Grains Market Overview 14.05.2021

Yesterday, CBOT SRW wheat, corn and soybean futures prices and wheat, corn and rapeseed futures prices in Paris fell.

The currency pair EUR/USD rose to 1.2080. The price of US WTI crude oil fell significantly to 63.82 USD/barrel.

Oil price decreased yesterday after four-day rise in oil prices because the key US pipeline resumed operations. It is a well known fact that China is a key consumer of raw materials and copper and iron ore prices also decreased on Thursday. On Wednesday, US government data showed that domestic oil stocks had shrunk to their lowest level since late February which increases the signs of a market recovery. In addition, the International Energy Agency (IEA) said the world had already largely absorbed the surplus that had accumulated when the pandemic lowered demand.

CBOT
Chicago Contract USD/mt +/-
Wheat July 257.76 -10.36
Corn July 265.64 -15.75
Soybeans July 582.02 -21.50
Soymeal July 464.51 -30.2

 

EURONEXT
Paris Contract EUR/mt +/-
Wheat September 216.00 -9.50
Corn June 250.25 -7.00
Rapeseed August 532.75 -22.50

 

Yesterday, CBOT July SRW wheat futures prices fell by 28 1/4 cents to close at $7.01 1/2 a bushel. The high wheat prices and their rapid rise in recent days is the reason for the decline yesterday - profit taking. After reaching a double peak, speculators are leaving the market for now. Heavy rainfall in places in the US Wheat Belt is one of other factors for the drop in wheat prices. The drought remains in North and South Dakota and this will potentially be the next reason for rising prices. In other major wheat producers around the world, weather conditions remain favorable. In the May report of the USDA, there were no prerequisites for maintaining high wheat prices. It was clear that the wheat market was heavily dependant on the corn and soybean markets. With the decline on the corn and soybean markets yesterday - wheat had no choice. In the week ended 06.05.2021, the export sales of wheat from the United States were 30,290 tons (-95,571 a week earlier and 203,480 tons a year earlier). Since the beginning of the season, the export commitments for wheat reach a total of 25.53 million tons (26.38). Sales of wheat from the new crop were 268,042 tons (149,808) and export commitments for the new wheat crop are 3.26 million tons (2.28). With the end of the season approaching 01.06.2021, sales of wheat from the old crop are weakening.

Yesterday, the prices of July corn futures in Chicago decreased by 40 cents to close at $6.74 3/4 a bushel. Prices fell following great losses on the soybean market and positive forecasts for the prospects for crops at the beginning of the season. The data from the May USDA report were assessed as neutral for the old 2020/21 season and slightly bearish for the new 2021/22 season. High prices have encouraged farmers to sell aggressively. Weekly export sales of corn from the United States decreased by -113,360 tons due to canceled contracts (137,375 and 1,073,237). Since the beginning of the season, the export commitments for corn from the United States reach 47.74 million tons (38.53). Weekly sales of the new corn crop reached 2.08 million tons (554,495) and export commitments for the new corn crop reach 4.87 million tons (3.37). Yesterday, the USDA report indicated that the world corn market will remain highly competitive in the new season. Suppliers such as the United States, Brazil, Argentina and Ukraine will try to sell their good production and buyers such as China will do what is necessary to reduce their dependencies. A crucial factor for the world's corn balance remains precipitation, which, given the high production estimates, should be at good levels. Any disturbance in rainfall will have an immediate impact on the markets. Refinitiv Commodities Research expects a corn production in the United States of 392 million tons in 2021/22, which is well above the USDA estimate. Some analysts believe that the USDA may increase corn areas. Thus, their current forecast of 381 million tons may turn out to be below the actual result if rainfall is sufficient.

Yesterday, Chicago July soybean futures prices fell by 58 1/2 cents to close at $15.84 a bushel. Export sales were considered as neutral. After soybeans reached the highest prices since 2013, there seems to be a reason for the drop in prices. The higher the prices, the faster the decline and yesterday's trade is an example of that. In general, there is no common reason for the decline. The prices were too high for a long time. Stocks of new soybean crop in the United States are expected to be critically low. Weekly export sales of soybeans from the United States are at the level of 94,341 tons (165,259 and 538,483). Since the beginning of the season, export commitments for soybeans from the United States have reached 61.38 million tons (40.09). Sales of soybeans from the new crop were 102,490 tons (440,000) and export commitments for the new soybean crop reach a total of 6.93 million tons (1.67). Weekly export sales of soymeal were 74,608 tons and weekly soyoil sales were 808 tons. Data from the May USDA indicate for a relatively low level of stocks and excellent productions. Whether Brazil will be able to come up with a soybean production of 144 million tons in the new season is difficult to answer.

Yesterday, the markets reacted sharply due to the closure of the Mississippi River for shipping in the Tennessee-Arkansas area. Over 709 barges have already been stranded by the Mississippi River Closure. We are yet to see when shipping will be allowed. Almost every barge loaded with corn or soybeans on the Upper Mississippi, Ohio, Illinois or Missouri rivers is destined for export from the Gulf of Mexico. Problems with grain exports from the United States may have had a wrong effect on prices on other exchanges around the world, which also fell sharply. The events give other exporters a chance to raise their prices in an attempt to replace the US supplier.

In central Brazil, the drought situation is worsening. Some analysts, however, expect a second corn crop in Brazil of 75 million tons and corn exports of 35 million tons. Forecasts are now showing good rainfall in the period of May 23 - 24 right in the center of the Corn Belt - Moto Grosso.