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Morning markets: Wheat futures hit 10-month high, after Canada downgrade - June 28

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Corn and soybeans continued their retreat from recent highs as wheat strengthened in yesterday’s
trading.

 

 

There was lacklustre trading ahead of the release of the USDA acreage report estimating crop planting progress report tonight - although the International Grains Council (IGC) has cut its corn and soy production estimates.

 

 

Some analysts question whether the USDA figures will reveal the full impact of the delayed planting in the “soggy US Midwest”.

 

 

US wheat futures rose in early trading but US fund selling meant the September CBOT position ended Thursday unchanged at $5.47 a bushel.

 

 

The International Grains Council (IGC) raised its estimate of 2019 global wheat production by 3m tonnes to 769m tonnes. It projects higher yields in the EU, India and the Ukraine.

 

 

The EU September wheat futures contract closed down €0.50 at €182.25 a tonne.

 

 

But US wheat stocks remain high, despite the USDA’s latest weekly all-wheat export sales of 612,100 tonnes coming in ahead of trade expectations, in contrast to the previous week’s 187,600 tonnes.

 

 

“The pressure of US inventory, and the need to price some it into feed rations, will become more important after today’s Acreage report,” noted Tobin Gorey of Commonwealth Bank Australia.

 

 

But Australian east wheat futures for January 20 closed Aus $5 a tonne higher at AUS$45, in response to dry conditions there.

 

 

Potential for surprises

 

 

“The USDA acreage report has the potential for surprises, having seen such an unprecedented spell of wet weather in the US,” said CRM Commodities. “The winter wheat harvest in the US is set to gather pace next week as conditions improve. Quality is the big unknown!”

 

 

CBOT corn futures ended Thursday with a 0.4% decline to $4.51 per bushel for November 19.

 

 

“The acreage report will give some idea of how many acres did not get planted with corn because of the very wet spring US spring,” noted Mr Gorey. But he added: “The report probably will not completely resolve the uncertainty”.

 

 

The IGC has already reduced its estimate of US corn production to 333.5m tonnes from the previous 362.4m tonnes forecast, “following weeks of wet weather leading to planting delays and deteriorating crop conditions.”

 

 

But the IGC’s downgrading of the US prospects is partially offset by a rise in its EU corn harvest projection, leading to a 23m tonne cut in its global corn figure.

 

 

Oilseed commodities continued to retreat from the season high reached earlier this month. The Chicago November price closed 0.7% down at $9.12 a bushel, with the ICE canola contract for the same month 0.4% down to CAN$452 a tonne, a fifth consecutive daily fall.

 

 

IGC drops global soy 9m tons

 

 

“The drop, or least its size, looks partly driven by a weaker twist in momentum,” observed Mr Gorey. ‘Beans still have bigger concerns to come – the USDA acreage report will be influential.

 

 

Whether it completely reveals the consequences of the wet weather in the US Midwest is another question."

 

 

The IGC has reduced its forecast of global soybean production to 349m tonnes (358m tonnes) in the light of the adverse US weather conditions that has delayed crop planting.

 

 

“Oilseed markets continue to weigh up global soy stocks with US crop losses, whilst global rapeseed areas continue to dwindle amidst drought and agronomic limitations,” commented CRM Commodities.

 

 

Turning to the ongoing US: China trade talks, it noted: “Yet another round of talks between China and the US is taking place this weekend between the two presidents - but will anything come from them this time?”

 

 

Terry Reilly at Futures International described the week’s USDA export sales as “poor for soybeans, poor for meal and ok for soybean oil”.

 

 

He reported that China took 79,600 tons of old crop soybeans and 63,000 tonnes new crop, with about 7 cargos of soybeans bought this week, but predicted quiet trading on Thursday, ahead of the G-20 summit where both presidents are due to meet on Saturday.

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