European market
European and French farmers are worried by the consequences of the hydric stress situation on the yields’ potential. At the same time, the Black Sea basin benefits from favourable weather conditions. This will likely allow Russia to once again be a major player on the international stage during the next campaign.
Geopolitics issues are back with a further deterioration in relations between China and the United States. This is suggesting possible tensions over international trade between the two countries.
This morning, the Euro is strengthening to deal at 1.1135 vs. Dollar. The crude oil remains stable at 35.50 $/barrel on the WTI.
FranceAgrimer displayed a crop rating in wheat at 56% of good to excellent, down 1 point from the previous week. This is the lowest level since 2011. It is likely that this crop rating will again deteriorate due to forecasts of temperatures above average. The crop rating has been left unchanged in winter barley at 52%, the spring barley is down by 2 points to 56%. The 2020’s harvest will be quite early this year; indeed, the vegetative stage is currently 12 days ahead of recent years’ average.
On the international scene, the USA sold 132,000 t of soybeans to China and 101,600 t of corn to an undisclosed destination.
Palm oil consolidates around 2,400 ringgits per ton on close deliveries, while canola is little changed. The canola market is mixed between the selling retention of Canadian farmers and tensions with China over the Huawei conflict.
American market
Despite new US sales to China, soybean prices fell on Friday due to mounting tensions between the two countries over the crisis in Hong Kong. Fears to see the Chinese not respecting the January 15 commitment are back. In this election year, Donald Trump may be tempted to toughen the relationship to satisfy a part of his electorate.
In corn, sowing is almost complete and weather conditions are favourable, prompting funds to further increase their short positions posted at 276,000 lots as of May 26. This position is quite unusual at this time of the year when funds typically become more neutral to prepare the summer weather market.
In soy and wheat the funds are almost neutral now.
On Friday, theses players were net sellers in 11,500 lots of corn and 5,500 lots of soybeans. They were net buyers in 5,000 lots of wheat.
The ethanol production recovered last week and inventories posted their lowest level since January.
Wheat prices rose on Friday in Chicago amid declining 2020’s crop estimates in the EU. However, the US export activity remains weak and uncompetitive.
Black Sea market
During last week, precipitations have been recorded in Romania, Ukraine and the European part of the Russian Federation.
The weekly cumulative rainfall exceeds 50 mm in the so-called central regions in Ukraine and in Russia. After a dry start to spring, cumulative rainfall in some regions are reaching levels never seen for a month of May and few areas have been spared. The plains of eastern Romania and those of the Stavropol region in Russia were the less rainy. These regions concentrate the highest losses of potential compared to normal. Usually rains are beneficial for the average grain weight but they could also increase the fungal pressure.
The rainy weather will remain in place for the coming week…