European market

Yesterday, cereals physical markets were in little evolution. European weekly export numbers are progressing slowly in the context of the end of season with an aggregate volume of 21.56 Mt in soft wheat, 4.7 Mt in barley and 1.1 Mt in durum wheat. The current pace of import is also subdued and so far, 10.2 Mt of corn have been imported in EU from the start of the marketing year.

Business on wheat futures contracts were reduced both on Euronext and CME with prices in small decline. Today, the Sète Grains Exchange will be the opportunity for many operators to meet each other.

Feed barley market is stabilizing while Saudi Arabia announced a massive tender of 1.5 Mt for deliveries in July and August.

German Cooperatives Association released its new rapeseed production estimation for 2017. Expected volumes are in decline at 4.68 Mt vs 4.93 Mt due to tough weather conditions. Despite this downward revision of rapeseed harvest in Germany, prices tumbled yesterday in reaction to the decline of soybean following the freefall of the Brazilian real.

American market

Yesterday, despite good export sales, prices registered a sharp setback on American markets.

Soybean was the most affected by the decline of the real against the dollar. This situation was directly weighing on prices in Chicago. The corruption scandal in Brazil, directly involving the President Temer triggered a freefall of the real by – 6 % vs dollar. The Brazilian currency is now at its lowest level since last December.

The sharp decline of the Brazilian real will boost local producer’s sales of corn and soybean as their income will be increased by the devaluation of their currency vs dollar.

The downturn of the real will  ease corn exports prospects especially in direction of Mexico. Indeed, this country is searching new supply sources following the announcements of tougher trade relations from Donald Trump.

Black Sea market

Black Sea area is currently experiencing favorable climatic conditions for a good emergence of spring crops and proper development of winter crops in Ukraine, where field works are now nearly completed, in Russia and Kazakhstan. Temperatures should remain below seasonal by 1 or 2 degrees Celsius in the Eastern part of Ukraine and in Russia and rains, slightly above average, are expected in key areas of winter crops production. Consequently, analysts are positive about 2017 harvest potential as reflected by recent upward revisions of expected straw cereals output in Russia. Remaining small uncertainties are more about rapeseed but they should not impact the balance sheet too much.