Analysis 10/11/2020

European market

The announcement of the probable discovery of an anti-covid vaccine caused yesterday euphoria on the stock markets.  As the result, the veg oil prices rose sharply in the wake of crude oil. Cereal prices were moving into the slightly positive trend, but traders were being very cautious ahead of tonight's USDA report.

On the international scene, Saudi Arabia announced that it had bought 860,000 t of milling wheat in its latest tender and Ethiopia 600,000 t. The origins are optional but confirm the good demand on the international scene. South Korea, for its part, announced that it had bought 288,000 t of corn. The USA has sold 123,000 t of soybean to an undisclosed destination.

As a result of political tensions between Australia and China, the price of wheat from Australia is becoming the most competitive in the world. This is accompanied by an expected harvest that is significantly higher than in recent years, at around 30 Mt.

European wheat exports as of 6 November stood at 7.84 Mt, down by 24% on last year to date. Barley exports were 2.90 Mt, down by 7% from last year. Corn imports are down by 19% to 5.86 Mt.

The water deficit persists throughout the European continent, as well as in the Black Sea basin, with the arrival of negative temperatures.

This morning, the MPOB reported an increase in palm oil exports of 3.84% in October compared to the previous month and stocks down by 8.63%, mainly as a result of a 7.75% drop in production.

The dollar strengthened slightly to 1.1835 against the euro and to 76.35 against the ruble. The crude oil is posted close to 40 $/barrel on New York, in retreat compared to the highest of yesterday.

American market

Soybean prices marked the biggest, among other commodities, rise on markets yesterday, following the announcement of an anti-covid vaccine. Wheat prices, for their part, lost some ground, particularly in the face of Australia, a major competitor for American origins.

Traders are cautious ahead of tonight's USDA report, which is expected to show a sharp downward revision in US corn stocks as a result of a sharp upward revision expected for exports to China. The USDA is also expected to revise downwards its production estimate for Ukraine still posted at 36.5 Mt last month, while Agritel analysts put it at just 30.5 Mt.

Wheat stocks in the 8 major exporting countries are also expected to fall, according to Agritel analysts.

The USDA reports that 93 % of winter wheat is sown in the USA, compared to 91 % on the 5-year average. 91% of corn is harvested, compared to an average of 80% to date, and 92% of soybeans are harvested, compared to an average of 90%.

Funds were net buyers yesterday for 6,000 lots of corn and 7,000 lots of soybeans. They were net sellers for 3,500 lots of wheat.

Black Sea market

While the first morning frosts are expected in the next few days in the European half of the Russian Federation, producers are busy with the final sowings. Already 19.1 Mha of winter crops or 99.4% of the official target have been sown this year, a new record!

Even if these first frosts should not be too severe, the quality of the crops, as well as their tolerance to frost, remains questionable, especially in the areas most affected by the lack of water. It should be noted that morning frosts are now likely to be repeated daily in winter wheat growing areas.