Jonathan Lane, ADM Agriculture’s head of grain trading, comments on the wheat market

The forecast for hotter, warmer weather across much of the western corn belt and northern plains has put fresh bullish impetus into US grains markets.

Yesterday’s USDA reports caused little excitement as US corn and wheat numbers were much as expected. On the global front, ending stocks for 2021/22 came in ahead of trade expectation.

However, the reports did confirm that future market direction will continue to be driven by the corn market. With the potential for further Brazilian crop downgrades and less-than-ideal summer weather forecast for the western corn belt, the market will need to buy additional US acreage and maintain its above-trend yield aspiration.

Although US and Canadian spring wheat production remains at threat as heat and dryness concerns intensify, US winter harvest has commenced and improving conditions in the EU/Black Sea could further enhance production numbers.

The National Agricultural Statistics Service (NASS) lifted the good/excellent rating the for the US winter wheat crop by 2 percentage points, while lowering the spring wheat crop rating by 4 points to just 38%, as drought conditions intensify in the northern plains.

Southern hemisphere wheat crops are being sown into favourable conditions, supporting current production levels and confirming the abundance of global wheat supplies, which may well be needed over the 2021/22 season.

In more detail, the USDA monthly update reduced US corn closing stocks as ethanol usage and exports were raised, with the lower stocks carrying through into the 2021/22 balance sheet.

Not to be outdone by USDA, which lowered the Brazilian corn crop 3.5mln t to 98.5mln t, CONAB, Brazil’s agricultural statistics agency, reduced its total crop production by almost 10mln t on the month, to 96.4mln t.

USDA also raised US 2021 wheat production and lifted global production by 5.5mln t, with bigger crops seen for the EU, Russia and the Ukraine. This was partially offset by a higher feeding figure, resulting in a net 2mln t gain in 2021/22 stocks.

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) now puts the country’s 2021/22 wheat crop at 27.8mln t.

Market researcher IKAR estimates Russia’s crop at 80mln t, as crop conditions improve in southern and central regions following recent rains, while UkrAgroConsult forecasts Ukrainian output at 28.8mln t, up 1.2mln t from the previous estimate, with yields expected to match the record levels from the 2016-17 season.

Strategie Grains reports that larger wheat crops are expected in Europe, lifting its EU-27 projection 1.5mln t on the month m to 131.1mln t. It did add that cooler conditions might lead to a late-than-usual harvest.

UK crops continue to improve due to the recent more-favourable weather conditions, with estimates of this year’s wheat harvest now exceeding 15mln t.

For more information on the grain markets please go to the ADM Agriculture YouTube channel.

Will Ringrose, ADM Agriculture’s head of oilseeds, comments on the OSR market

A choppy week for CBOT soybeans, which traded sharply higher on Monday before closing lower. The US balance sheet remained tight and the change to hot and dry weather across some of the growing regions is causing concern over crop conditions. All eyes will be on weather developments.

US soybean plantings were reported to be 90% complete compared with 84% last week. Crop conditions were 67% good/excellent, below trade expectations.

Last night’s USDA report last night gave little fresh news. Ending stocks finished at 155 mln bushels against the average estimate of 143 mln, and there were no changes to supply or demand for new crop.

Informa estimates the US soybean crop closer to 122mln t than the 112mln t last year. It puts Brazilian production for 2021 at 139mln t, 11 mln t up on last year, and Argentinian production at 44mln, 5 mln t down on last year.

China remains quiet though there was a rumour yesterday that they came back into the market to buy some Argentinian soybeans. 

Malaysian palm dropped sharply again yesterday on the back of increased stocks and a 14% fall in exports the first 10 days of June. Asian markets traded lower as did soy-oil after last night’s USDA report, which lowered US production but also reduced domestic and export use.

In Canada some rain is making its way across Alberta, taking some weather premium out of prices for the time being. However, the long-range forecast is for drier weather again, which will be closely watched. 

Conditions in Western Australia look good with ample rain and more to come, helping recently planted canola. Crops elsewhere in the country still look well. ABARES raised its crop production estimates to 4.2mln t from 3.5mln t earlier in the year.

Matif saw some support earlier in the week before losing those gains in the last few sessions. Crop prospects look better than they did a few months again but harvest is delayed by a week or so. Expect for prices to track US markets until the combines start to roll.