Soybeans rose on short-covering and weather risks; corn benefited from soy spillover support, while wheat increased as harvest pressure eased and traders covered short positions ...
Good morning, Farmer Family ...
US farm markets mostly rose on Wednesday.
Corn prices shifted 0.86% higher.
The rest of the soy complex was mixed as soymeal climbed 2.65%, while soyoil tumbled 1.83% lower.
Wheat prices found substantial gains, as Chicago SRW gained 2.47%, Kansas City HRW climbed 2.91%, and Minneapolis spring wheat rose 2.68%.
- Corn ended higher on spillover support from rising soybean and wheat prices.
- Warm, dry weather in the Midwest could aid the corn harvest and limit early frost concerns, according to Commodity Weather Group, but the weekly U.S. Drought Monitor report showed abnormal dryness in Iowa, Minnesota and Illinois, and about 16% of Ohio in "extreme drought."
- StoneX increased their US corn yield estimate by 0.6 bpa to 182.9 bpa.
- However, production was cut by 80 million bushels to 15.127 bbu, likely on lower acreage.
- Limiting gains, farmers continued to clear out old-crop corn to make room for the new harvest.
- A weaker U.S. dollar has also supported the corn market.
- Soybeans ticked higher, on support from short-covering and weather risks.
- Soymeal were also on the rise, reaching their highest level for a month.
- On the other hand, soybean oil stepped up its correction, completely wiping out last week's rebound.
- Industry players have been assessing whether overly dry weather in the U.S. Midwest will dent earlier projections of bumper soybean yields in the upcoming harvest.
- Dryness is stressing roughly 25% of the nation's corn and soy crop, a note from Commodity Weather Group said.
- On this wake, StoneX trimmed US soybean yield by 0.4 bpa.
- However, they raised the production total by 92 mbu to 4.575 bbu on increased acreage.
- Meantime, soybeans have been supported as the possibility of Chinese tariffs on Canadian canola raised hopes that China could buy more U.S. soy.
- For wheat, prices rose as harvest pressure eased.
- Farmers have begun seeding the U.S. winter wheat crop that will be harvested in 2025.
- However, moisture deficits are expected to build for up to half of Plains hard red winter wheat over the next 16 to 30 days, according to Commodity Weather Group.
- As a result, traders covered their short positions.
- Meantime, Russian wheat prices stabilized, and strengthening European wheat prices have added support.
- In this context, all three crops have been moving away from near four-year lows, with the recovery boosted by short-covering and a weaker dollar amid a risk-off mood in financial markets.
- However, farmers continued to clear out old-crop corn to make room for the new harvest, pressuring the nearby corn contract, though selling of old-crop soybeans has slowed to a trickle.
- Meantime, July export data from Census showed 5.26 MMT.
- That was 4.3% below the June total, though more than double the same month last year.
- The marketing year sales have totaled 53.06 MMT, which is 4.18 MMT shy of the full year projection from USDA with August data left.
- Shipments of distillers were a 6-year high for July and the largest total since January 2022 at 1.094 MMT.
- Ethanol exports totaled 135.99 billion gallons, down 7% from June but a record for July.
- For soybeans, Census data showed July soybean exports at 1.495 MMT.
- That was a 11.62% improvement from June and 17.04% above last year’s July total.
- However, in the first 11 months of the marketing year, 44.42 MMT have been shipped, leaving 1.85 MMT needed in August to hit the 46.27 MMT USDA projection.
- Meal shipments were down 6.1% from last year at 1.018 MMT.
- For wheat, during July official exports totaled 1.959 MMT according to Census data.
- That was a 4-month high and 33.63% above June, as well as 12.6% above the same July last year.
- Meantime, low water conditions have led to several barges running aground along a key stretch of the lower Mississippi River, the U.S. Coast Guard said on Wednesday, just as the busiest U.S. grain export season gets underway.
Spot basis bids for corn were steady to higher at elevators and river terminals across the U.S. Midwest.
- The corn basis rose by 10 cents at an elevator in the Chicago, Illinois, area and by 5 cents at another in Blair, Nebraska.
- It rose by 7 cents at a river terminal in Morris, Illinois.
- Spot basis bids for soybeans in the U.S. Midwest were flat to lower.
- The spot soybean basis dropped by 10 cents a bushel at a processor in Decatur, Illinois, by 15 cents at another processor in Morristown, Illinois, and 5 cents at another in Cedar Rapids, Iowa.
- Spot basis bids for hard red winter (HRW) wheat were steady to lower in the southern U.S. Plains.
- Protein premiums for HRW wheat shipped by rail to or through Kansas City were unchanged for wheat with all levels of protein content.
- Commodity funds were net buyers in CBOT corn, soybean, soymeal, and wheat contracts, while they were net sellers in soyoil.
Wheat, corn and soybeans eased, but hovered close to multi-week highs after a flurry of short-covering by speculative investors pulled back prices from near four-year lows.
- Notably, the most-active wheat contract on the Chicago Board of Trade was down 0.5%, as of 0252 GMT, but up around 10% from the start of previous week.
- Corn dipped 0.1%, although the contract was 7% above its lows early last week.
- Soybeans fell 0.5%, but have gained around 6% in the last fortnight.
- The grain and oilseed markets continue to have a firmer bias as speculative funds unwind massive short positions in the complex.
- A weak dollar also helped stimulate some overseas demand for U.S. agricultural goods.
- However, ample supply is likely to keep a lid on prices.
- Huge corn and soybean crops will soon be harvested in the United States.
- Most analysts also believe the markets are well-supplied, which should weigh on prices.
- Meanwhile, if U.S. wheat prices rise to levels where it becomes uncompetitive again, it will miss out on global market opportunities.
South America
The area planted with soybeans in Brazil will grow in 2024/25 at its slowest pace in almost two decades, agribusiness consultancy AgRural said.
- The agency indeed is forecasting a modest 0.9% expansion, compared with the previous season.
- Notably, AgRural expects Brazil's soybean area to reach 46.4 million hectares.
- However, the consultancy also believes that Brazil's soybean production could reach 168 million metric tons in 2024/25, up 14% on a yearly basis.
- A second consultancy, Patria AgroNegocios, also forecast Brazil's soybean area will reach 46.45 million hectares in the new season, but it sees a slightly higher percentage increase as its estimate for 2023/24 sat at 45.69 million hectares.
- The 1.66% growth projected by Patria would be driven by Brazil's north and northeast regions.
- Patria sees Brazil's soybean output potentially reaching 166.72 million tons in 2024/25, up 15.5% from the previous season.
- Meantime, Brazil grain exporter association ANEC pegged September soybean exports at 5.6Mt, soymeal at 1.7Mt and maize at 6Mt.
- It estimated cumulative calendar year soybean exports to end of September at 89Mt, and full year 2024 at 99Mt.
Europe
European grain markets ended mixed.
- December wheat settled 0.6% higher to 220.50 euros ($244.38) per metric ton, marking a seventh straight daily gain.
- The contract earlier climbed to 221.75 euros, its highest since Aug. 14, but like in the previous session failed to break clear of the 220 euro chart ceiling.
- MATIF corn Nov ended up €1.5/t to €203.75/t for its seventh straight daily gain.
- Meanwhile rapeseed extended losses ending down €3.25/t to €466.5/t.
- Wheat prices rose to reach a three-week high as Chicago extended a rally amid weather concerns and signs of improving export demand.
- A risk-off mood in financial markets, as investors fret over economic growth, has also encouraged short-covering in wheat after recent lows.
- However, the Euronext strength is making European third-country grain exports almost impossible.
- The market is still facing pressure from cheaper Black Sea supplies.
- In Germany, operators switched their focus from third country exports to domestic EU/British sales.
- There is purchase some interest from British mills but only for 13% high protein grades.
- Meantime, financial investors reduced their net short position in Euronext wheat last week, data published by the exchange on Wednesday showed.
- In oilseeds, November rapeseed settled 0.7% lower to 466.5 euros a ton.
- The market has been pressured by falling crude oil prices and further weakness in Canadian canola, a day after China announced an anti-dumping investigation into canola imports from Canada.
- On this wake, during yesterday's session, prices in Winnipeg came close again to the CAD 570/t level on the November 2024 contract, not far off the level of the previous day.
North Africa
According to the Ministry of Supply and Domestic Trade of Egypt, the current wheat stocks in the country are sufficient to meet the domestic demand for the next 5.9 months.
- It is also reported that the country's vegetable oil reserves are sufficient for 6.4 months, and sugar reserves - for 16.3 months.
Ukraine
As of September 4, Ukraine exported 7.201 mln tonnes of grains and pulses since the beginning of 2024/25 MY, including 212 thsd tonnes shipped this month, according to the press service of the Ministry of Agrarian Policy of Ukraine.
- In terms of crops, the country exported wheat for 3.78 mln tonnes, barley for 1.104 mln tonnes, corn for 2.288 million tonnes.
- As for wheat, it should be noted that the volume of its shipments has already reached 23.3% of the volume agreed for export in 2024/25 MY (16.2 mln tonnes).
- The total export of Ukrainian flour since the beginning of the season as of 4 September is estimated at 11.9 thsd tonnes, including 10.8 thsd tonnes of wheat.
Russia
According to preliminary data from the Russian Grain Union, the Russian Federation has shipped 6.754 mln tonnes of main grain crops for export in August.
- That was 12.3% less than in the same month last year.
- However, August results turned out to be above expectations, as in the last week of the month shipments, which had been lagging behind before, intensified and began to exceed the figures for the same month last year.
- In particular, shipments of the main types of cereals increased by 19%, to 1.561 mln tonnes, wheat - by almost 36%, to 1.461 mln tonnes,’ said Elena Tyurina, director of the RZS analytical department.
- At the same time, she specified that Russian wheat exports in August amounted to 6.06 mln tonnes, which was 6.7% behind last year's figure.
- Barley shipments decreased to 499.4 thousand tonnes from 1.34 mln tonnes a year earlier, corn - to 193 thousand tonnes from 257.5 thousand tonnes.
- A total of 12.251 mln tonnes of the main types of cereals were shipped for export in the first two months of the 2024/25 MY, 8.1% less than last season.
- This included wheat exports of 10.143 mln tonnes (8.2% less), barley exports of 1.613 mln tonnes (11.3% less) and maize exports of 495,000 tonnes (4.6% more).
Southeast Asia
Pakistani Federal Minister for Planning, Development and Special Initiatives said that under the direction of the Prime Minister, 1,000 farming experts will be sent to China for training in agricultural sector.
- The minister said that $11 million would be spent on their training.
- The minister also said this step will lay the foundation of “green revolution” in the country as they will learn the modern methods of agriculture in China.
- So far, Pakistan has imported agricultural products of around 10 billion dollars annually due to low yield per acre.
Malaysian palm oil prices extended losses to a third straight session.
- The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange closed down 1.09% at 3,888 ringgit ($893.79) per metric ton.
- Dalian's most-active soyoil contract fell 0.9%, while its palm oil contract was down 1.4%.
- Also, the strengthened ringgit has made palm oil significantly uncompetitive.
- Malaysia's palm oil inventories are expected to have climbed to their highest levels in six months at the end of August due to lacklustre export demand.
- India's palm oil imports in August fell 27% from a month ago on ample stocks and as negative margins prompted refiners to curtail purchases of the tropical oil.
- Oil prices fell, after plunging more than 4% the previous day, and weaker crude oil make palm a less attractive option for biodiesel feedstock.
- Supporting prices, China said on Tuesday it plans to start an anti-dumping investigation into canola imports from Canada, sending prices of domestic rapeseed oil futures to a one-month peak.
Australia
A bounce in US wheat values has fed through to eastern Australian prices for feed wheat and barley.
- In the north, limited availability of road freight to service the stockfeed sector once the chickpea harvest gets legs has further fuelled price lifts of up to $20 per tonne.
- In the south, spring arrived with some gusty winds in the higher latitudes, and some good rain in patches.
- Sorghum is trading sideways in thin volume, with the still unconfirmed news that China plans to limit its purchases of sorghum and barley hanging over coarse grains bound for export.
- Meantime, the 8-day forecast is looking more positive for the cropping regions of SA, western Vic and southern NSW with 10-25mm expected over the coming week and, for SA particularly, it cannot come soon enough.
- The BOM latest Climate Driver Update noted the El Ni?o–Southern Oscillation (ENSO) is currently neutral.
- Three of 7 climate models suggest the possibility of sea surface temps in the tropical Pacific exceeding the La Ni?a threshold from October, while the remaining 4 models, including that of the Bureau, suggest temps are likely to remain at ENSO-neutral values throughout the forecast period.
- This means it is possible a La Ni?a may develop in the coming months.
- In this context, new crop cereal prices yesterday in Western Australia were bid up A$3/t.
- New crop wheat was bid $350/t FIS, and barley was bid $305/t FIS.
- WA canola bids eased about $5/t, to $755/t FIS.
- Eastern Australian price movements were similar.
- Wheat bids were up around $6/t to about $335/t.
- Canola and barley were largely unchanged.
- Delivered Darling Downs wheat bids were $318/t and barley $295/t.
International grain and oilseed tenders & trade
- Japan's Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 87,660 metric tons of food-quality wheat from the United States and Canada in a regular tender that closed on Thursday.
- Leading South Korean animal feed maker Nonghyup Feed Inc. (NOFI) purchased about 65,000 metric tons of animal feed wheat in an international tender on Wednesday. It was bought in one consignment at an estimated $265.48 a ton cost and freight (c&f) included, plus a $1.50 a ton surcharge for additional port unloading. Seller was believed to be trading house Posco. The wheat was sought for arrival in South Korea around Nov. 30. The wheat can come from any worldwide optional origins, but Russia, Argentina, Pakistan, Denmark and China are excluded as sources. The wheat cannot be loaded in ports in Russia and Ukraine.
- Algerian state agency ONAB has issued an international tender to purchase up to 120,000 metric tons of animal feed corn sourced from Argentina or Brazil only. The deadline for submission of price offers in the tender is Thursday, Sept. 5. Corn shipment is sought by Oct. 10 at the latest in three consignments each of between 30,000 and 40,000 tons.
- GASC announced an invitation to offer imported vegoils. The deadline for the submission is for Tuesday 10/9/2024. The arrival is for 20 Nov. 24 to 5 Dec. 24 &/or 10-25 Dec. 24. Payment to be with at sight LC by ITFC.
Outside markets ...
Oil prices fell by more than $1 a barrel in a see-saw trading.
- Brent crude futures settled down 1.42%, while U.S. West Texas Intermediate crude futures settled down 1.62%.
- Brent crude futures tumbled as much as 11%, or about $9, in a little over a week, hitting a low of $72.63 on Wednesday, their lowest close since June 27, 2023.
- Meanwhile WTI ended below the $70 per barrels to the lowest settlement since Dec. 11.
- Traders remained worried about demand in coming months.
- Lackluster data from the U.S. and China reinforced expectations of a weaker global economy and oil demand.
- Meantime, crude producers offered mixed signals about supply increases.
- OPEC+ was discussing delaying a possible output increase.
After the sessions close ...
- Delayed Weekly U.S. oil inventory data from the American Petroleum Institute showed U.S. crude oil fell by 7.431 million barrels last week.
- That was more than analysts' expectation.
This morning, oil prices edged up.
- Brent crude futures for November rose 0.48%, at 0607 GMT, while U.S. West Texas Intermediate crude futures for October were up 0.51%.
- After plunging to multi-month lows previously prices rebounded as major producers may delay an output increase planned for next month and U.S. inventories fell.
- However, gains remained limited by persistent demand concerns.
- Weekly U.S. oil stocks data from the Energy Information Administration (EIA) is due on Thursday at 1430 GMT.
The Baltic Exchange’s dry bulk sea freight index in London retreated on dips in rates across all vessels.
- The overall index shed 2.3%, after touching its highest since July 15 in the previous session.
- The capesize index dipped 3.7%.
- The panamax index was unchanged, maintaining its lowest level in more than a year.
- The supramax index was down 0.7%.
Us stock indexes settled mixed.
- The Dow Jones Industrial Average, gained 0.1%, the S&P 500 fell 0.2%, while the Nasdaq composite shed 0.3%.
- Stocks were weighed down on some negative corporate news and negative carryover from the previous session, then recovered from early losses and moved higher as the 10-year T-note yield dropped to a 2-week low.
- The US Jul JOLTS job openings fell -237,000 to a 3-1/2 year low of 7.673 million, showing a weaker labor market than expectations.
- That boosted hopes for the Fed to cut interest rates by 50 bp at the Sep 17-18 FOMC meeting.
- As a result, the 10-year T-note yield fell -6.6 bp to 3.765% by the close.
- Supporting stocks, US July factory orders rose +5.0% m/m, stronger than expectations of +4.9% m/m and the largest increase in four years.
- However, stocks gave up their gains and turned mixed after the release of the Fed’s Beige Book Wednesday afternoon sparked growth concerns.
- Meantime, the US July trade deficit widened to -$78.8 billion from -$73.0 billion in June, the largest deficit in 2 years and a negative factor for Q3 GDP.
- US MBA mortgage applications rose +1.6% in the week ended August 30, with the purchase mortgage sub-index up +3.3% and the refinancing mortgage sub-index down -0.3%.
- The average 30-year fixed rate mortgage fell -1 bp to a 16-month low of 6.43% from 6.44% in the prior week.
- In Europe, the Euro Stoxx 50 dropped to a 2-week low and closed down -1.31%.
- The Eurozone Aug S&P composite PMI was revised down by -0.2 to 51.0 from the previously reported 51.2.
- The Eurozone July PPI fell -2.1% y/y, the fifteenth consecutive month that producer prices have fallen year-over-year.
- In China, the Shanghai Composite Index fell to a 6-3/4 month low and closed down -0.67%.
- Japan's Nikkei Stock 225 plunged to a 2-1/2 week low and closed down sharply by -4.24%.
- The Japan Aug Jibun Bank services PMI was revised down by -0.3 to 53.7 from the previously reported 54.0.
This morning, Asian markets were mixed.
- Japan’s benchmark Nikkei 225 slipped 1.1%, the Kospi ended 0.3% lower, Hong Kong’s Hang Seng index declined 0.6%, the Shanghai Composite index was up less than 0.1%, Australia’s S&P/ASX 200 rose 0.4%.
- Japan's wage growth remains strong, as average cash earnings in July grew 3.6% year-on-year, while real earnings unexpectedly increased by 0.4% in July.
- In South Korea economy contracted by 0.2% in the second quarter.
- Meantime, operators are awaiting for several other reports this week to get a clearer picture of the economy for the Fed and Wall Street.
- The Institute for Supply Management will release its services sector index for August on Thursday.
- The U.S. will release its monthly jobs report for August on Friday.
- The US July trade deficit widened by the most in 2 years.
- Lower T-note yields also weighed on the dollar.
- Losses in the dollar accelerated after the US July JOLTS job openings fell more than expected to a 3-1/2 year low.
- Meantime, the EUR/USD rose slightly on dollar weakness.
- The euro indeed was undercut by weakness in Eurozone producer prices and a downward revision to the Eurozone Aug S&P composite PMI.
- Also, dovish comments from ECB Executive Board member Cipollone and ECB Governing Council member Kazaks have been negative for the euro.
- On the other hand, the USD/JPY fell, as the yen garnered some safe-haven support from the plunge in the Nikkei Stock Index.
- Meantime, Governor Ueda said the BOJ will continue to raise interest rates if the economy and prices perform as expected.
This morning, the U.S. dollar was trading at 143.48 Japanese yen, while the euro cost $1.1084, up from $1.1082.
Settlement Prices for Key Commodity, Index & Currencies
- Chicago wheat Dec contract was up 14c/bu to 580.6c/bu;
- Kansas wheat Dec contract was up 16.6c/bu to 593c/bu;
- Minneapolis wheat Dec contract was up 16.2c/bu to 623.4c/bu;
- MATIF wheat Dec was up €1.25/t to €220.5/t;
- ASX wheat Jan '25 contract was up A$5 to A$325/t;
- US DWI Cash (durum wheat index) was down 5.98c/bu to 619.35c/bu;
- 1CWAD (Canadian durum) avg spot price was down C$0.09/t to C$292.86/t.
- EDW (EU durum) Dec contract was unchanged to €314.5/t;
- Chicago corn Dec contract was up 3.4c/bu to 412.6c/bu;
- MATIF corn Nov was up €1.5/t to €203.75/t;
- Chicago soybeans Nov was up 9.4c/bu to 1,021.4c/bu;
- Winnipeg canola Nov contract, was down C$11.2/t C$579.7/t;
- MATIF rapeseed Nov was down €3.25/t to €466.5/t;
- Brent crude Nov was down US$1.05/barrel to $72.70;
- WTI crude Oct was down US$1.14/barrel to $69.20;
- BADI (Baltic Dry Index) was down 45 points to 1.902;
- Dow Jones was up 38,04 points to 40.974,97;
- S&P 500 was down 8,86 points to 5.520,07;
- NASDAQ Composite was down 52,00 points to 17.084,30;
- US dollar index (Dec '24) was down 0.470 points to 100.946;
- AUD/USD firmer at US$0.6725;
- USD/CAD weaker at $1.3505;
- EUR/USD firmer at $1.1082;
- USD/RUB weaker at ?87.4970.
Author: Sandro F. Puglisi
Source: Me, AAFC, ABARES, Abiove, AHDB, Amis, Argus Media, Baltic Exchange, Buenos Aires Grain Exchange, CFTC, CGC, China AgMin, Clear Grain Exchange, CME, Conab, Copernicus, CWG, ECB, ECMWF, EIA, Euronext, European Commission, Eurostat, FAO, FCI, FED, GASC, GIWA, ICE, IEA, IGC, IKAR, JRC MARS Bulletin, LSEG, MPOB, National Bureau of Statistics of China, ODC, OIAC, RBA, Reuters, Rosario Grain Exchange, Russia AgMin, Russian Grain Union, S&P Global, SovEcon, StatCan, USDA, UA AgMin, and Others ...
This newsletter is a free version of the daily report created by the "Author" exclusively for “Banca del Grano”. On the date of publication, the "Author" did not have (either directly or indirectly) positions in any of the securities mentioned here, and all information and data is solely for informational purposes. Thus, please consider making a voluntary donation to the "Author", helping Banca del Grano maintain a free access to the most important and reliable ag commodity market information and insights worldwide:
IBAN: IT 64 K 3608 10513 8244696644702
For more information please view the Banca del Grano Disclosure Policy, on www.bancadelgrano.it.
