Analysis 17/09/2020

European market

Slight rebound of cereals prices yesterday on Euronext after the decline observed from the start of this week. Algeria, one of the largest importers of French wheat could open its market to Black Sea origins in easing requirements about the bug tolerance from 0.1% to 0.5%.

Yesterday, FranceAgrimer revised downwards its wheat export estimates to third countries at 6.6 Mt from 7.75 Mt seen in August. This is reflecting the poor export sales observed in France from the beginning of the marketing year if we make exception of the unexpected business with China. This number must be compared with last season’s volume of 13.46 Mt. The French wheat crop is seen by the body at 29.5 Mt, close to Agritel’s estimation of 29.2 Mt. Sales to EU countries are also cut at 6.4 Mt vs. 7 Mt last month. The quality of the production is good, the average protein level is displayed at 11.6% and the specific weight at 79.2 kg/hl according Arvalis.

In corn, the end-of-year carryover stock in France is revised upwards to 3.1 Mt compared with 2.0 Mt last year. At the same time APK is revising down its crop estimate for Ukraine to 35.1 Mt. Agritel Kiyv estimates that only 33.5 Mt will be harvested this year in the country.

On the international scene, Egypt bought 235,000 t of wheat yesterday, of which 175,000 t came from Russia and 60,000 t from Poland. Prices ranged from 248.24 $/t CIF to 250.82 $/t CIF. Another sale of 327,000 t of US soybean to China has been recorded yesterday.

The rapeseed was in the spotlight yesterday on Euronext with a progression of about +5 €/t on the various deliveries of the contract. Beyond the breach of chartist resistances earlier this week, this crop is benefitting from the veg oils' global rally. The palm, soybean and canola are still well oriented and the European rapeseed surfaces in 2021 should be down again.

After the meeting of the US Federal Reserve last night, the Euro is lower this morning vs Dollar at around 1.1750. The crude oil is firm in NY at 39.55 $/b.

American market

Another rise in prices yesterday in Chicago on all products. The oilseeds are once again in the spotlight. The US soybean export activity to China remains buoyant and this should encourage local farmers to increase the acreage next year. At the same time, the wheat acreage is also expected to grow, after reaching an all-time low last year.

Corn prices are now reaching a six-month high, despite another drop in the ethanol production to 926,000 barrels/day and falling stocks. They are currently close to a lowest level since January 2017.

Tonight's exports sales numbers are expected to be in the range of 0.3 to 0.7 Mt for the wheat, 0.8 to 1.9 Mt for the corn and 1.5 to 2.8 Mt for the soybean.

Yesterday, funds were net buyers for 20,000 lots of soya, 20,000 lots of corn and 3,000 lots of wheat.

Black Sea market

The Ukrainian Agrometeorological Centre points out that the country is currently experiencing the driest autumn for last ten years. Water reserves in the upper layers of the soil (0-10 cm) are missing or nearly missing in 70 to 80% of Ukraine. Only the west of the country is experiencing a better situation. In some regions, the meteorological centre specifies that the current conditions are the worst in the last 50 years of observations. The drought has intensified since mid-July when last significant rainfall was observed. Within 15 days, few improvements are expected, and we are currently in the optimal period for winter sowing (from 10 to 25 September) …