Yesterday, US corn prices ended higher, soybean closed lower, wheat contracts made dramatic gains.
Corn prices received a little help from the wheat complex this week, with December futures rallying 2.8% from last Friday.
Soybean prices were not as lucky as the grains this week, as nearby November contract took a 3% loss.
Soymeal was weaker again with a 3.3% drop.
Bean oil held nicely, with a 1.1% rally.
Wheat markets were another double digits higher.
Indeed, KC was the leader to the upside, posting a 5.52% gain.
CBOT was up 4.35%.
MPLS wasn’t as stout but still managed a 1.42% rally.
On macro markets, oil settled above $78 a barrel on Friday, just shy of a three-year high reached earlier this week, on expectations that OPEC ministers will maintain a steady pace in raising supply.
Thus Brent crude rose 97 cents, or 1.2%, to settle at $79.13 in its fourth weekly rise.
U.S. West Texas Intermediate (WTI) rose 85 cents to settle at $75.72 in a sixth week of gains.
Brent has risen over 50% this year and reached a three-year high of $80.75 on Tuesday.
For the week, Brent futures were up around 1,38% and WTI crude was up 2,35%, natural gas prices were up about 7%
Wednesday’s weekly EIA report showed that U.S. crude oil inventories as of Sep 24 were -7.2% below the seasonal 5-year average, gasoline inventories were -2.7% below the 5-year average, and distillate inventories were -12.2% below the 5-year average.
Crude has carry-over support from Thursday on expectations for strong Chinese energy demand after China Vice Premier Han Zheng ordered top state-owned energy companies to secure supplies for the approaching winter at all costs.
Concern about tighter global crude supplies is bullish for prices.
Meantime, U.S. crude oil production in the week ended Sep 24 rose +4.7% w/w to 11.1 million bpd, which was -2.0 million bpd (-15.3%) below the Feb-2020 record-high of 13.1 million bpd, that limited gains.
But Friday’s U.S. economic data was bullish for energy demand and crude prices.
Indeed, U.S. Aug personal spending rose +0.8% m/m, stronger than expectations of +0.7% m/m.
Also, the Sep ISM manufacturing index unexpectedly rose +1.2 to a 6-month high of 61.1, stronger than expectations of a decline to 59.5.
In addition, the University of Michigan U.S. Sep consumer sentiment rose +1.8 to 72.8, stronger than expectations of no change at 71.0.
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 12% on the week to end at 5,202.
On the financial side, U.S. stock indexes on Friday recovered from early losses and settled moderately higher, but not by enough to keep the stock market from its worst week since the winter.
Thus, on Friday the S&P 500 Index closed up +1.15% , the Dow Jones Industrials Index closed up +1.43%, and the Nasdaq 100 Index closed up +0.70%.
The S&P 500 and Nasdaq 100 rebounded from 2-1/4 month lows, and the Dow Jones Industrials recovered from a 1-1/2 week low.
Better-than-expected U.S. economic data on Friday was supportive for stocks, while signs of faster inflation were a bearish factor for stocks.
For the week the Dow Jones Industrial Average fell 472 points, or 1.35%, to 34,326, the S&P 500 lost 98 points, or 2.19%, to 4,357 and the Nasdaq Composite dropped 481 points, or 3.19%, to 14,566.
On Friday, the yield on the 10-year US Treasury fell back to 1.46% from 1.52% late Thursday, but that’s still well above its perch of 1.32% from a week and a half ago.
The U.S. Dollar Index increased from last week’s 93.36 to close at 94.04.
Coming back on grains market, weekend rains will deliver 0.75” or more in a band stretching from Texas to Indiana until Monday, according to the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts some seasonally wet weather in store for the Northern Plains and upper Midwest between October 8 and October 14, with warmer-than-normal conditions likely for most of the country.
Meantime, on Monday US weekly crop progress figures have showed corn 18 per cent (pc) harvested, beans 16pc and sorghum/milo 31pc.
US row crop yields remained mixed.
There are more disappointing results from drought stressed areas but few are any real surprise.
General sentiment appears to be starting to swing back towards a lower corn yield, but that can change quickly as more fields come off.
According to USDA, U.S. farmers have now planted 34% of the total intended winter wheat area for harvest in 2022, against 21% last week and 2 points ahead of the 5-year average.
With final HRS and durum data in this week, there will be no more weekly wheat harvest report for the current year.
The overall average HRS grade is U.S. No. 1 Dark Northern Spring (DNS) and the overall average durum grade is U.S. No. 1 Hard Amber Durum (1 HAD).
About durum, compared to last week, 1000 kernel weight increased from 42.3 to 42.8 grams, total defects increased from 1.1% to 1.4% and HVAC decreased from 92.3 to 87.6%.
Compared to last year, there was an overall increase in grain protein from 15.5 to 17.6% (12% mb), decrease in 1000 kerel weight from 46.6 to 42.8 grams and decrease in test weight from 61.9 to 60.2 lb/bu.
Thus, the overall grade remains U.S. No. 1 Hard Amber Durum (HAD).
Thursday’s Grain Stocks report showed September 1 corn stocks were tallied at 1.236 bbu, which was down 35.6% from last year.
However, that was 81 mbu above the average trade estimate.
Ditto for soybean.
The report showed that September 1 stocks of soybeans were 256 mbu, a 51.3% drop from last year but 82 mbu above the average trade estimate.
In add, NASS raised 2020 production by 81 mbu keeping the residual use from being a negative number.
Meantime, the Small Grains Report, showed U.S. wheat supplies at their lowest levels in 14 years.
Indeed, the report showed U.S. farmers produced 44.8 million metric tons (MMT), or 1.645 billion bushels of wheat in 2021, down from 49.7 MMT (1.826 billion bushels) last year, down 52 mbu from August and 35 mbu below trade estimates.
Of that cut, 42 mbu was in winter wheat, with 12 mbu from spring.
That helped to tighten first quarter stocks on September 1 to 1.78 bbu (48.4 MMT), nearly 72 mbu below the average analyst guess and the lowest September figure since 2007.
On the other hand, the monthly Grain Crushings report showed August’s ethanol corn draw was 417.317 mbu.
That was up from 411.11 mbu (1.51% larger) last year but was otherwise the lowest corn grind since April.
USDA revised July’s corn use lower for a MY total of 5.031 billion bushels.
That was about 3.5 mbu short of USDA’s September WASDE forecast.
The monthly update reported DDGS production at 1.82m tons.
Meantime, USDA’s monthly Fats and Oils update showed soybean processors crushed 168.24 mbu of beans in August.
That was down 3.7% from last year, taking the 2020/21 MY total to 2.140 bbu, as USDA revised July’s crush lower to 166.3 mbu.
That was just below the average trade guess of 169, but within the range of estimates.
That matched USDA’s September WASDE forecast.
CAIR reported soybean oil stocks at 2.183b lbs, which was above the expected 2.128.
The monthly update implied an 11.83 lb/bu soy oil yield and a 44.32 lb/bu meal yield.
US weekly corn export sales continue to remain light at 370,400 MT for the week ending 9/23.
Outstanding sales are now just 9% larger than year ago.
Total commitments are now 40% of the USDA projection, now just 10% above the 5-year average buying pace.
Soybean export sales through September 23 were tallied at 1.094 MMT according to Export Sales data.
That back up from the previous week and take total export commitments to 24.286 MMT.
US Exporters have now booked 43% of the USDA estimate, which is now 2% behind the average pace.
Last year’s 63% does skew that average pace higher.
Outstanding sales are now 31% below LY, which had a large forward book coming into the MY.
Thursday’s Export Sales report showed wheat bookings backing off again to 290,100 MT for the week ending September 23.
That was down 19% from last week’s 355,900 (MT) but within trade expectations of 250,000 MT to 550,000 MT.
Total commitments for wheat exports are now 11.198 MMT, which is 47% of the USDA forecast vs. the 53% average pace for this date, and 21% 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.
Friday’s weekly Commitment of Traders report indicated that managed money spec funds increased their net long in corn futures and options by 30,391 during the week ending September 28.
That took them to a net long 244,741 contracts by Tuesday.
About soybean, added just 9,610 contracts to their soybean net long positions in the week ending 9/28.
They took that smallest position in more than a year back up to 59,311 contracts as of Tuesday.
About wheat, report showed spec funds in CBT wheat adding to their net short position by 4,324 contracts for the week ending 9/28.
That took them to net short 9,815 contracts.
In KC HRW, they added a total of 7,093 contracts to their net long for the week, to 46,127 contracts.
In this context, all wheat futures were up for a third week in a row.
Indeed, CBOT soft red winter (SRW) futures were up 32 cents to close at $7.55/bu.
KCBT hard red winter (HRW) futures were up 40 cents to end at $7.59/bu.
MGE hard red spring (HRS) futures gained 13 cents to close at $9.29/bu.
CBOT corn futures were up 15 cents to $5.26/bu.
CBOT soybean futures were down 39 cents to close at $12.85/bu.
Meantime, corn basis bids were steady to mixed Friday, moving as much as 8 cents higher at an Illinois ethanol plant and as much as 8 cents lower at an Illinois river terminal.
Soybean basis bids fell 1 to 15 cents lower across four Midwestern locations while holding steady elsewhere across the central U.S.
Wheat basis bids were down in both the Gulf and Pacific Northwest (PNW) this week.
Indeed, as of September 27, US HRS for Oct. ’21 was valued at $413.00/ mt FOB PNW (substantially unchanged from last week).
FOB Gulf HRW 11/12.5 pro is valued at $343.60/mt (down $2.2/mt from last week).
Softer rail rates, sluggish demand, and high futures prices were the main factors behind the slight reductions.
From Canada, (Omissis …).
In this context, as of September 27, Canadian wheat prices for FOB delivery were (Cdn$/mt):
– for the N1 class CWRS 13.5% – $495.64, up $4.15 per tonne;
– for the N2 class CWRS 13.0% – $486.36, up $1.94/t;
– for the N3 CWRS – $415.36, up $3.98 ;
– for the N1 CWAD – $744.86, down $11.46 per tonne.
(1USD=Cnd$1.268).
From South America (Omissis ..).
In this context, as of September 30, Argentina Wheat Grade 2 export price, (Up River) was at $300, up $2 from last week.
Argentina corn feed was up $2 for the week, closing at $247.
Brazilian corn feed (Paranagua) was at $267, up $5 from past week.
Argentina barley feed, was unchanged at $265.
Argentina soybean shedded 9$ to close at $544.
Brazilian soybean tumbled $22 finishing the week at $535.
On European market (Omissis …).
Matif December wheat futures jumped 11 euros from last week, closing at €264.25/t.
Matif corn November futures gained 13 euros to close the week at €236.5/t.
Matif rapeseed November futures, bounced again by 24,75 euros, ending the week at €644.25/t.
Nov-21 UK feed wheat futures rosed £8.75, closing at £202.75/t.
Meantime, as of September 30, FOB prices in US dollar for French wheat with 11.5% protein and Oct. delivery, were at $ 302.76/mt, up $3.93/mt from last week.
French durum wheat, closed at $481.40, up $0.92 from last week.
Corn delivered Bordeaux Spot – July 2021 basis was at $274.92 per tonne, up $5.39 from last week.
FOB Rhin Spot – July 2021 basis was at $278.4 per tonne, up $4.18 week on week.
Feed barley delivered Rouen – July 2021 basis was at 276.08$/t, up $1.86.
Malting barley FOB Creil Spot – July 2021 basis was at $345.68 per tonne, up 11.69$ from past week.
Rapessed FOB Moselle Spot – Flat – 2021 harvest was at 741.24$/ton, up $22.87 compared to prior week.
Standard sunseed delivered St Nazaire Spot – Flat – 2021 harvest was down $0.86 from last week at $655.4 per tonne.
As of September 27, German wheat with 12.5% protein for Oct. delivery, closed at $315.80, up 1.30/mt.
Baltic wheat with 12.5% protein was at $314.60 /mt, up $1.90/mt.
(EUR/USD=> US$1.1600).
From the Black Sea basin, (Omissis …).
From October 6, the export duty on Russian wheat will be increased to 57.8 USD/t, from 53.5 USD/t the week ago.
Additionally, the export duty on barley also will grow to 43.1 USD/t from 35.3 USD/t last week.
At the same time, the tariff for corn will decrease to 45.2 USD/t from 46.3 USD/t of prior week.
Indicative prices are 282.6 USD/t for wheat, for barley 246,6 USD/t and for corn 249,7 USD/t.
From Australia, (Omissis …).
Indicative delivered prices in Australian dollars per tonne were:
Barley Downs: (Nearby) $285 up $1 – (New crop) $295 down $7;
Wheat Downs: (Nearby) $350 up $18 – (New crop) $332 down $3;
Sorghum Downs: (Nearby) $305 steady – (New crop) $285 steady;
Barley Melbourne: (Nearby) $282 up $2 – (New crop) $290 steady;
Wheat Melbourne: (Nearby) $350 steady – (New crop) $340 steady.
(AUD/USD=> US$0.723).
Internationally, (Omissis …).
TCP Pakistan confirmed purchase of 550k mt of milling wheat at 377 usd as following:
Solaris 275K; SSOE 110K; Aston 110K; CHS 55K.
Tunisia’s state grains agency is thought to have purchased 100,000 tonnes of soft wheat and 50,000 tonnes of animal feed barley in an international tender on this morning.
C&F basis were as below:
For soft wheat, Aston (P1 – 25K) at 364 usd;
Graincorp (P2 – 25K) at 359.85 usd;
Casillo (P3 – 25K) at 366.89 usd and another (P3 – 25K) at 367.89usd.
For barley, Cofco (P1 – 25K) at 319.05 usd;
Al Ghurair (P2 – 25K) at 329.50 usd.
Bangladesh has decided to import 100,000 tonnes of wheat from Russia to meet the growing demand for the staple food in the country.
Jordan had 5 participants in this week’s 120000 tonnes wheat tender:
– Dolj; – Ameropa; – Cargill; – CHS; – Nibulon.
MIT made no purchase and cancelled its tender.
Taiwan’s MFIG purchasing group bought about 65,000 tonnes of animal feed corn to expected to be sourced from Brazil in an international tender.
The corn was purchased in a single consignment, all at an estimated premium of 292.00 U.S. cents a bushel c&f over the Chicago March 2022 corn contract CH2.
Seller was believed to be trading house Viterra.
Algeria OAIC started buying optional origin milling wheat up to 600,000t, but the talk is that it was mostly French origin with OAIC accepting some lower grade specs to get it bought.
Prices were pegged in the mid $360s to $370s levels per tonne.
A United Nations agency has issued an international tender to purchase about 200,000 tonnes of milling wheat on behalf of the Ethiopian government.
The deadline for submission of price offers in the tender is Oct. 8.
Omissis …
Watching next week market, the first full week of October starts off with the weekly Export Inspections report on Monday morning and with the Crop Progress report released in the afternoon.
On Tuesday, Census will release trade data from August.
EIA data for ethanol production and stocks will be released on Wednesday.
Fast forward to Thursday and FAS will put out their weekly Export Sales report.
Author: Sandro F. Puglisi
