European market

A new week begins and European wheat remains under the same selling pressure. The decline in the euro/dollar exchange rate, back to its lowest level since mid-October at 1.1170, and the notable gains in French export competitiveness were not enough to halt the continuous fall in prices. Following the break below the 232 €/t support level on the Dec 26 contract, the downward move accelerated, with prices dropping by -7.50 €/t to 226.50 €/t. This marks the lowest close since 14 July. European wheat is now joining its Chicago counterpart in a bearish spiral, with the latter falling back to its lowest level since 1 July.

The latest trigger was yet another statement in the Russian press, according to which Russia confirmed it is in contact with Turkey and is studying options for resuming navigation in the Black Sea. The market completely ignored a second, totally contradictory statement issued afterwards by the Russian Ministry of Foreign Affairs, which said that Russia sees no prospect of resuming the Black Sea Grain Deal.

Much less sensitive to fund activity, corn on Euronext posted only limited losses yesterday, ranging from -0.25 to -1 €/t. Rapeseed, on the other hand, detached itself from the broadly bearish sentiment and the downward influence of soybeans to continue its rebound. After closing up +2.75 €/t yesterday at 552.25 €/t, the Feb 27 contract has moved back into its previous trading range of recent weeks, between 550 and 560 €/t.

American market

The Chicago market experienced another day of sharp losses yesterday across wheat, corn and soybeans. In addition to domestic factors such as poor US wheat export performance and harvest pressure on corn and soybeans, two external bearish forces weighed on the market.

Wheat continued its downward spiral in Chicago, falling back to its lowest levels since early July, amid ambiguous statements from Russia that have led bearish funds to believe that navigation in the Black Sea could resume.

Corn and especially soybeans were heavily affected by the decline in the Brazilian real. The surprise victory of incumbent President Lula strongly disappointed financial investors, who sold off both Brazilian equities and the currency. With the real falling by more than 9 % against the dollar, the export competitiveness of Brazilian corn and soybeans improved considerably, as did returns for local producers. The decline in corn was nevertheless more limited than that of soybeans in Chicago, due to less competition from Brazilian corn in the coming months than from soybeans at the start of the year.

The USDA reported yesterday evening that the US soybean harvest had reached 79 %, which is 2 points ahead of the average pace. Corn harvest progress stands at 60 %, compared with a historical average of 66 % for this date.

Black Sea market

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