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- North American oilseeds trade to the green on Mondays session although heading into the overnight session, Canola and soy oil are higher while soybeans are lower.
- Soybean weakness in the overnight as we await the biscuit break to start the morning session.
- China made a surprise move overnight and its central lending system cut the overnight interest rate by 0.15%. The second cut since June serving as a hopeful stimulant to its sluggish economy.
- China has been the talk of the agriculture industry as weakness in the Chinese economy could spill into agriculture and other raw material demand.
- Hogs got slaughtered in recent sessions and trading down close to 7% for the week. Live hogs in China down 2% for the past five.
- Global Vegoils mostly lower for the week as illustrated above:
- Weakness in Chinese Rapeseed oil, Malaysian Palm Oil and the MATIF contract are helping keep Canadian canola prices subdued despite the smaller Canadian canola crop harvest set to begin.
- Some Canadian canola crop has been harvested, but only in the most severe drought struck regions.
- A bearish tone has overcome the global markets in recent weeks partly on the Macroeconomic level.
- United States had its Debt rating dropped from AAA to AA+ on August 1st, the first credit rating drop since the Financial crisis
- Chinese economic figures for July came in surprisingly low versus expectations.
- Chinese exports were down 14.5% vs the expectation of 9.8% leading into the data release.
- Chinese imports were also down 12.4% vs the expected 5.6% drop
- Bearish beans and crude oil, essentially most things linked to the globes 2nd largest economy
- Pro Farmer crop tour begins next week, touring US Midwest fields trying to gauge an accurate private estimate of the crop. August 21st to 24th are the tour dates.
- Soybean crop ratings jumped by an amazing 12% in Illinois week over week. General sentiment amongst the trade is that the crop is growing and not shrinking week over week.
- 59% of the crop is rated as Good to Excellent, Analysts expecting a 55% figure, 54% rating a week ago.
- Rains set to miss soybean region this week for the most part.
- USDA WASDE:
- Charts listed below
- Old crop 2022/23 global soybean carryout growing to 103.1 vs 102.7 in July’s report
- New crop 2023/24 global soybean ending stocks seen falling slightly by 1.6 mmt
- Rapeseed ending stocks down 700,000 tonnes year over year, although not as tight as 21/22
- USDA FAS left Canadian canola production estimates unchanged at 19mmt, the same month over month and the same as last year. USDA is one of the highest estimates of the crop so far, many private estimates atleast 1mmt less than the USDA is publishing.
- European commission lowered its production estimate for oilseeds, mostly rapeseed, by 700,000 tonnes early August as the crop caught a late season drought. Germany, Czechia, Lithuania, Denmark and Romania suffered the greatest from the hot dry weather in its rapeseed production region
- USDA HAS EU Harvest at 20.2 MMT while the EU has 19.5 mmt estimate
- USDA also stating Canadian crop at 20.3 mmt while Agrifood Canada sits at 18.8 mmt.
- Russia and Ukraine still attacking each others port infrastructure, even worst now that the trade deal has been nullified.
- The two nations are amidst harvest and currently need the ports more than ever.
- In the past year, Ukraine relied upon Black Sea ports for about half of its exports, 25% through the Danube river system and another 25% through western borders into EU regions for further transit.
- JRC MARS released July 24th:
- EU Rapeseed yield cut by 3% from June report
- Citing heat and dryness towards tail end of crops life
- Rapeseed harvest continues in Europe, although wrapping up in most areas. Harvest pressure taking place.
- $645 CDN per tonne is the value of a tonne of Canola in Liverpool England, $14.63 per bushel at an export positioned port
- ABARES (Australia’s USDA) had a crop report June 6th. Next ABARES report is September 5th
- Wheat at 26.2 mmt down 34% from last year and should come in below 10 year average
- Barley at 9.9 million tonnes, down 30% from last year and 11% from the 10 year.
- Canola to fall 41% to land at 4.9 mmt. Still 15% above the 10 year average.
- ABARES (Australia’s USDA) had a crop report June 6th. Next ABARES report is September 5th
- Australia is a mixed bag, some eastern regions have been getting rains although many areas quite dry.
- Aussie is still early into its growing season, moisture going to be watched closely going forwards.
EU RAPESEED S+D CHART (EU COMMISSION) – July 27, 2023
USDA FAS OILSEEDS
OILSEED TECHNICAL INDICATORS
CANOLA – BOLLINGER BANDS (18 Day Moving Average Red, 50 Day Black, 100 Day Yellow)
September SOYBEAN OIL – BOLLINGER BANDS (18 Day Moving Average Red, 50 Day Black, 100 Day Yellow)
November PALM OIL – BOLLINGER BANDS (18 Day Moving Average Red, 50 Day Black, 100 Day Yellow)
- Drought in Urals and Siberia regions of Russia could affect pea yield prospects in the growing region
- US Pea crop early harvest looking to be better than expected
- Durum is the hot topic of the trade. Saskatchewan’s Durum crop is in dire straights and rated at 16% good to excellent.
- Much international attention as there is limited good durum crops in many regions across the world
- Italian durum prices turning higher
- Importer affordability is the topic of the day as many durum importers have signaled unwillingness to pay and need to use credit facilities to facilitate purchases
- World of durum heating up with production issues in southern France, Canada and North Africa, Italy also faced some production issues in its most recent harvest due to quality and flooding.
- Canada’s durum crop is concentrated in the drought region of the prairies and looks to be getting smaller each day as we inch towards the crops maturity.
- EU feed and Malt Prices steady, despite late season drought and some production issues.
- Canadian oat production could come in less than 2021 drought year due to the shrinking yield on far less acres than last year. The oat crop in northern regions is suffering from lack of sufficient rainfall.
- Stats Canada pea acres down 10% year over year
- EU malt barley crop to come in 18% lower than last year
- Canadian Prairies. Dry areas persist but getting smaller or less severe with recent rains. Some pockets, eastern Alberta, very dry. Rainfall not abundant enough in areas to take the pressure off, more timely rains needed to help crop advance.
- Yellow pea prices at Chinese warehouses have been sliding, greens and maples have been holding up stronger.
- Pulse prices generally softer in global markets.
- Australia continues to flood Chinese market with all pulses.
- Poor Conditions in Northern African Durum production regions.
- Canadian Flax offers into China still holding a price premium to Kazakh or Russian flax.
- Russia flooding market with its crops
- Kazakh Flax stocks to remain high here and record stocks once again at July of 2023
- 2023 EU Durum crop is forecasted to be upwards of 7.8 million tonnes. Which could be largest in over 5 years.
- Some quality issues expected though, especially in Italy.
United States – Crop Production Regions
- Chicago Wheat can not catch itself and trading down 6.5%, followed by Euro wheat down 4.5% for the week.
- Plenty of action in the Black Sea and with any news in the overnight, the news is quickly faded on the trade heading into the morning.
- Corn lower and technically still has room to the downside.
- USDA WASDE:
- Bigger than expected old crop corn stocks, less than expected new crop
- Wheat less than expected of crop, nearly the same as expected for new crop.
- Ukraine crop getting bigger according to the USDA
- 27.5 mmt vs 25 mmt on the corn crop for total production month over month.
- 21 vs 17.5 mmt total on the wheat crop month over month
- Corn good to excellent at 59% which is up 2% week over week and 1% higher than trade estimates
- Spring wheat 42% G/E up 1% week over week and 1% more than expected.
- 92% of the winter wheat is harvested
- This week, Bangladesh tendered for milling wheat at $304 to $322 delivered, need to pull freight to achieve FOB levels
- Big GASC (Egypt) wheat tender had FOB tenders come in at $270+ last Monday. Just a few weeks ago, offers were in the $240 range in early July. Some tenders were passed upon at $240 a few weeks ago. Tenders were all bid on by both Russian and Ukrainian exporters.
- Australia / China set to resume unrestricted Barley trade here as a 80.5% tariff was announced it was being dropped.
- China and Australia used to hold a major Barley trade prior to restrictions imposed in 2021.
- Canada could loose some market share into China as it filled some of the missing gap from the Australian barley trade.
- Grains weak at the start of the week:
- Feelings of the US corn crop getting bigger week over week vs smaller
- Crop conditions improved 2% to 57% week over week
- 1% higher than expected
- Futures markets not trading much of the current war risk with logistics at risk due to the increasing maritime activity in the Russian and Ukraine war. 2 non military vessels have been attacked in the past week.
- European yield reports.
- German wheat crop to come in at 21.8 mmt which is a 3.2% drop from last year
- Germany and France having severe sprouting issues in some of its wheat and remaining cereals due to some late season rains. We will continue to watch this close but there are some severely sprouted crops standing in field yet and will be downgraded to feed at best.
- From France to Russia, yields are not disappointing, just coming in a tad less than anticipated.
- JRC MARS July 24th:
- Wheat yields down 2% month over month
- Spring Barley down 3% month over month
- Winter Barley Unchanged
- US corn crop still pricing better into Southern regions of Canada in comparison to Barley. Plenty of Corn has been booked into feedlots to help take the pressure off Canadian barley crop that is facing some very significant production issues in its traditional growing region.
- Australian Barley crop estimated at 11mmt, down from last years massive 14.1 mmt. China expected to step into the market for this crop
- China imported 1.1 mmt of Barley in June, most of it being French origin
- India banned the export of Non Basmatti Rice to help fight food inflation.
- Chinese wheat imports up 62% year on year but corn imports down 12%. January to July.
- Private analysts have Russia’s 2023 wheat crop at around 88 mmt, this past years crop was estimated to be at well over 100 mmt. 88 mmt would be back to a “normal” production number. It is important to note that this is a 3mmt increase in crop size estimates from just a few months ago. As they say, big crops get bigger.
- Russia’s domestic reporting agency has the crop at 78 mmt.
- Eastern Region of Russia trending dry
- Russia’s western and southern region faring better,
- As of August, Ukrainian wheat production expected at 21 mmt, same as last years 21 mmt and down from 25 mmt in 2020.
WASDE – GLOBAL GRAIN FOB WHEAT PRICES
September Dalian Corn (China) – BOLLINGER BANDS (18 Day Moving Average Red, 50 Day Black, 100 Day Yellow)
September Spring Wheat – BOLLINGER BANDS (18 Day Moving Average Red, 50 Day Black, 100 Day Yellow)
September Chicago Wheat – BOLLINGER BANDS (18 Day Moving Average Red, 50 Day Black, 100 Day Yellow)
September Corn – BOLLINGER BANDS (18 Day Moving Average Red, 50 Day Black, 100 Day Yellow)
UNITED STATES RAINFALL – WPC 5-7 DAY QPF