European market
Due to the decline of the euro vs dollar yesterday below 1.19, soft wheat prices rebounded. The December delivery of Euronext closed up by +1.75 €/t to settle at 161.25 $/t. The CME wheat European contract was left unchanged at 163 €/t on the same month of delivery.
First previsions from FranceAgrimer for the 2017-18 marketing year are confirming the rise of supplies in France due to an increase of the production and collect, consequently, the ending stock will progress and is now seen at 3.4 Mt which is a level slightly above 2015-16’s season when the harvest reached a record level. The export activity toward EU will be dynamic above 7.8 Mt. The business toward third countries will double from last campaign at 10.2 Mt, remaining well below previous years due to a stiff competition with Black Sea producers.
For the corn, FranceAgrimer reckons that ending stock in 2017-18 will be above 2.5 Mt. This increase is justified by the expected rise of the production and by a smaller demand than the average of previous years from EU countries and also from animal feed sector in France. However, if it will be higher than last campaign.
On the oilseed market, the rapeseed and sunflower are evolving differently. Rapeseed is benefitting from the technical rebound observed at the beginning of the week on Euronext and from the good performance of veg oils. Sunflower on its side is experiencing some harvest pressure.
American market
Despite of last USDA’s numbers showing outlook of a higher production in USA due to both a rise of acreage and improved yields of 49.9 b/acre, prices in Chicago bounced back sharply yesterday and closed 10 cents above the previous day on the November delivery. The rise of soy oil and another export sale of 167 310 t of soybean to Mexico have provided some support to prices. Before the start of US harvest, traders are paying attention to the dry conditions in place in Brazil able to delay plantings.
Cereal prices have little moved. Corn has closed nearly unchanged from the day before on the three front deliveries. The start of harvest will give more clues about corn yields to confirm the better outlook reflected in last USDA statement of 169.9 b/acre. For the wheat, prices are a bit up and are back to last week levels but still below 4.50 $/b on the December 2017 delivery.
Black Sea market
Barley and wheat prices are increasing on the physical market for harbour delivery. For example, the milling wheat with 11.5 % protein is now displayed around 162-163 $/t. Logistical problems are coming back and especially the lack of wagons and locomotives while the important collected volumes will now have to be carried from eastern and center parts of the country toward the harbours. Direct consequence of the pile up in silos is a rise of the spread between the EXW-elevator and the CPT-port of +8 $/t to +23 $/t in 3 weeks time for milling wheat. In response to concerns, Ukrzaliznytsya, the public railway company has ensured that they will provide more locomotives and the situation should return to normal by the end of the month. To note that the subject of disruptancies on the rail network is common in Ukraine where Investments are still unsufficient.
