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Morning Markets: Soybeans and corn gain, as wheat falls

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Early Monday trading saw a sharp fall in wheat futures with gains for corn and soya. This continues the recent market trend driven by plentiful US wheat supplies and lacklustre exports, while corn and soya strengthen on export orders.

 

The Chicago soft red winter wheat September futures contract had closed Friday at $5.31¼ a bushel, 0.3% up on the day. However, early Monday business saw a 4-cent fall to $5.27½/ bu.

 

Last week traders had noted that the wheat premium to corn was high, especially with “somewhat timid” trading volumes. Weak US export activity is not supporting values, despite the smaller harvest in Europe. Brazil expects to harvest a record 7 million tonnes of wheat this year, up from the 5.15m tonnes in 2019.

 

In Europe, the Paris September 20 wheat futures were unchanged at €182.75/tonne for Friday’s close. French analyst Agritel says wheat values are “torn between substantial global supply and a disappointing European harvest”.

 

However, Agritel notes that the differential between physical and futures market prices in France is widening as farmers react to the smaller harvest production by becoming reluctant to release their crops to the market.

 

French wheat 90% harvested

 

The FranceAgrimer authority reported the French soft wheat harvest was 90% complete on July 27th and on course to wrap up within the week, although it is forecast to be 29.2 million tonnes down on the 2019 harvest.

 

Russia’s ministry of agriculture reports the wheat harvest there is 50% complete, with average yields of 3.49 tonnes/ha (3.44 t/ha in 2019). The barley harvest is 25% completed with average yields also up on last year.

 

The CBOT September corn futures closed Friday 0.1% up at $3.16 a bushel and were trading at $3.16½/bu on Monday morning. The European maize futures finished Friday at €178/tonne.

 

The market continues to lack direction, waiting on harder news as to the prospects of increased US crop yields and orders from China, where prices are twice those in the US.” Market participants are still trying to gauge the depth and breadth of Chinese needs and wants,” noted Benson Quinn Commodities.

 

Agritel reports little trading activity after China’s major purchase of US corn last Thursday and Mexico’s purchase of 114 300 tonnes of US corn on Friday.

 

Corn falls 7% over July

 

“Corn remains mixed between a large world supply, particularly with the expected production in the US and Ukraine, and fears in France,” it said. “The slight rebound in Chicago corn prices on Friday does not erase a 7% drop over July.”

 

Agritel added that favourable weather forecasts point to a bumper US corn harvest, despite the drop in acreage posted in the end June WASDE report.

 

The August Chicago soybean futures contract closed Friday 0.4% higher at $8.97½ a bushel, with early Monday business priced at $9.03½/bu, buoyed by last week’s export sales orders for new crop of 3.34m tonnes, an eight year high.

 

In Europe, the nearby MATIF oilseed rape contract closed last week at €381.75/tonne. Agritel expects rapeseed prices to find support from global vegetable oils markets, with palm oil strengthening in Kuala Lumpur.

 

Dry conditions in France

 

“Soybean prices are benefiting from the surge in the veg oil market on the international scene, particularly in China,” it reported.

 

“Weather forecasts in France point to a continuation of hot temperatures and water deficit, which will accentuate fears about the upcoming corn and beet harvests. Concerns about future rapeseed sowings will also quickly come to the market if the weather does not change.”

 

 

 

 

 

 

 

 

 

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