European market
At the end of this week, harvesting work will undoubtedly progress significantly before the rains announced from Sunday. The progress in the harvest will allow to increase the supplies in this period of campaign's lean and will ease the short-term demand. The market remains nervous both about the European situation, where delays in harvesting are being observed in several regions, and about quality issues in the event of delayed work. In addition, the North American tense context due to dry conditions, also offers a factor of firmness to the Euronext market. For the first time since mid-May, prices have exceeded €220/t on the September expiry, pulling all maturities in its wake.
yesterday, the monthly IGC publication did not bring any relief to the market. The world wheat production estimate has been revised downwards by -1 Mt to 788 Mt. Faced with a persisting sustained demand, the size of the carryover stock has been cut compared to last month. The decline is strong in the main exporting countries at 57 Mt due to the drop of production announced in the USA and Canada. In corn, the situation has not changed much, with production and stocks expected to rise compared to last year.
The August 2021 expiry on the rapeseed is scheduled for this evening on Euronext. The daily variation amplitudes remain important although lower than last week. Nevertheless, prices finally evolved little yesterday. The North American situation remains a crucial element to follow. After the strong tension of early July, canola prices are now consolidating.
American market
After the final day of the Wheat Quality Council's Crop Tour, the final yield estimate for spring wheat in North Dakota is 29.1 bu/ac, the lowest level in nearly 30 years. The last areas have shown slightly better yields than ones seen in previous days. The largest spring wheat producing state in the US has suffered from dryness and continues to experience dry conditions. The expected yields could drop by -33% compared to recent years' average. However, market participants note that field observations are in line with USDA's estimates of a 28 b/acre yield for the state.
Chicago wheat prices rose yesterday. The September 2021 futures on the SRW contract was dealing above $7/b, but failed to reach mid-July highs.
Dry conditions are also supporting soybean and corn prices. However, the upward movement has been challenged by weekly export sales figures that are confirming recent cancellations for the 2020/2021 crop year. However, the volume of 2021-22 corn sales has been quite decent at 529,300 t for the past week. In soybean, new crop sales were in line with expectations. An exceptional sale of 132,000 t was reported yesterday to an unknown destination.
Black Sea market
Wheat prices in both Russia and Ukraine rose again yesterday. Prices in the region are now catching up with the bullish trend recorded in Europe and North America since the beginning of the week. However, despite this upward adjustment, the price differential remains largely in favour of Black Sea exporters, particularly to Asian destinations. This competitiveness is also improved by the high prices of maritime freight whic benefits the closest origins.
The Russian market is driven by questions about the country's production volume. The dry conditions in the Volga and Urals areas have prompted several local analysts to revise their estimates downwards for 2021. Yield potential is expected to be unsurprisingly below last year's level, and even under the five-year average. Nevertheless, the end-of-campaign stocks should leave significant availability for the export market.
