US grains prices were mixed once more last Friday as traders continue to monitor weather forecasts for the central U.S. and square positions ahead of the next World Agricultural Supply and Demand Estimates (WASDE) report from USDA, out on this morning later.
Corn prices faded more than 1.75%.
Winter wheat contracts also finishing the session lower.
Spring wheat prices moved 1.3% higher.
Soybeans pricecs also firmed 1% higer.
On macro markets, oil prices rose for a second day on Friday as the market reacted to falling U.S. inventories, and signs of strong Asian demand from both China and India added support.
Consequently, Brent crude oil futures were up $1.43, 1.93%, at $75.55.
U.S. West Texas Intermediate futures were up $1.62, or 2.2%, at $74.56.
However, gains in oil prices were capped by worries that members of the OPEC+ group could be tempted to abandon output limits that they have followed during the COVID-19 pandemic, with talks breaking down because of an impasse between major producers Saudi Arabia and the United Arab Emirates.
Additionally, also the global spread of the Delta coronavirus variant and worries it could stall a worldwide economic recovery also weighed on oil prices.
For the same reason, markets were roiled earlier past week and reduced risk appetite, prompting a flight to safety, with some betting the reflation trade had stalled and secular stagnation was back on the agenda.
However, the fear has been partly offset by ultra-easy monetary policy from major central banks.
So, after dipping sharply over the early part of the week, yields on 10-year US Treasury notes were up on Friday by 7.2 basis points to 1.360%, well above the 4-1/2 month low of 1.25% hit on Thursday.
Also in Europe, safe-haven German Bund yields ticked higher but were still eyeing the biggest two-week drop since March 2020 as investors eyed a likely longer road to economic recovery.
In currencies, the safe haven yen weakened 0.35% versus the greenback at 110.18 per dollar.
Meantime, U.S. stocks hit new highs, mimicking gains in European equities.
The broad S&P 500 was up 48,63 points, or 1.13%, to 4,369.55.
The Dow Jones Industrial Average was up 448.23 points, or 1.30%, to 34,870.16.
The tech-heavy Nasdaq Composite added 142.13 points, or 0.98%, to 14,701.92.
The dollar index fell 0.205%, with the euro up 0.24% to $1.1871.
But all that could be tapered if inflation still picks up.
Coming back on grains market, grain prices were mainly lower following a USDA weekly export report (released a day late after the July Fourth holiday) that was below trade estimates.
Indeed, USDA’s Weekly Export Sales Report Friday shows corn exports at the low end of trade guesses and soybean exports below pre-report estimates.
In particular corn were at 173,200 metric tons (mt), for old crop, vs. trade expectations of 100,000 to 350,000 and at 198,200 mt for new crop vs. trade guesses of 150,000 to 650,000.
Soybeans were at 63,800 metric tons (mt), for old crop, vs. trade expectations of 100,000 to 275,000 and at 118,500 mt for new crop vs. trade guesses of 200,000 to 500,000.
USDA noted that old crop corn sales were up from the previous week and the four-week average while old crop soybean sales were below recent levels.
About wheat, export sale were at 290,800 mt.
Cumulative sales for the first month of the 2021/22 marketing year, showed a year-over-year decline of 29% so far.
About soybean meal were at 211,800 (old crop) and 55,800 (new crop).
Corn export shipments slipped 16% below the prior four-week average.
Soybean export shipments improved 8% above the prior four-week average.
Also on Friday, USDA’s daily report showed that private exporters reported to the U.S. Department of Agriculture export sales of 228,600 metric tons of soybeans for delivery to Mexico during the 2021/2022 marketing year.
The marketing year for soybeans began Sept. 1.
In this context, corn basis bids were steady to firm after rising 3 to 10 cents higher across a handful of Midwestern locations.
Soybean basis bids were steady to mixed , moving as much as 10 cents higher at an Iowa processor while dropping as much as 10 cents lower at an Indiana elevator.
From South America, Argentina’s 2021 corn harvest is now 56% complete, per the latest report from the Buenos Aires Grains Exchange, which estimates that production will reach 48 million tonnes this season.
“High levels of moistness have interrupted the flow of harvesting in some areas, but as harvesters advance in later-planted areas, yields remain higher than initial expectations,” according to the group’s report. Argentina is the world’s No. 3 corn exporter.
Harvesting of Argentina’s 2020/21 soy concluded last month and sowing of the 2021/22 wheat crop in Argentina advanced 7.2 percentage points over the last week to cover more than 91% of expected planting area, the exchange said in the report.
On European market, French corn quality ratings are holding steady from a week ago, with 89% rated in good-to-excellent condition through July 5, per farm office FranceAgriMer.
French farm office FranceAgriMer estimates that 79% of the country’s soft wheat crop is in good-to-excellent condition through July 5, holding steady from a week ago.
Harvest has begun but is just 1% complete versus 2020’s pace of 10%.
In durum wheat 15% were harvested on July 5 against 33% last year to date.
These delays linked to climatic conditions raise concerns from a climatic point of view.
However, the return of the high pressure is expected for the weekend.
This year’s soft wheat harvest in France, is expected to reach 7.4 tonnes per hectare, up 8% from 2020 and 4% above the 10-year average, crop institute Arvalis said on Friday.
Wheat crops in the northern half of France benefited from adequate rainfall and cool temperatures during spring, whereas in the south a wet winter followed by drought from late February to late April curbed yield potential, Arvalis said in a joint statement with industry group Intercereales.
Taking the farm ministry’s current soft wheat area estimate of 4.9 million hectares, Arvalis’ yield projection would suggest potential output of 36.3 million tonnes, up from 29.1 million last year.
Some traders and analysts see production reaching 38 million tonnes, reflecting higher expectations of both area and yield.
The farm ministry will issue its first 2021 soft wheat production forecast on Tuesday.
Average protein content in the French harvest was expected at 11.6%, stable compared with last year and the 10-year mean, Arvalis said.
Farm office FranceAgriMer, have pointed to good yields and protein content but more moderate readings for test weights, another quality specification used in flour milling.
From Black Sea basin, on the other hand, harvests are continuing with good surprises in terms of yields and a little more uncertainties in terms of quality, particularly in Romania.
As on July 8, Ukraine harvested 2% of wheat areas and 11% of barley.
The country, infact, had garnered 1.4Mt including 1Mt of barley.
To note that average barley yields are record high at this stage of development.
Indeed, these amount to nearly 4T / ha (3.93T / ha precisely) against 3T / ha last year for an equivalent area.
In wheat, while only 300Kt were collected, the first feedback from the field allows the authorities to post a yield at this stage of 3.15T / ha, a figure which will swell rapidly as the cutting progresses.
Russian wheat exports have fallen nearly 20% year-over-year during the first five months of 2021 after reaching 367.1 million bushels.
Because prices are so much stronger versus last year, the monetary value of those sales only fell 4.5%.
Russia is the world’s No. 1 wheat exporter.
Meantime, Russia’s agriculture ministry has proposed setting a floor for its grain reserve at 3 million tonnes for 2022-2023, according to government documents published on Friday.
A document from the ministry said it also planned to introduce a white sugar reserve of 250,000 tonnes to ensure uninterrupted supplies and stabilize prices.
The agriculture ministry had previously said it would start buying grain for its state stockpile in 2022.
Kazakhstan’s president sacked Agriculture Minister Saparkhan Omarov on Saturday, saying his ministry had not done enough to tackle the impact of a drought affecting farmers in several regions.
Kazakhstan, Central Asia’s largest grain producer, was expected to keep exports stable at 7.5 million tonnes of wheat in the 2021/22 year, including flour, with a 2.8% decline in the crop to 13.9 million tonnes.
The former Soviet republic, sandwiched between China and Russia, is also a major producer of oilseeds and meat.
From the Middle Kingdom, although China has bought massive amounts of corn for both the current marketing year and for delivery in 2021/22, the country is likely to slow down future purchases as its local harvest is coming quickly, and as domestic prices have eased in recent weeks.
Meantime, according to the China Merchandise Reserve Management Center, China will buy 13,000 tonnes of frozen pork for its state reserves on July 14, .
China’s state planner said late last month that the central and local governments would start purchasing pork for state reserves for the first time since 2019 after a sharp drop in hog prices from January to early June.
A previous notice from the reserve management centre said China would buy 20,000 tonnes of frozen pork on July 7.
From Australia markets were mostly steady to end last week, with some of the near-term demand shorts looking to be covered and new crop still tracking around on global movements.
Another rain front crossing the Western Australian grainbelt is consolidating the excellent start to the grain growing season in WA, setting the scene for another potentially record crop.
All regions of the state have received top-up rain recently and this has continued to drive tonnage estimates up.
In its latest crop report, the Grain Industry Association of WA (GIWA) says the very wet areas in the south-west and south coast of WA are now becoming very, very wet and tonnage estimates are down at least 10 to 15 per cent in the southern areas of the Albany Port zone and the coastal strip in the Esperance Port Zone.
But, the solid crops across the rest of the state will make up the difference to neutralize the impact on total grain production for WA.
The large areas of wheat in the low rainfall regions of the Geraldton, Kwinana and Esperance Port Zones are in better shape this year than they have been since 2016 which was a record tonnage year.
The 10.6 million tonnes (Mt) of wheat that was produced in 2016 was from just under 4.5 million hectares.
There is 14 per cent more wheat area this year than in 2016 and the increase in area sown to wheat in 2021 will have a big impact on the final total grain production.
Barley and canola area estimates have come back slightly from last month due to lost areas to waterlogging.
Whilst these wet areas are now likely to obtain only average grain yields, the grain yield potential for barley and canola is still very good for the remainder of the state’s crop.
The total oat area is down on previous years due to the reduction in area sown for hay.
However, the tonnage outlook for oat grain is well up on recent years due to very good growing conditions in areas where oats are grown.
This includes more area planted in the medium to low rainfall regions where there were early planting opportunities, reasonable prices, and the swing out of hay to grain for the dedicated hay growers.
Internationally, Pakistan issued an international tender to purchase 500.000 T of wheat from optional origins that closes on July 27.
Forty percent of the grain is for shipment in August, with the remaining 60% to be shipped in September.
Iran purchased 130,000 t of milling wheat earlier this week, thought to have been sourced from Germany, the Baltic Sea or Black Sea regions.
The grain is for shipment in August and September.
Have a good day.
