Analysis 07/09/2020

European market

There was little movement on Friday in Europe, with operators cautious ahead of a three-day weekend in the USA with markets closed today across the Atlantic. In addition, traders are waiting for Friday's USDA report.

On the international scene, the USA again sold 318,000 t of soybeans to China and 175,000 t of soybean meal to the Philippines. China remains a key player in the markets at the moment with soybean imports of 9.8 Mt in August, compared to 10.09 Mt last month. Over the month of August, French third-country exports of wheat totalled only 644,000 t, of which 255,000 t went to China and only 179,000 t to Algeria. On this last destination, we are competing this year with the Baltic countries. Barley exports were also sharply down compared to last year with 282,000 t shipped to third countries, mainly to China. This volume of 282,000 t is divided into 216,000 t of feed barley and 66,000 t of malting quality.

In Canada, total wheat stocks as of July 31 were 5.0 Mt compared to 5.9 Mt last year. Durum stocks were only 0.7 Mt compared to 1.8 Mt last year. Canola stocks are also down to 2.7 Mt from 4.2 Mt last year to date.

In corn, FranceAgriMer downgraded the crop rating to 61% estimated as “good to excellent” from 62% last week.

To note this morning, a sharp decline in crude oil prices displayed under the level of 40 $/b at 39.20 $/b in New York. The euro was at 1.1830 against the dollar.

American market

Markets are closed today in the USA for Labor Day.

Wheat is testing an important support zone in Chicago at 5.50 $/bu for December contract, the lowest level since August 27. It will be interesting to follow the reopening of the markets tomorrow morning to see the behaviour of the funds on this product in pre-opening.

Chinese purchases are supporting soybean and corn prices, which combined with a possible reduction in yield estimates on both commodities next Friday has supported prices so far. It remains to be seen now whether this move will be sustainable or not. The first Brazilian soybean crop estimate for next spring is a record 131.7 Mt, up by +6% from last year's very good figure.

According to Safras, corn production in Brazil could reach 115.5 Mt.

It should be noted that the American markets are still driven by the momentum in Chinese purchases. However, it is difficult to predict what the future holds. 

Funds were net buyers Friday for 15,000 lots of corn and 2,000 lots of soybeans. They were net sellers for 3,500 lots of wheat.

Black Sea market

Among all products, it was a sunflower that had the week's biggest price increase with the rise of +30$/t. This increase could be explained by strong demand for oil both in China and more recently in India. In its wake, the soybean gained more than 10 $/t over the week.

On the cereal side, wheat prices increased over the week by 8-9 $/t on a CPT-Odesa basis depending on the quality. Milling wheat is thus at a new high for the campaign above the 200 $/t in port delivery. Barley also strengthened to a lesser extent and returned to the highs observed a month earlier. The corn price for October delivery was unchanged at 173 $/t, Odesa delivery.