Global grain rally on supply concerns and export restrictions; bean price rallies with strong US demand and battling for acreage

CORN

Global corn loadings for December were stronger YoY led by US and Brazil. Ukraine slowed from the near record November while Argentina remained very poor.

US corn FOB bids eased in November as the recent CBOT price rally triggered more farmer selling. As South America bids firmed with the draining of supplies, the US remained the most competitive corn exporter, driving the weekly US sales.

US corn commitment (open sales + exports) to both China and the rest of the destinations for 20/21 remained well above the 3-year average, as an overall increase in the US supplies benefitted most destinations.

Global Wheat Loadings and Seasonality 

WHEAT

Global wheat loadings were weaker YoY for December. Black Sea wheat loadings slowed seasonally and remained lower YoY in December, while Australian pace shot up, a record for December in our tracking. US wheat loadings pace remained a multi-year low for December.

Extremely strong US white wheat sales have led the USDA to increase the crop year export target by 20 mbu, sending the white wheat prices higher despite lower overall US wheat prices.

Net sales of US hard red winter picked up in recent weeks, reflecting resurfacing Chinese demand incentivized by a decline in the FOB wheat prices. Pakistan offtakes have also been stronger, leading the USDA to raise the country’s import guidance to the highest in more than 10 years.

Russian wheat FOB prices firmed in November, further diminishing the competitiveness of Black Sea wheat. Further, with the addition of the export tax, Russia effectively is priced out in the latest GASC tender. On the other hand, Australian bids weakened as a bumper harvest hit.

OILSEEDS

Global bean loadings slowed MoM seasonally but remained largely flat YoY as stronger US loadings offset weaker South American. Global meal loadings slowed both YoY and MoM, weighed by South American.

Despite the rally in CBOT bean prices, the US widened its FOB price discount to South America, as South America continued to run out of beans. South American soybean crush compressed in November, hurting soymeal and oil supplies.

Despite the strong US crush, US soymeal FOB prices maintained a premium to South America, having previously traded at par, due to strong US domestic meal demand pull.

Argentinian soy oil prices outpaced both the United States and Brazil, leading to the largest US soy oil price discount against Argentina since May 2017. Overall vegoil complex rallied further as palm oil fundamentals remained tight.

Softseeds balance tightened further, reflected in the rallying ICE. Global sunflower seed production in the December WASDE was further lowered. Global canola trade was also raised, ex Canada and Australia. The 20/21 ending stocks are expected to fall back to a normal level, from the 18/19 glut caused by the trade disruption on Chinese imports.

Global Canola Loadings