US farm market closed lower this week.
Corn futures slumped 5.2% this week, a 29 ½ cent per bushel loss that totally reversed the gains from the August 12 crop report.
Soybean futures plunged 5.8% this week, or 79 ¼ cents per bushel.
Soy oil played a big role in that, dropping 9.8% in a single wheat amidst pressure from palm oil and EPA biofuel rumors.
Soy Meal was down 1.2%, benefitting from spread unwinding.
Wheat futures were lower in all three markets.
CBT SRW was up 6% a week earlier, but fell 6.3% this week.
KC HRW was down 5.4%.
Minneapolis spring wheat continued to be well supported due to limited new crop supplies, but was down 2.7% for the week.
On macro markets, oil prices closed out their biggest week of losses in more than nine months with another down day on Friday, as investors sold futures in anticipation of weakened fuel demand worldwide due to a surge in COVID-19 cases.
Brent crude fell 8% on the week, settling down $1.27, or 1.9%, to $65.18 a barrel, its lowest since April and down about 8% for the week.
U.S. West Texas Intermediate (WTI) crude for September settled down $1.37, or 2.2%, to $62.32 a barrel on Friday, to lose more than 9% for the week.
On the financial side, investors are preparing for a rockier ride ahead for markets, as worries over slowing growth, a looming rollback of the Federal Reserve’s easy money policies and a global COVID-19 resurgence threaten a rally that has seen the S&P 500 double from last year’s lows.
Thus, the Dow Jones closed at 35.515 slumping for the week by 395 points or 1,11%, the S&P 500 fell 4.468 down -27 or 0,60%.
The NASDAQ Composite index, continued its downtrend , closeing the week at 14.714, registering a loss by -108 points or 0,73%.
The U.S. Dollar Index increased from last week’s 92.59 to close at 93.58.
The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal, and iron ore, increased 15% on the week to end at 4,092.
Coming back on grains market, conditions remained mostly the same this week compared to last in the Plains states and the PNW with persistent hot and dry weather.
Some pockets of Kansas and parts of Colorado received rain.
Hot temperatures ranging between 3 to 6 degrees °F above normal were common in much of the Dakotas and Wyoming.
Temperatures were well above normal in Oregon and Washington and dry conditions continued to persist across the region and into Montana.
Much needed rainfall is expected in the Northern Plains this weekend and into next week.
Western Iowa may receive another 1” or more rainfall between Saturday and Tuesday, with the rest of the Corn Belt not set to gather much more than 0.25” during this time, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts seasonally warm weather for most areas west of the Mississippi River between August 27 and September 2, with drier-than-normal conditions settling into the Great Lakes region.
Meantime, weekly crop progress reported by USDA have seen, the corn good-to-excellent rating fell 2pc to 62pc compared with the trade guess of 64pc.
Around 73pc of the corn crop is dough stage, up from 54pc last week and only just behind last year’s 74pc at this time.
Soybeans good-to-excellent rating fell 3pc, now pegged at 57pc, 94pc of the bean crop is blooming, up from 91pc last week and is smack on the 5-year average.
Spring wheat good-to-excellent rating was unchanged at 11pc.
The poor-to-very-poor rating increased 2pc to 64pc.
Spring wheat harvests are now over 58%, confirming disappointing yields.
The Pro Farmer crop tour fed the market yield reports all week, with PFA putting their corn US average yield at 177 bpa on Friday.
USDA had projected US average yield at 174.6 bpa on August 12.
On the other hand, about soybean, the Pro Farmer tour group found several states with lower average pod counts than usual, but projected final yield would be 51.2 bpa.
That’s above the NASS August figure of 50.0 bpa.
Meantime, the current appreciation of the dollar, linked to fears that the Fed will reduce its support conditions for the financial market by the end of the year, is modifying the outlook for US export activity.
Indeed, weekly export sales results were broadly within range expectations.
Wheat exports were 306,700 metric tons, which was up 5% week-over-week but 23% below the prior four-week average.
Wheat export shipments slipped 6% lower week-over-week but stayed 29% above the prior four-week average.
Japan was the No. 1 destination.
To note that US wheat export sales commitments through August 12 were 38% of the full year estimate, trailing the 42% average for that date.
Year-to-date commercial sales for delivery in 2021/22 total 9.0 million metric tons (MMT), 19% lower than last year at the same time.
USDA expects total 2021/22 U.S. wheat exports will reach 23.8 MMT, 12% lower than last year, if realized.
Corn exports saw old crop sales climb noticeably above the prior four-week average, to 216,500 MT.
New crop sales added another 510,000 MT.
Corn export shipments fell 22% lower week-over-week and moved 31% below the prior four-week average.
Mexico was the No. 1 destination.
Soybean exports found 67,700 MT in old crop sales.
Nevertheless, sales volumes of soybeans in the new season show high levels with 2,142,100 MT.
In this context, soybean export shipments jumped 99% higher week-over-week and 37% above the prior four-week average.
China accounted for more than half of that total.
The corn and soybean markets on Friday, dropped sharply on reports that EPA was recommending the White House approve a reduction in 2021 mandated blend levels for biofuels.
Soybean oil, the main feed stock for biodiesel, was particularly hard hit since nearly all of the consumption growth for that commodity in recent years has been for industrial use.
Friday’s CFTC report indicated spec funds added another 24,867 contracts to their net long in corn futures and options during the week ending August 17.
That took them to a net long 278,911 contracts ahead of the big decline on Thursday and Friday.
About soybean, data indicated managed money spec funds increased their soybean net long positions this week.
They added 5,531 contracts to their net long, bumping it back up to 97,179 contracts as of August 17.
About wheat report showed managed money spec funds in CBT wheat expanding their net long by 5,058 contracts for the week, taking it to 24,185 contracts by August 17.
For KC HRW, they increased the net long another 1,785 contracts for the week, to 46,548 contracts.
Going into the numbers of grain futures, CBOT soft red winter (SRW) futures fell 48 cents to close at $7.14/bu.
KCBT hard red winter (HRW) futures were down 40 cents to end at $7.02/bu.
MGE hard red spring (HRS) futures lost 26 cents to close at $9.18/bu. CBOT corn futures lost 30 cents to $5.38/bu.
CBOT soybean futures were down 80 cents to close at $12.93/bu.
Fisically, corn basis bids were steady to weak Friday after falling 5 to 25 cents lower across three Midwestern locations.
Soybean basis bids tumbled 20 cents lower at an Indiana processor on Friday but held steady elsewhere across the central U.S..
Wheat basis bids eased in the Gulf region this week for both HRS and HRW as farmer selling picked up and more wheat was on offer.
Soft Red Winter basis was slightly higher despite increased supply.
Basis in the PNW was up slightly but farmer selling there also picked up.
Elevators will need to keep wheat moving to make room for other row crop harvests.
Again this week, no offers were made for HRW 12.5% protein exported from the Gulf.
From South America, the Parana River in Argentina continues receding, possibly into 2022.
The river, which connects inland grain producers to the leading export hub at Rosario, is at its lowest level in 77 years, forcing ships to load 18% to 25% less cargo.
Argentina’s government is currently looking to the Inter-American Development Bank as it seeks a path to contain the effects of the devastating drought decimating the South American river.
Additionally this week, the Buenos Aires Grain Exchange said in a weekly report that 43% of wheat is “poor-to-dry,” up from 39% last week.
On European market, Romania is leading the EU bloc for wheat exports in the 2021/22 trade year, shipping 968.0 TMT of wheat since July 1.
Romania has become a leading supplier of wheat to Egypt this year with another tender sold to GASC this week.
This year, Romania has harvested 11.3 MMT of wheat, a bumper crop, after yields improved following a drought-hit crop in 2020.
Neighboring Bulgaria has also harvested a bumper crop, bringing in 7.1 MMT of wheat, up 54% compared to 2020.
From the Black Sea basin, Russia’s agriculture ministry halted daily publication of grain harvesting data “while it refines the reporting format used by the country’s growing regions,” reported Reuters.
The ministry also said it is “currently doing technical work with the regions to refine the form and structure of the operational data on crop harvesting and sowing of winter grains.”
The latest data on the ministry’s website is from August 6, while the analytical center, Specagro, published data as recently as August 11, which showed 74.9 MMT of harvested grain.
The ministry has not changed its forecast for wheat, leaving it at 81.0 MMT, according to Interfax news agency.
UGA, the Ukrainian grain traders union, is lobbying the Algerian grain authorities to ease conditions for wheat tenders.
The union said that relaxing requirements for the W index, an indicator for flour strength, and reducing its spec on insect-damaged kernels would boost the potential for Ukrainian wheat to participate in Algerian wheat tenders.
UGA said that Algeria has “expressed readiness to discuss possible changes to the tender procedures.”
Ukraine shipped around 200.0 TMT of wheat to Algeria in 2020/21, accounting for 1.2% of exports.
Watching next week market, grain traders will be trying to suss out the White House’s actual intentions for RFS blend requirements.
Monday will feature the USDA Export Inspections report in the morning.
In the afternoon, NASS will release their weekly Crop Progress data.
The monthly USDA Cold Storage report is also expected.
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.
