European market
Weakened by Chicago’s trend, cereals retreated yesterday both on Euronext and on physical market. US markets remain the drivers of European prices on short end while Black Sea is setting the tone on longer term.
This decline is offering an opportunity to Egypt to come back on the market in launching another wheat tender. This should be a chance for French origins to demonstrate their current competitiveness.
On a geopolitical point of view, British MP’s have voted against early elections in December. The situation remains unclear on the other side of the Channel about the Brexit scenario.
The European Union has cut the corn yield estimation to 7.57 t/ha vs 7.63 t/ha seen last month; this is a drop of -9.3% compared to last year. For the sugar beet, the average yield has also been revised down at 71.3 t/ha vs 72.2 forecasted in September. It is a bit better than last year (+3.5%), but well below the 5-year average (-5.1%).
The palm continues its rally and is bringing a clear support to the oilseed complex, including the rapeseed. However, canola prices are experiencing the bearish effect of the harvest pressure.
On the international stage, we can note the sale of 135 000 t of US soymeal to Philippines.
Wheat sowing in France are disrupted by the heavy rainfall, pushing some farmers to use ploughs to facilitate plantings.
American market
In Chicago yesterday, wheat and corn prices dropped. The US wheat is suffering from a lack of competitiveness and the corn is weakened by a good progression of harvests. For the soybean, traders are in the expectation of new elements about the trade relationship with China.
USDA said yesterday that 56% of winter wheat is in good to excellent condition vs 53% last year at the same date. Corn is considered in good to excellent conditions up to 58% vs 56% last week and 68% last year to date. 41% of the corn acreage has now been harvested vs 30% one week ago and 61% on 5-year average to date. The harvests of soybean are completed up to 62% vs 46% last week and 78% on 5-year average to date.
Improved climatic conditions are allowing harvesting works to gain momentum in the north of USA at the exception of North Dakota still penalized by winter conditions.
Yesterday, funds were net sellers in 7 000 lots of corn, 4 000 lots of wheat and were net buy buyers in 3 000 lots of soybean.
Black Sea market
As every year at the same time, there are problems to transport the cereals toward the Ukrainian ports. To avoid this problem, exporters tried to be proactive in transporting a maximum of grains in advance to ease the flows during autumn. However, for the third time this year, the rail carriers have been pushed to limit the traffic from main producing areas to the forts as stations close to terminals are unable to manage the current circulation. A break of three days has been decided. Some cargoes about to load will have to remain docked for a few days more.
This situation is offering selling opportunities to operators able to deliver goods by trucks.
