China, the number one buyer in the grains market, stepped in again yesterday and bought 2.1 million metric tons (mmt) of U.S. corn , the second largest daily purchase in history.
China’s purchase was in addition to the purchases made earlier this week , putting weekly totals at 5.848 mmt to China and 0.316 mmt to the unknown category.
That brings total US weekly corn sales (that we know of) to 6.1644 mmt.
Other sales maybe will show up in the next week’s weekly report, if they were below the 100,000 tonne.
So, Chicago corn prices moved higher again ending more than 2% higher, anchored by ample optimism over rising Chinese demand and a slowdown for the South American harvest amid dwindling domestic stocks.
Overnight gains have prices positioned around 8% higher this week, making it possible to see the biggest weekly gain since June 2013.
Also soybean prices closed out a very volatile week, trending nearly 1%, thanks in part to spillover strength from corn.
Consequently, also wheat prices tacked on moderate gains, following corn and soybean prices higher, with a round of technical buying that lifted most contracts more than 2% higher.
The confirmation on Jan. 26 that the Russian government increased its wheat export tax (see below), added more support at all wheat futures prices week-over-week, US futures in particulary.
In this context, CBOT soft red winter (SRW) futures jumped 28 cents on the week to close at $6.63/bu.
KCBT hard red winter (HRW) futures increased 25 cents to end at $6.38/bu.
MGE hard red spring (HRS) futures added 21 cents to close at $6.34/bu.
CBOT corn futures jumped 46 cents on the week to end at $5.47/bu.
CBOT soybean futures gained 58 cents to close at $13.70.
Prices remain below but near multi year highs captured earlier this month.
We must note, however, that US wheat market have seen minimize the results, by the increas of farmer sell following the jump in futures prices pressured Pacific Northwest (PNW) HRS basis for March and April deliveries.
Indeed, increased commercial selling by US elevators and reduced export demand pressured also Gulf HRW export basis for nearby and deferred deliveries.
Looking at week’s US wheat commercial sales of 380,000 metric tons (MT) for delivery in 2020/21, we note were up 15% from last week’s 330,000 MT and in line with trade expectations of 250,000 MT to 600,000 MT.
Year-to-date US wheat commercial sales now total 21.8 million metric tons (MMT), 4% ahead of last year’s pace.
US Ag forecasts total U.S. wheat exports will reach 26.8 MMT in 2020/21, 2% ahead of last year, if realized.
However, Canada’s Ministry of Agriculture predicts the country’s wheat production will drop 4% in 2021/22 on lower expected yield and reduced planted area.
Total Canadian wheat exports are forecast to fall 5% from 2020/21 to 20.0 MMT.
As to oil seed complex, for it’a part, soybean growing conditions continue to deteriorate in Argentina.
The Buenos Aires Stock Exchange, indeed, has reduced its ratings from “good to excellent” by six points to 22%, a contraction of 37 points compared to last year.
Soy ratings have been reduced by three points, to 18%, down 48 points compared to 2020!
The Buenos Aires Stock Exchange, in add, has reduced its estimate of harvest by 500 kt this year, to 46 Mt, against 49.6 Mt last year.
On Euronext, however, wheat prices retreated despite a tight international market, and only corn could benefited from the new massive US sale to China.
European rapeseed, meanwhile, benefited from the sharp rebound in palm prices, after Indonesia announced a sharp increase in its export taxes throughout February.
So, European prices have again evolved in dispersed order this Friday.
Wheat in particular fell sharply despite the rebound in US prices and fundamentals still so tight mainly as Russian exporters, have notably accelerated their loading rate last week (1.3 Mt), in anticipation of the Russian export tax which will come into force in two weeks, doing pression on market and also as traders waited for news of top buyer Egypt to reenter the market.
Russian consultancy agency, has upped its estimates for the country’s 2020/21 wheat exports to 1.393 billion bushels, based on its current export pace.
In the meantime, the European Commission (EC) increased its European wheat export forecast between December and January from 24.0 MMT to 26.0 MMT on reduced domestic feed wheat estimates.
And also US Ag forecasts confirm that the European Union (EU) will export 26.5 MMT in 2020/21.
However this meens that EU wheat export sals will be down 31% on the year and 10% less than the 5-year average.
From Black Sea area, Reuters reported total Ukrainian wheat exports as of Jan. 29 totaled 13.0 MMT, down significantly from last year on reduced production.
The US AG forecasts Ukraine will export 17.5 MMT of wheat in 2020/21, down 17% from last year and 3% less than the 5-year average.
So, Euronext Friday session closed with a tonne of common wheat fell by 2,75 euros on the March contract to 227 euros, and by 1,00 euros on the May contract to 223.25 euros.
A tonne of corn, it increased by 75 cents on the March deadline to 216,50 euros, and 1,00 euros on the June deadline to 212.00 euros.
A tonne of rapeseed rose by 5 euros on the May deadline to 439.75 euros and by 1.00 euros on the August deadline to 401,75 euros.
On Wall St., the Dow tumbled 527 points lower in afternoon trading to 30,076 after skittish investors engaged in a selloff after this week’s GameStop fiasco, which some see as a sign that a market bubble is about to pop.
Energy prices trended slightly into the red, with crude oil and diesel each sliding 0.1% lower.
Gasoline saw more severe cuts, losing about 0.75% this afternoon. The U.S. Dollar firmed slightly.
The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials like grains, coal and iron ore, fell 19% on the week to close at 1,470.
The U.S. Dollar Index increased from last week’s 90.24 to end at 90.54.
