Analysis 31/01/2022

European market

Friday was marked by the interventions of agricultural sector's experts at the Paris Grain Day organised by Agritel, an Argus Media Company, which was held in person and by video in compliance with health regulations at the Méridien Porte Maillot. The Paris Grain Day consensus this year was 3.87, confirming bullish market sentiment on a scale of one to five, with one being very bearish and five very bullish.

On the international scene, Egypt bought 420,000t of wheat, all Black Sea origins. France was penalised by the freight cost differential, despite being competitive on a FOB basis. The USA sold 264,000 t of soybeans to China, 141,514 t to Mexico and 251,500 t to an undisclosed destination. France will have to find other destinations for its wheat than Algeria. Until the last tender, Algeria ignored the French origin.

Tensions at the Ukrainian border with Russia continue to support prices. In the event of an invasion by Russia, logistics flows would probably be severely disrupted.

Prices in Chicago are rising sharply amid adverse weather conditions for winter wheat in the US, as well as for soybeans and corn in Brazil and Argentina.

The vegetable oil market is supported by the continuing strength of palm oil, but also by the almost uninterrupted rise in crude oil prices.

The dollar remains firm this morning at 1.1160 against the euro and 77.90 against the rouble. Oil continues to rise to 87.85 usd/barrel in New York.

American market

The weather is once again affecting the markets with exceptional  conditions in some parts of the USA, complicating the logistical aspects in particular. Corn is also supported by the firmness of fertilizer prices. Urea prices are rising again after the sharp decline seen at the beginning of the year. Ethanol stocks are up, probably as a result of the slowdown in consumption due to Covid. In Argentina, the USDA revised its production estimate downwards to 51.0 Mt from 54 Mt in the last USDA report.

Soybeans are still supported by the water deficit in southern Brazil and most of Argentina. Production in Brazil could fall below 130 Mt compared to the 139 Mt estimated in the last USDA report. Soybeans are supported by the firmness of the oilseed complex, particularly palm oil, and by the continuing rise in veg oil prices.

Wheat was not left out on Friday with a rise in prices, particularly in a context that remains tense from a geopolitical point of view between Russia and Ukraine.

On Friday, funds were net buyers in 19,000 lots of corn, 12,500 lots of soybeans and 5,500 lots of wheat.

Black Sea market

A tax on Russian grain exports is ‘likely' to continue to be implemented in the long run but could evolve to a more flexible scheme, an agricultural broker at Atria Brokers Christina Serebryakova told the Paris Grain Day conference last Friday.

The Russian government has established a "huge revenue source" from the levy and is unlikely to abandon it anytime soon, Serebryakova added. But the government is increasingly considering revising the formula in an effort to free farmers and agribusinesses of the financial burden. Discussions with the wider agricultural industry are expected to start after 15 February, when the grain export quota kicks in for the remainder of the 2021/22 marketing year.

To receive the full Black Sea Basin daily reports, send an e-mail with your contact details to