Yesterday, markets recorded a high volatility. All gains of the day before have been wiped out. Traders wanted to limit the risk exposition before a 4-day weekend. Indeed, Euronext will be closed today and Monday. These erratic movements are highlighting the importance of the price risk management through a dedicated framework. US markets will be closed only today and will reopen on Monday.
The biggest movements have been registered on the rapeseed market. The May delivery is showing massive prices swings. It should be noted that the options expire on 15 April for the last term of the 2020 harvest. The 2021 harvest is already raising many questions. The condition of the crops is considered quite concerning in many regions, particularly in eastern France. This is coupled with the risk of frost if temperatures drop significantly in the next few days.
Egypt is taking advantage of the downturn to launch a wheat tender for shipments on 1-10 August. Bids are due next Tuesday, April 6. South Korea bought 65,000 t of wheat from the US yesterday.
The corn was also down yesterday. Prices are considered as too high compared to wheat, suggesting that consumption of wheat will be higher than expected in the livestock feed sector at the expense of corn.
The dollar is losing some ground at 1.1780 against the euro and is steady against the rouble at 76.25. The crude oil rebounds to 61.25 $/barrel (WTI).
Prices finished the week lower in Chicago yesterday. Volatility should remain high after the long weekend. Wheat export sales have been disappointing this week at 331 100 t.
The corn erased a part of the large gains recorded on Wednesday. The weather conditions in Brazil will have to be monitored. Few rains are expected n the next couple of weeks suggesting a possible negative impact on the yields already hit by late sowing. In Argentina, the Buenos Aires Exchange said that the corn harvest is achieved up to 7.9% so far. The production is estimated to 45 Mt. US export sales this week amounted to 797 300 t, below traders’ expectations.
The soybean retreated significantly yesterday following disappointing export sales figures and a correction after the rally observed behind the release of the USDA report on Wednesday. In Argentina, the harvest is beginning and the local exchange is estimating the production at 44 Mt vs. 47.5 Mt still seen by the USDA.
Yesterday, funds were net sellers in 3 500 lots of corn, 8 000 lots of soybean and 7 000 lots of wheat.
Black Sea market
The Russian Ministry of Agriculture has begun testing the mechanism for calculating grain price indices which will then be used as the basis for setting floating grain export duty from 2 June. The base prices will be calculated by Russia’s National Mercantile Exchange (NME). The levy will be 70% of the difference between this base price and $200/t for wheat and $185/t for barley and corn. The exchange will post these reference prices in dollars once a business day. These prices will be based on the volume of transactions with contracts signed 4 to 60 days prior to the calculation of the index.
These floating duties will replace a €50/t levy set for wheat exports from 1 March to 1 June, and €10/t and €25/t on barley and corn respectively for exports from mid-March to 2 June.