Rome – January 09, 2021
Corn, wheat, and soybeans hit multi-year highs in Jan driven by dry weather in S.America and Argentine corn ban. Russian wheat export restrictions and tight EU S&D also provides support.
CBOT soft red winter (SRW) futures close at $6.38/bu.
KCBT hard red winter (HRW) futures end at $5.93/bu.
MGE hard red spring (HRS) futures close at $6.07/bu.
And Euronext took off sharply in the green to conclude its week at 216,75 €/t.
Broad farmer selling following significant momentum in the futures market pressured Gulf and Pacific Northwest (PNW) export basis for nearby delivery.
This week’s U.S. wheat commercial sales of 275,000 metric tons (MT) were down 47 percent from last week’s 521,000 MT, but in line with trade expectations of 250,000 MT to 500,000 MT.
Year-to-date commercial sales for delivery in 2019/20 total 20.8 million metric tons (MMT), 10% ahead from last year’s pace.
USDA expects 2019/20 U.S. wheat exports will reach 26.8 MMT, 2% higher than last year, if realized.
This week, moderate drought conditions were removed for some areas, even if growing regions in western states continued to be dry.
Russian wheat production for 2021/22 is expected to be around 78.4 MMT.
Despite the lowest level of accumulated rainfall and soil moisture in five years, above average temperatures have benefited the wheat crop.
A lack of snow accumulation however, leaves dormant wheat plants more vulnerable to cold damage, though no severe winter weather is predicted over the next ten days.
Soviet Ag cut their 2020/21 Russian wheat export forecast to 36.3 MMT, down from 40.8 predicted in November.
The US Agency in its December report predicted 40.0 MMT.
This is due to the export tax which will begin February 15 and last until June 30, the end of the Russian export calendar.
As of January 6, total Ukrainian grain exports are 26.41 MMT, down 16% from this time last year, of which 12.51 MMT is wheat.
In October, Ukraine implemented a 17.5 MMT wheat export quota for the 2020/21 marketing year and current sales account for slightly more than 71% of the quota.
The Buenos Aires Grain Exchange (BAGE) reported the Argentine wheat harvest at 98.4 percent complete and estimated production to be 17.0 MMT, following better than expected yields.
The US Agency estimates that Indian wheat production will reach 107.6 MMT this marketing year, an 8 percent increase over three years, while forecasts exports to nearly double to 1.0 MMT as stocks jump 30 percent.
On January 6, 2021, the Ministry of Fisheries, Animal Husbandry and Dairying, Government of India (GOI) reported Avian Influenza (AI) outbreaks in the states of Rajasthan, Madhya Pradesh, Himachal Pradesh, and Kerala (at 12 epicenters).
Bird Flu also Hits Foie Gras Farmers as Lethal Strains Sweep Europe.
In fact, the bird flu is expanding in France particulary.
124 poultry farms are now concerned and more than 350 000 ducks have been slaughtered.
More than 3.5 million birds dead in widest outbreak since 2016.
More cases are likely in the coming months, Rabobank says.
An advisory has also been issued to the affected states to contain the outbreak of AI (bird flu).
However, CBOT corn futures end at high level $4.97/bu.
Euronext corn future close the week at 202,50 €/t.
Operators in particular anticipate a cut in South American production in the USDA report which will appear on Tuesday.
Avg est of Janaury US corn stocks/use is 10.8% (range – 9.1%-13.6%).
Dec’s proj was 11.5% and 13.4% LY.
The Jan high of July futures is forecast at $5.15 for stocks/use of 10.8%.
Price is forecast at $5.50 for stocks/use of 9.5%.
July corn closed at $4.95.
Brazilian and Argentine corn harvests should also be revised downwards according to consensus.
Brazilian government forecast corn crop at 102.6Mt, down 2.3Mt from Nov.
Argentina’s government yesterday said it would review a decision to suspend corn exports until March 1 following a meeting with the country’s ag minister and leaders of Argentina’s main ag associations.
The ag ministry issued a statement saying an agreement had been reached to guarantee adequate domestic corn supplies and cushion local prices against big moves in international markets, even if corn ratings were cut by 5 points to 12% from 55% last year at the same time.
South America recent rains helped crops and more is forecast for coming week.long-range forecasts continue to look drier.
The Buenos Aires Stock Exchange has also reduced its ratings of Argentine soybeans “good to excellent” by almost half, to only 27% against 52% last year at the same period!
US Ag, forecast 131.5Mt soybeans on 31 Dec, but warned about weather.
Chinese live hog futures tumbled 12.6% on their debut on the Dalian Commodity Exchange today.
But analysts said the contract’s high listing price and expectations for supplies to build weighed on futures.
In fact, CBOT March soybean futures firming even more high level close at $13.78/bu.
US soybeans also support the oilseed complex by advancing once again to its highs of July 2014.
In particular, oilseeds continue to benefit from tense fundamentals, as well as the loss of competitiveness of Canadian canola.
Once again, rapeseed particularly stood out by leaping forward to settle on Euronext at 440 € / t on its February 2021 contract!
Since mid-December, the maturity has thus skyrocketed by nearly € 35 / t.
The prices of black gold continued to increase this weekend, after the announcements of the members of OPEC + of their desire to contain the supply and the hopes of a return of demand, with the vaccination campaigns and all oil complex is bullish.
According to the FAO, the world food commodity price index has increased by 3.1% in 2020. Vegetable oils have progressed the most, with an increase of 19.1% in 2020. The cereal sector, for its part, rose by 6.6% compared to 2019.
The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials like grains, coal and iron ore, increased 11% on the last report to end at 1,448.
The U.S. Dollar Index was slightly up from the December 18 close of 90.02 to close at 90.12.
