US farm markets were mixed this week, but mostly higher.
Corn prices managed to hold steady this week, as December was down just 0,09%.
The Soybean complex was mixed this week, as beans were up just 0,07%.
Soymeal was the factor this limited beans’ gains, as December contract was down 0,7%.
Soybean oil held the market up, with gains around 2,98%.
Wheat prices showed another rally this week.
Indeed, Chicago SRW wheat futures were 2,11% higher.
KC HRW climbed 0,94%.
MGE HRS were up 1,72%.
On macro markets, oil prices rose for a third week in a row to a near three-year high on Friday as global output disruptions have forced energy companies to pull large amounts of crude out of inventories.
The rally was slightly dampened by China’s first public sale of state crude reserves.
Thus, Brent futures rose 80 cents, or 1.04%, to settle at $78.05 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 68 cents, or 0.93%, to settle at $73.98.
For the week, Brent futures were up around 3,6% and WTI crude was up 2,79%.
That was the highest close for Brent since October 2018 and for WTI since July 2021, both for a second day in a row.
It was the third week of gains for Brent and the fifth for WTI.
In this context, the Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal, and iron ore, increased 9% on the week to end at 4,644.
On the financial side, stocks bounced back from a sharp selloff at the start of the week tied in part to concerns over a default by China’s Evergrande and its potential risk to global financial markets.
Thus the Dow and S&P 500 edged higher on Friday and ended a turbulent week with slight increases, helped by gains in Tesla and Facebook that offset a tumble by Nike.
In fact the Dow Jones Industrial Average rose 33.18 points, or 0.1%, to 34,798, the S&P 500 gained 6.5 points, or 0.15%, to 4,455.48 and the Nasdaq Composite dropped 4.55 points, or 0.03%, to 15,047.70.
For the week, the Dow was up 0.6%, the S&P 500 gained 0.5% and the Nasdaq was near flat.
On Wednesday, the Federal Reserve said it would reduce its monthly bond purchases “soon” and half of the Fed’s policymakers projected borrowing costs will need to rise in 2022.
Investors are now looking for signs of progress on President Joe Biden’s spending and budget bills.
Meantime, the U.S. Dollar Index increased from last week’s 93.09 to close at 93.36.
Coming back on grains market, most areas in the Midwest and Plains will be completely dry between today and Tuesday, although parts of the eastern Corn Belt could gather up to 0.25” during this time, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts more seasonally dry weather for the eastern half of the country between October 1 and October 7, with warmer-than-normal conditions likely for most of the country next week.
Meantime, USDA’s latest crop progress report, out Monday afternoon and covering the week through Sept. 19, confirmed that this fall’s corn and soybean harvests have kicked off in earnest, with progress equal to or slightly ahead of the prior five-year average.
Crop quality improved slightly for both crops, despite analyst predictions that ratings would hold steady from a week ago.
Corn harvest moved from 4% complete a week ago to 10% through September 19, mirroring analyst expectations.
That puts the 2021 pace off to a slightly faster start than the prior five-year average of 9%.
Nearly all of this year’s crop (93%) is now dented, with more than half (57%) now fully mature. Both of those maturity phases are tracking ahead of the prior five-year average.
Corn quality improved a point, with 59% of the crop now rated in good-to-excellent condition.
Another 26% is rated fair (down a point from last week), with the remaining 15% rated poor or very poor (unchanged from last week).
Soybean harvest progress moved to 6% through Sunday, matching the prior five-year average.
More than half of the crop (58%) is now dropping leaves, up from 38% a week ago.
That’s ahead of both 2020’s pace of 56% and the prior five-year average of 48%.
USDA also raised soybean quality ratings by a point, with 58% of the crop now in good-to-excellent condition.
Another 28% is rated fair (down a point from last week), with the remaining 14% rated poor or very poor (unchanged from a week ago).
Winter wheat plantings moved from 12% complete a week ago up to 21% through Sunday.
That’s a bit faster than 2020’s pace of 19% and the prior five-year average of 18%.
Just 3% of the crop is now emerged, which matches last year’s pace and bests the prior five-year average of 2% so far.
The latest batch of grain export data from USDA, out Thursday morning that covered the week through Sept. 16, showed some lackluster results for corn and wheat, but soybean volume was more encouraging after moving to the upper end of trade estimates.
Wheat volume fell 42% lower week-over-week but stayed just above the prior four-week average.
Corn slumped to the lower end of trade estimates, meantime.
Corn export sales moved higher week-over-week but only gathered another 373.400 t last week.
Analysts were generally expecting a bigger haul, with trade guesses ranging between 299.735 t and 800.142 t.
Cumulative sales for the 2021/22 marketing year are less than half of last year’s pace so far, with 845.864 t.
Total commitments are now 40% of the USDA projection, 12% above the 5-year average buying pace.
Outstanding sales are still 17% larger than year ago, due to the large amount of forward sales last MY.
Corn export shipments were more robust, with 485.165 t.
Mexico accounted for more than half of that total, with 254.013 t.
China, Japan, Jamaica and Guatemala rounded out the top five.
Soybean exports saw net sales reach 903.548 last week.
That was toward the higher end of trade estimates, which ranged between 500.762 t and 1.099.499 t.
Cumulative sales for the 2021/22 marketing year are still slim versus last year’s pace so far, however.
US Exporters have now booked 41% of the USDA projected 21/22 total which matches the average pace.
Outstanding sales are 29% below last year, which had a large forward book coming into the marketing year.
Soybean export shipments came in at 283.039 t.
Mexico was the No. 1 destination, with 3.1 million bushels. Japan, China, the Netherlands and Malaysia filled out the top five.
Wheat exports tumbled 42% lower week-over-week but stayed 1% above the prior four-week average, with 356.520 t.
That was a bit toward the lower end of trade estimates, which ranged between 250.381 t and 598.737 t.
Cumulative sales for the 2021/22 marketing year are still trending moderately below last year’s pace, with 6.839.211 t.
Total commitments for wheat exports are now 10.905 MMT, which is 46% of the USDA forecast vs. the 51% average pace for this date.
Year-to-date commercial sales for delivery in 2021/22 total 10.8 million metric tons (MMT), 20% 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.
Wheat export shipments inched 2% above the prior four-week average, with 508.926 t.
Mexico topped all destinations, with 92.532 t.
The Philippines, Japan, China and South Korea rounded out the top five.
Friday’s CFTC Commitment of Traders report showed managed money spec funds added 2, 121 contracts to their net long in corn futures and options during the week ending September 21.
That took them to a net long 214,350 contracts by Tuesday.
About soybeans, CFTC Commitment of Traders data showed spec traders slicing another 5,679 contracts from their soybean net long positions in the week ending 9/21.
They took that position down to 49,701 contracts as of Tuesday, the lowest point since August 2020.
About wheat, in contrast, report showed money managers in CBT wheat flipped their net position from short back to long by 5,491 contracts for the week ending 9/17.
That took them to net long 514.
In KC HRW, they added 1,388 contracts to their net long for the week, to 39,034 contracts.
Indeed, according to a Bloomberg survey, the trade on average is expecting NASS to cut all wheat production by 15 million bushels next Thursday, spread across white and HRS classes.
In this context, CBOT soft red winter (SRW) futures were up 15 cents to close at $7.236/bu.
KCBT hard red winter (HRW) futures were up 6 cents to end at $7.196/bu.
MGE hard red spring (HRS) futures gained 15.5 cents to close at $9.16/bu.
CBOT corn futures were down 0,5 cent to $5.266/bu.
CBOT soybean futures were up 1 cent to close at $12.85/bu.
Corn basis bids held steady across the central U.S. on Friday after showing significant variability earlier this week.
Soybean basis bids tilted 5 cents higher at an Indiana elevator while holding steady elsewhere across the central U.S. on Friday.
Wheat basis bids were flat in both the Gulf and Pacific Northwest (PNW) this week with the exception of HRW from the Gulf.
Demand both domestically and in the export market has been light.
Soft white wheat (SWW) saw a slight reduction following a purchase from Taiwan this week.
As of September 20, US HRS for Oct. ’21 delivery was valued at $413.00/ mt FOB PNW (up $3/mt from last week).
FOB Gulf HRW 11/12.5 pro was valued at $345.80/mt (up $20.70/mt from last week).
From Canada, omissis ….
In this context, as of September 20, Canadian wheat prices for FOB delivery were (Cdn$/mt):
– for the N1 class CWRS 13.5% – $491.49, up $15.74 per tonne;
– for the N2 class CWRS 13.0% – $484.42, up $16.11/t;
– for the N3 CWRS – $411.38, down $2.25 ;
– for the N1 CWAD – $756.32, down $128.04 per tonne.
(1USD=Cnd$1.282).
From South America .. (Omissis ..).
In this context, as of September 23, Argentina Wheat Grade 2 export price, (Up River) was at $298, up $5 from last week.
Argentina corn feed was unchanged for the week, closing at $245.
Brazilian corn feed (Paranagua) was at $262, down $4 from past week.
Argentina barley feed, was unchanged at $265.
Argentina soybean gained 3$ to close at $553.
Brazilian soybean sheded $9 finishing the week at $557.
Omissis …
Matif December wheat futures gained 5 euros from last week, closing at €253,25/t.
Matif corn November futures lifted 5.5 euros to close the week at €223,5/t.
Matif rapeseed November futures, jumped again by 18,75 euros, ending the week at €619.50/t.
Nov-21 UK feed wheat futures rosed £3, closing at £194/t.
Meantime, as of September 10, FOB prices for French wheat with 11.5% protein, for Sept. delivery, were at $298.83/mt, up $1.98/mt from last week.
French durum wheat, closed at $480,48, up $9.28 from last week.
Corn delivered Bordeaux Spot – July 2021 basis was at $269.53 per tonne, up $0.95 from last week.
FOB Rhin Spot – July 2021 basis was at $274.22 per tonne, down $0.24 week on week.
Feed barley delivered Rouen – July 2021 basis was at 274.22$/t, up $0.93.
Malting barley FOB Creil Spot – July 2021 basis was at $333.99 per tonne, up 4.15$ from past week.
Rapessed FOB Moselle Spot – Flat – 2021 harvest was at 718.37 $/ton, up $15.11 compared to prior week.
Standard sunseed delivered St Nazaire Spot – Flat – 2021 harvest was up $8.36 from last week at $656.26 per tonne.
As of September 20, German wheat with 12.5% protein for Oct. delivery, closed at $314.50, up 12.20/mt.
Baltic wheat with 12.5% protein was at $312.70 /mt, up $12.70/mt.
(EUR/USD=> US$1.1719).
Omissis …
From the Black Sea basin, omissis ….
Meantime, Russia has set out its grain export taxes for Sept 29-Oct 5.
About wheat will be $53.5, up $2.6 from prior week.
About barley will be $ 35.3, up $4.30 from the prior week.
About corn, will be $ 46.3, down %1.5 from the prior week.
Indicative price are for wheat at $276.5, for barley at $235.5, for corn at $251.2.
Omissis …
From the Middle Kingdom, some analysts reported that China imported its highest level of wheat in more than two decades in marketing year 2020/21, with the United States supplying commercial sales of more than 3.2 MMT.
Meantime, China bought around 2 MMT of Australian wheat so far, out of total 5 MMT in sales made for the current crop which will be harvested Nov-Dec.
They have reportedly also canceled several cargoes of French wheat given the quality.
China accounts for 19% of global wheat consumption and USDA estimates that more than 50% of global wheat stocks are stored in the country.
On the other hand, China sold only 10.5k (9%) of 115k from US GM corn, while no offers were made for the 12k tonnes of Ukrainian non-GMO corn also offered during state reserves auction.
Omissis ….
Indicative delivered prices in Australian dollars per tonne were:
Barley Downs: (Nearby) $284 down $4 – (New crop) $288 down $7;
Wheat Downs: (Nearby) $332 down $10 – (New crop) $335 steady;
Sorghum Downs: (Nearby) $305 steady – (New crop) $285 steady;
Barley Melbourne: (Nearby) $280 up $2 – (New crop) $290 up $5;
Wheat Melbourne: (Nearby) $350 down $5 – (New crop) $340 steady.
(AUD/USD=> US$0.730).
Omissis …
Internationally, in September, Pakistan has been an active wheat buyer with the Trading Corporation of Pakistan (TCP) announcing multiple tenders.
Pakistan, indeed, bought more wheat than it was announced: 290k from Cargill, 120k from Falconbridge, 105k from CHS, 60k from Agrocorp at an average price of $383.5
Next tender for 640k was announced on Wednesday for Sep 29.
Wheat products account for 72% of the country’s caloric intake, with per capita wheat consumption around 124 kilograms per person annually.
Wheat is also Pakistan’s leading crop, with 80% of farmers growing the crop on around 40% of the cultivated land.
The Korea Feed Association (KFA) in South Korea purchased about 60,000 tonnes of animal feed corn in a private deal on Friday after earlier making no purchase in an international tender for 138,000 tonnes.
It was purchased by the KFA from trading house Olam at an estimated $329.90 a tonne c&f plus a $1.75 a tonne surcharge for additional port unloading.
The tender from the KFA on Friday had sought shipment in December.
The corn bought from Olam was for shipment by Dec. 30, traders said.
The private purchase was $3.09 a tonne lower than Olam’s offer in the tender.
Algeria’s state grains agency OAIC is believed to have purchased durum wheat in a tender which closed on Wednesday.
The volume bought was unclear but initial trade estimates were between 300,000 tonnes to almost 500,000 tonnes.
The durum was expected to be sourced mostly from Mexico with some consignments also from Canada.
Traders estimated prices at between $620 and $640 a tonne c&f. Another estimated the Mexican durum was bought at about $630 to $640 a tonne c&f and the Canadian at about $650 a tonne c&f.
Shipment was sought in two periods between Nov. 1-15 and Nov. 16-30.
Omissis …
Watching nex week market, is likely to be a volatile one week.
We start off per normal with the weekly Export Inspections report on Monday morning and the Crop Progress report that afternoon.
Wednesday morning, EIA will release their weekly update on ethanol production and stocks.
Traders will be busy on Thursday with the day starting out with the weekly Export Sales report.
Later that morning at 11:00 CDT, NASS will put out their quarterly Grain Stocks report, as well as the annual Small Grains Summary.
Thursday is also the last trade day for September Feeder Cattle futures and options and first notice day for October bean meal and oil.
Friday marks the first day of October and the release of the monthly Grain Crushing, Fats & Oils, and Cotton Systems reports, as well as the last trade day for October Live Cattle options.
Author: Sandro F. Puglisi
