Grains Market Overview 29.07.2021

Yesterday, CBOT SRW wheat futures prices rose significantly and Chicago corn and soybean futures prices rose slightly. In Paris, wheat, corn and rapeseed futures prices increased significantly.

The EUR/USD currency pair rose to 1.1846. The price of US WTI crude oil increased to 72.39 USD/barrel.

The price of oil rose again after a decline in US fuel and crude oil stocks. The U.S. Petroleum Institute (API) said gasoline stocks fell by 6.23 million barrels last week. This would be the biggest drop in motor fuel stocks since March, if confirmed by government data on Wednesday. Crude oil stocks in the United States decreased by 4.73 million barrels last week, API reported. This would be the ninth decline for the last ten weeks if confirmed by the Energy Information Administration on Wednesday. According to a study by Bloomberg, stocks will fall by 2.5 million barrels. Global stocks are expected to decline by the end of the year as key energy consumers continue to recover from the pandemic, although the recent increase in COVID-19 infections raises concerns about the short-term outlook for demand.

Chicago Contract USD/mt +/-
Wheat September 253.07 +5.24
Corn December 216.13 +1.08
Soybeans November 500.08 +0.55
Soymeal December 394.74 -3.42


Paris Contract EUR/mt +/-
Wheat September 216.25 +4.25
Corn June 262.00 +3.50
Rapeseed August 535.00 +5.75


Yesterday, CBOT SRW September wheat futures prices rose by 14 1/4 cents to close at $6.88 3/4 a bushel. Field tests conducted on the first day of the North Dakota Field Tour showed an average yield of 29.5 bushels/acre. On the first day of the 2019 tour, the yield was estimated at 45.6 bushels/acre. Over the next 5 days, rainfall in the US soft wheat areas is not expected and the crop will be successfully harvested. We will see precipitation to the north and west in the areas with spring wheat. This will stop the harvesting campaign. Weekly export sales of wheat from the United States are expected within 350,000 - 600,000 tons for the week ended July 22, 2021. Due to the late start and the delayed harvesting campaign of wheat in Russia, SovEcon lowered the forecast for wheat exports in 2021/22 by 1.3 million tons to 37.1 million tons. The recent rainfall in Russia has delayed the harvesting campaign. According to Rusagrotrans forecast, grain exports from Russia will reach 4.6 - 5 million tons in August compared to 2.3 - 2.4 million tons in July and 5.74 million tons in August 2020. The problems with floods in China and the EU and the lower than expected wheat yields in Russia are factors in reducing forecasts for the world’s new wheat production. There seems to be potential for price growth, not great, but still growth of 10 - 15 USD/ton. The expected low wheat production in Canada will also be a catalyst for prices.

In China, the government is fighting with falling pork prices by introducing new emergency measures. It is very likely that the desired price stability will be achieved and breeders will be profitable. When achieving the balance, however, what will be the consumption of feed, and hence the import of corn and wheat in the country? This is a crucial question for the new season.

Yesterday, Chicago December corn futures prices increased by 2 3/4 cents to close at $5.49 a bushel. The corn market is gathering news and does not currently have a clear market direction. In the United States, there are now two major trends  - a serious decline in production in the northern and western regions of the country and very good performance in the central and eastern parts. There are concerns that China will use less corn for fodder. To refute the thesis, an option for restoring the herd of pigs in the country is presented. On the other hand, during the African plague, poultry production in China increased and is now expected to decline. For now, China's economy is behaving positively, which means more stable demand. Weekly export sales of corn from the United States are expected at the level of 0 - 600,000 tons (-100,000 - +300,000 tons of the old crop and 100,000 - 300,000 tons of the new corn crop). Until the beginning of next week, it will rain in the US Corn Belt and the volume of precipitation will determine how the market will assess the potential for average yield. In the week ended July 23, 2021, ethanol production reached 1,014 million barrels per day in the United States, which is 14,000 barrels per day below last week's level. Ethanol stocks rose by 215,000 barrels to a total of 22,733 million barrels.

Yesterday, CBOT November soybean futures prices went up by 1 1/2 cents to close at $13.61 a bushel. Rainfall in the United States is controversial but so far everyone expects a yield of 50-51 bushels/acre. Yesterday, the world oil market remained neutral/declined slightly. For now, the forecast for the beginning of August points to warm and dry weather in the United States. The condition of the crops is worse than the previous year and only a lot of rainfall can change the vision for lower yields. The expected decline in Canada's canola production will improve China's demand for US soybeans. Weekly export sales of soybeans from the United States are expected in the range of +/- 100,000 tons of the old soybean crop and 200,000 - 400,000 tons of the new soybean crop. Weekly sales of soymeal are projected within 50,000 - 200,000 tons of old crop and 25,000 - 125,000 tons of the new crop. Weekly soyoil sales are expected within 0 - 10,000 tons. According to StatsCan, 594,000 tons of canola were exported from Canada in June, which is the lowest level for the last 21 months (724,000 tons in May and 824,000 tons in June 2020). Since the beginning of the season, total canola exports have reached 9.9 million tons (9.3).