GRAIN & PRICE WEEKLY REPORT

Once again, US grain prices drifted lower this week.

Corn futures has been in retreat mode this week, with December contract dropped 5.37% for the week.

Soybean futures slipped 2.36%, giving back most of last week’s gains. 

Soy oil was down 2.51%.

Soy meal was 3.51% lower . 

Wheat futures joined the rest of the commodities ag complex even if with marginal losses. 

Indeed, Chicago SRW wheat futures were down just 0.85%.

MGE HRS were 0.14% lower.

KC HRW was 0.57% down.

On macro markets, oil prices fell on Friday after a weaker than expected U.S. jobs report indicated a patchy economic recovery that could mean slower fuel demand.

However, losses were capped by concerns that U.S. supply would remain limited in the wake of Hurricane Ida, which cut production from the U.S. Gulf of Mexico.

Thus, Brent crude futures settled lower by 42 cents, or 0.58%, at $72.61 a barrel. 

U.S. West Texas Intermediate (WTI) crude futures were down 70 cents or 1%, at $69.29.

Both benchmark oil contracts were largely steady for the week, with U.S. crude up 0.80%.

As we just said, US non-farm payrolls missed expectations.

In fact there was an increase of only 235,000 jobs. 

Economists had forecast non-farm payrolls would increase by 728,000 jobs. 

Consequentially, investors now are girding their portfolios for potential stock market volatility, even as equities hover near fresh highs after logging seven straight months of gains.

So, on Friday MSCI’s ACWI, which is 60% U.S. equities, rose 0.11% to 746.46, while the Nasdaq gained 0.21%.

The S&P 500 index edged 0.03% lower and the Dow Jones Industrials fell 0.2%. 

The broad STOXX Europe 600 index of pan-regional stocks closed down 0.56%.

Japanese shares jumped after officials said Prime Minister Yoshihide Suga would step down.

Indeed, Japan’s TOPIX stock index rose to a 30-year high and was last up 1.61%, with the Nikkei gaining 2%. Asian shares are still off their peaks from earlier in the year however, and lagging those elsewhere.

Meanwhile, Chinese blue chips were down 0.5% and Hong Kong was off 0.72% after activity in China’s services sector slumped into sharp contraction in August.

For the week, the Dow Jones Industrial Average closed the week at 35.369, down 86 point, or by 0,24%, compared to last week.

The S&P 500 gained 26 points, or 0.58% for the week, closing to 4.535. 

The Nasdaq Composite added 234 points, to close the week at 15.363, jumping week over week by 1.55%.

The U.S. Dollar Index decreased from last week’s 92.72 to close at 91.41. 

Meantime, the Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal, and iron ore, decreased 7% on the week to end at 3,944.

Coming back on grains market, this week hurricane Ida literally put underwater some parts of NY and NJ via heavy rains.  

Louisiana and Mississippi has been also devastated by high winds and flooding. 

The most direct impact on ag prices came from the grain export terminals out of commission in New Orleans. 

Indeed, some of those terminals may be out of service for several weeks.  

That had a bearish influence on September contracts, since delivery elevators are on the river between Chicago and St. Louis, and the demand for that grain is for export trade at New Orleans.  

Meantime, the updated 7-day QPF from NOAA shows the next week will return to dryness for the Northern Plains. 

W. NE may get a pocket of 1” or less, with another pocket in E. IA for 1 – 1 1/2”. 

Most of the rain will stay South from KS through S. IL to WV. 

Weekly US crop progress report showed on Monday corn condition rated 60pc good-to-excellent, soybeans were at 56pc, and milo at 58pc.  

Corn harvest progress was pegged at 50pc complete in Texas with other southern states also starting to rapidly push forward. 

In this context, IHS Markit forecasts corn acreage at 94.4m acres planted and 86m harvested with a 175.4 bpa yield. 

About soybeans, IHS Markit forecasts soy acreage at 88.1m acres planted and 87.2m harvested with an UNCH 50 bpa bean yield. 

On this wake, USDA’s National Agricultural Statistics Service (NASS) announced this week it review all available data, including survey data, satellite-based data, and the latest information from USDA’s Farm Service Agency and Risk Management Agency, for planted and harvested acreage for corn, cotton, peanuts, rice, sorghum, soybeans, and sugarbeets in preparation for the September Crop Production report. 

If the data review justifies any changes, NASS will publish updated planted and harvested acreage estimates in the Sept. 10 report. 

USDA currently is for corn at 92.7 planted and 84.5m harvested acres. 

For soybeans, USDA currently at 87.6 planted and 86.7m harvested acres.

About the wheat complex, winter wheat harvest is complete, spring wheat was estimated 88pc harvested nationally after the recent weather, against 77% last week and 71% to date on the average of the last 5 years.

HRW composite grade is No. 1 with 11.9% (12% moisture basis) protein on average. 

Spring wheat composite protein of 15.4% (12% mb) in this No. 1 DNS crop is well above the 5-year average SW composite grades as No. 2, with high protein, low moisture and lower test weight values reflecting extreme heat and drought conditions. 

The Northern Plains durum harvest is progressing with less than 20% of the crop remaining, well ahead of last year and the 5-year average pace. 

With no rain forecast, harvest should make good progress.

Cooler temperatures and recent rainfall provided relief from the prolonged drought, but the impact on quality is a concern.

Grain moisture is up from 10.1 to 10.4%, 1000 kernel weight is up from 39.7 to 40.8 grams, and test weight is up slightly from 59.9 to 60.1 lb/bu (78.0 to 78.3 kg/hl), while protein is down from 15.9 to 15.7% (12% mb). 

Vitreous kernel content is 92.6, higher than last year; the crop currently grades a U.S. No. 1 Hard Amber Durum. 

Meantime, monthly Grain Crushing data showed 449.12 mbu of corn was used for ethanol production in July, which was up 5.86% from a year ago. 

Weekly EIA data shows ethanol production continuing to be weak, at a 26-week low of 905,000 barrels per day. 

About soybeans, Wednesday’s Fats & Oils report showed July’s soybean crush at 166.35 mbu, back up from June but down 9.84% from last year. 

On the other hand, weekly corn old crop export sales were net negative 300,837 MT for the week ending 8/26. 

The YTD total as we near the end of the 20/21 MY is 70.023 MMT for shipped and unshipped bookings. 

That is 99% of the USDA projection, vs the 104% average. 

New Crop sales were the largest since May at 1.16 MMT. 

Weekly export sales data indicated 68,224 MT in old crop bookings for the week of 8/26. 

That takes the YTD total for commitments to 62.228 MMT with less than a reporting week remaining in the MY. 

That is 101% of the USDA forecast vs. the normal pace of 104%. 

New crop sales totaled 2.133 MMT, the second largest in the MY. 

USDA’s Export Sales report showed bookings rebounding from last week’s MY low to 295,303 MT for the week of 8/26. Buying has gotten off to a slow start as total commitments for wheat exports are now 9.423 MMT nearly through the first quarter. 

That is 40% of the USDA forecast vs. the 46% average pace. 

Export shipments MY to date are 23% of that number, vs. the 25% average. 

Census export data indicated 5.473 MMT (215.47 mbu) of corn was shipped in July, the fourth largest total on record for that month. 

Export data out of Census indicated just 945,805 MT (34.75 mbu) of soybeans were exported in July, a 7-year low. 

Census showed 2.051 MMT (74.37 mbu) of wheat exported in July. 

That was slightly above June but 14.58% below last year’s 7-year high.

On the other hand, Commitment of Traders data indicated managed money spec funds trimming back anther 12,209 contracts from their net long in corn futures and options during the week ending August 31. 

That took them to a net long 258,785 contracts by Tuesday.

Friday’s Commitment of Traders data shows spec funds parring back another 14,084 contracts from their soybean net long positions for the week ending 8/31. 

They took that position down to 69,141 contracts as of Tuesday, the lowest point in more than a year.

The Weekly CFTC Commitment of Traders report showed spec traders in CBT wheat were trimming just 612 contracts from their net long position for the week, taking it to 11,370 contracts as of 8/31. 

For KC HRW, they added to the net long by just 314 contracts for the week, to 47,705 contracts.

In this context, CBOT soft red winter (SRW) futures were down 4 cents to close at $7.14/bu. 

KCBT hard red winter (HRW) futures were up 3 cents to end at $7.15/bu. 

MGE hard red spring (HRS) futures lost 21 cents to close at $9.15/bu. 

CBOT corn futures were down 50 cents to $5.08/bu. 

CBOT soybean futures were down 76 cents to close at $12.83/bu.

On Friday corn basis bids were mostly steady, but showed some wide variability across a few Midwestern locations after slumping as much as 30 cents lower at an Illinois processor while jumping as much as 50 cents higher at an Indiana ethanol plant.

Soybean basis bids were steady to mixed across the central U.S. – especially at several Midwestern processors, where bids moved as much as 5 cents higher at a Nebraska location while dropping as much as 10 cents lower at an Indiana location.

Wheat basis bids in both the Gulf and Pacific Northwest (PNW) was firmer this week as the damage from Hurricane Ida, was still being absorbed.

Meantime, traders made no offers again this week for HRW 12.5% protein exported from the Gulf. 

Total U.S. SW 9.5% max protein offers were also limited this week.

From Canada, on Monday Stats Canada released their July production estimates largely inline with trade expectations. 

All wheat production was seen 35% lower than last year at 22.9 million mt. 

Area harvested was seen 8.5% lower at 22.7 million acres while average yield was decreased 29% from last year to 37.2 bpa. 

The decrease in production was primarily in #springwheat, which was put at 16.1 million mt, down 38% from last year. 

Durum production was pegged at 4.0 million mt, down 39% from last year. 

Stat’s Canada’s wheat number is roughly 1 million mt larger than Agri Food Canada’s Ag estimate released last Thursday. 

Agri Food Canada Ag put their Canadian wheat (excluding durum) production at 20.2 million mt. 

USDA’s number for Canadian wheat production is at 24 million mt.

Stat’s Canada report put Canadian #durumwheat production at 4.0 million mt, down 39% from last year. 

This is in line with trade’s number and slightly higher than AAFC’s 3.8 million mt estimate.

Meantime, widespread rain across North America has slowed harvest and will not be good on quality.

However strong demand should limit the impact of this.

In particular, spring wheat harvest is 25% complete in Saskatchewan , up only 12% from the week previous. 

Alberta is 15% done with an average yield of 30.2 bpa. 

Durum harvest in Saskatchewan is 33% complete, up 11% from the week previous. 

Yields remain dismal. 

Meantime, Canadian wheat #exports for week 3 were 187.3k mt for a season total of 979.5k mt. 

This is 77% (-287k mt) of last year’s to date amount.

Canadian durum exports for week 3 were 28.7k mt for a season total of 258.5k mt, 12% (27.5k mt) more than last year.

The sharp rally we have seen in Canadian prices suggests offshore interest in North American durum.

For this week, started August 30, Canadian wheat prices for FOB delivery were (Cdn$/mt):

- for the N1 class CWRS 13.5% - $496,41, down $3.12 per tonne; 

- for the N2 class CWRS 13.0% - $488,02, down $4.65/t;

- for the N3 CWRS - $406,49, up $2.77 ;

- for the N1 CWAD - $743,92, down $2,59 per tonne.

(1USD=Cnd$1.261).

ICE canola futures bounced on Thursday, ending a five-day fall, on spillover support from higher soyaoil and crude oil.

Concerns about hail and wind damage to crops in Saskatchewan and exporters’ pricing contracts, added to support, a trader said.

November canola gained $1.70 at $892.50 per tonne.

Later-delivery contracts declined.

In the Canadian province of Saskatchewan, 11% of canola has been harvested, the provincial government said.

November-January canola spread traded 1,955 times.

From South America, good rains seen over the last 10 days in southern Brazil gave the soil moisture a boost and favored the 1st corn crop planting progress in Rio Grande do Sul. 

According to the AgRural, 5% of the area had been planted in south-central Brazil by Aug 26.

In contrast, Argentine wheat in the west is especially need of rainfall as this area has been dry since planting was completed.

Meantime, Argentina's government extended beef export restrictions on Tuesday until the end of October, seeking to bolster domestic supply to help contain rising local food prices, according to a decree published in the official gazette.

The South American country has suffered from high inflation for years with the annual rate now running above 50%. 

The sector lost around $100 million in exports last month alone due to the restrictions and the measures could even adversely push up prices.

Approximately 96% of Paraguay's grain exports utilize the Paraguay and Parana Rivers and the movement of grain has been slowed significantly, and for barges that do make the trip to Argentina, it is taking three times longer than normal. 

There are silos in Paraguay still full of last year's production, and if the situation does not improve by the end of 2021, there may still be gain in Paraguay that has not been exported. 

The old crop will have to be moved out to make way for the new crop which will start to be harvested in January.

Meantime, meatpackers in landlocked Paraguay will probably slaughter 20% to 25% fewer cattle this month due to a lack of shipping containers, soaring transport costs and erratic transit times, said Korni Pauls, deputy chairman of trade group CPC.

In this context, as of September 02, Argentina Wheat Grade 2 export price, (Up River) was at $287, down $4 from last week.

Argentina corn feed was down $7 for the week, closing at $229.

Brazilian corn feed (Paranagua) was at $265, down 5$ during the week.

Argentina barley feed, was unchanged at $265.

Argentina soybean fell 5$ to close at $536.

Brazilian soybean shedded $8 finishing the week at $547.

On European market, FranceAgriMer reported wheat harvest at 99% complete as of 8/30. 

Quality has suffered from the wet weather as the crop reached maturity and a delayed harvest. 

On this wake, according to the farm office FranceAgriMer, most of this year's French soft wheat crop was failing to meet a usual milling standard.

Indeed, only 39% of the crop was estimated to surpass the 76 kg per hectolitre (kg/hl).

Some 94% of the crop was meeting the basic 11% protein standard, with 77% exceeding 11.5%.

For Hagberg numbers, 57% of the crop was exceeding the 240 level, whereas 28% was below the 220 threshold often applied in France.

For durum wheat, the less produced variety used in pasta, the results also confirmed weak test weights as well as low Hagberg readings.

For test weights, 49% of the crop met the 76 kg/hl level. In Hagberg numbers just 20% of the crop was surpassing 250, with 40% below the 100 mark.

Poor quality in France has added to concerns about global durum supply, even if some bargain hunters are already working to mix the poor quality of French durum wheat with other origins and make the product marketable.

Meantime, as of August 29, the EU exported 3.68 million tonnes of wheat against 3.28 million the previous year. 

Barley exports reached 2.12 million tonnes against 1.60 last year. 

To note that the current figures no longer take into account those of the United Kingdom since January 1, 2021. 

Rapeseed imports stood at 574,664 tonnes on August 29, compared to 809,917 tonnes last year.

In this context, Matif September wheat futures fell 6,25 euros from last week, closing at €243,75/t.

December delivery moved from €/ton 246,75 to €/ton 244,50 with losses around 2,25 euros for the week.

Matif corn November futures shedded 4.5 euros to close the week at €217/t.

Matif rapeseed November futures, gained 0,25 euros ending the week at €571,75/t.

Nov-21 UK feed wheat futures fell £5,95, closing down at £190,05/t. 

Meantime, as of August 27, FOB prices for French wheat with 11.5% protein, for Sept. delivery, were at $290,86/mt, down $1.98/mt from last week.

French durum wheat, closed at $510,49, up $53.57 from last week.

Corn delivered Bordeaux Spot - July 2021 basis was at $265.93 per tonne, down $2.35 from last week.

FOB Rhin Spot - July 2021 basis was at $277.80 per tonne, down $5.72 week on week.

Feed barley delivered Rouen - July 2021 basis was at 269.49$/t, down $2.31.

Malting barley FOB Creil Spot - July 2021 basis was at $311.04 per tonne, up 0.57$ from past week.

Rapessed FOB Moselle Spot - Flat - 2021 harvest was at 686.20$/ton, up $5.51 compared to prior week.

Standard sunseed delivered St Nazaire Spot - Flat - 2021 harvest was substantially unchanged from last week at $632.77 per tonne.

As of August 30, German wheat with 12.5% protein for Sept. delivery, closed unchanged at $305.80.

Baltic wheat with 12.5% protein was at $298/mt, down $3/mt.

From the Black Sea basin, Ukraine’s agriculture ministry says that total grain production including wheat is likely to set a record this year at 80.6 MMT reported Reuters. 

The ministry added that 60.68 MMT of grain could be exported, including 32.0 MMT of wheat with 60% of that milling quality.

Last year Ukraine exported 16.6 MMT of wheat.

Russian wheat exports picked up pace last week ahead of a $7.70 increase in the export tax on September 1. 

For the week of August 26, Russia exported 1.6 MMT, twice the volume of the week before. 

For the whole year, Russia has exported 6.2 MMT of wheat, 13% below last year's volume exported by this time.

From the Middle Kingdom, Chinese importers have cancelled a series of animal feed barley shipments from the Black Sea region in recent weeks due to weaker than expected domestic demand and expectations for a large corn crop.

Meantime, Sinograin sold only 9,063k of US corn at auction held on this morning, from 111,321k offered in total.

From Australia, local trade saw mostly domestic short-term old crop interest and limited new crop movements. 

Participants continue to evaluate crop ideas and watch recent weather.

Extended run weather maps forecast dry weather across the country into mid-Sept in one of the driest model runs we’ve seen in quite a while.

Meantime, Australia exported 1,954,516 tonnes of wheat in July, down 29 per cent from the 2,765,805t shipped in June, according to the latest data from the Australian Bureau of Statistics (ABS).

Bulk shipments, at 1,667,021t in July, were down 37pc from 2,648,924t in June. 

The biggest July destinations were Indonesia, 656,623t, China, 255,401t and The Philippines on 136,402t.

Containerised exports at 287,495t rose a startling 146pc in July from the 116,881t shipped in June, with Thailand on 77,373t, Vietnam on 59,778t and Malaysia on 53,177t the biggest markets for the month.

The jump in containerised exports over July is thought to reflect the attractive pricing of high-protein wheat out of Australia at a time when the fierce summer had impacted comparable Canadian and northern US grades.

Australia’s July 2021 wheat-export figure is more than four times the 436,507t shipped in July 2020, and the volume increase demonstrates the ability of eastern states to keep shipping into the back months of the export year following the breaking of the drought.

Exporters are running down their stocks as another big crop is coming in all states of Australia, and global markets look to supplement shipments from Northern Hemisphere exporters at a time when Australian wheat normally struggles to compete on price.

In this context, indicative delivered prices in Australian dollars per tonne were:

Nearby New-crop

Barley Downs  $302 up $4 $300 up $5 Jan;

Wheat Downs  $365 up $15 $342 up $7 Jan;

Sorghum Downs  $302 up $2 $290 steady Mar-Apr;

Barley Melbourne  $292 steady $300 steady Jan;

Wheat Melbourne  $372 steady $368 steady Jan.

(AUD/USD US$0.740).

Internationally, according to the United Nations food agency, world food prices jumped in August after two consecutive months of decline, pushed up by strong gains for sugar, vegetable oils and some cereals.

FAO's food price index, which tracks international prices of the most globally traded food commodities, averaged 127.4 points last month compared with 123.5 in July.

The July figure was previously given as 123.0.

On a year-on-year basis, prices were up 32.9% in August.

In particular, FAO's cereal price index was 3.4% higher in August from the previous month, with lower harvest expectations in several major exporting countries shunting up world wheat prices by 8.8% month-on-month, while barely surged 9.0%.

By contrast, corn and international rice prices declined.

FAO also said in a statement that worldwide cereal harvests would come in at nearly 2.788 billion tonnes in 2021, down on its previous estimate of 2.817 billion tonnes but still up on 2020 levels.

The fall in its estimate for world cereal production this year was triggered by persistent drought conditions in several major producing countries.

Among the major cereals, the forecast for wheat production saw the biggest downward revision -- down 15.2 million tonnes since July to 769.5 million tonnes -- due mainly to adverse weather conditions in the United States, Canada, Kazakhstan and Russia.

The forecast for world cereal utilization in 2021/22 was cut by 1.7 million tonnes from July to 2.809 billion tonnes, still 1.4% higher than in 2020/21.

The estimate for world cereal stocks by the close of seasons in 2021/22 was lowered by 27.0 million tonnes since July to 809 million tonnes, pointing to a decline of 0.9% on stock levels registered at the start of the period. 

Watching next week market, US trading is delayed by a day thanks to Monday’s Labor Day holiday. 

The markets will open back up Monday evening for the Tuesday session. 

The holiday will push back the USDA Export Inspections and Crop 

Progress reports to Tuesday at their normally scheduled times. 

Weekly EIA data will be release on Thursday morning, with the Export Sales report pushed to Friday morning. 

Monthly WASDE and Crop Production reports will also be released on Friday at 11:00 am CDT. 

Author: Sandro F. Puglisi

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We wish you a good weekend.