Grain prices got a nice boost last Friday.
The optimism of demand and expectations for the lower production estimates by USDA in its next batch of data in next WASDE report that will be releasded on Thursday, are pressuring all markets.
Soybeans rose more than 1%.
Some wheat contracts trended more than 2% higher.
Corn prices were more muted, but December futures did pick up another 3.75 cents.
On macro markets, oil prices dropped 2% on this morning, extending last week’s steep losses on the back of a rising U.S. dollar and concerns that new pandemic curbs in Asia, especially China, may set back the global recovery in fuel demand.
Consequently, Brent crude futures slid $1.41, or 2%, to $69.29 a barrel by 01:25 GMT, after having slumped 6% last week, their biggest weekly loss in four months.
U.S. West Texas Intermediate (WTI) crude futures fell $1.32, or 1.9%, to $66.96 a barrel, after having slumped nearly 7% last week in their steepest weekly decline in nine months.
On the financial side, a positive jobs report drove U.S. stocks modestly higher Friday.
Nonfarm payrolls, indeed, increased by 943,000 in July after rising 938,000 in June, the Labor Department said in its closely watched employment report, pushing unemployment down to 5.4% and suggesting the economy maintained its strong momentum.
Economists had forecast payrolls increasing by 870,000 jobs.
However, a parallel rise in Treasury yields with Benchmark 10-year Treasury yields which rose to 1.3019%, a week high after their close at 1.217% on Thursday, signaled a downside: the Federal Reserve could curtail its massive stimulus policies faster then expected.
To note that yields have been under 2.0% since July 2019.
Consequently, stock gains were muted.
The Dow Jones Industrial Average rose 144.39 points, or 0.41%, to 35,208.64, the S&P 500 gained 7.44 points, or 0.17%, to 4,436.54 and the Nasdaq Composite dropped 59.36 points, or 0.4%, to 14,835.76.
Asian shares, meantime, wobbled on this morning amid sharp losses in gold and oil prices, while the dollar reached four-month highs on the euro.
Coming back on grains market, with three days of trading prior to the August WASDE report, markets are already starting to take some risk off actions – plenty of ideas about where final corn yield will be but in the meantime markets will trade whatever figure the USDA publishes on Thursday there.
Survey estimates for this week’s WASDE reports are generally in the ~177-178 range for corn yield, ~50.5 range for bean yields, both slightly below USDA figures from July.
Wheat production estimates are also slightly lower for spring wheat, other spring wheat ideas averaging ~20 mbu lower.
Various estimates of HRS are sub 300 mbu.
US Corn Belt weather maps remain in focus, meantime.
Forecasts early/mid this week are for a widespread inch to inch and a half across almost the entirety of the central and eastern Corn Belt.
Rains across the WCB into the weekend proved fairly patchy though, with misses for parts of northern Iowa/eastern Kansas and Nebraska but reasonable falls in southern Minnesota.
In this context, corn prices failed to find much traction Friday as traders continue to look for balance between robust export demand and what is likely to be a historically large crop this season.
While soybean prices rose spurred largely by export optimism and some lingering questions about this year’s production potential.
Wheat prices, on their part, rose sharply again, in a context where the situation remains very tense for spring wheats, whether in the United States or in Canada.
The situation has become irreversible in these areas given the water deficit episode of recent weeks.
However, some are starting to talk slightly higher average yields with the larger areas of poorer yielding crops still being cut for hay, though both figures are hard to peg in this season.
Corn basis bids were largely unchanged across the central U.S. on Friday but did move as much as 10 cents higher at an Iowa processor and as much as 6 cents lower at an Ohio elevator.
Soybean basis bids fell 5 to 10 cents lower at three Midwestern processors, but held steady at most other locations in the central U.S..
Wheat basis bids were mixed past week in the Pacific Northwest (PNW) and Gulf.
HRS was flat in the PNW while HRW was up as harvest in Montana advances.
Production is advancing rapidly, but weather conditions have left many unknown factors making farmers cautious about production prospects, supporting basis prices.
On European market, there were new price increases on Euronext for all products last Friday.
The weather still does not allow the resumption of harvesting sites in Europe.
According to FranceAgrimer only 66% of soft wheats were harvested in France on August 2, an average delay of 11 days compared to the average.
This is to be compared with 97% of harvested last year to date.
74% of wheat is surprisingly rated as good to excellent.
The winter barley harvests are considered to be almost complete.
Conseqeuntly, this increase in prices, is particulary marked for close deliveries, with an accentuated difference between milling wheat and fodder wheat.
The main element of quality lacking is specific weight.
Rapeseed prices, on their part, started to rise again last Friday in the wake of Canadian canola.
On the hoder hand, the euro against the dollar has fallen, and this is making it possible to regain some competitiveness on the international scene for European’s wheat origins.
From the Black Sea basin, wheat harvest continues.
Russian wheat harvest pushing over 14.5 mha according to government figures there on Friday.
Ukraine is expected to be pushing 24 million tonnes harvested early this week for wheat, ~8Mt barley
Indeed, according to the Ukrainian Ministry of Agriculture 72% of wheat and 79% of barley are harvested to date.
Meantime, wheat prices are rising also in the Black Sea area in the wake of other places, with a price differential which is accentuated between milling wheat and wheat of lower quality.
Feed barley prices are also progressing, although physical activity is reduced with a growing price gap between buyers and sellers.
From the Middle Kingdom, China imported 8.67 million tonnes of soybeans in July against 10.09 million last year in the same month.
Last Friday, China’s state grains stockpiler Sinograin auctioned off just over 1 million bushels of corn that had originally been imported from the United States.
That was 12% of the total grain available for sale.
Sinograin has made a flurry of similar sales since June in an attempt to bolster local supplies and cool off high prices.
From Australia, RBA comments on Friday suggested that they expect to see some choppy economic activity through the coming year with cyclical lockdowns and post-lockdown bounces until vaccinations reach higher levels.
They also upgrade their economic growth forecast to four percent, from three and a half prior.
WA rains largely were in the 5-20 mm range over the weekend, with a few brighter spots.
Extended run weather maps are already starting to flirt with another mid-month system though, with a few variations between models about how far south it will track.
Internationally, the USA sold 131,000 t of soybeans to China and Tunisia eventually bought around 75,000 t of milling wheat and 100,000 t of feed barley.
Taiwan purchased 1.8 million bushels of milling wheat, sourced from the United States, in a tender that closed last Friday.
The grain is for shipment between late September and early October.
In Egypt, the price of bread is expected to rise for the first time in 44 years, the price of this staple food having been blocked to date.
That’s opening concerns about political stability there.
We wish you a good day.
