European market
The markets marked a break yesterday in wheat after the progression of the previous day, in a context remaining tense due to the water deficit in northern Europe, and insufficient rain in the Black Sea region. The feed barley prices fell sharply in a context of weakening demand, a consequence of the health crisis. Corn worldwide is sinking, with prices at their lowest since 2009, a consequence of the crisis in the ethanol sector, mainly in the USA.
Crude oil displays a lot of volatility for a June contract. This morning the prices were trading at 12 $/b on New York, after a crazy Monday when the closest May contract was displayed in negative territory. It was impossible for the buyers to take delivery, and the storage units were full. The euro, for its part, has changed little, posted this morning at 1.0850 against the dollar.
On the international scene, Taiwan and South Korea purchased 65,000 t and 206,000 t of corn, respectively, without specifying the origin.
In oilseeds, prices fell sharply, especially in the wake of palm and crude oil. The biodiesel sector is obviously under pressure, and despite a European rapeseed crop which promises to be very short, prices remain depressed. It will be interesting to follow the StatCan report on canola planting intentions in Canada on Friday.
American market
The new sharp decline in corn was registered yesterday. The corn prices are at their lowest since 2009 when the post-subprime crisis was recorded. The ethanol sector constitutes nearly 35% to the corn outlets in the USA, and this sector is under pressure now from the fall in crude oil prices. The prospect of increasing areas compared to last year is adding to this downward trend of prices.
This movement limits the upside potential on wheat, as feed manufactures substitute wheat for cheaper corn.
The soybean sector is facing the arrival of the South American harvest. In Brazil, the production is displayed at around 122 Mt and in Argentina at 51 Mt. Competition on the international scene will remain hard on this product.
The funds remained net sellers yesterday for 16,000 lots of corn and 2,500 lots of wheat. They were net buyers for 3,000 lots of soybeans.
Black Sea market
Despite the rally recorded on Monday on the different wheat contracts on Euronext, the main exporters in the Black Sea region have hardly revised their forward prices upward for the 2020/21 campaign. In fact, during the recovery following the Easter break, the prices marked a slight upward revision of +1/2 $/t depending on the operators. Thus, the CPT Odessa price for harvest delivery is still displayed below 180 $/t.
This situation highlights the lack of visibility on the next harvest. Traders are particularly concerned about the risk of default, in a context where the yield potential in the area is seriously questioned due to the still dry conditions.