Analysis 01/09/2020

European market

The markets were very hesitant yesterday, divided between climatic adversities linked to the La Nina phenomenon, and a euro-dollar this morning which is close to 1.20, penalizing French export competitiveness.

On the international scene, the USA once again sold 596,000 t of corn to China, while Pakistan bought 320,000 t of wheat from the optional origin. Algeria is buying 50,000 t of feed barley.

StatСan released its crop estimates for Canada in the early afternoon yesterday. All wheat production is reported at 35.74 Mt compared to 32.35 Mt last year, an increase of 10.5%.   Durum wheat production is displayed at 6.93 Mt compared to 4.98 Mt last year, an increase of 39.2%. Canola production is estimated at 19.40 Mt compared to 19.48 Mt last year, a decrease of -0.4%. Pea production is projected at 5.0 Mt compared to 4.2 Mt last year, up by 17.9%.

Corn closed yesterday on Euronext down by about 1 €/t, despite the water deficit of this summer. In Romania, the harvest could fall this year by almost 40%, to around 10 Mt compared to 17 Mt last year.

Rapeseed is benefiting from the good performance of vegetable oils and soybeans. This morning at the reopening of the palm oil market in Kuala Lumpur, rapeseed prices rose by nearly 2% for the December contract.

Crude oil evolves little, posted at 43 $/barrel in New York.

American market

Wheat prices remained very firm in Chicago last night, buoyed by new fund purchases, but also benefiting from the weaker dollar. Corn was more hesitant, with funds marking a pause on this commodity, while soybeans were at their highest level in more than 2 years.

The weekly crop rating for corn was down by 2 points compared to last week at 62% estimated as “good to excellent”. However, this was one point above traders' expectations. The crop rating for soybeans was down by 3 points from last week at 66% judged as “good to excellent”, within the range of expectations.

This weekend's rains were insufficient to reverse the risk of water stress on the corn and soybean crops. However, they were beneficial for the later plantings.

Funds were net buyers yesterday for 5,000 lots of wheat and 2,000 lots of soybeans. They were neutral in corn. 

Black Sea market

In Ukraine, CPT-Port Odesa offers were posted yesterday up by +4 $ compared to Friday, at 173 $/t. This is a new high since the launch of the forward contracts. In the areas most affected by the summer drought, i.e. the central part of the country, some producers have returned fields or cut for silage the crops originally planned for grain. As a result, production prospects are revised downwards. This is what the teams of the European Agritel Tour had the opportunity to confirm last week during the crop tour. The market for October/November/December delivery has recorded a significant rally of +25 $ in the space of a month. The loading schedule this autumn is intense and farmers are still reluctant to sell in this bullish market context. Traders fear defaults on previously signed contracts at much lower price levels. Some are even suggesting to producers to revise the initial price upwards in order to secure autumn deliveries as much as possible... This unprecedented situation attests to the current tension on the corn market in Ukraine.