Volatility was the name of the game in the grain markets past week, and Friday was extended that theme as most contracts saw changes between 1% and 2%.
Unfortunately, most prices trended lower as traders returned to technical selling.
The Memorial Day long weekend, indeed, has meant that last Friday was month-end for most part of operators.
Consequently corn prices dropped as much as 2%, with winter wheat contracts down 1.75% to 2%.
Soybean prices saw more muted losses of around 0.5%, meantime, while spring wheat prices firmed more than 1% higher on ongoing drought problems across major production areas for that crop.
Going inside the numbers, Chicago wheat fell 12.75usc/bu, Kansas was off 13usc/bu while Minni bucked the trend, closing 10.25usc/bu higher.
Black Sea wheat futures fell USD$3.75/mt while Matif eased EUR0.75/mt.
Corn fell 7.75usc/bu, soybeans fell 6.5usc/bu, soymeal rallied USD$5.25/st and soyoil was off 1usc/lb.
The Dow added another green close, up 64.81 points.
Crude fell USD$0.53/bbl and the Aussie was trading at 0.7695
The HRW belt is not in the bin yet.
Even though yield estimates are massive, rain may have a say in the outcome because the 2.5 inches which fell though western Texas/OK/KS sparks the quality discussion.
These qualitative aspects will be decisive for the future in the evolution of wheat prices according to the specificities of each of the contracts.
In add, some climate concerns are back in North America with a dry climate that is likely to settle again on US and Canadian spring wheats.
Corn new crop prices, meantime, fell 8 to 10 cents per bushel at the close amid favorable weather forecasts on the corn belt for the next 10 days, despite weekly export sales exceeding expectations, while old-harvest corn prices stood out by starting a new upward movement.
Consequently, the key factor to monitor for the next few weeks will therefore be the rains at the crucial time of corn flowering in the USA.
Soybeans also fell back, particularly in a context of falling crushing margins linked to the decline in both meal and oil.
Soybean plantings are currently hampered by the rains but are nevertheless still carried out in advance for this period.
In Brazil, even if some beneficial rains have appeared, the situation seems irreversible in the earliest areas and production should be significantly lower than the 102 million tonnes still posted by the USDA in its May report.
Safras (Brazilian Ag consultant), indeed, was the latest to join the Brazilian corn crop cut band wagon – lowering their estimate from 104 million tonnes (Mt) to 95Mt.
Brazil’s government, indeed, is worried about overly dry weather later this year, with the country’s agriculture ministry issuing an “emergency drought alert” that stretches between June and September, stating rains could be scarce during that time.
Brazil could face everything from lower crop yields to lower hydro-electric power generation from its Paraná river basin, depending on the potential severity.
China and Brazil, meantime, have established a new agreement prompted between the Brazilian unit of a Chinese seed company, LongPing High-Tech, and a Chinese university.
The end goal is to develop improved soybean seed varieties.
As part of the venture, Brazilian soybean genetics will be sent to Chinese researchers for additional testing and studies.
Brazilian soybean exports by far are sold to China.
In add, higher wheat production in China could eat away at break-neck corn import paces from China, providing a source of weakness to U.S. corn prices.
However, harvest delays in Argentina and the low potential of Brazilian production are limiting availability before the arrival of harvests in the northern hemisphere.
The Argentinian Stock Exchange, meantime, shows harvests of 30.9% for a total expected production of 46 million tonnes.
Also in Europe, the market continued to consolidate, ending the week slightly bearish.
Thanks to more favorable weather conditions, FranceAgriMer has revisited its crop rating upwards for wheat, winter barley and spring barley, to 80% against 79%, 77% against 75% and 85% against 84% respectively.
In corn, while planting is now complete, the crop rating is 91% good to excellent.
The low temperatures in May nevertheless lead to a vegetative delay in the wheat, of which only 47% reach the heading stage against 94% last year.
From Black Sea market, the Russian export tax was set at USD$28.10/t for June 2-8.
Russia, meantime, is suffering from a lack of rainfall in spring wheat production areas, consequently, SovEcon analysis has reduced its estimate of the Russian harvest by 800 kt this year, to 80.9 Mt.
Data presented by the authorities on Friday show that Ukrainian growers are on track to complete sowing work.
Were buried:
5.14 Mha of maize, i.e. 96.5% of the stated objective
6.12 Mha of sunflower or 95.6%
1.22 Mha of soya or 87%
Despite the late spring and the repeated rains during the month of May, the producers only ended the sowing campaigns with a little significant delay. “
Aussie June Markets showed some life on Friday with bids up across the boards for both new and old crop.
New crop canola rebounded, and east coast track values pushed back up towards $750/t.
Meantime, the planting pace continues to power along, and its estimate that most areas are coming to the tail end of their programs. Some parts of SA have pulled up due to the dry conditions in parts of the Mallee and Murraylands.
Australia’s weather maps for 8-15 days are forecasting a widespread 5-10mm event for parts of SA through into Victoria, and up along the east coast.
The 5-10mm events will keep the crops drip fed for now in most cropping regions, but growers will need a very kind 25-30mm event.
On the international scene, the results of Saudi Arabia’s invitation to tender for its 720,000 t of common wheat will be known today.
Note also the purchase by Indonesia of 60,000 t of milling wheat from the Black Sea.
The day should be relatively calm in the absence of English and American operators with closed markets.
Tonigth we will see how the session close.
