LAST WEEK MARKET COMMENT

The end of past week marked the end of an impressive series of 10 consecutive sessions in which the US government brought in at least one overseas corn order.

During this period, China placed five purchase orders with a volume of over 1 million tonnes.

However, a stronger dollar weighed down all agricultural commodity prices on Friday. 

In fact, denominated in the US currency, these tend to fall when the greenback goes up.

Consequentially, Chicago wheat fell 2.5usc/bu to close the week at 674.25usc/bu, down just under 30usc/bu over the week. 

Kansas eased 2usc/bu, while Minni managed to finish in the green, closing up 5usc/bu to close the sunny side of 700usc/bu. 

Corn fell 8usc/bu 659.25usc/bu which was up 17.25usc/bu over the week. 

Soybeans were down 8.5usc/bu, meal was off USD$3/st and soybean oil was down 0.28usc/lb. 

On macro markets, energy futures moved higher, with crude oil jumping more than 2.5%, to move again back above $63 per barrel. 

Gasoline and diesel each rose about 1.5% higher. 

On the financial side, stocks tied to the reopening of the economy, such as Carnival, found solid gains on Friday, so, on Wall St., the Dow improved 123 points to 34,207, however, It remained on pace for weekly losses after experiencing some downward volatility. 

The U.S. Dollar firmed moderately.

Coming back on grains market, on the weather side, precipitation is expected in the Midwest and Great Plains region sice to Tuesday, particularly in North Dakota and South Dakota.

Meantime, forecasts for the next 8 to 14 days point to warmer than seasonal normal temperatures in the Corn Belt and wetter than usual weather in central Canada between May 28 and June 3.

In this context, the USDA will start reporting the crop condition as of tonight which are expected to be woeful at best. 

Additionally, even if some of the Canadian spring wheat areas are suffering from some lack of moisture, this will go some way toward offsetting what will be a massive HRW crop. 

Meantime, Gulf basis was higher past week as old crop stocks remain tight, and given dry conditions, farmers are unwilling to forward contract too much new crop wheat sales. 

The PNW basis was lower due to light export demand limiting the need to draw wheat from farmers.

Corn basis bids were steady across most Midwestern locations Friday, but they did firm 3 cents at an Indiana ethanol plant.

Soybean basis bids tipped a penny higher at an Illinois river terminal while tumbling 16 cents lower at an Ohio river terminal and holding steady across most other Midwestern locations.

From South America, Brazil’s Safras & Mercado once again raised its forecast for the country’s 2020/21 soybean harvest, bumping it up another 2.3% to reach 5.041 billion bushels. 

That will be a record-breaking production for the country, if realized.

Meanwhile, multiple ships are stuck in port at Argentina’s Rosario port, loaded with soybeans and other grains for export, following a 48-hour strike earlier this week due to workers demanding (and failing to receive) access to coronavirus vaccines. 

“The strike generated a total breakdown of logistics, causing congestion at anchorages and making it impossible for new ships to arrive at port to load,” according to a letter from the Argentinian Port and Maritime Activities Chamber.

Meantime, Argentina is reporting that 7 ships carrying grain have been stranded by low Parana River levels, as loading strike caused boats to be caught with too much supply on board as river levels declined amid a lack of water flow from Brazil.

On European market, reassuring production projections in the US, Russia and in same Europe too, are weighing on prices.

Indeed, Euronext fell back into the red on Friday evening in the face of a market that seems reassured by the production potential of large producers in the Northern Hemisphere. 

In France, the growing conditions are reassuring. 

FranceAgriMer notably maintains the “good to very good” wheat rate at 79%, against 75% on average. 

In France, 93% of the corn crop is rated in good-to-excellent condition through May 17, falling 3 points from a week ago, according to farm office FranceAgriMer. 

Meantime, nearly all (97%) of the country’s corn crop has now been planted, trending 4 points higher year-over-year., 

However, european corn prices over the previous season continued stood out, however, confirming their slight rebound from the previous day as the slower harvests in Argentina and the very weak Brazilian production outlook in Brazil are supporting this trend.

On the political side, the relationship between the EU and China has worsened. 

The European parliament voted last Thursday to freeze the proposed new investment agreement with China. 

This comes in response to Beijing sanctioning 10 EU parliamentarians after they questioned Chinas’ treatment of its Uyghur people in Xinjiang.

From North Africa, Egypt’s GASC is seeking wheat in tender on today for Aug 8-22, payment at sight.

Egypt, the world's largest wheat importer, has strategic reserves sufficient to cover consumption for 5.9 months, Supply Minister Ali Moselhy told a local television channel on Sunday.

They used to work on about 7 million tonnes to import, they got down to 6.5 million tonnes and last year they bought less than 6 million tonnes, as reported by Moselhy in a statment.

This year, Egypt planned to decrease imports again to a certain extent, based on the local harvest.

Consequentially import could be less than 6 million tonnes again.

The government, hopes to procure 3.6 million tonnes of local wheat from farmers this season, had so far bought 2.9 million tonnes.

Meantime, reserves of vegetable oils were sufficient for 4.9 months and sugar for 5.5 months.

From Black Sea basin, the Russian Ministry of Agriculture has also announced a massive national harvest again this year, at 80.7 Mt. 

The export target is set at 51 Mt, an increase of 3 Mt compared to last year.

Russia’s agriculture ministry so, is expecting a rise in grain exports during the 2021/22 marketing year, partly due to the fact that farmers may not use up the entire export quota for the current marketing year, which can be rolled over. 

Russia’s top three wheat customers are Turkey, Egypt and Bangladesh.

Meantime, Ukraine's agriculture ministry has increased forecast for 2020/21 barley exports to 4.15 million tonnes from the previous outlook of 4.0 million.

The data show a decrease in domestic consumption makes the higher exports available.

The ministry also revised up overall grain export outlook for the current season to 45.817 million tonnes from 45.667 million tonnes.

It left unchanged forecast for wheat and corn exports at 17.5 million tonnes and 23.5 million tonnes respectively.

However, the ministry said Ukrainian grain exports had fallen by about 23.3% to 40.85 million tonnes so far this season.

The volume included 15.6 million tonnes of wheat, 20.4 million tonnes of corn and 4.14 million tonnes of barley. 

In this context, Ukrainian wheat export prices have reversed its trend direction, having lost $6 a tonne over the past week thanks to improved crop forecasts in key production regions, the APK-Inform agriculture consultancy said on Saturday.

Bid prices for high-quality soft milling wheat decreased to $263-$270 a tonne FOB Black Sea port, APK-Inform said. 

Feed wheat lost by $5 a tonne to $261-$268 FOB Black Sea.

APK-Inform also said corn bid export prices decreased by $2 over the past week to $282-$289 FOB, while bid prices for Ukrainian-origin barley decreased by up to $4 to $242-$249 per tonne FOB Black Sea.

Aussie new crop wheat markets finished the week down $10-12/t across most port zones. 

Domestic January-onwards barley markets across the east coast remained relatively unchanged over the week, the Eastern Australian feed barley ASX contract for January settling at $265, which was a touch firmer by Friday’s close. 

New crop canola had a roller-coaster week which saw domestic delivered crush bids unchanged for the week. 

Over the other side of country WA FIS grower bids finished the week at $800/t FIS Kwinana port zone.

Current crop delivered wheat bids were a touch softer on Friday for June/July slots. 

Barley continued to catch a bid and traded for July plus carry Geelong/Melbourne. 

Southern NSW barley continues to work its way down into Geelong/Melbourne range.

Weather maps are looking a touch healthier this morning, with WA set for another fantastic rain event with a widespread 15-20mm event on the 8-day BOM forecast. 

SA has built some more confidence in the model with rain due to hit most of the state tomorrow. 

It’s forecasting a widespread 5-15mm across the cropping regions.

Dry run-up in the northern part of Australia will give sorghum harvest and cotton picking a good week’s run at it.

Tonigth we will see how the sessions close.