US grain markets remain closed on this morning due to the long weekend of Independence Day.
Meantime grain prices slumped last Friday on another round of technical selling and profit-taking.
In fact, soybean and spring wheat prices were the only winners after a late-session rally left those commodities with modest gains by the close.
Nearby corn contracts stumbled to 3% losses.
Winter wheat contracts incurred losses ranging between 1.75% and 3.25%.
On macro markets, OPEC+ resumed talks on raising oil output a day after the United Arab Emirates blocked a deal.
The standoff could delay plans to pump more oil through the end of the year to cool prices that have soared to 2-1/2 year highs.
Meantime oil prices ended the week mixed.
Brent crude settled up 33 cents, or 0.44%, and U.S. crude settled down 7 cents, or 0.09%.
Global shares rose on Friday, hitting an all-time high on lift from a better-than-expected U.S. monthly jobs report that signaled a strong end to the second quarter in the world’s largest economy.
Data showed U.S. job growth accelerated in June as nonfarm payrolls increased by 850,000 jobs after rising by 583,000 in May, although the unemployment rate rose to 5.9% from 5.8% the previous month.
The MSCI All Country World index closed at 725.41, up 0.39% on the day.
The pan-European STOXX 600 index settled 0.26% higher.
On Wall Street, the S&P 500 and Nasdaq hit record highs.
The Dow Jones Industrial Average rose 152.82 points, or 0.44%, to 34,786.35, the S&P 500 gained 32.4 points, or 0.75%, to 4,352.34 and the Nasdaq Composite added 116.95 points, or 0.81%, to 14,639.33.
The benchmark 10-year yield was down 3.9 basis points at 1.4407%.
Also Euro zone government bond yields fell, as investor fears over the rise in COVID-19 cases outweighed strong U.S. data.
In fact, Germany’s 10-year bond yield, the euro zone benchmark, dropped to -0.24%, its lowest since mid-June.
The dollar slipped from a three-month high, pressured by the weaker details of the U.S. nonfarm payrolls report.
U.S. employment remains about 6.8 million jobs below its peak in February 2020.
There are a record 9.3 million job openings.
The dollar index fell 0.375 points or 0.4% to 92.222.
Coming back on grains market, a late week ruling by a US court has put into question the summer time sales of E15 gasoline in the US – suggesting that vapor pressure waivers issued earlier were beyond the government’s authority to issue.
Not much expected to change for this current season given the time lags to any changes, but raising a new red flag for the “blend wall” for 2022.
Census data showed May was a record for US corn exports for the month with 8.48 MMT (333.78 mbu) shipped.
That put the MY total export at a record 2.149 bbu through May.
To reach USDA’s June forecast, June July and August shipments need to average 233.5 mbu each.
Official soybean exports were 1.267 MMT in May according to Census data.
That left the season’s total soybean export at 58.475 MMT (2.149 bbu).
To reach USDA’s June WASDE forecast the Q4 exports need 131.4 mbu or 44 mbu/month.
For meal and oil, Census data showed 952,771 MT and 32,307 MT were shipped in May.
Census data showed May wheat exports were 2.4 MMT, or 87.85 mbu.
That concluded the MY with 971.34 mbu of wheat exports. Adding wheat products the total export converts to 991.4 mbu, or 6.4 above USDA’s June estimate.
Recall NASS survey data found ending stocks were 8.2 mbu lighter than USDA’s estimate (at 843.8 mbu).
The extra 2.2 mbu of use was likely fed given the wheat corn spread through Q4.
Funds were seen at 254,434 contracts net long as of Tuesday the 29th on corn.
CFTC data suggests that came via a week of pre report buying, with 4,177 new longs opened and 2,208 new shorts.
Commercial OI dropped 11.9% through the week going into the NASS reports.
PMPU long liquidation and PMPU short covering was a near wash, leaving commercials 537,055 contracts net short on 6/29.
The weekly CoT report showed soybean spec traders reduced their net short by 4,047 contracts through the week that ended 6/29.
That was brought about by a week of net new selling ahead of the report, though the group was still 76,257 contracts net long going in.
CFTC data showed the commercials reduced exposure going into the report, as OI dropped 123,345 contracts in the PMPU subgroup.
Commercials were still 161,082 contracts net short as of 6/29.
The Commitment of Traders data release had managed money at 774 contracts net long in SRW as of 6/29.
That was 2,241 contracts less net long from the prior week, driven by long liquidation going into NASS’s reports.
For HRW, the weekly update showed managed money was covering shorts, driving their net long 7,871 contracts stronger to 22,723.
The CFTC report showed spec traders were 9,969 contracts net long in spring wheat as of 6/29.
That was a weekly drop of 898 contracts.
In this context at the close of Friday session’s, Jul 21 corn closed at $6.97 1/4, down 22 1/2 cents, nearby cash was $6.74 1/2, down 12 1/4 cents, Sep 21 Corn closed at $5.92, down 9 3/4 cents, Dec 21 Corn closed at $5.79 3/4, down 9 1/4 cents, new crop cash was $5.56, down 9 cents.
Jul 21 Soybeans closed at $14.51 3/4, up 5 cents, nearby cash was $14.29 4/5, up 3 5/8 cents, Aug 21 Soybeans closed at $14.33 1/4, up 3 1/2 cents, Nov 21 Soybeans closed at $13.99, up 3 1/2 cents, new crop cash was $13.47 1/2, up 3 1/2 cents.
Sep 21 CBOT Wheat closed at $6.52 3/4, down 12 3/4 cents, cash SRW Wheat was $6.20 3/7, down 12 3/8 cents, Sep 21 KCBT Wheat closed at $6.19 1/4, down 19 cents, cash HRW Wheat was $5.89 7/9, down 19 1/8 cents, Sep 21 MGEX Wheat closed at $8.38 3/4, up 2 cents.
Corn basis bids were narrowly mixed at three interior river terminals on Friday while dropping 5 cents at an Iowa processor and 18 cents at an Ohio elevator.
Other locations across the Midwest held steady.
Soybean basis bids were largely steady across the central U.S., with two notable exceptions – an Ohio river terminal tumbled 15 cents lower while an Iowa processor climbed 10 cents higher.
From South America, a third day of frost in Sao Paulo corn fields led to some private Brazilian firms citing a 6 MMT production loss.
Rural Clima pegged the national 2nd crop at less than 60 MMT, from their previous 62-65 MMT expectations.
CONAB had their June estimate at 69.96 MMT for Brazil’s 2nd crop and 96.4 for 2020/21’s total output.
Stone X figures Brazilian corn output will total 87.93 MMT.
That is down by 1.75 MMT from their previous estimate.
Argentina’s 2020/21 corn production is set to hit a record of 59 million tonnes, the country’s Agriculture Ministry said on Friday, an estimate which includes both commercial grain and that used by farmers themselves and not sold.
The South American country’s government usually has forecasts above those of the domestic grains exchanges, which only include commercialized corn in their projections.
The Buenos Aires grains exchange estimates a harvest of 48 million tons for 2020/21 corn, though on Thursday it noted that the yields of the crop were higher than expected.
The harvest is just over half completed.
On European market, European grains followed Chicago into negative territory on Friday.
According to French farm office FranceAgriMer, 89% of the country’s 2021 corn crop is in good-to-excellent condition through June 28, with ratings holding steady from a week ago.
French farm office FranceAgriMer estimates that 79% of the country’s soft wheat crop is in good-to-excellent condition through June 28, holding steady from a week ago.
Winter barley condition fell a point, with 74% of the crop rated in good-to-excellent condition, and harvest has kicked off with 2% progress so far.
Harvesting of durum, the wheat variety used in pasta, was also under way with 1percent of the crop area cut.
That compares with 16percent a year ago.
France is the European Union’s top grain producer.
The weather, however, remains a source of major concern in western Europe and therefore mainly in France with unusual rainfall at this time of year, delaying the harvesting sites which were only just beginning, causing risks of qualitative degradation.
From Black Sea basin, Ukraine’s agriculture ministry is expecting the country’s 2021 corn crop to reach a record production of 1.461 billion bushels – a year-over-year increase of more than 22%, if realized.
Corn exports this marketing year have reached an estimated 907.8 million bushels so far.
Ukraine’s agriculture ministry predicts the country’s 2021 wheat production will rebound 14.5% from a year ago to reach 1.047 billion bushels.
Ukraine’s total grain harvest could eclipse its record-breaking effort from 2019 if current projections hold.
During the season now over, Ukraine exported nearly 49 Mt of grains and oilseeds.
Thus, wheat exports amount to 16.5 Mt, ie 1 Mt below the memorandum signed between exporters and authorities at the start of the season.
Also 4.2 Mt of barley were exported, the majority of which went to China.
Corn exports stand at 23.5 Mt.
On the oilseed side, Ukraine mainly loaded during the first half of the season 2.4 Mt of rapeseed and 1.5 Mt of soybeans.
Russia cut their export taxes nominally.
As always the tax is formula-driven so it’s largely expected.
The tax was down to US$41.20/t from $41.30 prior.
From the Middle Kingdom, USDA-FAS estimates that China’s 2020/21 corn imports will come in around 1.102 billion bushels, with relatively strong demand from high domestic prices and efforts to restock supplies.
Once those supplies have been replenished, and if China can ramp up domestic production, import needs for 2021/22 could fall to around 787 million bushels.
Meantime, China’s grain stockpiler Sinograin continues to generate corn auctions to quell high prices and meet domestic demand needs, selling another 1.1 million bushels of imported corn from its reserves earlier today, although that was only 18% of the total amount on offer.
There is a lot wheat, rice and many other things that can replace (corn), noted one grain purchasing manager in northern China.
It remains worth noting that sales of imported corn supplies are relatively rare in China, which has not done so in several years.
USDA-FAS reports that U.S. soybean exports during the first quarter of this year reached a total value of $7.7 billion – the second-highest level on record and nearly double the same period in 2020.
Export volumes are up substantially due to the rebound of trade with China owing to the removal of retaliatory tariffs, the rebuilding of the swine herd from African swine fever (ASF), and a delayed South American harvest extending the U.S. selling window, according to the agency’s summary statement.
From Australia, local markets continued to pick up momentum to end the week up some $7-8/t on wheat, though closer to unchanged on barley.
Canola pushed up again to earlier May highs as the global boards moved upward.
The AUD’s bounced back over US75¢, though still down several cents from a few weeks ago.
Nice widespread sprinkles across much of the south east to end the weekend, though overall accumulation still fairly limited.
The BOM’s building up this forecast for WA slightly, with the last runs approaching a widespread inch across the WA wheat belt this week.
Meantime, Aussie wheat export of 2.66 million (Mt) tonnes in May, was up 11 per cent from 2.4Mt shipped in April, according to the latest export data from the Australian Bureau of Statistics (ABS).
Indonesia on 457,540t was the biggest market, followed by Vietnam on 422,624t and Kenya on 218,274.
Western Australia remains the load-bearer of the volume on around 962,000t, while New South Wales came in second after a decent jump month on month to 604,000t.
Its expect another big month in June with more than 2Mt exportable wheat.
In containerised exports, volume dipped below 200,000t for the first time since December, with total boxed exports at 183,306t being down 11pc from the April total.
This could well be an indicator of compounding problems in the container market which are being felt most at Sydney’s Port Botany.
In the bulk durum market, Italy took 95,604t, the biggest monthly figure for a single durum destination seen in years which surpassed Australia’s durum exports to Italy seen in February of 84,375t.
On the international trade scenario, Egypt’s General Authority for Supply Commodities, set a tender on Saturday to buy an unspecified amount of wheat from global suppliers for shipment from Sept. 1-15 for payment using 180-day letters of credit.
GASC Vice Chairman Ahmed Youssef said the authority was seeking to buy cargoes of soft and/or milling wheat from the United States, Canada, Australia, France, Germany, Poland, Argentina, Russia, Kazakhstan, Ukraine, Romania, Bulgaria, Hungary, Paraguay and Serbia.
Tenders should reach GASC by noon (10.00 GMT) on this morning.
The results should come out after 3:30 p.m. (13.30 GMT) today.
At its last tender on June 28, GASC bought 180,000 tonnes of Romanian wheat for shipment Aug. 25-Sept 5.
For the current tender, GASC is seeking to buy 55,000- to 60,000-tonne cargoes.
Have a good day.
