European market
The European grain market tried yesterday to digest the very strong downward pressure seen the previous day. While prices erased part of their risk premium linked to the conflict between Russia and Ukraine on hopes of progress toward peace negotiations, the situation remains extremely difficult on the ground, with strikes continuing on both sides.
European prices benefited yesterday from a drop in the euro/dollar below 1.1200 throughout the afternoon. Beyond the macroeconomic risks linked to energy prices, the euro is suffering from concerns over France’s public finances. The yield on the 10-year French OAT exceeded the highly symbolic 5 % threshold yesterday for the first time in 24 years. Investors are questioning France’s ability to reduce its deficit in a tense political and social environment and amid expectations of a sovereign rating downgrade this Friday.
In the Middle East, tensions remain high and the possibility of renewed attacks between the United States and Iran continues to fuel discussions. Oil reflects these concerns, returning to 100 $/barrel in New York. This trend is providing underlying support to the vegetable oil sector and, more broadly, the oilseed complex. Soybeans, palm oil, canola and rapeseed all closed sharply higher yesterday on their respective futures markets in Chicago, Kuala Lumpur, Winnipeg and Paris.
While rapeseed gained +7 €/t at yesterday evening’s close to reach 547.25 €/t on the Euronext Feb 27 contract, the rebound in wheat was more limited. The Dec 26 wheat contract closed up +1.5 €/t at 234.25 €/t. It had to contend with a Chicago wheat market that remains under downward pressure.
Corn stood out as the only product to close lower yesterday on Euronext, falling by -3.25 €/t to 265.25 €/t on the Mar 27 contract, amid demand rationing and arbitrage against wheat, which became significantly more competitive in animal feed following its sharp decline the previous day.
American market
Chicago saw a two-speed market yesterday. On one side, the soybean complex remained firm, supported by fund buying amid a rise in oil prices to 100 $/barrel in New York and gains across the entire oilseed sector. Soybeans also drew support from the strong pace of recent U.S. sales to China. The USDA yesterday reported a massive weekly export sales figure of 2.841 mn t of soybeans.
On the other side, grains remained under downward pressure, with funds continuing to sell. Wheat declined further as the market reacted negatively to disappointing U.S. weekly export sales, which fell to their lowest level in six weeks at just 240,000 t, according to the USDA yesterday. Corn also moved lower amid ongoing harvest pressure, although losses were more limited thanks to weekly export figures that increased and exceeded expectations, reaching 1.527 mn t.
Black Sea market
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