European market
The markets continue to show firmness, while the current price levels will prompt certainly users to limit their purchases as much as possible. The climatic risk caused by the Nina effect remains one of the main drivers of this price increase, with fears still present over the autumn wheat crop condition in Russia and the soybean sowing season in Brazil.
Vegetable oil prices continue to show great volatility, with a decline in soybean oil yesterday and palm oil this morning. However, uncertainty remains about the consequences of the Nina effect, combined with the lack of labour caused by the COVID, affecting prices in Malaysia and Indonesia.
Argentina has just approved the cultivation of GMO wheat, making it the first country in the world to accept this crop, thus running the risk of consumer opposition to such products.
Internationally, the US yesterday sold 132,000 t of soybean to China and 120,000 t to undisclosed destinations. Pakistan, in its latest tender, reportedly bought around 330,000 t of wheat, most likely from the Black Sea.
Chinese demand remains one of the main drivers of the increase in demand on the international scene, but activity remains weak on the part of the traditional buyers of French origin, namely Algeria and Morocco. Germany has already shipped 115,000 t of wheat in October to Algeria.
The climatic conditions will have to be monitored in the coming days, mainly in the countries currently suffering from a water deficit.
The dollar and crude oil remained stable this morning at 1.1760 against the euro and 40 $/b respectively.
American market
Prices in Chicago show further gains with funds’ long positions reaching very high levels, particularly in soybeans and corn. Yesterday alone, the funds bought 15,000 lots of corn, 6,000 lots of soybeans and 12,000 lots of wheat.
Wheat prices have reached their highest level since July 2015, soybean prices their highest since the end of April 2018, and corn prices their highest since the beginning of the year.
In soybean, coupled with Chinese demand, which remains strong, the delay in sowing in Brazil raises fears of a very tense situation on the physical market next January. According to a Reuter’s survey of producers, the next harvest could be around 132 Mt, a record, as a result of the increase in acreage.
Tomorrow's USDA report could show lower corn and soybean yields as a result of the water deficit.
US agricultural exports to China reached a record $2.15 billion in August. China's purchases are mainly explained by the restocking.
Black Sea market
The physical Black Sea market remains sensitive to the rally recorded on the world's main commodity exchanges in recent days. Like Chicago or Euronext, Black Sea grain prices are reaching new highs for the current season. Russian wheat 12.5% is at 242 $/t FOB Novorossiysk, and Ukrainian wheat 11.5% is at 240 $/t. Ukrainian corn is at 206 $/t FOB, slightly higher than barley, which is trading at 204 $/t.
The same movement can also be observed in oilseeds. Ukrainian GMO soybeans are now at 426 $/t FOB. Sunflower seed is recovering at 473 $/t, for ex-factory delivery in the south of the country, VAT included.
