Rains in Brazil and year-end positioning trigger grain sales
Low trading volumes continue to linger in grain markets, pushing corn prices down $ 0.07 to $ 0.11 / bushel during today’s trading session. The end-of-month, end-of-year and weekend positioning also lowered the corn complex. Rains across Brazil also exacerbated today’s losses.
Nearby futures have dipped below the $ 6 / bushel benchmark.
There wasn’t much positive news for the corn complex in the USDA’s weekly export sales report released today. Export loading volumes have declined. Cancellations increased from 1.5 million bushels on the week to 4.1 million bushels.
Export load volumes fell 16% week-over-week to 36.3 million bushels shipped in the week ending Dec. 23. The total was slightly above the eight-week average volume of 35.4 million bushels and a significant increase from the five-year average of 26.5 million. bushels for the 15e marketing year 2021/22 declaration week.
Mexico (11.0 million bushels), China (10.0 million bushels) and Japan (7.5 million bushels) were the top destinations for US corn shipments last week.
There were more signs of optimism for corn export markets this morning. Old-crop corn export sales increased 30% on the week to 53.7 million bushels. Export sales of the new crop were less optimistic, falling from 3.0 million bushels to 2.4 million bushels. Japan and Canada recorded the largest export sales of older crops last week, while Japan also recorded an order of 2.4 million bushels for 2022/23 corn.
Admittedly, the peak corn export season is still almost two months away from ramping up. These seasonal declines therefore have no significant negative impact on prices.
Soybean prices fell from $ 0.11 to $ 0.31 / bushel today as widespread rains fell across Brazil, both in the north and in central and southern parts of the country, subject to drought. Harvest has just started in Mato Grosso, Brazil, but is not yet far enough along to be hampered by today’s showers. Year-end positioning and lackluster export data also led to the day’s sell off.
As the Brazilian soybean harvest begins earlier than expected in Mato Grosso, global buyers have continued to purchase soybean supplies from the United States, although these volumes are likely to decline in the coming weeks, especially if Brazil’s harvest schedule is exceeding historical benchmarks.
For the week ending Dec. 23, U.S. soybean exporters shipped 63.3 million bushels to international customers, down 7% from the previous week’s loading activity, according to the weekly report. of USDA export sales.
As is typically the case this time of year, China (34.7 million bushels) was the top destination for U.S. soybeans last week, grabbing 55% of the week’s total exports. Turkey (4.4 million bushels) and the Netherlands (3.1 million bushels) were second and third, respectively.
Sales of older crops slowed by a third from the previous week, to 22.1 million bushels, with China (15.9 million bushels) leading the charge. Export sales of new crops increased from 2.7 million bushels to 2.8 million bushels for the base period Dec. 17-23 after an unknown buyer placed an order for 2.4 million of bushels for delivery in MY 2022/23.
Wheat prices fell from $ 0.11 to $ 0.17 / bushel during today’s session thanks in part to a higher dollar. But year-end positioning also played a role in the sell-off, which saw Minneapolis futures drop below $ 10 / bushel.
Favorable forecasts for world production and exports weighed on the wheat complex. Wheat export volumes increased in the USDA Export Sales Report released today, but new export sales orders were lower than analysts expected.
The recent surge in international demand for wheat will benefit Russian wheat exporters, according to an updated forecast from Russian agricultural consultancy Sovecon.
“After a period of export slowdown in the second half of November, Russian wheat exports started to accelerate,” Sovecon said in a note. Sovecon now projects Russian 2021/22 wheat exports at 1.25 billion bushels, up 0.6% from the consulting firm’s previous forecast.
New access to Algeria and potentially China bodes well for Russian wheat shipments in the second half of its 2021/22 marketing year, while typical demand from Turkey and Egypt stay fixed. Crop deficits will leave Russia the second-largest world exporter in 2021/22 with 1.32 billion bushels, according to the USDA, just behind the 1.36 billion bushels of European Union exports.
The Buenos Aires Grain Exchange expects recent rains in Argentina to help boost crop yields in the South American country. With 89.7% of Argentina’s wheat crop already harvested, yield reports continue to pour in at higher than expected levels.
The Exchange has updated its forecast to 771.5 million bushels for 2021/22 production, up 2% from its previous estimate. The USDA currently estimates the Argentine wheat crop at 734.8 million bushels, of which about two-thirds are exported. Argentina will likely be the world’s seventh largest exporter this year, with much of the exportable supply going to neighboring Brazil.
“The progress of the harvest has shown an improvement in the yields collected in key areas of the south of the province of Buenos Aires. If this improvement is maintained towards the end of the harvest, the production projection could be increased again”, the Buenos Aires Grain Exchange reported.
The Argentine wheat harvest will probably be completed at the end of January. Soybean planting in Argentina is over 81% complete and the maize area is 71% planted. Dry conditions in La Niña were less severe than last year in Argentina, allowing favorable crop development.
Wheat export shipments for the week ending December 23 were up from the previous week, in large part due to a competitive global export market. Wheat shipments to international customers from US terminals increased 76% on the week to 12.3 million bushels – a four-week high for weekly wheat exports.
Weekly wheat export loading rates have been particularly poor over the past 10 weeks, averaging just 8.5 million bushels per week. Today’s report is therefore a welcome reminder that there are potential business opportunities for US wheat exporters, especially as the main exporter, Russia, weighs an export quota in the first half of the year. next year and continues to increase its tax multiplier on wheat exports.
Lower transportation costs for close-haul shipments continue to be a deciding factor in grain purchasing decisions globally. Last week’s wheat shipments were mainly destined for Japan (3.3 million bushels), Colombia (1.7 million bushels) and Mexico (1.6 million bushels).
Export orders for older crops were halved from last week’s volumes, falling to 7.7 million bushels for the week. Taiwan recorded the largest order with 4.0 million bushels.
No export orders were scheduled for 2022/23 over the past week.
Global weather issues have been a key driver of wheat prices over the past month. Dry weather on the American plains will likely further exacerbate the upward momentum in wheat prices. I study these factors as well as what 2022 has in store for the wheat market in my last E-corn-omics article.
Scattered flurries are possible in the Upper Midwest today, although any accumulation is likely to be light, according to the near-term NOAA forecast. Abnormally warm temperatures will continue to linger across the Heartland for a day or two before cooling off considerably on New Years Day.
The storm system developing in the north and central Rockies will begin to move east across the plains tomorrow evening, bringing snow to the central plains and rain to the southern and eastern plains of the corn belt La Niña style by Saturday morning.
Stock markets edged up on weak weekly unemployment figures. The S&P 500 landed its 71st Record market close of the year 2021, closing up 0.08% at $ 4,796.92.
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A volatile economic environment is the only certainty in 2022. Find out if your farm’s financial health can withstand the turbulence of the New Year by joining us for the Farm Futures Ag Business Summit on January 20-21, 2022 in Coralville, Iowa!
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