The US Department of Agriculture announced on Wednesday evening a 2021 wheat harvest sufficient to absorb the increase in global consumption, while the US corn harvest is expected at 381 Mt, close to the record set in 2016.
Despite past weekend recovery, notable climatic improvements in Europe and the US are reassuring and therefore have put pressure on all prices trend.
Indeed, a big sell-off last Thursday, have seen the traders slashed corn prices dramatically.
That pattern continued also Friday, with corn prices tumbling around 4.5% lower by the close.
Also wheat prices were in the red for much of the Friday session but pulled ahead to close slightly in the green on the close.
Soybean contracts were mixed on Friday session, amid a round of uneven maneuvering.
Particulary, Chicago wheat was up 6.25usc/bu, to settle at 707.25usc/bu.
Kansas was a push.
Minni finished the red side of unchanged.
Corn was down 30usc/bu to close at 643.75usc/bu.
Beans rallied 7usc/bu to finish the week at 1591usc/bu with meal quoted slightly lower to close at USD$418.5/st.
Canola finished in the black, Matif rapeseed up EUR$15/mt and WCE was up CAD$14.50/mt.
It was the last session that May contracts were on the board, last Friday.
Energy futures, in contrast, trended higher, with crude oil was up nearly 2.5%.
Diesel rosed 1.75%.
Gasoline was up more than 1.25%.
Inflation fears still continuing to lurk in the background.
However, after seeing sharp cuts earlier past week, on Wall St., the Dow moved higher again rising of 360 points, trading to 34,382, as a very volatile week drawed to a close.
The U.S. Dollar, meantime, softened moderately.
Coming back on grains market, corn prices spilled into the red for three consecutive session, as traders continued to liquidate a portion of their net long position.
That left prices dramatically lower again on Friday and down more than 80 cents on the week, despite demand has not let up for corn market.
Indeed, China flashed another 1.36 million tonnes (Mt) which pegs their new crop shoping list at 5.3Mt including the early sales in the unknown bucket.
Soybean prices, on the hother hand, showed some recovery after a mixed round of technical maneuvering last Friday in a sometimes choppy session.
Wheat prices stumbled early in Friday’s session but recovered back into the green by the close, snapping up small to moderate gains during the session, but close week’s balance in to red.
In fact, wheat is still finding some support in the dry conditions which are for now particularly prevalent in the south of the country.
Meantime, IHS Markit Agribusiness has estimated 2021 U.S. corn plantings at 96.849 million acres.
That’s up from the group’s March estimates of 94.294 million acres.
Based on USDA’s yield this pretty much solves any corn problem – if it’s true.
However, if this increase in acreage were to prove to be to the detriment of soybeans in part, that will allow the latter’s prices to remain at high levels prices.
Conversely, they tightened the spring wheat acres which has the opposite effect on the balance sheet.
Indeed, IHS Markit Agribusiness expects spring wheat plantings to reach 11.610 million acres this year, which would be a year-over-year reduction of 640 million acres, if realized.
About soybean, IHS Markit Agribusiness is now projecting 2021 U.S. soybean plantings at 88.485 million acres, down moderately from its March estimate of 89.730 million acres.
That’s still above USDA’s March 31 estimate of 87.6 million acres it made in this year’s Prospective Plantings report.
Meantime, barge traffic faced significant delays on the Mississippi River as repairs were needed on a bridge in Memphis, Tenn.
More than a thousand barges were in a queue before traffic resumed on Friday.
The bridge, however, remains closed to vehicle traffic for now.
In this context, corn basis bids were steady to soft Friday after falling 3 to 6 cents lower across half a dozen Midwestern locations.
Soybean basis bids were steady to soft, falling 3 to 5 cents lower at three interior river terminals on Friday and moving as much as 7 cents lower at an Indiana processor.
From South America, in Brazil, the situation remains adverse for corn crops, even if some rains are expected at the end of the week over the southern half of the country.
Indeed, some respite for the Brazil corn belt with 100mm forecast in the southern belt baked into the 15 day outlook.
However, the debate remain “is this all too late?”.
According to the AgroBravo, the lack of rain in important producing regions (a great share of Brazil’s territory) in the past weeks may limit the crop yield in about 40% of the impacted acres.
The potential production was set at 90 million tons (3.5 billion bushels of corn), but with the irreversible losses in big producing states due to drought, this number will most likely fall to 75 million tons (2.9 billion bushels of corn), a reduction of around 16% compared to last year.
On European market, Euronext regained some color last Friday night after being heckled for two sessions mainly following the latest USDA report.
In fact, if from a fundamental point of view, few changes can be observed, the improvement in climatic conditions in the USA and France has encouraged producers to mark prices and financial operators to take profits on long positions.
Meantime, the 2021 corn planting season is nearly wrapped up in France, with 95% of this year’s crop now in the ground through May 10, according to farm office FranceAgriMer.
That’s up from 89% the prior week.
French farm office also reports steady soft wheat conditions for the country’s 2020/21 crop, with 79% rated in good-to-excellent condition through May 10.
Ratings had declined for the previous four consecutive weeks.
Same situation unchanged in winter barley at 76% good to excellent, as in durum wheat at 69%.
Spring barley, however, is up 85% as good to excellent compared to 82% the week before.
The recent rains, even disparate, allow us to regain some optimism about the harvests to come.
Rapeseed, once again posted a good performance on Euronext on Friday, again in a context where the coming French harvest is expected to be weak, due to unsatisfactory crop conditions and areas which could ultimately, according to some analysts, display under 900,000 ha.
In add, European rapeseed has committed to the sharp recovery of soybean oil to wipe out its losses from the day before.
The market includes in particular the expected increase in the consumption of vegetable oil for the manufacture of biodiesel over the next campaign.
The sharp rebound in crude oil prices also contributed to the rise in oil-rich seeds on Friday.
However, all european grain and oilseed prices closed the week’s balance in to the red.
From Black Sea basin, Ukraine is preparing for a rainy week with in prospect between 15 and 60 mm of rain in the next 7 days depending on the region.
These rains are timely, when more than three quarters of corn and sunflowers are in the ground against 50% in soybeans.
The emergence therefore promises to be homogeneous, enough to compensate for the potential yield losses linked to the delay accumulated since the beginning of spring.
Neighboring Romania should also be well watered as well as the Russian Kuban.
From Middle Kingdom, China’s sow herd moved 1.1% higher between March and April and 23% higher year-over-year, despite some recent outbreaks of African swine fever.
Hog herd inventories have mostly returned to normal, according to data from the country’s agriculture and rural affairs ministry.
A healthy Chinese hog herd tends to be a hungry customer for grains.
From Australia, the winter cropping zones from Geraldton to Dalby are at various stages of winter crop planting adding to the spot market logistics squeeze.
The local market held up reasonably well in the face of a softer futures, finishing down $2-3/t for the week, following the release of the USDA report.
Canola found new highs with PKE track reaching $784/t, but felt some basis pressure following a very helpful 10-15mm of rain for the week through the NSW Central West which spurred on some more grower selling.
Victoria on the other hand held its recent basis form as crop establishment is far from being realised.
There’s limited rain for the east coast on the 8-day forecast but WA continues the dream run with another ~10mm on the forecast.
On the international trade scenario, Japan purchased 4.5 million bushels of food-quality wheat from the United States, Canada and Australia in a regular tender that closed on Thusday.
Just under half of the total was sourced from the U.S.
The grain is for shipment in July.
Tonigth we will see how the sessions close.
