European market
Another volatile session was registered on the markets yesterday, with attention focused on the Middle East. According to the attacks targeting the region's energy infrastructure, crude oil is reacting with nervousness. This was particularly the case for Brent, which is now trading above the level of $110/barrel.
In the face of this persistent uncertainty, the dollar is fully playing its role as a safe haven. The dollar index is strengthening and driving the euro/dollar parity down. The pair is now moving below 1.15, supporting competitiveness of eurozone exports. At the same time, in the United States, the Fed has left its rates unchanged, justifying this status quo by still too many geopolitical uncertainties.
The macroeconomics was again the main driver of the increase in grains on Euronext yesterday. Wheat manages to return to the €205-210/t zone on the May contract and trades again close to €215/t on the September contract. However, this progress, driven by the general dynamics of raw materials, should not make us forget the fundamentals: global wheat supply remains ample and growing conditions in the Northern Hemisphere are reassuring for the moment.
European corn, on the other hand, has largely benefited from the lack of goods from Ukraine to maintain a certain firmness. Now in the wake of wheat, corn concentrates uncertainties, as global areas appear to be at risk in the face of soaring fertilizer costs.
The oilseed complex, for its part, remains dependent on the evolution of vegetable oils. In Europe, however, the acceleration of rapeseed/canola import flows, especially from Australia, is putting pressure on the rapeseed front contract. The May contract fell by €1.25/t yesterday on Euronext, but the August contract regained €0.25/t.
American market
US prices are not spared by the nervousness that has gripped all the markets in recent weeks. New York crude oil is down, but its European counterpart, is up. The latter, more easily accessible for export, benefits from an increased demand in the current context, which allows it to accentuate its premium.
However, the widespread firmness observed on the energy markets in recent weeks is likely to support US corn prices. The first reason naturally concerns its potential use for the production of ethanol, the second lies in the uncertainties related to the areas. While the USDA Forum recently indicated that American farmers would consider sowing 94 million acres of corn, the situation has probably changed. In bigger need of urea, corn is seeing its production costs strongly up under the effect of rising fertilizer prices. In this context, caution remains in order, and the next few weeks should bring more visibility as to the choices made by US producers.
Soybeans, for their part, remain at the mercy of Donald Trump's statements. After the downturn at the beginning of the week caused by the cancellation of the presidential visit to China, the prices have marked an increase following the announcement by the White House confirming finally an upcoming visit to the country. At the same time, uncertainty remains high regarding the decisions expected at the end of the month on US biofuel policy. All of these elements accentuate volatility in markets that record particularly marked weekly amplitudes.
Black Sea market
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