Agri- Commodities: 03-07/06/24

Monday: A Rough Start

Grain markets began the week on a bearish note. Wheat prices struggled to maintain early gains and ultimately closed lower. Corn prices extended their losing streak to six days, pressured by strong U.S. corn ratings and a sharp decline in energy markets. The initial U.S. corn crop ratings came in at an impressive 75% good/excellent (G/E), well above the expected 70%, boosting expectations for a robust harvest.

Russian Agriculture Minister Oksana Lut indicated that the nation might declare an emergency due to recent frost damage, potentially expediting insurance claims for affected crops. The price of 12.5% protein Russian wheat for June shipment rose slightly to $248 per ton FOB, as reported by IKAR.

In other global developments, Australia's ABARES projected a 12% increase in wheat production for 2024/25, reaching 29.1 million metric tons (mmt), which is 10% above the 10-year average. Tender activities picked up, with Egypt's GASC and Algeria announcing significant wheat purchase tenders. U.S. weekly export inspections were robust, with corn inspections notably exceeding expectations at 1,374k tons. The USDA also reported a rear private sale of 110k tons of corn to Spain.

Tuesday: Continued Pressure

Tuesday saw further declines in grain prices, with Chicago wheat leading the downturn as U.S. harvest activities ramped up, potentially pressuring prices if yields come in higher than expected. Despite this, MATIF milling wheat futures managed to recover most losses, buoyed by substantial demand from Algeria and Egypt, which collectively bought about 1.3 mmt of soft wheat, including French wheat.

India slightly increased its wheat production forecast for 2024 to 112.9 mmt, up from 112 mmt, while the USDA had previously estimated it at 114 mmt. Egypt’s GASC made significant purchases totaling 470k tons of milling wheat from multiple origins, notably excluding Russia. Meanwhile, Algeria's OAIC bought at least 800k tons of soft milling wheat, and Jordan canceled a tender due to high prices.

Wednesday: Downward Trends Persist

Wednesday continued the downward trend for wheat prices, despite further reductions in Russian wheat crop forecasts. SovEcon revised its estimate for Russian wheat production down to 80.7 mmt, from the previous 82.1 mmt. Non-commercial participants increased their net long positions in MATIF milling wheat, signaling some speculative confidence despite the bearish market.

Thursday: Mixed Movements

Grain prices were mixed on Thursday, with corn and soybeans gaining on technical buying, while wheat continued to face downward pressure. Turkey's decision to suspend wheat imports until October 15 likely contributed to the decline in wheat prices.

Tunisia issued tenders for wheat and barley, while U.S. weekly export sales showed mixed results, with decent corn sales but sluggish soybean sales. The USDA reported a private sale of 152k tons of corn to unknown destinations, adding to market activity.

The European Central Bank officially reduced its key interest rate from 4% to 3.75%, while raising inflation forecasts, signaling cautious future monetary policy.

Friday: Week Ends on a Negative Note

The week concluded with further declines in grain prices, particularly for MATIF milling wheat, impacted by Turkey's import ban. This move could ease anticipated market tightness due to lower Russian wheat output and increased Indian imports.

French soft wheat condition improved slightly, with 62% rated as G/E, up by 1 percentage point from the previous week. Tunisia confirmed purchases of wheat and barley for July shipments, with competitive pricing seen in recent tenders.

The USDA reported a notable sale of 104k tons of soybeans to China. U.S. non-farm employment data exceeded expectations, adding 272k jobs in May, suggesting economic resilience that might influence Federal Reserve decisions.