GRAIN MARKET VIEW
August 21, 2023 – Market Focus
Good morning, Farmer Family …
Corn prices trended 1.37% higher.
Soybeans rose 1.95%.
The rest of the soy complex was also in the green with soymeal up 1.08%, and soyoil up 0.78%.
Wheat gains were variable as Chicago SRW climbed 4.03%, Kansas City HRW rose 2.80%, and Minneapolis spring wheat gained 1.90%.
Grain traders have been nervous amid escalating tensions between Russia and Ukraine which could disrupt Black Sea crop shipments.
On Friday, a Ukrainian drone smashed into a building in central Moscow after Russian air defenses shot it down, Russian officials said.
Prior attacks have targeted various infrastructures such as ports and grain silos.
Traders covered short positions in the soy and corn markets ahead of the weekend, with weather forecasts showing little rain and hotter temperatures for the rest of August in the U.S. Midwest.
The shift in weather helped both markets recovering from multi month low.
This week, traders will assess findings of the annual Pro Farmer crop tour, which will examine corn and soybean fields across the Midwest.
Meantime, USDA reported an export sale of 112,000 MT to Mexico for the new crop marketing year under the daily system, on Friday.
For the week …
Corn was up 1.05%. New crop December was helped by the Friday move, and rallied 1.18%.
Soybeans faced early selling pressure on crop condition improvement but manage to end with a 1.9% gain on the week for September. New Crop November took charge, with a 3.5% rally.
Meal was the weak spot for the complex, down 1.56%, while bean oil rallied a strong 6.49%.
The wheat complex was again a weak spot on the week, with all three exchanges closing lower.
Chicago led the way for the bears, down 2.15%; Minneapolis spring wheat was 1.5% lower; and Kansas City HRW held together a little better, with September just 0.3% in the red.
The US corn crop conditions improved another 2% to 59% gd/ex by August 13.
Ratings for soybean shot up 5% to 59% gd/ex.
The winter wheat was at 92% harvested, spring wheat was shown at 24% complete, and conditions were up 1% to 42% gd/ex.
The 2023 durum harvest was 27% complete in Montana and underway in North Dakota at 4% complete.
Of the remaining North Dakota crop, 47% was mature and 85% was turning color.
Crop conditions for the northern durum crop decreased with North Dakota now at 52% good to excellent and Montana at 18%. Overall, Montana representatives expect a good quality crop with higher protein, average test weight and – as long as the weather holds – no color issues. In North Dakota, yields are expected to be below average due to prolonged heat and dryness.
Warm, mostly dry weather with isolated rain showers is forecast.
Wednesday’s EIA report showed a 46,000 barrel per day increase in production to 1.069 million bpd during the week of August 11. Stocks were in building mode, up 555,000 barrels to 23.435 million.
The monthly NOPA crush report showed a record July crush of 173.3 million bushel, 1.81% above last year. Bean oil stocks dropped to the lowest since October at 1.53 billion lbs.
Weekly Export Sales report tallied 233,471 MT in old crop corn bookings in the week of 8/10, a 3-week high. New crop sales slipped to 704,694 MT. Soybeans export sales dropped to 93,616 MT. New crop sales soared to 1.408 MMT, the second largest this year. All wheat bookings fell from prior week’s MY high to 359,539 MT.
In this context …
Corn basis bids were steady to soft across the central U.S. after trending 5 cents lower at an Illinois river terminal and 10 cents lower at an Indiana ethanol plant.
Soybean basis bids were steady to weak after tracking 5 cents lower at an Ohio river terminal and 15 cents lower at an Ohio elevator.
Basis levels increased across all U.S. wheat classes and export regions, marking the end of weakening basis trends observed over the last several months. Recent demand from regular buyers also helped support PNW basis.
Large speculators increased their net short position in Chicago Board of Trade corn futures in the week ended Aug. 15, regulatory data released on Friday showed.
The Commodity Futures Trading Commission’s weekly commitments of traders report also showed that non-commercial traders increased their net short position in CBOT wheat and cut their net long position in soybeans.
This morning, Chicago soybeans rose, climbing to their highest levels in more than three weeks, while corn gained more ground as concerns over hot and dry weather conditions in the U.S. Midwest buoyed agricultural markets.
Wheat advanced for a second session, supported by escalating tensions in the Black Sea region.
2023-24 harvest was at 9pc complete, of which winter wheat 56pc, spring wheat 2pc, durum and barley at 12pc, canola at 1pc.
The Manitoba Agriculture, Food and Rural Development Crop Report, for the week ending 15 August, noted varied rainfall across the province with most precipitation recorded in northwest and central regions.
Harvesting of 2023-24 winter wheat reached 67 percent complete and spring wheat 5 percent complete. Spring wheat crops were seen in generally fair/good condition.
The Alberta Crop Report noted that the past 30 days featured close to average rainfall across the province, with scattered rains helping to slow down crop maturing and stabilize crop conditions.
As at 8 August, spring wheat condition was rated at 45pc good/excellent, durum at 32pc, barley at 40pc and canola at 42pc.
Brazilian farmers had harvested 77.88% of the area planted for their second corn crop, agribusiness consultancy Patria AgroNegocios said on Friday.
Brazil’s grain exporters association ANEC estimated that August corn exports will reach 9.0Mt, soybeans at 7.8Mt, and soymeal at 2.1Mt.
The Brazilian government has purchased 30,600 metric tonnes of corn to boost public food stocks, Conab said on Friday.
Buenos Aires Grain Exchange reported that for the week ending 17 August, its 2022-23 maize harvest was 90pc complete, with conditions rated 58pc fair/excellent.
2023-24 wheat planting was complete, and conditions were rated 85pc fair/excellent.
Britain’s wheat exports slowed in June but are still running well ahead of last season’s pace, customs data showed on Tuesday.
European grain market recovered on Friday after a depressed week.
Wheat prices rebounded from a one-month low.
Rapeseed closed up after earlier reaching a two-week high.
FranceAgriMer reported that as at 14 Aug, the 2023-24 common wheat harvest was 96pc complete and spring barley at 98pc.
2023-24 maize condition was rated 84pc good/excellent.
Germany’s agricultural cooperatives group DRV have kept their 2023 grain harvest estimate relatively steady at 41.9Mt, including wheat at 21.5Mt, corn at 4Mt, and barley at 10.8Mt.
Soft wheat exports from the European Union so far in the 2023/24 season had reached 3.72 million metric tons by Aug. 13, down 11% YoY.
Romanian Black Sea port shipped 8.1 mln tonnes of Ukrainian grain in January-July.
As for wheat, the strategic reserves are adequate for 4.7 months, but he intends to increase it to 6 months.
Egypt’s wheat purchases from the UAE Al Dahra deal are expected to take place starting January, the Minister said.
A new irrigation canal, “Mardin-Ceylanpınar” that runs from the Atatürk Dam in Şanlıurfa to Mardin in southeast Türkiye, will allow the region to harvest crops three times a year and boost farmers’ income, the Agriculture and Forestry Ministry said.
The Iraqi Ministry of Agriculture announced on Sunday that the country has achieved self-sufficiency in wheat production for the current year 2023, eliminating the need for wheat imports.
As of 17 Aug, Ukraine harvested 26.8 MMT of grain from 5.9 MLN HA.
Ukraine in the first half of August exported 820,000 metric tons of grain via its ports on the Danube River.
The agriculture ministry said Ukraine’s grain exports had totalled 3.3 million metric tons in the 2023/24 July-June season as of Aug. 16.
Fire in Russia’s Novorossiysk port supports wheat, despite limited impact.
The Russian wheat harvest is 50% complete, with local estimates projecting a crop of 89.5 MMT.
Sovecon estimated total Russian wheat exports in August at 4.8 – 5.1 million metric tons.
For marketing year 2023/24, Russian wheat exports have topped 6.6 MMT, a 78% increase from last year.
Russia hiked their wheat export tax to reflect the weakness in the ruble (and a strong shipping pace), going from 3,713 rubles/MT to 4,269 per.
The price of 12.5%-protein Russian wheat scheduled for free-on-board (FOB) delivery at the beginning of September was $250 per metric ton in the week ending August 11.
Tass News Agency reported that Russia is working with its partners on alternatives to the Black Sea Grain Initiative.
Kazakhstan is planning to impose a ban on road and railway imports of wheat.
China will minimize losses in agriculture sector in flood-hit areas, state broadcaster China Central Television (CCTV) said on Thursday, as China will make good use of disaster relief funds to speed up the reconstruction work.
China’s Ministry of Finance has arranged for a one-time subsidy fund of 2.4 billion yuan ($329.67 million) for fertilizers and pesticides for corn and soybeans grown in the north of the country, state media said on Monday.
India’s rain so far in August is 40% less than normal, which could threaten production potential for its summer-sown crops that includes soybeans, corn, rice and more.
Malaysian palm oil prices ticked up on Friday and closed their first weekly gain in four on robust demand, a weaker ringgit and stronger rival edible oils.
GIWA’s August crop report noted total grain yield potential had slipped by more than 1Mt in the last few weeks.
Wheat is now pegged at 9.15Mt, barley at 4.36Mt and canola at 2.51Mt.
IGC raised global consumption by 1 MMT to 805.0 MMT and decreased global ending stocks by 2.0 MMT to 261.0, a five-year low.
The inter-governmental body, put global corn production at 1.221 billion metric tons, up from a previous forecast of 1.220 billion and the prior season’s 1.160 billion.
Reflecting a lower figure for total use, combined soyabean ending stocks in 2022/23 are seen 2m t higher, at around 54m. Marginally reduced outlooks for the US and Canada lower the 2023/24 world production projection by 2m t m/m. With consumption seen unchanged from before, inventories are set to accumulate markedly. With an increased figure for China’s arrivals more than offsetting reductions elsewhere, trade is predicted 1m t higher m/m, at a record of 171m (+2%).
The purchase is financed by World Bank.
Suppliers should submit offers on a free-on-board basis for at sight payment. The deadline for offers is Aug. 23.
The corn will be used as feed, GASC said.
Closing date August 23, 2023.
This morning oil prices rose, as global supply is tightening with lower exports from Saudi Arabia and Russia.
The Nasdaq has fallen 7.2% in the past three weeks, and the S&P 500 4.6%.
This morning, the dollar edged up to 145.38 yen from Friday’s 145.32 yen.
The euro rose to $1.0880 from $1.0878.