All US grain prices were down this week with exception of soymeal.
In spite the late week bounce, corn futures ended the week with 1.24% loss.
Ditto for soybeans that minimized the week’s losses, only losing 0.43%.
Soymeal, in contrast, posted a 0.41% gain.
Soybean oil was feeling pressure from competing veg oils and fell 5.46%.
Wheat prices were the leaders in week’s sell-off.
Indeed, Chicago SRW wheat futures fell by 5.2%.
KC HRW slipped 5.6% lower .
MPLS HRS was down 3.7%.
On macro markets, oil rose on Friday, supported by growing signs of supply tightness in the United States and by U.S.-China trade hopes gave riskier assets a boost.
Indeed, the news of a call between U.S. President Joe Biden and his Chinese counterpart Xi Jinping, raised hopes for warmer relations and more global trade.
In focus next week will be revisions to the oil demand outlook for 2022 from OPEC and the International Energy Agency.
OPEC will likely revise down its forecast on Monday, two OPEC+ sources said.
Thus on Friday Brent crude closed the session $1.47 higer, or 2.3%, to $72.92 per barrel.
The session high was $73.15 a barrel.
U.S. West Texas Intermediate (WTI) crude rose $1.58, or 2.3%, to $69.72.
Both grades posted a small gain on the week.
Brent has rallied 41% this year on supply cuts by the Organization of the Petroleum Exporting Countries and some demand recovery from the pandemic.
On the financial side, Wall Street ended sharply lower on Friday as investors weighed signs of higher inflation, while Apple Inc tumbled following an unfavorable court ruling related to its app store.
U.S. producer prices rose solidly in August, leading to the biggest annual gain in nearly 11 years and indicating that high inflation was likely to persist as the pandemic pressures supply chains, data showed.
Investors are also uncertain about when the Federal Reserve may begin reducing massive measures enacted last year to shield the economy from the pandemic.
Apple dropped 3.3% after a judge struck down a core part of its App Store rules, benefiting app makers. Its drop contributed more than any other stocks to the Nasdaq and S&P 500’s declines.
Thus, the Dow Jones Industrial Average fell 0.78% to close at 34,607.72 points, while the S&P 500 lost 0.77% to 4,458.58.
The Nasdaq Composite dropped 0.87% to 15,115.49.
For the week, the S&P 500 lost 1.7%, the Dow declined 2.15% and the Nasdaq shed 1.61%.
Friday was the first time since February that the S&P 500 declined five days in a row.
Also the three main U.S. indexes, like for oil, had got some support early from news of a phone call between U.S. President Joe Biden and Chinese leader Xi Jinping that was taken as a positive sign, which could bring a thaw in ties between the world’s two most important trading partners.
That limted weekly losses obviusly.
On the other hand, the U.S. Dollar Index increased from last week’s 91.41 to close at 92.45.
The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal, and iron ore, decreased 2% on the week to end at 3,864.
Coming back on grains market, some light rains will make their way across the Northern Plains and upper Midwest between today and Tuesday, while areas farther south may not receive any measurable moisture during this time, per the latest 72-hour cumulative precipitation map from NOAA.
Meantime, USDA last week rated 63% of North Dakota and 66% of South Dakota topsoil short to very short.
The PNW remains dry with no improvement this week.
The USDA reported that topsoil moisture rated short to very short was 100% in Washington, 89% for Oregon, 75% in Idaho, and 93% in Montana.
This year, drought conditions and extreme summer heat led to Washington state’s lowest wheat production since 1973.
The agency’s 8-to-14-day outlook predicts more seasonally dry weather for the Great Plains between September 17 and September 23, with most of the country likely to see warmer-than-normal conditions later this month.
Meantime, on Friday NASS raised their corn yield projection by 1.7 to 176.3 bpa.
That combined with an increase to acreage to boost production 246 mbu, to 14.996 billion bushels.
The US balance sheet was also raised by 70 mbu to 1.187 bbu for old crop and up 166 mbu for new crop to 1.408 bbu thanks to the larger supply.
US soybean yield was at 50.6 bpa, a 0.6 bpa increase from last month.
That helped to push production higher by 35 mbu to 4.374 bbu, despite a reduction in acreage.
Old crop ending stocks were up 15 mbu to 175 mbu, with new crop 30 mbu higher to 185 mbu on the larger carryover and production.
US wheat ending stocks trimmed by 12 mbu to 615 mbu, mainly due to decreased imports.
The world ending stocks number was increased 4.16 MMT to 283.22 MMT.
Separately, on Friday USDA also released the weekly Export Sales report.
Net sales for corn tallied 905,800 MT of new crop corn sales in the week of 9/2.
That plus 2.978 MMT carried over from last MY and the 20.442 previously sold take the total of shipped and unshipped sales to 24.326 MMT or 38.6% of the USDA projection.
Normally would be 25% sold by the first week of the MY.
About soybeans, weekly export sales data showed 1.472 MMT in new crop bookings for the week of 9/2.
Mix that with 1.805 MMT in carried over unshipped from old crop and 17.747 MMT in forward sales, and total export commitments are 21.025 MMT.
That is 37% of the current WASDE forecast vs. the 36% average pace.
About wheat export sales, net sales of 388,400 metric tons (MT) for delivery in 2021/22, were up 32% from last week’s 295,300 (MT) and in line with trade expectations of 150,000 MT to 525,000 MT.
Year-to-date commercial sales for delivery in 2021/22 total 9.8 million metric tons (MMT), 24% lower than last year at the same time.
Total commitments for wheat exports are now 9.926 MMT through the first quarter.
That is 42% of the USDA forecast vs. the 48% average pace.
USDA expects total 2021/22 U.S. wheat exports will reach 23.8 MMT, 12% lower than last year, if realized.
Meantime, the large managed money spec funds in corn futures and options cut 43,613 contracts from their net long position during the week ending September 7.
According to CFTC data that took them to a net long 215,172 contracts by Tuesday.
Spec funds slashing another 11,625 contracts from their soybean net long positions for the week ending 9/7.
They took that position down to 57,516 contracts as of Tuesday, the smallest long in more than a year and a 180,878 contract reduction from their huge position last fall.
Spec traders in CBT wheat were cutting their net long position in more than half by 6,203 contracts, taking it to 5,167 contracts as of 9/10.
For KC HRW, they pared back 6,470 contracts from the net long position to 41,235 contracts.
In this context, CBOT soft red winter (SRW) futures were down 39 cents for the week to close at $6.75/bu.
KCBT hard red winter (HRW) futures were down 39 cents to end at $6.76/bu.
MGE hard red spring (HRS) futures lost 32 cents to close at $8.83/bu.
CBOT corn futures were down 6 cents to $5.02/bu.
CBOT soybean futures were down 8 cents to close at $12.75/bu.
Meantime, corn basis bids were once again highly variable on Friday after tumbling 50 cents lower at two Midwestern ethanol plants while firming as much as 10 cents higher at an Iowa processor.
Soybean basis bids were steady to mixed across the central U.S., moving as much as 7 cents higher at an Illinois river terminal and as much as 10 cents lower at an Indiana processor.
Wheat basis bids were mixed this week in both the Gulf and the Pacific Northwest (PNW).
High wheat prices keep demand limited while a robust export program for other row crops is limiting elevator capacity.
In the Gulf, the effects of Hurricane Ida last week are still causing logistical challenges especially for SRW transportation.
Traders continue to made no offers again also this week for HRW 12.5% protein exported from the Gulf.
Total U.S. SW 9.5% max protein offers were also limited this week.
From Canada, in its September World Agricultural Supply and Demand Estimates (WASDE) report, USDA lowered its estimate of Canadian wheat production in 2021/22 by 1.0 MMT to 23.0 MMT.
If realized, this will be the smallest Canadian crop since MY 2007/08.
From South America, USDA reduced Brazil corn production by 1.0 million tons.
Indeed, USDA now saw Brazilian corn production at 86 MMT, compared to 87 MMT in August, the average trade guess of 84.8 MMT, and CONAB’s 85.75 MMT.
On the other hand, USDA also raised Argentina corn production by 1.5 to 50 MMT.
Argentina wheat production, meantime, was reduced by 500,000 tons to 20.0 million on dry conditions.
In this context, as of September 09, Argentina Wheat Grade 2 export price, (Up River) was at $288, up $1 from last week.
Argentina corn feed was up $7 for the week, closing at $236.
Brazilian corn feed (Paranagua) was at $265, unchanged from past week.
Argentina barley feed, was unchanged at $265.
Argentina soybean gained 5$ to close at $541.
Brazilian soybean lifted $6 finishing the week at $553.
On European market, Coceral has lowered its estimate of 2021 soft wheat production in the European Union and Britain to 143.4 million tonnes from 145.8 million projected in May.
The revision was mainly due to lower than expected crops in France, Germany, and Scandinavia.
Particularly, soft wheat production for the EU’s 27 members was trimmed to 128.6 million tonnes from 130.9 million, including a reduced estimate of French production at 35.1 million compared with 36.0 million in May.
Meantime, estimated barley production in the EU and Britain was cut to 60.3 million tonnes from 62.4 million, while forecast corn output was increased to 67.3 million tonnes from 65.0 million previously.
For rapeseed, estimated 2021 production in the EU plus Britain was kept unchanged from May at 18.5 million tonnes.
Euronext, a European-based commodity business, said it plans to launch a durum wheat contract in the second half of next year.
The exchange last year said it would develop cash-settled contracts to expand its commodity business which currently focuses on physical delivery.
The new contract will provide physical price benchmarks instead of simply a futures contract.
Barilla, a leading pasta manufacturer, said that tight global wheat supplies and soaring raw materials prices are creating challenges for the Italian pasta maker.
The company also noted that the situation left little room for flexibility regarding the increase in raw material, energy, packaging, and logistics costs.
In this context, Matif December wheat futures fell 6,75 euros from last week, closing at €237,75/t.
Matif corn November futures shedded 5.5 euros to close the week at €211,50/t.
Matif rapeseed November futures, fell 1,00 euros ending the week at €570,75/t.
Nov-21 UK feed wheat futures fell £7,05, closing down at £183/t.
Meantime, as of September 10, FOB prices for French wheat with 11.5% protein, for Sept. delivery, were at $284.18/mt, down $6.67/mt from last week.
French durum wheat, closed at $485.48, down $25 from last week.
Corn delivered Bordeaux Spot – July 2021 basis was at $260.50 per tonne, down $5.43 from last week.
FOB Rhin Spot – July 2021 basis was at $273.52 per tonne, down $4.27 week on week.
Feed barley delivered Rouen – July 2021 basis was at 261.68$/t, down $7.80.
Malting barley FOB Creil Spot – July 2021 basis was at $325,62 per tonne, up 14.58$ from past week.
Rapessed FOB Moselle Spot – Flat – 2021 harvest was at 682.04 $/ton, down $4.15 compared to prior week.
Standard sunseed delivered St Nazaire Spot – Flat – 2021 harvest was down $5.19 from last week at $627.57 per tonne.
As of September 07, German wheat with 12.5% protein for Sept. delivery, closed at $305.20, down 0.20/mt.
Baltic wheat with 12.5% protein was at $302.90 /mt, up $1/mt.
From the Black Sea basin, USDA numbers were for wheat have seen Russia at 72.5 mmt (0 mmt); Exports at 35 mmt (0 mmt).
Ukraine at 33 mmt (0 mmt); Exports at 23.5 mmt (0 mmt).
For corn, Russia is now at 15.5 mmt (-1 mmt); Exports at 4.8 mmt (-0.2 mmt).
Ukraine is now at 39 mmt (0 mmt); Exports is at 32 mmt (0 mmt)
From the Middle Kingdom, USDA data reported Chinese wheat output was raised 900k MT to 136.9 MMT.
Meantime, Chinese state stockpiler Sinograin sold around 640,000 bushels of imported corn at auction.
Sinograin also announced it would auction off another 3.9 million bushels of corn on September 14 that had originally been imported from the United States.
Last year’s US soybean imports by China were increased by 2.0 million tons while new crop imports remain unchanged.
Meantime, this week China announced weakening demand for feed ingredients as hog prices remain under pressure.
From India, India’s government raised the state-mandated price (MSP), the price the government will pay for new-season wheat, by 2% to US$27.39 per 100 kg, or $273.90 per metric ton.
India is the world’s second-largest wheat producer.
The chief of one farmer organization said Indian growers should be disappointed in the small increase.
He added that increased production and labor costs were too high to be absorbed by the modest increase to MSP.
From Australia, Australia’s chief commodity forecaster said this week that farmers are on course to harvest a near-record wheat crop.
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) said it expects production for the season ending June 30, 2022, to total 32.63 MMT, up from the 27.8 MMT forecast in June.
USDA, meantime, boosted 1.5 MMT to 31.5 MMT.
Consequentially, Aussie FOB prices for wheat and barley have taken a tumble in the past week to reflect a surge in grower and trade selling and a downtrend in Northern Hemisphere cereal values.
In the week, rainfall in the northern region was patchy, and included a much-needed 10-20 millimetres over parts of the north-west and central plains, and 20-30mm over the central to southern slopes in NSW.
That has prompted some trade and grower selling of new-crop, and pushed out some leftover grain in the current-crop window as the inverse collapses.
In this context, indicative delivered prices in Australian dollars per tonne were:
Barley Downs: (Nearby) $292 down $10 – (New crop) $297 down $3 Jan;
Wheat Downs: (Nearby) $345 down $20 – (New crop) $335 down $7 Jan ;
Sorghum Downs: (Nearby) $302 steady – (New crop) $285 down $5 Mar-Apr;
Barley Melbourne: (Nearby) $290 down $2 – (New crop) $295 down $5;
Wheat Melbourne: (Nearby) $360 down $12 – (New crop) $355 down $13.
(AUD/USD unchanged at US$0.737).
Internationally, Bangladesh issues tender to buy 50,000 tonnes wheat
Closing date Sept. 16, 2021.
Jordan did make no purchase in tender for 120,000T wheat trade.
Three trading houses participated: CHS, Ameropa, Cerealcom.
After that, Jordan issued new tender to buy 120,000 tonnes wheat.
The deadline for submission of price offers is Sep. 15.
The lowest offer in the international tender from Egypt ‘s state commodities buyer GASC to buy wheat was $310.25 per tonne FOB (C&F $343.15) for wheat sourced from Ukraine.
The offer have been submitted by trading house Nibulon for 60,000 tonnes.
Other best prices were:
GTCS at $317.00 FOB, for wheat sourced from Russia (C&F $344.80);
LDC at $314.00 FOB, for wheat sourced from Ukraine (C&F $347.75).
The highest FOB price, was at $320.00 offered by Grain Export for wheat sourced from Russia.
C&F prices, ranged between $343.15 and $355.23 per tonne.
Saudi Arabia issues tender to buy about 360,000 tonnes of wheat for november arrival, with 76 tw min! (instead of 77).
The tender deadline is Friday, September 10,
Algeria bought about 60,000 tonnes of feed barely in a tender.
The barley was sought for shipment in two periods.
Morocco’s state grains agency ONICL has issued a tender to import about 363,000 tonnes of U.S.-origin soft wheat under a preferential tariff import quota.
Tunisia purchased 75 000 tonnes of soft milling wheat and 100 000 tonnes of animal feed barley from optional origins in an international tender that closed earlier today.
The grain is for shipment in October and November.
Prices CFR in USD were for soft milling wheat, $351.97 (LDC), $352.68 (Casillo) and $353.68 (Casillo).
Barley prices were, $321.15 (Cofco), 320.10 (LDC), $320.23 (Viterra), $321.23 (Viterra).
The Philippines purchased around 112,000 tonnes of animal feed wheat, likely sourced from India and Australia, in a tender that closed on Thursday.
The grain is for shipment in September and October.
The Trading Corporation of Pakistan (TCP) was said to have purchased 405,000 tons of milling wheat of which 240,000 tonnes from Cargill and 165,000 tonnes from CHS all at $369.50 a tonne c&f.
Shipments are between Oct. 1 and Nov. 30.
Meantime, TCP Pakistan issued other two tenders yesterday to buy 500K mt milling wheat(5% More Or Less Seller’s Option) and 200K mt 5% MOLSO white sugar.
Deadline for both tenders is Sept.20, 2021.
Watching next week market, we get back to a somewhat normal schedule.
Monday starts off with the Export Inspections report in the morning, with the Crop Progress report released that afternoon.
Tuesday will be the last trading day for September corn, wheat, and soybean futures.
Wednesday we will get the monthly NOPA report showing August crush among its members and the weekly EIA report in the morning.
Export Sales data will move back to its normal Thursday morning time slot.
Author: Sandro F. Puglisi