European market
A day of indecision on European grain markets yesterday, as the new elements available failed to provide fresh momentum.
On the one hand, operators welcome the correction of the euro/dollar exchange rate, now close to 1.18 versus 1.20 last week. The appointment of Kevin Warsh as the new chair of the US Federal Reserve still needs Senate confirmation, but it could bring its share of short‑term uncertainties. Indeed, the Fed’s independence from the White House will be crucial in this new term to maintain investor confidence in the dollar.
On the other hand, the rebound in competitiveness of European offers remains modest compared with the competition. Nevertheless, French operators are managing to stand out thanks to slow logistics in the Black Sea. Whether linked to the weather or the conflict, Russian and Ukrainian export activity is not particularly strong. As a result, some international buyers continue to turn to the French origin. Loadings should remain steady in the coming weeks.
Finally, close attention remains on negative temperatures, especially in Ukraine. The mercury is dropping below -20 °C in the east of the country, with limited snow cover. For now, field reports are not alarming, but the situation will need to be monitored closely at the end of winter to assess any potential damage.
As for rapeseed, the low pace of imports in Europe, combined with the firm tone in soybeans and oils, is providing renewed support to the seed on Euronext. The Mar contract is once again approaching the key 480 €/t zone, which it still has not managed to break through.
American market
Debates around the US position toward Iran and the appointment of Kevin Warsh to the Federal Reserve continue to influence oil and the dollar index. This is leading to position adjustments by financial operators, already very active at the start of the year. While it remains difficult for agricultural commodity prices in Chicago to take a clear direction, new elements are nevertheless feeding the discussions.
Among them are recent statements from the Trump administration regarding the biofuels industry. By providing clarifications on the potential benefit in terms of carbon credits for players in this market, the US Treasury is offering meaningful support to corn and soybean consumption. The initiative has been welcomed by the industry, which highlights the positive direction taken by the administration on this issue.
In China, attention was focused on the annual publication of the “No. 1 central document”, which presents the country’s guidelines on agriculture and rural development. Often indicative of national priorities, the document notably reflects the intention to consolidate and improve soybean production. The idea of diversifying production and sources of supply appears frequently, as does the intention to maintain “reasonable” prices for most agricultural products.
Black Sea market
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