European market
The euro/dollar exchange rate has dropped by 2% over the week. As a result, its value is back below 1.0800, providing support for European grains over the past few days. At the same time, however, the dollar index is strengthening and crude oil is weakening, which is penalising the entire commodities sector. The price of crude oil is back testing its mid-November lows just above $72/b in New York. Doubts about the decline in global demand for crude have resurfaced, while the production cuts recently announced by OPEC+ are failing to impress.
The wheat market had a mixed picture yesterday, with Chicago continuing to rise on the back of further purchases of US wheat, while Euronext saw a sharp correction on the back of Egypt's purchase of 120,000 t of Russian wheat and 60,000 t of Ukrainian wheat.
Indeed, the latest GASC tender was a reminder, if one were needed, of the ample supplies in the Black Sea, with around 2mn t offered, most of it of Russian origin. The low volume purchased in the end, including 120,000 t with letters of credit for payment within 270 days, points to Egypt's weak interest and resources.
Despite Russian offers aligned on an unofficial floor of $250/t fob, the few offers of Romanian or French wheat were not competitive. The purchase of a panamax of Ukrainian wheat is a reminder that this highly competitive origin is a factor worth considering.
With a decline limited to -0.5 €/t on Euronext's February 2024 futures, which closed at 444.25 €/t, rapeseed is not doing so badly given the downward pressure seen on crude oil, canola in Winnipeg and palm oil in Kuala Lumpur. Canadian canola is struggling to cope with StatCan's Monday increase in production to 18.3mn t, compared with 17.4mn t forecast in September and 18.1mn t expected.
American market
Yesterday, the USDA announced another exceptional sale of 198,000 t of US wheat to China and a further rise in wheat prices in Chicago. This sixth consecutive session of gains took the wheat March 2024 contract up to $6.3625/bu, a 3-month high.
Corn also finished higher for the fifth session in a row, in sympathy with wheat and with recent good US export sales.
In both wheat and corn, the buying back of short positions or "short-covering" by funds has played a large part in the rebound in prices seen over the past week.
Soybeans are the exception. Funds are still selling. The situation is mixed, with operators partly reassured by the recent rains in Brazil. Soybeans yesterday returned to the $13/bu support level on the January 2024 futures, the lowest level for over a month.
Black Sea market
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