European market

Wheat prices rose on yesterday amid deteriorating production estimates from many major wheat exporters.

The Euronext September 2019 expiry was dealing at € 189 per tonne yesterday, its highest level since May 29.

In France, echoes of soft wheat yields are extremely heterogeneous, but the quality looks correct. Yields are ranging from the worst to the best depending on the region. The south-western part of the country, which is already finishing the harvest, appears to be strongly hit. The work should progress more widely to the north of the Seine next week, this will provide a better clue about the national potential.

The other area in Europe where yields are in sharp decline is the region of Romania/Bulgaria. Yesterday, the Bulgarian Minister of Agriculture posted a wheat production estimate in a range of 4.5 and 4.9 Mt, down by -25% from last year.

It will therefore be interesting to see the European wheat production in tonight's USDA's monthly report. Last month the prediction was of 141 Mt.

The rapeseed remains supported by poor yields in France. The August 2020 delivery on Euronext returned yesterday to its highest levels since February 24th.

On palm oil, we can note the fall of the Malaysian stock to 1,9 Mt at the end of June according to the monthly report of the MPOB published this morning. This higher drop than expected is essentially linked to better exports than expected, up by nearly 25% over June.

American market

The market in Chicago remained firm yesterday before the release of the USDA's monthly WASDE report tonight at 6pm CET.

In this context, funds were net buyers in 15,000 lots of corn, 4,500 lots of soybeans and 7,000 lots of wheat.

The wheat in Chicago hit a two-month high supported by fears of a lower production among major exporters. Weekly U.S. export sales of 326,000 t were at the low end of expectations.

Soybean and corn are still supported by the weather market. Indeed, even if they are currently very volatile, the weather forecasts in the United States are predicting a rise in temperatures for the next couple of weeks. This is a matter of some concern for the corn as the flowering period is just beginning in the Corn Belt.

On the export side, weekly sales are rather good for the corn at 1,008 Mt, matching the top of range expectations. In soybeans, export sales for the old crop are satisfactory but disappointing for the new harvest.

Black Sea market

Black Sea traders will be following with interest the release of the USDA report this evening. For the straw cereals, the Ukrainians are expecting USDA to lower wheat and barley production. Russia’s production for these two crops should not be amended.

Ukrainian producers are also anticipating a downward revision of the rapeseed production that was last estimated at 4 Mt by USDA versus 2.8 Mt by Agritel. In this respect, during our crop tour in June, we did not observe the 1 to 5 acreage ratio between rapeseed and wheat in the southeastern regions, which usually contributes to 50% of the rapeseed acreage. Surprises in terms of harvested areas cannot be ruled out.