Analysis 03/03/2020

European market

Wheat prices on Euronext followed Chicago’s trend and retreated again yesterday. On the US market, the corn and soybean were better oriented. High uncertainties on the global growth continue to pressure the demand of agri commodities. Even if a part of it is incompressible, the sanitary crisis is affecting market prices.

The rapeseed evolved in negative territory to start due to the fall in demand of crude oil, but finished up on the back of the soybean and palm rebound.

The euro continues its rally versus dollar and is dealing around 1.1150 this morning. Traders are anticipating a cut of interest rates by the US Fed to support the economy.

In Australia, ABARES is seeing the next wheat crop at 21.3 Mt vs 15.17 Mt this season. The expected acreage is estimated at 12 M ha vs 10.1 M ha in the last campaign. These figures must be interpreted with caution as plantings have not started yet.

In France, wheat exports toward third countries remain busy, in February they are estimated at 1.46 Mt.

On the international stage, Turkey is seeking 350 000 t of wheat and Thailand 240 000 t of feed wheat. Origins will be optional.

The European Commission has left unchanged its estimation of wheat exports to third countries at 28 Mt for the current marketing year vs 21.5 Mt last year. Corn imports have been left unchanged as well at 20 Mt vs 24.2 Mt.

American market

In Chicago, the trend was unclear yesterday with a wheat market evolving in negative territory while the corn and soybean rebounded.

Beyond fundamentals that are not explaining the current moves, the funds are driving the markets with short covering on corn and soybean and profit takings on wheat long positions. In a very uncertain context, funds are reducing their exposures.

Export inspections on the week ending on Feb 27 have been displayed as follow: 670 608 t of soybean , 896 221 t of corn (in the range of expectations) and 657 097 t of wheat (below anticipations).

Yesterday, funds were net sellers in 3 500 lots of wheat but net buyers in 10 000 lots of corn and 7 500 lots of soybean.

Sharp rebound of stock indexes yesterday, the Dow Jones earned more than 5%, the biggest daily increase since 2009. Traders are anticipating central bank’s actions to support the economy.


Black Sea market

In Ukraine, the question of the restoration of the Agricultural Minister is currently debated by the government and the President. As a reminder, in September this Minister was removed and placed under the supervision of the Economy Minister. Many players of the sector reacted negatively to this decision and asked the government to amend it. A decision should be known by the end of the week.

In the meantime, the President have asked for an extraordinary session of the Parliament on March 4, considering that the ususal agenda does not leave enough time to cover all topics. The law about the opening of the agricultural land market is still pending while it was supposed to enter into force in October 2020.