European market

Cereals’ markets progressed significantly, especially on the wheat, after the release of US export figures showing that American cereals are progressively replacing Black Sea origins on the international stage.

Furthermore, the breach of the chartist resistance of 207 €/t on the March 2018 delivery of Euronext is suggesting that the move could last with some phases of consolidation of course.

The market also benefitted from the announcement of a meeting between the Agriculture Ministry of Russia and main exporters of the country on the 21st of December. This is provoking speculations, including a reduction of the export activity that has been extremely busy until recently in Russia.

China said to have produce 257.3 Mt of corn in 2018, a bit less than the 259 Mt of 2017. Considering the difficulties to gather information in the country, these figures are questionable.

Euro prices are in small evolution, yesterday in its monetary policy, the ECB confirmed the end of the asset purchases program, suggesting that a good part of the accommodative policy is now over. The crude oil rebounded a bit after the release of lower weekly US stocks.

USA said to have sold 1.3 Mt of soybean to China, resuming the business with its main customer. However, doubts remain on the sustainability of these purchases considering existing tensions.

The rapeseed is struggling to perform in a context of limited rebound of crude oil and depressed veg oils.

American market

Good performance of the wheat yesterday on the CBOT, prices have been boosted by a good export weekly figure of 754 000 t, above traders’ expectations. This is the highest weekly number from the start of this marketing year.

The market is also benefitting from the progression of Black Sea prices, reflected by higher levels recorded at the last Egyptian tender (+5 to 6 $/t).

On the other way round, corn weekly export figure was a bit disappointing. For the soybean, the market remains suspended to the level of export business to China. Despite an announcement of a sale of 1.13 Mt, sales are well below previous years’ level. This could increase in dramatic proportions the ending stocks in USA just before the arrival of the Brazilian harvest.

Funds were net buyers of 6 000 lots of wheat and net sellers in 3 500 lots of corn and 9 000 lots of soybean.

Black Sea market

Tensions between Russian and Ukrainian authorities about the ship traffic through the Kerch strait remain high. The two main losers of this conflict are the Ukrainian ports of Berdiansk and Mariupol. In theory, war and civilian vessels of the two countries are allowed to navigate freely in this area, but the Crimea annexation has modified the rules. The construction of the bridge linking Russia to the city of Kerch has modified the conditions of navigation as the air draft is limited to 33 meters, blocking 20% of the Ukrainian ships going from or to Mariupol. Port authorities of Berdiansk and Mariupol are also saying that increased customs controls in Azov Sea are sometimes delaying the traffic by a few days. From 2014, the volume of goods dealt by the two Ukrainian ports has plunged by -40%, below 9 Mt. Less than 5% of the Ukrainian cereal’s exports are using this way. On the other way round, the bridge has boosted the Russian activity.