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Morning Markets: Wheat down as oilseeds gain

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Wheat values continue to retreat on favourable weather reports in major growing regions, while oilseeds are strengthening. Corn values are supported by export and bioethanol demand. South America’s weather and the recent US-China trade talks add variability to markets.

 

Last Friday’s trading saw funds as net buyers of 17,500 lots of corn and 12,000 lots of soybeans, but net sellers of 3,500 lots of wheat. Data shows large speculators raised their net long position in Chicago corn futures in the week to March 16th, while non-commercial traders (including hedge funds) increased their net short position in wheat but reduced their net long position in soybeans.

 

The Chicago Board of Trade May futures position hard red wheat had opened Friday’s session up 0.4% to $6.33 a bushel, only to close the day’s trading at $6.27/bu, the lowest since late December 2020. Early Monday pre-trading saw a further drop to $6.24¾/bu.

 

In Europe, the Euronext May wheat futures closed Friday €0.75 lower at €219.75/tonne.

 

Improving weather prospects across the Northern Hemisphere – particularly the US, EU and Russia - are favouring winter wheat crops and lifting hopes of increased harvest 2021 production. Rainfall in the southern US plains is offsetting dryer conditions in the northern mid-west states, with sufficient precipitation in parts of Russia and Ukraine to help developing crops grow away from the winter period. And the bumper Australian harvest is helping meet current demand.

 

Black sea wheat down

 

Reuters cites the APK-Inform consultancy view that Ukrainian wheat export prices lost as much as $7 a tonne over the past week on better 2021 global harvest prospects and a drop in Russian wheat prices. Pakistan is reported to have bought 300,000 tonnes of milling wheat through a tender.

 

The May Chicago corn futures had gained on Friday, opening the session at $5.49½/bu, ahead of its 40-day and 50-day moving averages. The contract closed Friday at $5.57¾/bu, although it had fallen slightly to $5.55¾ bu in early Monday trading.

 

Analysts report that US bioethanol makers are more optimistic for domestic use and ethanol exports, as better weather and easing coronavirus restrictions see people returning to their cars for longer journeys. The recent rains over the US plains are also seen as beneficial to new crop ahead of the planting season.

 

US corn stocks are already depleted after China’s early season buying spree, while other major origins, such as Brazil, are unlikely to have sufficient stocks to keep prices down.

 

But the USDA reported 800,000 tonnes of additional US corn sales to China on Friday, which brought the week’s total sales to 3.9 million tonnes.

 

Trade caution ahead of USDA planting data

 

Analysts warn that traders are likely to be more cautious this week ahead of the USDA US planting intentions report at the end of March – they predict 92 million acres of corn and 90 million acres of soybeans for harvest 2021.

 

Brazil’s corn plantings are said to be progressing well with favourable weather – it is 88% complete in the major growing region of Mato Grosso.

 

European corn ended Friday €0.25 down to €215.25/tonne.

 

Soybeans also rose over Friday, with the CBOT May position opening the session at $13.98/bu, slightly ahead of its 40-day and 50-day moving averages, and closing the day’s trading at $14.16¼/bu. Early Monday trades saw a further 75 cent gain to $14.17/bu.

 

Bean values are being supported by soymeal, which was up 0.6% to $400.60 a short ton for May on Friday - although the increased demand for corn could see increased supplies of the distillers’ grains (DDGs) co-products from bioethanol manufacture pressuring soymeal values in the high protein animal feed material market.

 

Sharp fall in Brazil soy to China

 

However, China’s General Administration of Custom reported that China’s soybean imports from Brazil fell sharply in the first two months of 2021. The country imported 1.03m tonnes of soybeans from Brazil in the Jan-Feb 2021 period, an 80% fall from the 5.14m tonnes in Jan Feb 2020.

 

While China is the world’s major buyer of soybeans, the wet weather seen in Brazil has delayed exports.

The Euronext oilseed rape May contract gained €10/tonnes to close Friday at €515/tonne. It rebounded from losses earlier in the week, following higher canola and palm oil values.

 

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