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Morning Markets: Bearish turn sees futures markets red across the board

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There were sharp declines across all major agricultural futures markets on Thursday through a combination of good weather and new crop prospects, a slew of increased harvest projections and funds liquidating long positions. Markets were still falling in early Friday trading.

 

The continuing saga of the Ever Given container ship blocking the Suez Canal is supportive of crude oil values. While some grain flows through the canal, analyst Futures International said little disruption to global grain trade flows is currently expected.

 

Funds were net sellers in 20 000 lots of corn, 13 500 lots of soybean and 8 000 lots of wheat over Thursday.

 

The International Grains Council (IGC)’s March report predicts a global wheat production of at 790 million tonnes in the 2021-22 marketing year, up from the 774m tonnes for the current year. It raises world corn production to 1.193 billion tonnes from 1.139bn tonnes and soybeans to 383m tonnes from 361m tonnes in 2020/21.

 

Overall, 2021-22 global grain production is estimated at a record 2.287bn tonnes by the IGC.

 

EU wheat up for 2021/22

 

The European Commission estimates EU27 wheat production from harvest 2021 at 126.7m tonnes from the 117.1m tonnes in 2020. Corn is pencilled in 71.2m tonnes (64.9m tonnes 2020-21) and oilseed rape at 16.73m tonnes from the prior year’s 16.1m tonnes.

 

Russian analyst IKAR has forecast Russia’s 2021 wheat harvest at 79.8m tonnes, up from its previous estimate of 78m tonnes. At the same time, it has raised its prediction for 2021/22 Russian wheat exports by 1m tonnes to 39.5m tonnes.

 

Brazil predicts 2021/22 (March-Feb) corn production at 105.8m tonnes.

 

The IGC forecasts US corn production for 2021/22 at 384m tonnes, up from the present year’s 360.2m tonnes, with 2021/22 US soybean output at 122.8m tonnes. Soybean ending stocks could recover by 500,000 tonnes to a historically low 3.6m tonnes by the end of the 2021/22 season.

 

The Chicago Board of Trade May SRW wheat futures contract fell for a second consecutive day on Thursday from the week’s peak of $6.34¾ a bushel on Tuesday. The position shed 10 cents on Wednesday and a further 12 cents Thursday to end the day’s session at $6.12½/bu.

 

Early Friday trading (10.30 GMT) saw a further drop to $6.11¾/bu.

 

The Euronext Paris milling wheat futures shed €4.5 tonne to close Thursday’s trading at €214/tonne.

 

Positive weather sparks fund liquidations

 

Agritel observed that positive weather reports in the US and Black Sea regions, plus raised production forecasts have seen funds taking profits on long positions. At the same time, physical markets are seeing subdued activity.

 

US wheat weekly export sales data met trade expectations at 414,000 tonnes. There was some buying activity with the purchase of 66,000 tonnes of US feed wheat by South Korea and the launch of a 400,000 tonne milling wheat tender by Ethiopia.

 

Russian authorities reported a significant improvements in its winter crop conditions, with an emergence rate of 100% in the Stavropol region near Krasnodar, with 60% of the crop in a favourable condition.

 

The CBOT May corn position opened Thursday at $5.53¼/bu and ended the day at $5.46½/bu. Friday pre-trades saw further weakening to $5.45¾/bu.

 

€9/tonne drop in EU oilseeds

 

Weekly US corn net export sales of 4.48m tonnes were higher than the previous week and four week average – with 3.89m tonnes of the total going to China and 111,000 tonnes to Japan.

 

Late corn plantings in Brazil that could delay harvest volumes is mildly supportive.

 

The Paris June corn futures lost €3.75/tonne to close Thursday at €211.25/tonne.

 

The US May soybeans futures closed Wednesday at $14.32¾/bu only to lose 18½ cents over Thursday to close at $14.14¼/bu. But early Thursday’s pre-trading saw the contract down to $14.11¾/bu.

 

The Euronext oilseed rape contract shed a huge €9 to close Thursdays trading at €516.25/tonne.

 

Agritel said the sharp correction in rapeseed followed falls in world canola, palm and soybean futures.

 

US weekly soybean sales were a low 166, 900 tonnes. The European Commission predicts rapeseed imports of 5.8m tonnes in 2021/22 after the 6.2m tonnes in the current season following a poor European rapeseed harvest Mt this season.

 

Futures International reported a proposed Russian export tax on sunflower seeds from July 1st to restrict the volumes of seeds and oil leaving the country. It said the export tax for sunflower oil could be based on a formula of 70% of the difference between a base price per tonne and a cut‐off price not to be disclosed.

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