US farm markets sold off on Monday.
Corn prices slashed by 3.26%.
Soybean prices tumbled 4.36%.
The rest of the soy complex was also in the red, with soymeal falling 2.26%, while soyoil futures eroded 3.85% lower.
Wheats dropped sharply, with Chicago SRW falling 5.47%, Kansas City HRW tumbling 5.08%, and Minneapolis spring wheat losing 4.49%.
Chicago soybeans and corn fell, pressured by expectations of cooler, wetter weather across the U.S. Midwest in August.
Rains will be highly variable this week, with some fields gathering as much as 2.5” or more and others remaining completely dry between Tuesday and Friday.
Further out, NOAA’s new 8-to-14-day outlook predicts seasonally wet weather will be probable for the entire central U.S. between August 7 and August 13, with cooler-than-normal temperatures likely to move from the Northern and Central Plains into the upper Midwest and western Corn Belt next week.
Thus, cooler temperatures and increased rain forecasts, will bolster crop development, adding more pressure to markets.
Wheat prices dropped, despite worries over Black Sea supplies, as no new major Russian attacks on Ukrainian grain infrastructure were reported over the weekend.
Also, the ongoing seasonal harvest, weighed on wheat prices.
On the export side, lingering demand concerns continued.
Weekly Inspections data indeed showed 522,927 MT of corn was shipped during the week that ended 7/27.
That was up 193k MT for the week, but down from 905k MT during the same week last year.
USDA also added 53.6k MT to past reports, which left the season’s total at 34.809 MMT.
That remains 33% behind last year’s pace.
As for soybean, the report had 329,518 MT of soybean exports for the week that ended 7/27.
That was up from 288k MT last week but below the 595k MT shipped during the same week last year.
The full season total reached 50.512 MMT, still a 5.9% lag from last year’s pace.
As for wheat, data indicated 581,278 MT of wheat was shipped during the week that ended 7/27.
That compared to 361k MT last week and 282k MT during the same week last year.
Of the shipments, USDA marked 245k MT were SRW with 185k as HRS.
China was the top destination.
However, the season’s total export still lags last year by 4.8% with 2.74 MMT shipped.
Thus, spillover weakness from other commodities, made an additional down pressure.
Separately, the USDA announced a large export sale for 132k MT of new crop soybeans to China.
Also, private exporters reported a 183,300 MT sale of soymeal to the Philippines for 23/24 delivery.
Ahead of a monthly USDA report, U.S. soy processors likely crushed 5.265 million short tons of soybeans, or 175.5 million bushels, in June, according to some analysts.
If the estimate is realized, it would be down from the 189.3 million bushels crushed in May but up from the 174.1 million bushels processed in June 2022.
It would also be the smallest monthly crush since September.
However, U.S. soyoil stocks as of June 30 were estimated to have thinned to 2.207 billion pounds.
If realized, the oil stocks would be down from the 2.386 billion pounds at the end of May and below stocks totaling 2.316 billion pounds at the end of June 2022.
Members of the National Oilseed Processors Association (NOPA), accounting for about 95% of U.S. soybean crushings, processed 165.023 million bushels of soybeans last month, a nine-month low.
The total was down from the 177.915 million bushels processed by NOPA members in May but up slightly from the 164.677 million bushels crushed by NOPA members in June 2022.
Soyoil supplies held by NOPA members as of June dipped to a seven-month low of 1.690 billion pounds, a nearly 10% drop from the prior month.
The USDA is due to release its monthly fats and oils report today, August 1, in the afternoon.
Meantime, traders locked end month profits in all ag commodity markets, determining a funds liquidation.
To note durum wheat prices skyrocketed, bucking the overall trend, but the market is now in highly overbought territory.
In this context, corn basis bids were steady to soft across the central U.S. after fading 1 to 20 cents lower at four Midwestern locations.
Soybean basis bids were mostly steady across the central U.S., but did trend 5 cents higher at an Indiana processor and 10 cents lower at an Iowa processor.
Commodity funds were net sellers of CBOT soybeans, wheat, corn, soyoil and soymeal futures contracts.
After the sessions close, USDA’s weekly Crop Progress report had corn crop conditions at 55% good/ex, which was down 2ppts from last week with 1% point to each.
Soybean crop conditions were at 52%, also down two percentage points.
Spring wheat, the bulk of which is grown in North Dakota, suffered the most, with good-to-excellent ratings dropping to 42% from 48% a week earlier.
Winter wheat harvest advanced 12% points to 80% complete.
The average pace would be 83% finished by 7/30.
As for spring wheat, USDA reported harvest began last week with enough nationally for 2% complete as of 7/30.
The average pace would be 5% finished.
As a result, on this morning, Chicago corn and soybean prices rose.
Wheat also rose for the first time in five sessions.
Notably, the most-active corn contract on the Chicago Board of Trade (CBOT) was up 0.2% at $5.14 a bushel, as of 03:39 GMT, soybeans added 0.6% to $13.39-1/2 a bushel.
Wheat climbed 0.8% to $6.70-3/4 a bushel.
The Alberta Crop Report noted recent hot weather had a varied impact on crop development, with fields progressing well where moisture levels were already adequate.
In contrast, some crops have been stressed where moisture levels were termed low.
As at 25 Jul, spring wheat condition rated at 45pc good/excellent, down from 46pc two weeks ago and 80pc last year.
Durum was 30pc (34pc previous fortnight, 48pc previous year), barley at 42pc (43pc, 73pc) and canola at 42pc (44pc, 69pc).
Alberta Agriculture estimates the average dryland yield of 38.9 bushels/acre for spring wheat (46.1 bpa), 54.5 bpa for barley (60 bpa), 77.4 bpa for oats (73.7 bpa), 32.2 bpa for canola (37.6 bpa) and 34.5 bpa for dry peas (38.3 bpa), with the five-year average in brackets.
The province has estimated the dryland yield index at 85, or 15% below the normal five-year average.
One year ago, this index was reported at 114 for this week, while during the 2021 drought year, this index was reported at 57.8.
The current index lands at the mid-point of the two previous years.
While the July estimate from Alberta Agriculture has tended to be extremely close to the final estimates released for canola and peas, this is not the case for the cereal grains, where yields tend to grow larger.
A number of reasons may be behind this tendency, including:
1) a tendency for a conservative estimate released in July;
2) the inclusion of irrigated acres when assessed by Statistics Canada;
3) a reduction in acres intended to be harvested, such as in 2021 when the poorest yielding cereal crop acres may have been fed or grazed;
4) a late-season improvement in weather that leads to improved prospects for the crop.
Brazilian farmers had harvested 55% of the area planted for their second corn crop in the center-south region by the end of last Thursday, consultancy AgRural said on Monday, up 8 percentage points from the previous week.
Work in the fields still lags the previous season, the consultancy’s statement added, when at the same time 73% of Brazilian corn fields had been reaped.
AgRural forecasts the 2023 crop to reach 102.9 million metric tons.
“Yield reports have been excellent in all states and reinforce the expectations of a bumper harvest,” AgRural said.
Safras & Mercado is projecting next year’s Brazilian soybean crop at another new record high at 171.5 MMT.
USDA used 165 MMT in July.
Some industry analysts are less aggressive on their acreage expectations, due to the strengthening of the Real vs. the dollar.
Safras had Brazil’s 2024 soy demand at 99 MMT exports (+4 MMT), crush at 55 MMT (+1.6), and soymeal production at 42.3 MMT (+3%).
In Argentina, the country has a special peso exchange rate in effect for export sales, in order to capture export taxes also on corn.
About 2.4 MMT has been sold under the program to date, with a target of 4-5 MMT by the end of August.
Meantime, a strike by grain inspectors calling for higher wages has affected shipments at river ports in the Argentine transport hub of Rosario, the local chamber of Port and Maritime Activities said.
In Europe grain and oilseed markets fell sharply on US drop, and Russia competition.
As shipments continue from ports on the Danube and Ukraine, and from the Sea of Azov in Russia, the price of European wheat is giving in to downward pressure on lack of export competitiveness.
European wheat prices in Paris indeed fell more than 3% at 240 euros.
Key EU customer Algeria on Monday had issued the first major wheat import tender from a big Middle East/North African buyer since Russia left Ukraine’s safe shipping deal.
However, the bullish impact of the tender was tempered by disappointment that Algeria was looking for October shipment, skipping the September shipment position.
Algeria’s last large purchase was for August shipment with only a minor purchase spoken of for September.
Also, with an initial price of around $276/t CIF from optional sources, most of supplies are likely to come from the Black Sea, especially from Russia, Romania and Bulgaria.
Meantime, Morocco has modified its wheat import subsidy scheme to offer the same rate for all supply origins, a step that traders say could encourage some shipments from top exporter Russia.
However, repeated rain is delaying the early stages of Germany’s wheat harvest, although rain has raised water levels on the Rhine in Germany, with much of it back or close to normal levels, allowing cargo vessels to sail fully loaded on the river.
In the oilseed sector, strong selling pressure on US soybeans from funds has also impacted European rapeseed.
However, crop consultancy Strategie Grains lowered its forecast for this year’s oilseed harvests in the European Union by a total of over 1 million metric tons, mainly to take account of damage caused by scorching weather in several parts the bloc.
In its latest monthly forecasts, Strategie Grains estimated the production of rapeseed at 19.3 million metric tons this year, down from 19.8 million tons forecast early July and 20.4 million in early June.
This now put this year’s rapeseed crop 0.7% below the 19.4 million tons harvested last year.
Rapeseed yields are below expectations, especially in France and Germany.
In Poland, the harvest was just starting at the end of July but here too, expected yields are revised lower.
As for sunflower, Strategie Grains cut its outlook for this year’s harvest to 10.5 million tons from 10.9 million tons earlier, still 13% above 2022.
The consultancy lowered its monthly soybean production forecast by 140,000 tons to 2.9 million tons, still 15.5% above 2022.
The risks of drought stress for both crops are high and have already affected yealds, notably in Bulgaria, eastern Romania, Slovakia, and Italy.
Morocco has modified its wheat import subsidy scheme to offer the same rate for all supply origins, a step that traders say could encourage some shipments from top exporter Russia.
State grains agency ONICL indeed said in a notice published on its website that from Aug. 1 subsidies will be based on the cheapest out of German, Argentine, French and U.S. wheat prices.
The document, however, did not mention Russian and Ukrainian supplies, which previously had been attributed a lower subsidy rate compared with other origins, but traders said this meant that wheat from the Black Sea countries would now receive the same subsidy as other origins.
Morocco is currently offering subsidies to import 2.5 million metric tons of wheat for the July-September period after its local harvest was affected by low rainfall for a second year.
According to some market rumors, Turkish traders are filing export registration for approximately 1.3 mln ton of durum wheat from Turkey, by Turkish origin.
Durum wheat prices significantly increased at local Turkish market.
Approximate FOB price requested was around 450 USD per Mt.
However, there are no buyers for this high level price.
Ukraine’s Ag Ministry reported 11 MMT of grain had been harvested for 23/24 to date, including 8.06 MMT of wheat.
Meantime, Ukraine’s grain exports for the first month of the new season rose to 2.16 million metric tons as of July 31 from 1.61 million in July 2022, Agriculture Ministry data showed on Monday.
The volume included 1.11 million tons of corn, 758,000 tons of wheat and 285,000 tons of barley.
The ministry said Ukraine had exported 1.1 million tons of corn, 361,000 tons of wheat and 142,000 tons of barley in July, 2022.
Exports for the entire 2022/23 season were almost 49 million tons, exceeding the previous season’s 48.4 million tons.
Meantime, Ukraine and Croatia have agreed on the possibility of using Croatian ports on the Danube and the Adriatic Sea for the export of Ukrainian grain, Foreign Minister Dmytro Kuleba said after talks with his Croatian counterpart on Monday.
The wheat harvesting pace is accelerating on drier weather.
According to Sovecon, the wheat harvest as of July 26 totalled 27.1 million tons (versus 31.8 million tons а year earlier) from 6.7 million hectares (versus 7.3 million hectares), with an average yield of 4.04 mt/ha (4.36 mt/ha).
This accounts for 22% of the total area.
There is a lot of chatter about low new wheat crop quality.
Surely it was negatively impacted by the recent rains and also it seems that many farmers cut the fertilizer application amid cost cutting considerations.
However, SovEcon estimates 2023 output at 87.1 MMT, up from their 86.8 MMT prior estimate citing higher than expected yields.
Meantime, Sovecon estimated total Russian wheat exports in July at 4.4 million tons, compared to 2.5 million tons in July 2022 and a historic average of 2.8 million tons for the month of July.
Russian wheat exports have been at record highs in recent months due to a bumper 2022 crop and large stocks.
Notably, Russia exported 930,000 tons of grain last week compared to 1.2 million tons a week earlier, including 900,000 tons of wheat compared to 1.1 million tons a week earlier.
In this context, according to the IKAR, the price of 12.5% protein Russian wheat scheduled for free-on-board (FOB) delivery in the second half of August was $241 per ton last week, down from $242 per ton a week earlier.
As for the other products, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 13,900 rbls/t, +300 rbls/t (Sovecon).
Price for sunflower seeds was at 26,325 rbls/t, +1,925 rbls/t (Sovecon).
Price for domestic sunflower oil was at 76,175 rbls/t, +4,000 rbls/t (Sovecon).
Price for domestic soybeans was at 34,600 rbls/t, +600 rbls/t (Sovecon).
Export price for sunflower oil was at $930/t, +$45 (IKAR).
Price for white sugar, Russia’s south was at $688.74/t, -$6.91 (IKAR).
Meantime, Russia is indicating that buyers of their steeply discounted wheat will have to pay in new Russian digital rubles.
Aussie local markets kicked off the week steady.
Monday’s local current crop wheat grower bids were down a couple of bucks, while new crop wheat values were largely unchanged.
Barley continued its wide bid offer spreads through the trade, with little bits of current crop traded in Victoria here and there.
Canola values lost some ground with bids in WA down $10/t.
On the weather side, July rainfall across the majority of WA’s cropping belt was very much below average, apart from the far south which received below average rainfall.
SA, Vic and most cropping regions in NSW also received below average July rainfall.
Starting August, the forecast has more showers (5-15mm) this week across most cropping regions which will keep things ticking over but a decent widespread rainfall event is needed in the coming weeks to keep current yield potential from sliding.