Chicago corn, soybean and wheat prices gained on Friday as hot, dry conditions in parts of the U.S. Midwest threatened yield potential at a time of tight global supply.
Tightening in global grains availability, linked to strong Chinese imports and deteriorating prospects for Brazil’s upcoming corn harvest, have made grain markets sensitive to fluctuating U.S. weather forecasts.
U.S. corn and soybean yields could be hurt by hot and dry conditions in a year where supply is already slim.
There are parched conditions also for U.S. spring wheat.
On June 1, USDA reported U.S. winter wheat conditions at 51% good to excellent, gaining four points from prior week.
The USDA also reported 79% of the winter wheat crop was headed.
The U.S. spring wheat crop was 97% planted, ahead of last year on that date.
The spring wheat crop is 80% emerged, therefore, this moment it’s still not crucial at all for the development of the plants.
However, this is a year when need a trendline yield in order to break even for new crop ending stocks on all grains.
Per latest data released by USDA, indeed, U.S. corn export sales of 970,500 tonnes contined gainfor the week ended May 27, compared with the prior four weeks.
Corn exports of 2.2 million tonnes were up 15% from the week prior and 9% higher than the previous four weeks.
U.S. soybean export sales of 198,000 tonnes were down significantly from the previous four-week average.
Exports of 221,700 tonnes were at a marketing-year low.
U.S. wheat export sales eased to 365,100 tonnes, down from the previous four weeks.
Shipments of 243,200 tonnes were down 56% from the prior four-week average.
Friday’s commitment of Traders report showed spec funds getting more bullish on corn, adding 21,845 contracts to their net long in corn futures and options in the week ending 6/1.
That put them net long 289,936 contracts, but still a far cry from the peak position of 401,993 net long held on April 13.
Spec traders in CBT wheat futures and options cut 1,3-07 contracts from their CFTC net long position in the week ending 6/1, taking it to 3,227 contracts.
In KC wheat, they cut another 4,415 contracts from their net long during the week to bring it down to 19,086 contracts.
Weekly Commitment of Traders data showed managed money spec funds in soybean futures and options trimmed their net long position by 602 contracts in the week ending June 1.
They were still net long 138,788 contracts at that time.
Specs in soy oil held their biggest net long position since April 27 on June 1, at 86,084 contracts.
In this context, corn contract on the Chicago Board of Trade (CBOT) Cv1 ended last Friday 20-3/4 cents higher at $6.82-3/4 per bushel, gaining 4% for the week.
New-crop December corn CZ1 added 25 cents to end at $5.91-1/2.
CBOT soybeans Sv1 gained 34-1/2 cents to $15.83-3/4 per bushel, increasing 3.48% for the week.
New-crop November soybeans SX1 added 32 cents to $14.35-1/2.
CBOT wheat Wv1 gained 11-1/2 cents to $6.87-3/4 per bushel, a 3.65% gain for the week.
KCBT hard red winter (HRW) futures were up 23 cents on the week to end at $6.36/bu.
MGE hard red spring (HRS) futures surged past week 85 cents to close at $8.10/bu.
On macro markets, oil prices made the second consecutive week of gains and rose to a two-year high on stronger demand prospects, as OPEC+ succeeded in draining global oil inventories and the successful rollout of vaccine programs continued.
In deed, on the week closing, Brent crude price rose to $71.89 per barrel.
West Texas Intermediate (WTI) rose to $69.62 per barrel.
The latest figures from the Commodity Futures Trading Commission (CFTC) on June 1 showed that long positions on crude oil futures on the New York Mercantile Exchange (NYMEX) numbered 646,517 contracts, up by 9,520 contracts from the previous week (1,000 barrels for each contract).
Global stocks rallied on Friday and closed near all-time highs.
Investors have been parsing economic data to gauge whether inflation could force the Fed to change course.
Consequentially, after U.S. jobs data was strong but not as robust as expected, easing investor worries that the Federal Reserve would soon rein in monetary stimulus, oil surged, also gold rose while the dollar dropped.
U.S. employers, indeed, increased hiring in May and raised wages.
The nonfarm payrolls increased to 559,000 jobs, but below than 650,000 forecasted by economists.
The pan-European STOXX 600 index rosed 0.39% after hitting a record high past week.
MSCI’s all-country world index, which tracks shares in 50 countries across the globe, gained 0.71%.
On Wall Street, Microsoft lifted the S&P 500, followed by Apple, as the index gained 37.04 points, or 0.88%, to 4,229.89, marking an overall near-record jump of more than 12% this year. Those technology firms account for more than 5% of the MSCI’s all-country index’s weight.
Shares for Amazon.com Inc, Facebook, Alphabet’s Google and Tesla also were up.
The Dow Jones Industrial Average rose 179.35 points, or 0.52%, to 34,756.39 while the Nasdaq Composite added 199.98 points, or 1.47%, to 13,814.49.
So-called “meme stocks” continued their wild ride, with AMC Entertainment Holdings shares little changed but on track to nearly double for the week.
The dollar index fell 0.39%, with the euro up 0.36% to $1.2168.
Spot gold added 1.1% to $1,890.65 an ounce after a 2% tumble on Thursday, its biggest since February.
From Central America, Mexico’s voters participated in the country’s largest election in its history.
In the mid-term elections, about 20,000 posts are up for grabs.
Violence disrupted the campaigning.
In the last 200 days, at least 89 politicians have been killed.
With the aid of other left-wing parties, Morena, President Andrés Manuel López Obrador’s party, is expected to retain a majority.
From South America, private analytics firm IHS Markit Agribusiness lowered its estimate of Brazil’s 2020/21 total corn crop to 88 million tonnes, down 5 million from its previous estimate.
However, late-planted corn in Argentina, another major exporter, is delivering higher-than-expected yields, the Buenos Aires Grains Exchange said last Thursday.
Farm group Argentine Agrarian Federation (FAA) warned that a recent protest by cattle ranchers could expand to include grain producers.
Argentine cattle ranchers blocked the sale of beef in protest of the government’s ban on beef exports.
The export ban is an effort to curb inflation.
The president of the farm group said that more protests might follow, and this time include cereal producers.
From European area, grain prices remained hesitant on Friday evening despite the strong recovery in Chicago.
Indeed, the September 2021 wheat contract fell by € 0.75 / t to € 214.75 / t.
The tonne of corn increased from 16,75 euros to 269,75 euros on the June deadline, whose closing is approaching.
While from only 0.25 euros on the August deadline to 254 euros, for around 300 lots traded.
The November 2021 corn contract, meantime, rose by 1,75 euro tonne on Friday evening, to 209,50 € / t.
Rapeseed, in contrast, fell by 1.25 euros on the August deadline to 537,50 euros, and by 0,50 euro on the November deadline to 531.00 euros, for nearly of 3,900 lots exchanged.
Prices were also easing on the physical market.
Really in Europe, growing conditions continue to reassure.
Warm June weather after widespread rain last month is helping European wheat crops recover from a chilly, dry start to spring, keeping the region on track for a rebound from last year’s disappointing harvest.
Forecasters have since late May increased estimates for soft wheat output in the European Union and Britain, with grain trade association Coceral now seeing the combined EU and British crop up nearly 14% from 2020.
France’s 2021 corn crop has started this season with stellar quality ratings, with 91% rated in good-to-excellent condition through May 31, per the country’s farm office, FranceAgriMer.
France’s soft wheat quality ratings rose two points this past week, with 80% of the crop rated in good-to-excellent condition.
That’s much better than ratings a year ago, when just 56% of the crop was rated in good-to-excellent condition.
The good/excellent scores for winter and spring barley each declined by 1 point, to 76% and 84% respectively, FranceAgriMer said.
Some analists sees the French crop at 38 million tonnes or above in light of the warm June weather.
France harvested just over 29 million tonnes last year, among its worst crops in decades.
In Germany, warm weather has also been beneficial and should limit any harvest delays.
Germany’s farm cooperatives association in mid-May forecast the 2021 wheat crop of all types will increase by 2.4% on the year to 22.66 million tonnes.
In Poland, production could edge up to 12.2 million tonnes from 12.0 million last year.
In Britain, the improved weather has increased chances of a reasonable harvest following a rebound in sowing.
UK wheat crop pushing up toward 15 million tonnes.
The planted area is expected to be about 30% up from last season to return to a more average level.
Britain harvested just 9.66 million tonnes of wheat in 2020, the smallest crop in more than three decades.
On the other hand, exports of French soft wheat outside of the European Union (EU) fell to their lowest in a decade last month.
In May, soft wheat exports outside the EU and United Kingdom were 273.6 TMT, the lowest level since 2009/2010.
Exports in May were down nearly 60% compared to April.
Soft wheat exports from the European Union in the 2020/21 season that started last July had reached 24.46 million tonnes by May 30, data published by the European Commission showed on Wednesday.
That was down from 32.68 million tonnes cleared by the same week last season, the data showed.
EU 2020/21 barley exports had reached 7.01 million tonnes, against 7.03 million a year ago, while EU 2020/21 maize imports stood at 13.34 million tonnes, down from 18.66 million.
Meantime, per latest data published by Euronext on Wednesday, on Matif Grain Exchange, non-commercial market participants cut their net long position in Euronext’s milling wheat futures and options in the week to May 28, .
Non-commercial participants, which include investment funds and financial institutions, reduced their net long position to 60,757 contracts from 98,477 contracts a week earlier, the data showed.
Commercial participants similarly lowered their net short position to 116,691 contracts from 139,003 a week earlier.
Commercials’ short positions accounted for 59.2% of the total short position, while commercial long positions accounted for 41.4% of the total long positions.
Non-commercial short positions represented 40.8% of total short positions, while non-commercial net long positions accounted for 58.6% of the total longs.
The report covered almost all of the open short positions and the open long positions in the wheat derivatives.
In Euronext’s rapeseed futures and options, non-commercial market participants edged down their net short position to 10,594 contracts from 10,649 contracts a week earlier.
Commercial participants lowered their net long position in rapeseed to 2,242 contracts from 4,765 contracts a week earlier.
From Black Sea basin, Russia has set out its grain export taxes for June 9-15.
The wheat export tax for the period will be at $29.40 a tonne.
For barley and maize the tax will be $39.60 and $50.00 a tonne respectively.
Russia’s deputy prime minister said that the new formula-based grain export tax would remain in place if increased global demand for food remains.
The new tax will update each week, complicating forward sales, according to traders.
The tax is calculated from a formula that weighs the floating index price calculated by a panel of industry experts and published by the Moscow Exchange (MOEX).
Exporters are responsible for 70% of that difference.
This week, for example, the floor price is $200/MT and the seven-day average index price published by MOEX is $241.78/MT.
Therefore, the June 9-15 export tax is $29.40/MT.
Consequentially, Russian wheat exports could decline 2.9% for the 2021/22 marketing year to 36,6 million tonnes, according to the country’s Sovecon consultancy.
Meantime, in a seemingly endless parade of Russian crop estimates, crop consultancy IKAR called the Russian crop up 500,000t to 79.5 million tonnes (Mt), while Sovecon, forecasted that 2021 productin will reach only 80,9 million tonnes against 85,9 million tonnes of 2020.
According to the APK-Inform, Ukrainian wheat export bid prices were flat over the past week on weak demand.
Prices, indeed, staied at $260-$264 a tonne FOB Black Sea.
Meantime feed wheat lost $1 a tonne to quote at $255-$260 FOB Black Sea.
Milling wheat bid prices for the 2021 harvest, has stood at $240-$247 a tonne CPT (Carriage Paid To) Black Sea and $235-$240 for feed wheat.
Corn bid export prices rose by $6 over the past week to $284-$297 FOB, while bid prices for barley added $1 to $243-$250 per tonne FOB Black Sea.
New crop corn traded between $245-$250 a tonne CPT Black Sea with the delivery in October-November.
Forecast for Ukraine’s 2021 grains harvest are unchanged at 73.6 million tonnes.
Ukraine has said it can harvest up to 30 million tonnes of wheat this year.
Meanwhile, the government has said grain exports could decline to 45.8 million tonnes in 2020/21 due to a weaker harvest in 2020.
According to a preliminary estimation by APK-Inform, Kazakhstan exported 538 thsd tonnes of wheat in April, up 14% compared to March and up 1.7 times compared to April 2020.
Kazakhstan exported 4.8 mln tonnes of wheat in July-April 2020/21 MY, up 21% (0.8 mln tonnes) compared to the same period of 2019/20 MY and up 2% (107 thsd tonnes) compared to the result of full 2019/20 MY.
Uzbekistan remained the leading importer of Kazakh wheat.
It imported 2.77 mln tonnes of the product in July-April 2020/21 MY, up by 0.96 mln tonnes compared to the same period of 2019/20 MY.
Tajikistan has imported 839.3 thsd tonnes of Kazakh wheat this season (+2.1%), Afghanistan – 485.8 thsd tonnes (up 1.5 times).
China resumed purchasing of Kazakh wheat after a slowdown of trade in February-March 2021.
Kazakhstan shipped 48.1 thsd tonnes of wheat to China in April, up 15 times compared to March.
It is the second largest monthly volume in 2020/21 MY.
To staing in the Middle Kingdom, China’s feed grain industry is unlikely to become self-sufficient despite the country’s efforts to ramp up domestic production, David MacLennan, chief executive of Cargill Inc said on Friday.
Tightening domestic supplies of feed grains and soaring demand from China’s pork producers has triggered record feed grain import purchases this year.
China has purchased record amounts of agricultural goods from the United States this year, including 3.2 MMT of wheat.
Consequentially USDA raised its forecast for U.S. agriculture purchases in the 2021 fiscal year by $3.5 billion to a record $35 billion.
Meantime, United States Trade Representative (USTR) Ambassador Katherine Tai spoke with her counterpart in China in an introductory virtual meeting past week and the two top trade officials discussed trade issues between the world’s two largest economies.
Ambassador Tai said that her review of the U.S.-China trade relationship is ongoing.
China’s state news outlet Xinhua, citing the Ministry of Commerce, reported that issues over anti-dumping and countervailing taxes on barley imported from Australia will be handled according to WTO rules.
India had the lowest daily number of new cases of COVID-19 reported in two months, 114,460.
The country has been plagued by a devastating second wave of infections that has yet to subside in the rural, although Delhi, the capital, and other places are prepared to relax lockdown restrictions.
Only 16.4pc of adults over the age of 12 have received their first dose of vaccination in the country.
From Australia, old crop markets remained relatively flat over the course of the week with liquidity trading across the port zones.
Barley was a fraction stronger on the bid side on Friday and gathered more interest for the July August slots.
We are seeing some more malt demand in SA and Victoria still only trading a premium of $3-5/t over feed barley.
Barley vessels continue to hit the stem for June July programs in Victoria and SA ports with approx. 250,000t on the stem between the two states.
New crop wheat markets were a fraction firmer across the boards for the week moving up $4-5/t, with barley also up $2/t for the week.
Canola markets fired along again, with WA finishing up Friday at $815-20/t FIS and East Coast track bid $780-level to the grower.
Weather maps continue to build for this week from WA right around to Northern NSW.
Most cropping regions are set to get a nice top up of moisture and the longer-term forecast are now calling for a avg to above avg winter rainfall.
On the international trade scenario, iranian state agency the Government Trading Corporation (GTC) is believed to have purchased around 195,000 tonnes of milling wheat in a tender for 60,000 tonnes which closed last Wednesday.
It was believed to have been bought in three 65,000 tonnes consignments.
Prices were unavailable.
Shipment was sought in June and July.
The wheat could be sourced from Russia, Germany or the Baltic States, all large recent suppliers of grains to Iran.
Iran also bought, 60,000 t of soybean oil and 30,000 t of sunflower oil.
Algeria, meantime, launched a call for tenders this weekend for milling wheat loading August.
Tonight we will see how the sessions close.
