Grains Market Overview 13.05.2021

Yesterday, CBOT SRW wheat and corn futures prices fell significantly after the data from the USDA May report. At the same time, Chicago soybean futures prices rose sharply. In Paris, wheat and corn prices fell moderately, while rapeseed prices increased notably.

The EUR/USD currency pair fell to 1.2078. The price of US WTI crude oil increased to 66.08 USD/barrel.

Oil consumption this year will be lower than expected, the International Energy Agency (IEA) wrote in its monthly market analysis. The reason is the worsening health crisis in India, as well as weaker demand for oil in the United States and Europe.

CBOT
Chicago Contract USD/mt +/-
Wheat July 268.14 -4.41
Corn July 281.39 -2.95
Soybeans July 603.61 +10.20
Soymeal July 494.72 +1.98

 

EURONEXT
Paris Contract EUR/mt +/-
Wheat September 225.50 -1.25
Corn June 257.25 -1.25
Rapeseed August 555.25 +12.00

 

Yesterday, CBOT July SRW wheat futures prices fell by 12 cents to close at $7.29 3/4 a bushel. Prices have fallen due to heavy rainfall in some places in the US Wheat Belt and the USDA forecast for a sufficient supply of wheat in the new season. However, rainfall was not massive and it does not solve the drought problem. FranceAgrimer lowered its forecast for the ending wheat stocks in France in 2020/21 by 0.1 million tons to 2.6 million tons. Export prices of Russian wheat 12.5% have risen to 274 - 278 USD/ton in the last 10 days.

Yesterday, Chicago July corn futures prices decreased by 7 1/2 cents to close at $7.14 3/4 a bushel. Crop prices fell due to the forecast for good rainfall in the US Corn Belt. Prices were also affected by the new USDA forecast for 2021/22. The USDA raised its forecast for US corn exports from the old 2020/21 crop to 70 million tons and lowered the ending corn stocks estimate to 31.93 million tons. Conab lowered its forecast for the Brazilian 2020/21 corn crop by 2.5 million tons to 108.97 million tons. Next week,  precipitation in some place is expected in Brazil.

Yesterday, CBOT July soybean futures prices rose by 27 3/4 cents to close at $16.42 1/2 a bushel. Soybean prices have risen sharply, mainly due to the new USDA forecast for the US ending soybean stocks, which remain at a very low level for 2021/22 combined with a good soybean production in the new season. The price of soybeans remains supported in the long run even in 2021/22. In the new USDA report, the data show a better performance of Brazil in the global soybean balance than the United States. Conab forecasts soybean exports from Brazil of 85.5 million tons in 2020/21. In May, 15.3 million tons of soybeans will be exported from the country, compared to 11.96 million tons a year earlier, according to Anec's forecast.

Key points from the May USDA Report:

Wheat - In 2021/22, the world's wheat production will reach 789 million tons (776.1 million tons in 2020/21 and 764.2 million tons in 2019/20). Wheat productions in different countries will reach:

  • Russia - 85 million tons (85.4 and 73.6)
  • Ukraine - 29 million tons (25.4 and 29.2)
  • China - 136 million tons (134.3 and 133.6)
  • the United States - 50.9 million tons (49.7 and 52.6)
  • the EU - 134 million tons (125.9 and 138.7)
  • Argentina - 20.5 million tons (17.6 and 19.8)
  • Australia - 27 million tons (33 and 15.2)

World's wheat consumption is projected at 788.7 million tons (780.9 and 748.8). World's total wheat exports are expected to reach 203.2 million tons (197.2 and 194.8), including:

  • Russia - 40 million tons (39.5 and 34.5)
  • Ukraine - 20 million tons (17 and 21)
  • United States - 25 million tons (26.5 and 26.3)
  • EU - 33 million tons (30 and 39.8)
  • Australia - 21 million tons 19.5 and 10.1)
  • Argentina - 13 million tonnes (9.5 and 13.6)

Imports of wheat to China will be 10 million tons (10.5 and 5.4). The ending stocks of wheat in the world will be 295 million tons (294.7 and 299.4), including China with 142.4 million tons (145.4 and 151.7), Russia with 15.1 million tons (12.1 and 7.2), the United States with 21.1 million tons (23.7 and 28), the EU with 28 million tons (27.2 and 24.7). The average wheat yield in the United States in 2021/22 is predicted at 50 bushels/acre, which is 0.3 bushels/acre more than 2020/21.

Corn - In 2021/22, the world's corn production is projected to reach 1,189.9 million tons (1,128.5 and 1,117.2), including:

  • China - 268 million tons (260.7 and 260.8)
  • United States - 380.8 million tons (360.3 and 346)
  • Brazil - 118 million tons (102 and 102)
  • EU - 66.7 million tons (64 and 66.7)
  • Ukraine - 37.5 million tons 30.3 and 35.9)

World's total corn consumption will reach 1,181.1 million tons (1,149.4 and 1,134.8). Exports from the United States will reach 62 million tons (70 and 46.9), Brazil 40 million tons (34 and 34.1), Argentina 38 million tons (32 and 39.9), Ukraine 30.5 million tons (23 and 28.9). Imports of corn to China will reach 26 million tons (26 and 7.6). The ending corn stocks in the world are expected at 292.3 million tons (283.5 and 304.5), including China with 198.1 million tons (198.2 and 200.5) and the United States with 38.3 million tons (31.9 and 48.8). The average corn yield in the United States in 2021/22 is projected at 179.5 bushels/acre (172 in 2020/21).

Soybeans - In 2021/22, world's total soybean production will reach 385.5 million tons (362.9 and 339.4), including:

  • Brazil - 144 million tons (136 and 128.5)
  • the United States - 119.9 million tons (112.5 and 96.7)
  • Argentina - 52 million tons (47 and 48.8)

Soybean imports to China will be 103 million tons (100 and 98.5). Exports from Brazil will be 93 million tons (86 and 92.1) and soybean exports from the United States are expected at 56.5 million tons (62.1 and 45.8). World's ending soybean stocks will reach 91.1 million tons (86.5 and 96.5), including ending soybean stocks in the United States of 3.8 million tons (3.3 and 14.3). The average soybean yield in the United States in the new season will be 50.8 bushels/acre (50.2 in 2020/21). The indicator is not very high, but it is not low either, perhaps above the average level in terms of potential.

Sunseed - The sunseed production in Ukraine is expected to reach 16.7 million tons (14.1 and 16.5). Sunseed production in Russia is projected at 14.5 million tons (13.3 and 15.3) and sunseed production in the EU at 10 million tons (8.85 and 9.4).

Much higher sunseed productions are expected in 2020. In order to keep oil prices high, there must be a steadily growing consumption of biodiesel oils.

Soybean prices will be strained due to low stock level in the United States. Also, whether soybean production in Brazil will reach 144 million tons in 2021/22 is very questionable.

Summary - We are moving to a stage of quite high yields and consumption. However, stocks are clearly lagging behind the first two indicators and this is worrying. Almost everything now depends on precipitation. However, we must emphasize that the USDA does not see any reduction in consumption at current prices of all crops, which we must closely monitor during the season. We have not yet reached the turning point yet.