Weekly Analysis 05.04.2021 - 11.04.2021

CBOT SRW Wheat futures prices have risen significantly over the past week. Chicago corn futures prices also slightly increased and soybean futures prices remained unchanged. In Paris, wheat, corn and rapeseed prices rose moderately.

Over the past week, the currency pair EUR/USD rose by 0.0141 to 1.1900. The price of US WTI crude oil fell by 2.13 USD/barrel to 59.32 USD/barrel.

Oil prices fell on Friday mainly due to the weaker dollar as investors assessed data on rising production and the impact of the pandemic on fuel demand. Stephen Ines, chief strategist for global markets at Axi, said oil prices are expected in the range of $60 - $70.

CBOT Chicago
SRW Wheat month 05.21 07.21 09.21 12.21
USD/mt 234.70 235.34 235.71 237.36
Corn month 05.21 07.21 09.21 12.21
USD/mt 227.25 221.55 201.07 195.46
Soybeans month 05.21 07.21 11.21 01.22
USD/mt 515.51 513.77 464.17 463.71

 

EURONEXT Paris
Wheat month 06.21 09.21 12.21 03.22
EUR/mt 212.75 199.50 200.00 201.00
Corn month 06.21 11.21 01.22 03.22
EUR/mt 217.00 190.50 192.00 193.50
Rapeseed month 05.21 08.21 11.21 02.22
EUR/mt 510.50 453.50 450.50 446.50

 

Over the past week, CBOT May SRW wheat futures prices increased by 27 3/4 cents to $6.38 3/4 a bushel.

For the previous week, the prices of May corn futures in Chicago went up by 17 1/2 cents to $5.77 1/4 a bushel.

During the past week, Chicago May soybean futures prices rose by 1 cent to $14.03 a bushel.

Chicago fund positions (futures + options), for the week ended April 06.

Accumulated US Export Sales, for the week ended April 01.

Managed Money
CBOT positions Long Short Net
 contracts thsd.  +/- thsd.  +/- thsd.  +/-
SRW Wheat 79.4 2.7 87.0 -4.4 -7.6 7.1
Corn 413.1 -12.7 26.5 -3.7 386.6 -9.0
Soybeans 167.4 7.6 13.1 -4.8 154.3 12.4
Soymeal 68.1 0.7 6.7 -2.4 61.3 3.1
Soyoil 102.5 -6.3 25.5 -2.5 77.0 -3.8

 

Total Export Commitments
US 20/21 19/20 18/19
million tons April 01 April 02 April 04
Wheat 25.186 25.041 24.597
Corn 66.483 33.756 43.743
Soybeans 60.749 37.233 43.847
Soymeal 9.064 8.980 9.473
Soyoil 0.655 0.924 0.619

*Source: CFTC, USDA

Last week, the weather in the United States was mostly dry. The drought deepened in North Dakota. It is also still not raining in Canada. In the EU and the Black Sea region, moisture is sufficient for the time being. There was a lot of rain in Australia, especially in the eastern parts of the country. In the central parts of Brazil it rained a little, but in the southern regions and Argentina the rains were moderate. Over the next 10 days, temperatures in the US Corn Belt will be moderate with minimal to moderate rainfall. In North Dakota, weather will be cold again with minimal rainfall. In the US Wheat Belt, weather will be from cool to moderately warm with minimal to moderate rainfall. In Canada, cold weather with minimal to moderate rain and snow. In Western Europe - not very warm weather with minimal to moderate precipitation in places and snow. On the Balkans, temperatures will be moderate with minimal rainfall. In Ukraine - moderate temperatures and light rainfall. In Russia, weather will be warm and dry. There will not be much rainfall in Indonesia and Malaysia. Over the productive areas of Australia, rainfall continues. In Brazil, rainfall will be minimal to moderate. In Argentina, rainfall will stop. In general, spring comes quite slowly in the Northern Hemisphere. There is precipitation, but little. Drought mainly affects areas in the United States. In Brazil, rainfall is becoming insufficient for the second corn crop.

GRAIN EXPORTS:

US Week Accumulated
thds. tons ended 01.04 20/21 19/20
Wheat 634.2 20,321 20,155
Corn* 2,053 35,971 19,597
Soybeans 345.2 55,162 31,969
EU Week Accumulated
thds. tons ended 04.04   20/21   19/20
Wheat 192.548 20,560 27,114
Corn* 7.140 1,868 4,109
Barley 106.068 5,924 5,958
Russia Week Accumulated
thds. tons ended 01.04 20/21 19/20
Grain 300.0 43,500 34,211
Wheat 200.0 35,300 27,873
Corn* 100.0 2,700 2,634
Barley 0.0 5,200 3,157
Ukraine Week Accumulated
thds. tons ended 09.04 20/21 19/20
Grain 813.0 36,487 46,323
Wheat 68.0 14,485 18,157
Corn* 740.0 17,290 24,210
Barley 0.0 4,110 4,456

* US (September - August)
* Russia, Ukraine and EU (July - June)

Exports of corn, wheat and soybeans from the United States have been excellent over the past week. Export sales of wheat from the new crop were very good, but there were no buyers for the old wheat crop. Sales of corn from the new crop were also strong. As for soybeans, some purchases have been cancelled last week and net sales were negative. EU wheat exports are relatively stable. Russia's wheat exports fell to 200,000 tons for the past week. Exports of wheat from Ukraine were only 68 thousand tons, but corn exports remain over 700 thousand tons for the second consecutive week .

Last week, the USDA released its April report on the state of the world's grain balance in 2020/21.

Key takeaways:

USDA  -  April 2021

Wheat
World, million tons April 20/21 +/- March +/-  19/20
Production 776 -0.29 +12.63
Trade 196 +0.73 +4.90
Consumption 781 +5.12 +33.83
Ending Stocks 296 -5.67 -4.52

 

Coarse Grains
World, million tons April 20/21 +/- March +/-  19/20
Production 1,445 +1.161 +34.25
Trade 229 +0.38 +16.24
Consumption 1,464 +5.38 +35.59
Ending Stocks 316 -2.42 -17.94

 

Corn
World, million tons April 20/21 +/- March +/-  19/20
Production 1,137 +0.74 +20.53
Trade 185 0 +10.13
Consumption 1,156 +4.42 +21.59
Ending Stocks 284 -3.82 -19.14

 

Soybeans
World, million tons April 20/21 +/- March +/-  19/20
Production 363 +1.37 +24.19
Trade 171 +1.19 +5.86
Consumption 370 +1.76 +12.54
Ending Stocks 87 +3.13 -9.51

 

Most important changes in the report:

Wheat - Wheat consumption in China in 2020/21 reached 150 million tons (145 million tons in the March estimate and 126 million tons in 2019/20) and 30.69 million tons in the United States (31.38 and 30.56). The ending wheat stocks in China are projected at 145.43 million tons (150.43 and 151.68), 12.08 million tons in Russia (12.58 and 7.23) and 23.18 million ton in the United States s (22.76 and 27.99). Wheat stocks in China are falling for the first time since 2012/13 due to increased demand for feed. Exports from Argentina are expected to reach 10.5 million tons (11 and 13.61) and wheat exports from Russia - 39.5 million tons (39 and 34.49).

Corn - The corn production in Argentina is expected to reach 47 million tons (47.5 and 51). Corn consumption in Argentina is predicted at 14.5 million tons (15 and 13.5), 70.5 million tons in Brazil (70 and 68.5) and 307.36 million tons in the United States (305.45 and 309.51). Exports of corn from Brazil will be 39.5 million tons (40.5 and 34.14), 23 million tons from Ukraine (24 and 28.93) and 67 million tons from the United States (65 and 46.92). The ending corn stocks in the United States are projected at 34.34 million tons (38.15 and 48.76).

Soybeans - The soybean production in Brazil is estimated at 136 million tons (134 and 128.5). Exports of soybeans from Brazil will reach 86 million tons (85 and 92.14) and 62.05 million tons from the United States (61.24 and 45.78). The ending soybean stocks in China will be 31.60 million tons (29.60 and 26.80) and 21.89 million tons in Brazil (21 and 20.74). Soybean consumption in China will fall by 2 million tons due to the impact of the African swine fever.

In general, the changes were expected and their impact on the market will not be significant. Demand for wheat in the world is growing. Declining corn stocks in the United States will push the corn price to 6 USD/ton and wheat market will be supported from this. Demand for soybeans remains strong despite large supplies from Brazil. As for the soybean price, it will most likely stay at its current levels for the time being.

Following the April USDA report, there is nothing to disturb the markets other than the weather and weather is now good almost everywhere.

Reducing ending corn stocks in the United States may be a compromise for the USDA, because markets have been expecting much lower ending stocks of corn. The level that many experts estimated was 27 million tons. Taking into account the large corn sales in March, annual exports will almost certainly exceed 70 million tons, compared to just 66 million tons in the USDA report in April. Most estimates indicate that much more quantities of corn have been purchased from the US market, which the USDA is calculating now, and they are to be announced. Given this, there were not enough new buyers to raise the price of corn on Friday. Global demand for corn is at consistently high levels, which also creates tension and price volatility. Ethanol production in the United States is growing and approaching pre-pandemic levels. The figure is now very close to 1 million barrels per day. Demand for corn feed in the United States is also high. The corn price has no choice but to go up to 6 USD/bushel. The precipitation in the coming months and the size of the sown areas will play a crucial role.

The Ministry of Agriculture in China has significantly raised its forecast for corn imports in the country in 2020/21 to 22 million tons from 10 million tons in the previous estimate. The estimate for oil production in the country was also increased by 1.26 million tons compared to the previous estimate to a total of 28.49 million tons. The import of oils is projected at 9.33 million tons (+0.88), which is due to the historically low stocks in the country.

Over the past week, the demand for soybeans around the world remained strong. Brazil exported huge quantities, which are still not enough. During the previous week, oil prices went up again. Demand for biodiesel oils around the world is high and supplies are limited. Biodiesel programs work well in the United States, Brazil, Indonesia and the EU. A problem in the oil segment is the African swine fever in China.

In the next 2021/22 season, soybean areas in Brazil are expected to grow to 40 million hectares from 38.5 million hectares in 2020/21. The first forecasts for the soybean production are at the level of 141 million tons (134 - 135 million tons for the old crop). Soybean expansion is expected given the high current prices and strong demand. It is certain that whatever is produced will probably be sold at high prices. Brazil's soybean exports in the new season will exceed the expected record of the current season of 87 million tons (85).

The Buenos Aires Grain Exchange lowered its forecast for the soybean production in Argentina by 1 million tons to 43 million tons. Farmers in the country have reduced sales to a minimum in order to protect themselves from the rapidly depreciating national currency. At the same time, farmers in Brazil are in a hurry to sell at high soybean prices. The shrinkage of the soybean production in Argentina is entirely covered by Brazil.

During the week, Tunisia bought 75,000 tons of wheat 11.5%, most likely from Bulgaria. Prices are in the range of 259.82 - 262.42 USD/ton C&F and delivery within 25.05 - 25.06.2021.

Over the past week, Egypt bought 345,000 tons of Black Sea wheat (Russia and Ukraine) from the new crop with delivery in early August. FOB prices were in the range of 230 - 234 USD/ton.

All traders in the Black Sea region are closely monitoring the escalating tensions between Russia and Ukraine. So far, there are no problems with logistics and prices. In fact, there can be problems only for Ukraine. It is unlikely that the Russians will stop exporting. This could happen after some conflict and possible sanctions from the world's major economies, something that did not happen during the 2014 crisis.

Wheat crops in the United States maintain a stable level of development. In the EU, Ukraine and Russia, wheat crops are in good and very good condition.

High prices for agricultural products immediately affected the US land market. In the short period September 2020 - March 2021, land prices in Iowa rose by 8%. This is due to the growing net income of farms, the optimism for high crop prices, the long-term low interest rates on loans and the poor supply of land. We are waiting for news about rental levels in 2021/22.

Changes in FOB Prices of key exporters:

USD/t US Argentina
week ended 01.04 09.04 +/- 02.04 02.09 +/-
Wheat 265 271 +6 273 269 -4
Corn 253 262 +9 238 245 +7
Soybeans 541 545 +4 513 515 +2

 

USD/t Ukraine France
week ended 02.04 09.04 +/- 01.04 09.04 +/-
Wheat 250 247 -3 253 260 +7
Corn 261 263 +2 261 270 +9
Sunseed 810 828 +18 641 657 +16

 

At the end of the week, FOB crop prices rose with few exceptions.

Wheat - During the past week, FOB wheat prices reversed the trend and rose. Exceptions were wheat prices in Argentina, which had a fairly high price, and Ukraine, which fell due to weak demand. During the previous week, FOB Australian wheat price with delivery in April fell by 2 USD ton to 263 USD/ton. So far, Black Sea wheat price is the cheapest on the market and it will most likely rise in the coming weeks.

Corn - Over the previous week, FOB corn prices rose. Argentinian corn has the lowest price but the US and Ukrainian corn prices are really close. Therefore, the demand for corn from the Black Sea region will remain good. Brazilian corn price continued to rise this time by 9 USD/ton to 283 USD/ton with delivery in July, ie. new crop.

Soybeans - Throughout the week, FOB soybean prices also increased. In Brazil, soybean price rose sharply by 15 USD/ton to 523 USD/ton. Argentinian corn is currently the cheapest on the market.

Black Sea crop prices (compared to the previous week):

Russia
months 04-05 06-08 08-10
Wheat 12.5% 247(-2) 232(+2) 232(+2)
Wheat 11.5% 245(-3) 228 232
Feed Wheat 242(-2) 225 229

 

Ukraine
months 04-05 06-08 08-10
Barley 247(-3) 230(+2) 230(+2)
Corn 266(+5) 269(+5) 230(+9)
Sunseed oil 1544(+22) 1504(-2) 1400(+36)

 

FOB Russian wheat prices decreased slightly during the previous week. The prices of wheat from the new crop remain relatively high and well above prices from last year. The prices of barley and corn from the new crop are also high. Prices of sunseed oil with delivery within October - December are at 1,108 USD/ton.