European market
The USDA report came as a surprise, with US corn acreage well below expectations. Given the very high net short position of funds on this commodity, the rise last night in Chicago was all the more significant.
In the wake of Chicago, prices on Euronext rebounded, despite the usual harvest pressure during this period. In France, the harvest is still going on with the same scenario of very significant yield differentials even within the same region.
Algeria bought yesterday a volume of wheat not communicated for the moment, on a price basis around 218 $/CAF for 2 delivery periods, the first and second half of September. With regard to the practised prices, the origins will be mainly European, according to the analysts, Baltic and French. Details of transactions and origins will be known later. Also note the purchase by Jordan of 60 000 t of hard quality wheat and by South Korea of 60 000 t of feed wheat, both optional origins.
Palm prices are recovering a little with a 29% increase in exports from Malaysia in June compared to April. The uncertainties about the future remain, however, with the COVID-19 pandemic accelerating in the USA and making a comeback in Asia.
In this general context, crude oil prices are still hitting 40 $/b and the dollar is not moving much, posted this morning at 1.1240 against the euro.
American market
USDA report surprised yesterday with only 92 Ma of US corn planted, down from 97 Ma posted in March and traders' expectations of 95.2 Ma. The drop in acreage did not benefit soybeans, with acreage estimated now at 83.8 Ma vs 83.5 Ma in March and traders' expectations of 84.7 Ma. The acreage for all wheat is displayed at 44.2 Ma vs 44.7 Ma in March or expected by traders. US farmers have certainly decided not to plant part of their acreage in the spring, in view of very low prices and in the midst of the coronavirus crisis.
Wheat acreage is at its lowest level since 1919. Note also the non-harvested areas.
All these bullish elements should be moderated by a drop in demand linked to the current world health situation, a decrease that is very difficult to apprehend. This translates into a slightly bearish USDA report this time, in view of the stocks at June 30th in the USA.
Funds were covering many short positions yesterday with net long positions for 40,000 lots of corn, 19,000 lots of soybeans and 3,500 lots of wheat.
Black Sea market
Despite the significant rise in wheat prices on Euronext on Monday, yesterday exporters revised significantly downwards their offers on the Black Sea. Wheat FOB prices were losing between 3 and 4 $/t depending on origin and quality. Wheat 12.5% FOB Novorossiysk is now below 200 $/t at 197 $/t.
The bases in relation to wheat Euronext remain particularly high at the start of this campaign compared to previous years. While the harvest is progressing in southern Russia and Ukraine, recent yield results are showing improvement. So, the harvest pressure could be felt in the days and weeks to come in the Black Sea basin.
