European market
Tensions in the Persian Gulf, after the attacks on facilities in Saudi Arabia this weekend, are strengthening. This situation brings an element of firmness to the crude oil in Europe and in the USA. The barrel price recorded yesterday a rise of + 14%. Such an increase pulls up products related to energy. This is why the rapeseed prices, already supported by tense balance sheets in Europe, recorded a strong increase at the beginning of this week. On Euronext, the November 2019 contract is now negotiated on a new campaign high at 388 €/t.
Prices on Euronext also rose in cereals in this first session of the week. The operators are, however, vigilant facing the need to remain competitive with the Black Sea origins, thus exploiting all price pressures on the physical market. With an important availability in France, the operators are looking for important export outlets. The result of Algeria's call for tenders, launched yesterday, will be followed with great interest especially as the loads are scheduled for November.
For the moment in Europe, the figures communicated by the European Commission confirm an export activity at the beginning of the campaign better than last year with 5.1 Mt to date. This figure is, however, relative to export business volumes, which are showing a clear increase in the season due to important availability. The barley exports now reach 1.6 Mt. The corn imports are increasing in parallel, with 4.5 Mt imported since the beginning of July.
American market
The soybean prices showed a new increase during the yesterday’s session and temporarily crossed the 9 $/b level on November 2019 contract in Chicago. The new sales to China, with 256,000 t of soybeans, reinforced prices already stabilized by Chinese purchases last Friday. These elements push prices to return to trading on the levels of late July.
As for crop conditions, the soybean areas were rated as good to excellent for 54% of crops, which was in line with expectations and slightly down from last week. In corn, the situation is stable compared to last week with 55% of crops considered as good to excellent. Regarding the harvests, the modest start is registered for corn with 4% of areas cut. Corn prices are still in the downward trend that began earlier this month. They are however slightly supported by the rebound in ethanol prices.
The delay in harvesting the spring wheat is confirmed with currently 76% of the cut area. This is well below estimates at this time of year. This situation provides an element of support for the market in the context of continuing strong international competition.
Black Sea market
In Russia, according to local analysts' data, cereal exports from 6 to 12 September have decreased by -35% compared with the exports of the previous week. As a result, only 774,000 t of grain was exported compared with 1.19 Mt shipped a week earlier. This volume is essentially comprised of wheat shipments at 738,000 t (1.08 Mt a week earlier). Barley exports declined four times from 103,000 t to 23,000 t. Corn shipments, on the other hand, doubled from 7,000 to 14,000 t. Turkey (147 000 t), Egypt (131 000 t) and the Philippines (57 000 t) were the main buyers of Russian cereals last week.
This drop in exports can be partly explained by the decline in FOB prices for Russian wheat, which has been on a downward trend for seven consecutive weeks. At the same time, Dmitry Patrushev, the Russian Minister of Agriculture, announced yesterday that the country will surely reach its target of exports for the year 2019 of 24 billion dollars. As a reminder, in 2018 Russia exported agricultural products for 25.8 billion dollars.