All grain prices closed higher this week.
Corn futures were up 3.57% this week, with September that took back some of last week’s losses.
Soybean futures posted a 5.06% gain on the week.
Soy oil continues to play a big role, with September futures up 6.63%.
Soy Meal was just 90 cents higher.
Also wheat futures clawed back part of last week’s losses in all three markets this week.
MPLS was the leader of the complex, up 1.93% on the week.
KC HRW was 1.46% higher since last Friday.
CBOT SRW was up 0.60%.
On macro markets, oil prices rose 2% on Friday, posting their biggest weekly gains in over a year, as energy firms began shutting U.S. production in the Gulf of Mexico ahead of a major hurricane expected to hit early next week.
Brent futures rose $1.45, or 2.07%, to settle at $71.63 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $1.30, or 1.93%, to settle at $68.72.
That was the highest close for Brent since Aug. 2 and for WTI since Aug. 12.
For the week, Brent gained around 11% and WTI rose more than 10%, which was the biggest weekly percentage gains for both since June 2020.
On the financial side, Wall Street rallied on Friday, pushing the S&P and the Nasdaq to record closing highs for the fourth time this week, as U.S. Fed Chair Jerome Powell’s wait-and-see approach in a much-anticipated address, has given investors and market participants some reassurance that the central bank’s extraordinary efforts to prop up the economy were likely to support riskier assets a while longer.
Maybe, this decision is as consequence of U.S. consumer spending slowed in July as a decline in motor vehicle purchases due to shortages offset a rise in outlays on services, supporting views that economic growth will moderate in the third quarter amid a resurgence in COVID-19 infections.
But the foundation for the recovery remains solid, with the report from the Commerce Department on Friday showing wages rising and Americans further boosting savings.
Inflation, meantime, continued to rise last month, fanned by the unrelenting supply constraints and the economy’s move toward normalcy after the upheaval caused by the pandemic even if the pace of increase is slowing.
However, businesses are also restocking and exporting more goods, suggesting a slowdown in growth this quarter could be only temporary.
The personal consumption expenditures (PCE) price index, meantime, excluding the volatile food and energy components, climbed 0.3% in July.
That was the smallest gain in five months and followed a 0.5% advance in June.
In the 12 months through July, the so-called core PCE price index rose 3.6% after a similar increase in June.
So, inflation appears to have peaked, which could preserve households’ purchasing power.
Just to remember, the core PCE price index is the Federal Reserve’s preferred inflation measure for its flexible 2% target.
In this context, the Dow Jones Industrial Average closed the week at 35,455.8 up 242.68 point, or 0.69% for the session, but lower than last week when closed at 35.515.
The S&P 500 gained 39.37 points, or 0.88% on Friday, closing to 4,509.37 and registering for the week a gain of 41,37 points.
The Nasdaq Composite added on Friday 183.69 points, or 1.23%, to close the week at 15,129.50, jumping week over week by 415,5 points.
To note that the S&P 500 posted 60 new 52-week highs and one new low; the Nasdaq Composite recorded 132 new highs and 37 new lows.
The U.S. Dollar Index decreased from last week’s 93.58 to close at 92.72.
The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal, and iron ore, increased 3% on the week to end at 4,235.
Coming back on grains market, on Monday, USDA confirmed that the corn crop is 41% dented, vs. 38% average.
The crop was also 4% mature, even with the 5-year average as of 8/22.
NASS Crop Progress data also showed 88% of the US soybean crop was setting pods, 1% above the average pace.
The crop was also 3% dropping leaves, even with average.
Meantime USDA lowered the corn good-to-excellent rating another 2pc to 60pc.
Beans were also lowered by 1pc to 56pc.
To note that the gap between the USDA condition rating for row crops and independent crop forecasters is getting wider.
The ProFarmer Tour has indeed announced potential yields significantly higher than the USDA figures published in early August.
The HRW harvest has officially wrapped up as samples continue to be analyzed in the lab.
The 2020 U.S. SW winter wheat harvest is all but complete with less than 10% of the SW spring crop
remaining.
Industry sources expect fall seeding to be delayed due to drought conditions.
Widespread precipitation slowed HRS harvest last week into this week.
According to USDA, South Dakota is now 95% harvested, Montana (85%), Minnesota (98%) and North Dakota (73%).
Industry sources report pockets of good quality and better than expected yields, however, bailed fields are numerous.
This year’s HRS crop currently grades at U.S. No. 1 Dark Northern Spring.
The Northern Plains durum harvest made good progress last week with Montana 70% harvested and North Dakota 57%.
Industry sources report variable yields but good quality.
This week’s crop condition ratings continue to reflect prolonged heat and drought stress.
USDA estimates only 28% of the North Dakota crop and 4% of Montana’s is in good to excellent condition.
Ethanol production continues a somewhat worrisome trend after falling lower for the second consecutive week, moving to a daily average of 933 million barrels for the week through Aug. 20, against 973,000 prior week.
That’s the lowest weekly tally since late February.
Stocks fell another 2% to 21.2 million barrels, against 21.6 million last week, to reach a six-week low.
Meantime, US weekly export sales for the period August 13-19, 2021 were about wheat only at 116,000 metric tons (MT) for 2021/2022.
That was a marketing-year low, down 62 percent from the previous week and 67 percent from the prior 4-week average.
That is down 22% from last year and 39% of the USDA forecast vs. the 44% average pace.
Shipments, meantime, were at 675,800 MT–a marketing-year high– up 14 percent from the previous week and 39 percent from the prior 4-week average.
Wheat export shipments MY to date are 21% of that number, vs. the 22% average.
About corn net sales were at 6,600 MT for 2020/2021, down 97 percent from the previous week and 95 percent from the prior 4-week average.
That took the season’s total shipped and unshipped total for corn exports to 70.324 MMT, which is 100% of USDA’s forecast total vs. the 104% average.
For 2021/2022, net sales were at 684,000 MT.
Shipments were at 760,500 MT, down 8 percent from the previous week and 35 percent from the prior 4-week average.
About soybeans, net sales were at 75,100 MT for 2020/2021, up 11 percent from the previous week and up noticeably from the prior 4-week average.
Shipments, meantime, were at 260,100 MT, up 1 percent from the previous week and 23 percent from the prior 4-week average.
That takes the YTD total for commitments to 62.16 MMT with just a few weeks remaining in the MY.
That is 101% of the USDA forecast vs. the normal pace of 104%.
For 2021/2022, net sales were at 1,750,000 MT, meantime.
Meantime, CFTC data showed managed money spec funds parring back 7,917 contracts from their net long in corn futures and options during the week ending August 24.
That took them to a net long 270,994 contracts by Tuesday.
About soybeans, Weekly Commitment of Traders data shows managed money trimming their soybean net long positions this week by 13,954 contracts.
They took that position down to 83,225 contracts as of August 24.
About wheat, Friday’s Commitment of Traders report indicated spec traders in CBT wheat were cutting 12,203 contracts from their net long position for the week, taking it to 11,982 contracts by last Tuesday.
Meantime, for KC HRW, they increased the net long another 843 contracts for the week, to 47,391 contracts.
In this context, CBOT soft red winter (SRW) futures rose 4 cents to close the week at $7.18/bu.
KCBT hard red winter (HRW) futures were up 10 cents to end at $7.12/bu.
MGE hard red spring (HRS) futures gained 18 cents to close at $9.36/bu.
CBOT corn futures gained 20 cents to $5.58/bu.
CBOT soybean futures were up 66 cents to close at $13.59/bu.
About basis bids, corn basis bids were mostly steady to weak on Friday after falling 2 to 15 cents lower across four Midwestern locations.
An Iowa river terminal bucked the overall trend after firming 5 cents.
Soybean basis bids tumbled 30 cents lower at an Iowa river terminal and 15 cents lower at an Indiana elevator while holding steady elsewhere across the central U.S..
About wheat, HRS basis in both the Gulf and the Pacific Northwest (PNW) was higher this week due to as soybeans and corn compete for elevation capacity.
Higher barge rates added to HRS Gulf basis.
HRW basis was also up as export capacity tightened going into the fall.
No offers were made for HRW 12.5% protein exported from the Gulf even if this week’s U.S. Wheat Associates (USW) Harvest Report on Aug. 27 put average HRW protein content at 11.9%, slightly above the 5-year average.
This week’s Harvest Report showed the current average PNW SW protein to be 11.1%, unchanged from last week’s average but well above the 5-year average of 9.8%.
Consequentially, grain traders remain reluctant to guarantee maximum proteins and total U.S. SW 9.5% max protein offers were limited.
From Canada, for the period August 17 to 23, 2021, harvest progressed to 29 per cent complete, up from 20 per cent last week and well over the five-year average of 12 per cent.
An additional 21 per cent of the crop is now swathed or ready to straight-cut, ahead of the five-year average of 16 per cent.
Ninety-three per cent of the winter wheat, 78 per cent of the fall rye, 76 per cent of the lentils, 81 per cent of the field peas, 42 per cent of the barley, 31 per cent of the durum, 23 per cent of the oats, 25 per cent of the spring wheat and six per cent of the canola has been combined.
An additional 30 per cent of canola has been swathed or is ready to straight-cut.
Harvest progress is most advanced in the southern regions.
Producers in the southwest region have 43 per cent combined, the southeast region 30 per cent, the west-central 27 per cent, the east-central 22 per cent, the northeast 25 per cent and the northwest 15 per cent.
Meantime, several large weather systems moved through the province last week, resulting in significant amounts of precipitation along with hail in some areas.
Indeed, the majority of crop damage this week was due to wind, heavy rainfall and hail.
Consequentially, more debate around Canadian production ahead of next Monday’s Stat Can report which is becoming a race to the bottom.
USDA is sitting at 24 million tonnes (Mt) wheat production with the average trade guess at 22.6Mt.
While that doesn’t seem like a massive difference, the flow on to exports in this environment is nothing but supportive.
Moreover, the Canadian Department of Agriculture has an all-wheat production estimate of only 20.18 million tonnes against 35.19 million last year.
The drought since spring has therefore greatly penalized the country on soft wheat, the production of which is estimated at 16.35 million tonnes and at 3.83 million in durum wheat.
Agri-Food Canada expects Canada’s 2021-22 all wheat crop to drop at 15.01 MMT.
That is a -42.7% from last season when was at 20.18 MMT.
That will be the lowest crop since 2007/8 if realized.
Meantime, Canada exported 792,000 mt of wheat during #crop weeks 1 & 2, which is 145,000 mt smaller than what we did last year.
Canadian durum exports for weeks 1 & 2 amounted 230,000 mt, which is 47,000 mt ahead of last year’s export shipments.
In this context, the milling wheat market continue to stay firm with bids around $10.50/bu.
Canadian durum wheat prices have responded strongly to the combined US-Canada durum problem, and $20/bu is now bid for N 3 CWAD in Saskatchewan.
$20.00/bu for N 3 CWAD is in the market as of last weekend.
These are the highest durum prices and the biggest premiums over spring wheat that we have ever witnessed.
Its should to note that even now, Canadian bids tend to show much bigger grade discounts than US bids.
Indeed, prices by US companies have been leading bids in South Saskatchewan, with Canadian Co’s clearly playing catch-up.
For this week, started August 23, Canadian wheat prices for FOB delivery were (Cdn$/mt):
– for the N1 class CWRS 13.5% – $499,53, down $4.1 per tonne;
– for the N2 class CWRS 13.0% – $492,67, down $3.67/t;
– for the N3 CWRS – $403,72, down $10.27 ;
– for the N1 CWAD – $746,51, up $99,65 per tonne.
(1USD=Cnd$1.265).
ICE canola futures eased on Thursday in two-sided trading, halting a three-day winning streak.
Trading was a “total mixed bag,” with prices underpinned by expectations of small Canadian production due to drought.
November canola dipped 30 cents to $914.10 per tonne.
In the Canadian province of Saskatchewan, 6% of canola has been harvested, the provincial government said.
November-January canola spread traded 1,231 times.
Canada’s agriculture department estimated canola production at 15 million tonnes, a 10-year low.
Trade estimates the Canadian canola crop at 14.1 million tonnes, down from 18.7 million a year ago, according to a Reuters survey.
Statistics Canada will report on production on Monday as we said.
From South America, Brazil is expected to harvest a record grain crop of 289.6 million tonnes in 2021/2022, driven by higher soybean and corn production in the season starting next month, government agency Conab said on Thursday.
In its first forecast for the coming grain season, Conab forecast Brazil’s soybean crop will grow by 3.9% to 141.3 million tonnes and its corn output will rise 33.8% to 116.0 million tonnes.
Meantime, Brazilian farmers who had coffee fields severely damaged a month ago by the worst frosts in 27 years have started taking out dead trees to make room for new plantings, with some of them planning to switch part of the affected land over to grains.
Argentine growers have sold 27.9 million tonnes of soybeans from the 2020/21 season, the Agriculture Ministry said on Tuesday in a report including data updated through Aug. 18.
The pace of sales was behind that of the previous season, when 29.9 million tonnes of the oilseed had been sold by this time in the year, according to government data.
The 2020/21 soybean harvest in Argentina ended in June with a harvest of 43.5 million tonnes, according to the Buenos Aires Grains Exchange.
Regarding corn, the exchange said harvesting of 2020/21 corn had been completed over the preceding seven days with an estimated total crop of 50.5 million tonnes.
Meantime, it said 6.6 million hectares had been planted with corn in the 2020/21 crop year compared with an expected 7.1 million hectares in the upcoming 2021/22 season.
On the other hand the ministry said 37.7 million tonnes had been sold from the 2020/21 season, about 3 million tonnes more than sales registered at this time last year.
Dryness throughout Argentina’s farm belt affected the development of wheat crops, the Buenos Aires Grains Exchange said in its weekly report on Thursday, but the damage was not enough for it to cut its 19 million tonne harvest estimate.
Meantime, Argentina said on Wednesday it had formed a new government agency to manage dredging operations needed to ensure navigation of the Parana River, which carries about 80% of the country’s grains exports from the Pampas farm belt out to sea.
For decades, cargo ships have paid tolls directly to the private dredging company in charge of keeping the river open.
In this context, as of August 26, Argentina Wheat Grade 2 export price, (Up River) was at $291, up $1 from last week.
Argentina corn feed was up $1 for the week, closing at $236.
Brazilian corn feed (Paranagua) was at $270, up 11$ during the week.
Argentina barley feed, was unchanged at $265.
Argentina soybean jumped 21$ to close at $541.
Also Brazilian soybean moved $21 higer, finishing the week at $555.
On European market, the European Commission has an estimate of net wheat production at 127.2 million tonnes against 127.7 estimated last month and 117.2 last year.
That would still be an 8.5% improvement over the prior year’s production, if realized.
Exports are estimated at 30.0 million tonnes against 27.3 million last year.
European barley production is estimated at 52.9 million against 52.6 estimated last month.
A fall in the average quality of France’s soft wheat harvest this year will lead to an increase in flour prices linked to additional work for millers to sort good grains from poor ones, a senior member of French millers group ANMF said on Monday.
However, there should be no impact on total volume of flour produced in France this year, said Erick Roos, chairman of ANMF’s process commission and director general of Moulins Soufflet, one of Europe’s biggest millers.
French soft wheat prices on the cash market have risen by 70 euros a tonne, or nearly a third, in the past month while September rose to the highest front-month price since March 2008 on Monday, as the market wrestled with rain damage to the EU crop and lower global supplies.
French flour output this year was still expected around last year’s at 3.6 million tonnes.
The industry traditionally consumes a little less than 5 million tonnes of milling wheat annually.
This year’s wheat crop in France is expected at nearly 37 million tonnes.
Recent rains slowed fieldwork, but harvest pace advanced another 5% to reach 96% through August 23, according to FranceAgriMer.
France is Europe’s No. 1 wheat producer.
French farm office FranceAgriMer also estimates that 91% of this year’s corn crop is still in good-to-excellent condition through August 23, holding steady from a week ago.
Some analysts, meantime, revised down French wheat output estimates by 3mt to 34.93mt, citing heavy rain this summer.
Similarly, Germany’s 2021 wheat crop of all types is expected to fall 3.6% on the year to 21.37 million tonnes after poor weather, according to estimates released by the agriculture ministry on Wednesday.
Crops suffered from swings in weather.
It is not yet possible for detailed judgements about wheat quality.
First indications of wheat quality criteria show protein content little changed on the year but test weights lower.
The winter barley harvest will rise 2.2% on the year to 8.96 million tonnes, while the spring barley crop, used in malt and beer production, will fall 18.4% to 1.62 million tonnes.
Corn crop will fall 1.8% to 3.94 million tonnes.
On the other hand, the country’s winter rapeseed harvest will increase only 0.2% on the year to 3.52 million tonnes.
In contrast, Romanian cereal production has surpassed, until now, 15 million tons, wheat and barley registering record-numbers this year, of 11.4 million tons, 1.9 million tons, respectively, the Minister of Agriculture, Adrian Oros, declared yesterday, adding that “the Ministry and minister have no merit for these large productions”.
There are three star crops that registered record-numbers this year, namely wheat and barley, in both overall productions and yield, but also rapeseed, which for the first time the average production surpasses the 3,000 kilogram / hectare threshold.
Wheat reached a total production of 11.4 million tons.
It is the largest production from 2007 and until now.
The average production for hectare is at its highest point – 5,349 kg / hectare.
Regarding the export potential in 2021, this remains high, given that the total internal consumption raises up to 4.5 million tons at most.
According to the minister of Agriculture, Romania also registers record levels for barley in 2021, for both the total production – 1.88 million tons, but also the average one – 5,599 kg / hectare.
Corn is also projected to show a nice increase with an expected output of 13.7 MMT, compared with 10.2 last year.
Last but not least, rapeseed registered the largest average production per hectare since 2007 and until now, namely 3,022 kg / ha, due to the types of plants used, application of adequate technology and favorable agro-meteorological conditions.
Meantime, European Union soft wheat exports for the 2021/22 marketing year have reached 2.903.112 t through August 22.
That’s 8.6% above last year’s pace so far.
EU barley exports are also moderately higher year-over-year, with 1.991.395 t.
European Union soybean imports during the 2021/22 marketing year reached 1.730.894 t through August 22, which is down 22% versus a year ago.
EU soymeal imports are lagging 35% below last year’s pace, with 1.83 million metric tons over the same period.
The European Commission also reported that EU corn imports for the 2021/22 marketing year reached 1.844.136 through August 22, which is trending 9.8% below last year’s pace so far.
Non-commercial market participants increased their net long position for the sixth week in a row in Euronext’s milling wheat futures and options in the week to Aug. 20, data published by Euronext on Wednesday showed.
Non-commercial participants, which include investment funds and financial institutions, expanded their net long position to 178,038 contracts from 159,950 a week earlier, the data showed.
Commercial participants similarly extended their net short position to 190,111 contracts from 186,470 a week earlier.
Commercials’ short positions accounted for 71.6% of total short positions, while commercial long positions accounted for 39% of total long positions.
Non-commercial short positions represented 28.4% of total short positions, while non-commercial net long positions accounted for 61% of the total longs.
In Euronext’s rapeseed futures and options, non-commercial market participants also added to their net long position, increasing to 7,770 contracts from 6,029 a week earlier.
Commercial participants upped their net short position in rapeseed to 11,650 contracts from 9,840 a week earlier.
In this context Matif September wheat futures tumbled by 23,25 euros from last week, closing to €250/t while December delivery moved from €/ton 244,50 to €/ton 246,75 with a gain of 1,25 euros for the week.
Matif corn November futures gained 5.5 euros to close the week at €221,25/t.
Matif rapeseed November futures, jumped 14 euros ending the week at €571,50/t.
Nov-21 UK feed wheat futures made small gains, closing up £3/t at £196/t.
Meantime, as of August 27, FOB prices for French wheat with 11.5% protein, for Sept. delivery, were at $292,84/mt, down $13.16/mt from last week.
French durum wheat, closed at $456,92/mt, up $62.63 from last week.
Corn delivered Bordeaux Spot – July 2021 basis was at $268.29 per tonne..
FOB Rhin Spot – July 2021 basis was at 283.53$/t.
Feed barley delivered Rouen – July 2021 basis was at 271.81 $/t.
Malting barley FOB Creil Spot – July 2021 basis was at $310.47 per tonne.
Rapessed FOB Moselle Spot – Flat – 2021 harvest was at 680.69 $/ton.
Standard sunseed delivered St Nazaire Spot – Flat – 2021 harvest was at $632.66 per tonne.
As of August 23, German wheat with 12.5% protein for Sept. delivery, closed at $305.80, down $2.50/mt.
Baltic wheat with 12.5% protein was at $301.10/mt, down $0.10/mt.
From the Black Sea basin, Belarus has imposed a ban on grain exports for six months, including exports to Eurasian Economic Union (EEU) members.
Although there was no official reason given, trade sources speculated it may be intended to stop the re-export of Russian grains without taxes outside the EEU bloc.
Belarus has harvested 6.2 MMT of grain this year, a 16% drop compared to last year.
Per latest data released by Russian agriculture ministry on Wednesday, Russia has harvested 86.4 million tonnes of grain before drying and cleaning with an average yield of 2.80 tonnes per hectare.
Wheat was at 63.2 mln tonnes with an yield, tonnes/hectare at 3.09;
Barley was at 15.3 mln tonnes, with an yield, tonnes/hectare at 2.48.
Total crops harvested area was at 30.9 million hectares of which wheat 20.5 and barley 6.2 million hectares.
Farmers have already sown winter grains for next year’s crop on 1 million hectares, down from 1.5 million hectares as of the same date in 2020, the data said.
Meantime, Russian wheat exports are off to a slower start this year, down 21%.
Russia usually sells most of its wheat in the first half of the marketing season, which began July 1.
However, farmers are holding on to their grain following a smaller-than-expected crop.
The export tax, which changes weekly, has also slowed export sales.
In particular, for the period Sept. 1-7, Russian agriculture ministry said on Friday that export tax were:
- For wheat $39.4, up $7.7 per tonne from prior week;
- For barley $27.0, up $0.4 cents, from past week;
- For corn $51.6, up $2, from last week.
Indicative price were for wheat at $256.4 per tonne, for barley at $223.7, for corn at $258.8.
SovEcon, a Russian-based analytical firm, noted meantime that Russian domestic wheat prices were growing quickly along with increased export prices.
Additionally, SovEcon estimates that in the first two months of the trade season, exports will total 5.3 MMT, down from 7.0 MMT sold by the end of August 2021.
Consequentially, the consultancy said on Friday it had cut its forecast for Russia’s 2021/22 wheat exports by 3.2 million tonnes to 33.9 million tonnes due to a lower crop, slow pace of exports and tough competition with other suppliers.
The Grain Union of Kazakhstan said flour exports to Afghanistan would be “badly hurt” due to a freeze of the Central Bank of Afghanistan’s assets, a steep fall in the currency rate, and the disabling of SWIFT payments.
Afghanistan buys more than 60% of the flour exported from Kazakhstan, amounting to about 2.2 MMT of wheat annually.
Ukraine has exported 7 million tonnes of grain since the start of the 2021/22 July-June season versus 6.4 million at the same point a year earlier, agriculture ministry data showed on Friday.
That included 3.4 million tonnes of wheat, 2.4 million tonnes of barley and 1.18 million tonnes of corn, the data showed.
Ukraine plans to thresh about 76 million tonnes of grain in 2021, up from 65 million tonnes in 2020.
The ministry last week said farmers had almost completed the 2021 wheat harvest, threshing 32 million tonnes from 97.6% of the sown area.
The government also 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, over the last decade, China has been steadily stockpiling key foods, and feed grains which now representing the largest strategic food reserves in the world.
USDA estimates peg China’s current strategic reserve of wheat at 144mmt, rice at 116mmt and corn at 198mmt.
Since 2011, stocks of all three core strategic grains have grown exponentially, with wheat and rice stocks having more than doubled and the size of corn stockpiles almost quadrupled.
When putting these mammoth current stockpile sizes into a global perspective, China currently holds around 50% of the world’s stores of wheat, 65% of worldwide rice stocks, and 70% of corn in storage.
However, looking at the strategic reserves of wheat, corn and rice, that are between 65 and 95% of annual domestic consumption, the state grain caches could probably satisfy the nation’s demand for between 9 and 12 months.
According to statements made in April 2021 by Liang Yan, the deputy head of the Chinese State grain and reserves administration , current Chinese grain reserves in its major production areas are sufficient to meet China’s demand for three months, and stocks held in major centers of consumption for six months.
Obviusly, this accumulation has served to bolster world demand for grains for close to a decade.
China’s 14th five-year plan from 2021-2025 makes significant commitments to achieving targets to increase China’s grain production capability and implement its national food security strategy.
These include protecting Chinese farmland from alternate uses, ensuring the total size of arable land under production remains above 120 million hectares, limiting non-grain production land usage and implementing a national food security industrial belt, including development of 72 million hectares of high quality farmland.
Investment in local breeding of high-performance hybrid grains is also something China is also concentrating on to lift yields, with the ‘Jingmai 9’ wheat variety reportedly achieving 11 tonne/ha.
Meantime, China released new guidelines to manage price indexes for commodities and services while seeking public consultation for them until Sept. 6, as part of broader measures to regulate the country’s commodities markets and manage price and information transparency.
The guidelines apply to the collection or usage of price information of goods and services in China, or price index behaviour that has “important impact” on the commodity and services market within China, said a statement by the National Development and Reform Commission (NDRC).
Price regulatory departments under the state council or provincial governments will evaluate and review commodity and service price indexes, according to the guidelines.
Price index providers are to carry out self-assessments every first quarter from 2022 onwards, and price indexes should undergo a trial for at least six months before being officially launched.
If price index providers are found to be non-compliant or in violation of regulations, their activities will be suspended and they will be included in the “dishonest enterprise” list, as well as the national credit information sharing platform.
The guidelines however do not give further information on the “dishonest enterprise” list.
On the other hand, in 2022, China’s hog production is forecast by USDA to decline by 5%. Low prices and disease outbreaks in 2021 led to significant slaughter and delayed restocking.
Pork production in 2022 will decline by 14% as fewer hogs come to market and government policies designed to limit price fluctuations inadvertently undermine expansion.
Pork imports will rise to 5.1 million MT (metric tons) as consumer demand for pork exceeds domestic production.
Cattle and beef production will grow slowly in 2022.
High beef prices will encourage investments by large producers.
However, small producers with poor herd genetics and space constraints will continue to dominate production.
Cattle imports will be stable at 350,000 head.
Beef imports will grow to reach 3.3 million MT, but at a slower rate, as high beef prices are balanced by more diverse beef suppliers entering the market.
Meantime, Chinese grain stockpiler Sinograin sold another 1.5 million bushels of its imported corn reserves at auction yesterday, which was 37% of the total available.
Sinograin also offered around 900,000 bushels of non-GMO corn, but none of that grain sold.
China has offered multiple auctions throughout the summer in an attempt to tamp down high domestic prices.
From Australia, values for nearby and new-crop barley have dropped a few dollars in the past week in the northern market, but continue to rally in the south as growers remain reluctant sellers and trade longs get harder to find.
The global shortage of high-protein wheat continues to drive Australian values higher, but prices in the north have eased in the new-crop wheat market now that stockfeed millers feel confident plenty of barley will be hitting the market from October.
Provided the eastern Australian harvest is a dry one, stockfeed millers are expected to stay on barley at maximum inclusion rates once new-crop becomes available.
However a wet or unusually low-protein harvest would see wheat displace barley in some cattle, pig and poultry rations.
Wheat and barley crops are thriving in most areas, and rain this week across south-eastern Australia has provided a welcome top-up ahead of spring’s arrival next week.
While most crops in central and northern New South Wales have good subsoil moisture beneath them, growers in southern regions are mostly looking for another soaking rain or two to ensure crops can maintain yield potential.
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.
(AUD/USD US$0.724).
Internationally, Turkey, confirmed that it had purchased 245,000 t of feed barley on its Friday tender.
Mauritius (a tiny African island east of Madagascar) issued an international tender to purchase 1.7 million bushels of wheat flour from optional origins that closes September 21.
Shipment is requested throughout 2022.
The Philippines passed on their tender for 168,000t of Sep/Oct wheat and then promptly re-tendered for 60,000t.
Pakistan purchased 160,000 t of milling wheat from optional origins in an international tender that closed earlier this week.
The grain is for shipment between mid-September and the end of October.
Tunisia has purchased an estimated 50 kt of barley at $ 321.24 / t C&F, and 50 kt of soft wheat at $ 351.33 / t C&F in an international tender.
Japan purchased 3.0 million bushels of food-quality wheat from the United States and Canada in a regular tender.
Of the total, 67% was sourced from the U.S.
The grain is for shipment in October.
South Korea purchased 135,000 t of animal feed corn from optional origins in an international tender.
The grain is for arrival in between late October and early December.
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 Wednesday.
It was bought from trading house Cargill at an estimated $345 a tonne c&f for shipment in the first half of February 2022.
Four other trading houses participated in the tender: Cerealcom offered $251.88, CHS offered $354.72, Ameropa $358.13 and Nibulon $361 all per tonne c&f.
Turkish Grain Board (TMO) will hold a tender for the import of 300.000 MT (+/- 5 % at buyer’s option) of milling wheat for shipment/delivery Sep 10-Oct 10.
Acceptable quality: 11.5p/76.5TW or 12.5p/78TW/225W.
Tender is on September 2nd.
Taiwan issued an international tender to purchase 50,000 t of grade 1 milling wheat from the United States that closes Sept. 3.
The grain is for shipment between mid-October and Nov. 1.
Egypt’s General Authority for Supply Commodities (GASC) set a tender on Friday to buy an unspecified amount of wheat from global suppliers for shipment from Oct. 15-25, for payment using 180-day letters of credit.
GASC Vice Chairman Ahmed Youssef said the authority was seeking to buy cargoes of soft and/or milling wheat from the United States, Canada, Australia, France, Germany, Poland, Argentina, Russia, Kazakhstan, Ukraine, Romania, Bulgaria, Hungary, Paraguay and Serbia.
Tenders should reach GASC by noon (1000 GMT) on Monday. The results should come out after 3:30 p.m. (1330 GMT) on the same day.
About other news, we sow International Grains Council, in turn, lowered its harvest estimates.
No news.
The IGC, indeed is lowering its estimate of world wheat production to 782 million tonnes, down 6 million tonnes from its estimate last month.
This is notably the result of the lowering of its estimate for Russia from 81 million tonnes to 75 million.
However, this is still higher than the USDA figure posted at the start of the month at just 72.5 million tonnes.
Canadian production is estimated by the IGC at 24.5 million tonnes.
In corn, the IGC leaves unchanged its estimate of world production at 1.202 billion tonnes.
Watching next week market, next week starts with the Monday release of the Export Inspections report in the morning and the Crop Progress report in the afternoon.
Statistics Canada will report on production on Monday.
Tuesday closes out the month with the First Notice Day for September corn, soybean, and wheat futures, as well as the expiration of August Live Cattle.
Wednesday marks the turn of the calendar to September with the monthly Grain Crushing, Fats & Oils, and Cotton Systems report in the afternoon.
That morning will show the release of the EIA report.
Skip to Thursday and USDA will release their weekly Export Sales report, with Census putting out July’s export data.
Friday rounds out the week with the last trading day for September serial options for live cattle.
Author: Sandro F. Puglisi
