- HEADLINES: Row crops stabilise; Wheat trades lower on Stats Can stocks data.
- Chicago values are mixed at midday, with row crops steady and wheat down on liquidation following larger than expected Canadian crop stocks. Selling momentum has eased as the return of power is slowly expanding across the greater New Orleans area. Current Gulf logistical issues are no doubt concerning, as evidenced by FGIS shipment data Tuesday, but we would remind that the hurricane’s impact on the movement of grain will be limited to 2-3 weeks. The timing of the return to normal is still unknown, but we doubts Ida’s impact will alter annual US corn, soy and even wheat exports.
- There are rumours that FSA inadvertently released its Sep acreage enrolment data this morning, two days ahead of schedule, but we cannot confirm the validity of any new numbers. FAS’s daily reporting system featured 106,000 tons of US soy sold to China. The US$ is higher, having traded through a short-term downtrend line, but energy markets are firm.
- Stats Canada pegged final 2020/21 Canadian wheat ending stocks at 5.7 million tons, vs. USDA’s 3.8 million. Using Stats Can’s production estimate of 22.9 million, Canadian wheat exports in 2021/22 will be 17.0-17.5 million tons, broadly in line with USDA’s forecast.
- Final 2021/22 canola stocks were pegged at 1.8 million tons, vs USDA’s 1.1 million. Larger beginning stocks will partially offset production loss, but work indicates Canadian canola exports this year will be capped at 6 million tons, vs. USDA’s 6.9 and vs. a massive 10.5 million in 2020/21.
- Stats Can data was far less bearish of feedgrains, with final barley end stocks placed at 700,000 tons. vs. USDA’s 900,000. Canada’s net feedgrain exports in 2021/22 will fall to 1.9 million tons, vs. 3.2 last year and the lowest since 2014. Canada will be a sizeable buyer of US corn late autumn onward.
- Importantly, rapeseed/canola futures in Canada and Europe are higher this morning and found strength prior to soybean’s late morning recovery. Note that price trends in global vegoil markets are positive into the very end of the calendar year. Spot Malaysian palm oil today is priced at just a $0.06/lb discount to spot Chicago soyoil. Palm oil’s discount to soyoil was $0.15/lb just 30 days ago.
- Egypt’s GASC secured 60,000 tons of Russian wheat and 240,00 tons of Ukrainian origin for late Oct/early Nov shipment at an average fob price of $313 per ton. This compares to GASC’s purchase price last week of $307 and reflects a new multi-year high.
- Today, Egypt’s GASC purchased 300,000 mt of wheat from Russia and Ukraine for shipment in Oct 25-Nov 03. The average FOB price paid was $313.09/mt. That is up $4.59 mt from the average price paid at the tender held last week. The average CIF price paid in today’s tender was $345.02/mt. That is up $3.15/mt from last week’s price. Ocean freight declined $1.44/mt to $31.93/mt. The CIF price was $97/mt more than was paid a year ago and the highest in over 6 years. GASC will pay for the grain within 180 days. Payment in 180 days is estimated to add $4-5/mt to the cost of the wheat. This is the 8th tender in a row that non-Russian origins captured most or all of the business.
- There has been no material evidence that wheat importer demand is slowing despite elevated wheat and freight prices. We calculate July-Aug world wheat trade at record 29.9 million tons, vs. 27.7 million a year ago.
- The midday GFS weather forecast is wetter in parts of the Southern Plains and Missouri but is otherwise consistent with prior runs. Near complete dryness and normal/above normal temperatures are scheduled into late next week. Max temperatures this weekend reach into the 90s across the Southern and Central Plains. The jet stream moves slightly southward beginning Sep 15, which allows a pattern of light/scattered showers to return to the Great Lakes Region thereafter. However, heavy harvest delaying rainfall is not indicated.
- It is difficult to be bearish Chicago ag markets at current prices and in early September. Yet, the cash market must push back against recent selling. A bulk of US corn will be gathered over the next 30-45 days, progress has started in KS, MO and KY, and cash market activity will be dull until harvest reaches 40-50% nationwide. Our strategy remains to use recent weakness to add to/extend coverage.