan specifically.
As global meat inventories drop, BRF hopes to adjust prices and recover some of the margins lost in coming quarters.
In this context, as of August 12, Argentina Wheat Grade 2 export price, (Up River) was at $283, unchanged from last week.
Argentina corn feed was up $4 for the week, closing at $244.
Brazil corn feed (Paranagua) was at $270, up 2$ during the week.
Argentina barley feed, was unchanged at $255.
Argentina soybean jumped 11$ to close at $540.
Brazil soybean was unchanged finishing the week at $548.
On European market, French farm office FranceAgriMer estimates that 74% of the country’s soft wheat crop is rated in good-to-excellent condition through August 9, unchanged from a week ago.
And 72% of the crop has been harvested over the same period, versus 66% last week.
French corn quality ratings firmed a point this past week, according to farm office FranceAgriMer. Through August 9, 91% of the crop is rated in good-to-excellent condition.
Meantime, Soufflet, a French grain group, said that much of the French new-crop soft wheat and durum wheat is showing weak quality results after heavy rainfall during harvest.
The heavy rain affected test weights, with Soufflet reporting that only 35% of soft wheat so far is meeting the milling standard.
On this wake, French analyst firm Strategie Grains on Thursday cut its monthly forecast of the European Union’s soft wheat crop, which it said could contribute to an “explosive” global supply outlook.
Strategie Grains, indeed, reduced its estimate of the French crop to 37 million tonnes, bringing it closer to the farm ministry’s current estimate of 36.7 million tonnes.
However, French output is still seen well above last year’s poor crop of around 29 million tonnes, but grain quality has emerged as more of a setback this year.
In Germany, about two-thirds of the crop has been gathered, with much work still to do in northern export-reliant regions.
Quality, especially test weights, has suffered from the rain.
Forecasters have cut German production estimates due to rain.
Some analysts now see the crop between 22 million and 22.5 million tonnes, below the farm cooperatives association’s 22.8 million estimate in mid-July.
In Poland, prospects were also less favourable.
Sparks Polska now estimates wheat production at 11.9 million tonnes, down from the 12.1 million projected in July and 12.0 million harvested in 2020, the analyst firm said, citing lower than expected yields.
Repeated rain has also hampered also Britain’s wheat harvest.
Forecasters have been expecting the British crop to rise by about half from last year’s low level to 14.5 million to 14.8 million tonnes, driven by a recovery in planted area.
In this context, non-commercial market participants raised their net long position for the fourth week in a row in Euronext’s milling wheat futures and options in the week to Aug. 6, data published by Euronext on Wednesday showed.
Non-commercial participants, which include investment funds and financial institutions, increased their net long position to 147,128 contracts from 140,587 a week earlier, the data showed.
Commercial participants expanded their net short position to 174,451 contracts from 155,397 a week earlier.
Commercials’ short positions accounted for 66.7% of the total short position, while commercial long positions accounted for 37.9% of total long positions.
Non-commercial short positions represented 33.3% of total short positions, while non-commercial net long positions accounted for 62.1% of the total longs.
The report covered nearly all of the open short positions and open long positions in the wheat derivatives.
In Euronext’s rapeseed futures and options, non-commercial market participants lowered their net long position to 4,804 contracts from 5,494 a week earlier.
Commercial participants increased their net short position in rapeseed to 8,799 contracts from 5,930 a week earlier.
In this context Matif September wheat futures jumped by 25 euros from last week, closing to €254,5/t.
Matif corn November futures gained 8.25 euros to closing the week at €221,75/t.
Matif rapeseed November futures, jumped 25,5 euros ending the week at €567/t.
Nov-21 UK feed wheat futures made small gains, closing up £12.35/t at £196/t.
From the Black Sea basin, the two main Russian agriculture consultancies – IKAR and SovEcon – cut again their estimates for Russia’s 2021 wheat crop this morning.
IKAR cut its forecast wheat crop to 77 million tonnes from 78.5 million.
Sovecon has yet to release details of its new forecast to the media, but this morning said on social media that it has cut its forecast for the harvest of wheat and corn in Russia.
Previously the consultancy expected the wheat crop at 76.4 million tonnes.
Meanwhile, IKAR has also reduced the barley forecast by 500,000 tons to 18 million tons.
On the other hand, the Agricultural Ministry of Russia updated rates of export duties for wheat, barley and corn under the mechanism of “grain damper” that came into force on June 2.
From August 18, with the indicative prices of wheat at 243.5 USD/t the export duty will be 30.5 USD/t.
They were at 244.4 USD/t and 31 USD/t the week ago.
With the indicative prices of barley at 222.4 USD/t (223.7 USD/t last week) the export duty will be 26.1 USD/t (27 USD/t).
The indicative prices of corn and its export duty remain unchanged at 255.9 USD/t and 49.6 USD/t.
Meantime, Ukrainian farms have harvested 39.5 million tonnes of grain from 56.2% of the sowing area, with the yield averaging 4.41 tonnes per hectare, the agriculture ministry said on Friday.
The volume includes 28.68 million tonnes of wheat, harvested from 87.8% of the area, with a yield of 4.60 tonnes per hectare, the ministry said.
For barley, 9.42 million tonnes have been harvested, from 91.7% of the area, with a yield of 4.16 tonnes per hectare.
Favourable weather could help Ukraine to harvest about 76 million tonnes of grain this year, up from 65 million in 2020, the ministry has said.
In this context, Ukraine has exported 4.61 million tonnes of grain since the start of the 2021/22 July-June season, up 10% from the same point a year earlier, agriculture ministry data showed on Friday.
That included 1.82 million tonnes of wheat, 1.62 million tonnes of barley and 1.15 million tonnes of corn, the data showed.
The government has said that grain exports could rise to 56 million tonnes in the 2021/22 season, including 20.7 million tonnes of wheat, 30.7 million tonnes of corn and 4.1 million tonnes of barley.
From the Middle Kingdom, last week, China’s state planner announced it would release reserves of commodities to stabilize supplies and market prices for household goods.
On this wake China sold 123,568 MT or 47% of the imported corn offered at an auction on Friday.
That was the 17th auction of imported corn since early June.
The National Development and Reform Commission (NDRC) said they would monitor production, markets and prices, and crackdown on any activity that would drive up product costs like hoarding and price collusion.
China was hit by widespread flooding last month, sparking the government’s intent to focus on market stabilization.
China holds the world’s largest wheat stocks with an estimated 141.6 MMT of grain siloed.
Meanwhile, China has lowered its estimates of soybean imports in the year 2020/21 following a decline in crush margins, the Ministry of Agriculture and Rural Affairs said in its monthly crop report on Thursday.
China’s 2020/21 soybean imports were seen at 98.6 million tonnes, down 1.84 million tonnes from last month’s estimates.
Importers also delayed purchases of the oilseed as the market expected prices of the new crop to fall in response to a bumper U.S. harvest, the ministry said.
China also cut its estimates of the crushing volume of soybeans in the year 2020/21 on a lower ratio of soymeal used in feed as hog margins have declined since March, and even slipped into negative territory.
In this context, analysts and traders have said that China’s soybean imports were set to slow sharply in late 2021 as a collapse in hog margins, and a sharp rise in wheat feed use curbed demand for soymeal, the main protein source in the animal recipe.
China’s forecasts of soybean imports and consumption in 2021/22 remain unchanged, the monthly China Agriculture Supply and Demand Estimates (CASDE) report found.
From Australia, on the production front, a week of relatively dry weather in all states bar Western Australia has been a blessing for growers wanting to apply nitrogen and spray weeds ahead of the onset of warm weather.
The big question remains the protein profile of wheat in New South Wales especially, and domestic feedgrain users are seeing barley as the best buy as the drought in Canada and the northern US and lower-than-expected yields in Russia drive up the wheat complex.
Potential total grain production for Western Australia is firm at around 20 million tonnes heading into spring, according to the latest crop report from the Grain Industry Association of WA (GIWA).
Meanwhile, consumers and traders have advanced their buying of new crop this week now that growers are starting to forward sell reasonable amounts of wheat and barley as offshore markets drive values to new season highs.
Trade sources have said the grower has been slow to shift focus away from heady new-crop canola prices, but multigrade wheat contracts are being taken out now that new-crop values are close to $300 per tonne.
Meantime, Australia exported 2,820,989 tonnes of wheat and durum in June, up 9.4 per cent from 2,578,529t shipped in May, according to the latest export data from the Australian Bureau of Statistics (ABS).
The June figure represents a high for the 2020-21 (Oct-Sep) shipping year, and points to the competitiveness of Australian wheat into Asia prior to Northern Hemisphere new-crop hitting the market.
Australia’s biggest bulk market by far in June was Indonesia on 797,293t, followed by Vietnam on 318,722t, The Philippines on 309,540t, and China on 229,951t.
Shipments to Indonesia in June showed the biggest single-destination number for the shipping year so far, pipping China in December with 779,511t.
On containerised sales, Vietnam on 48,233t, Malaysia on 36,809t, and Indonesia on 25,232t were the volume destinations.
Australia also exported 191,543 tonnes of canola in June, down 55 per cent from the 430,288t shipped in May, according to the latest export data from the Australian Bureau of Statistics (ABS).
Germany on 63,316t, followed by newcomer Pakistan on 49,625t and France on 25,000t were the three biggest markets for June-shipped canola as Australia’s export surplus dwindles ahead of new crop.
Shipping stems indicate Western Australia is the only Australian state left with enough canola to keep loading cargoes, and only handy-sized ones rather than the larger panamaxes.
Canada’s drought-reduced crop is now getting close to harvest as Europe’s oilseed crushers switch into processing their home-grown rapeseed.
Australian canola is expected to sell primarily into Asian and Middle East markets ahead of new crop, which will start to be shipped in volume in November, provided a wet spring does not delay harvest.
In this context, indicative delivered prices in Australian dollars per tonne were:
| Nearby | New-crop | |
| Barley Downs | $288 down $2 | $284 up $9 |
| Wheat Downs | $340 down $4 | $320 up $10 |
| Sorghum Downs | $290 down $2 | $270 steady |
| Barley Melbourne | $280 up $5 | $284 up $12 |
| Wheat Melbourne | $348 up $8 | $349 up $12 |
Waching the next week market, on Monday will feature the USDA Export Inspections report in the morning.
The NOPA monthly crush report for July is also expected. 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.
Friday will be highlighted by USDA’s monthly Cattle on Feed report.
If you want to read the full report with all prices and news on other international markets, don’t hesitate to register on
We wish you a good weekend.
Author: Sandro F. Puglisi
