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Morning Markets: Mixed trading after a downwards week, as WASDE looms


Friday’s trading had continued last week’s theme of attrition across the major agricultural commodity markets – CBOT wheat futures dropped below the $5 a bushel barrier, soybeans lost 10 cents on the day and corn moved closer to the $3 a bushel mark.


Monday trading opened with wheat unchanged, corn gaining strength and soybeans slipping further.


Growing crop production figures in the world’s major regions save Europe, added to exports running behind the expected pace dominate trade sentiment – Wednesday’s WASDE will be the next market route marker.


Last Friday, funds were net sellers in 15 000 lots of corn, 9 000 lots of soybean and 5 000 lots of wheat.


“Defensive price action in the row crop markets continues as there isn’t any concern about production or supply,” noted Brian Henry at Benson Quinn Commodities. “US wheat futures closed like there is an outside chance the market bottomed with today’s weakness.”


Friday’s Chicago September SRW contract closed Friday at $4.95½/bu, having opened the day at $5.01¼/bu and the week at $5.31¼/bu. It was unchanged in early Monday business.


In Europe, the Paris September futures position lost €1.25/tonne on Friday to finish at €178/tonne – it had opened the week at €182.75/tonne.


Black Sea wheat prospects rise


Wheat harvests in Russia and the Ukraine are yielding better than last year, while Australia and Canada have both raised production estimates. But France now reports that its wheat harvest will be below 30 million tonnes.

The current heat wave there is also reducing prospects for spring cereals and the corn crop.


Pakistan is in the market for 1.5 million tonnes of wheat.


The CBOT September corn contract ended Friday’s session at $3.07¾/bu, after starting the day at $3.11¼/bu. The contract had opened the week at $3.16/bu. Early Monday trading had rallied to $3.09/bu.


Terry Reilly at Futures International expects this week’s WASDE to “report an abundant corn supply on August 12th - we look to USDA to increase to 2.300 billion bushels from the current estimate of 2.150 billion bushels, which is up from 1.775 billion for 2019-20. US corn new-crop comments are running at their highest level since at least 2002-03, from our analysis. They actually could be at a record.”


Tobin Gorey at Commonwealth Bank of Australia added: “Corn futures prices got back to falling on Friday. New season lows were made as a big prospective US crop looks more and more likely to be realised while demand is shaky.”


The Paris maize contract lost just €0.25 cents Friday to close at €164.50/tonne after opening the week at €178/tonne.


Continued hot weather saw the French corn crop’s good to excellent rating drop 3% to 74%. Dry weather is also leading to some concern in the Ukraine – Agritel reported that local analysts have recently lowered their corn production estimates – however, production still looks likely to break records for the country.


Soybeans continue to fall


The CBOT soya contract finished Friday at $8.70½/bu, having started the day at $8.80¾/bu and the week at $8.97½/bu. As markets opened Monday, the contract was down further to $8.69½/bu.


The Paris rapeseed contract also lost ground – down €2.25 on the day to close at €377.25/tonne, having opened the week’s trading at €381.75/tonne. “Rapeseed ticked down on Friday, despite very firm veg oil prices, mainly due to a strong demand from China. Palm oil is retreating a bit due to a rise in Malaysian weekly stocks,” stated Agritel.


Canadian canola prices closed Friday unchanged at Can$490/tonne – “dealing at their highest level since October 2018 on hopes of export business to China,” noted Mr Gorey. “US$ canola prices fell for the first time in a while – they have perhaps reached their peak premium. And so, going forward, canola prices are less likely to ignore soybean’s price direction.”


Private export sales reported to the USDA Friday totalled 456,000 tons of soybeans for delivery to China during the 2020/2021 marketing year – the largest single day 24-hour soybean sale to China since July 22nd.


“Demand, which has been really good for beans despite a soft week and half from China, is not offsetting the optimism towards production” noted Mr Henry at BQ. “Quietly, in the background, you are starting to hear more talk of drier than desired conditions to this point in the growing season. By a wide margin, the crop is rated very well. Though, it isn’t finished.”


Terry Reilly added: “Chinese demand picked up this week from last week, buying more than 40 cargoes from both United States and Brazil, but supply overshadowed demand. Soybean meal was dragged lower, to fresh contract lows, throughout much of the day.”

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