European market
Markets were calm yesterday awaiting the USDA report.
However, Egypt’s tender was closely watched. This time 120,000 t of Russian wheat was bought against 120,000 t of Ukrainian wheat in the previous tender. France is uncompetitive at the start of the 2020/2021 campaign, which is usual for this period. Note that the price retained is between 226.90 and 227.59 $/t in CIF (delivered), a price even higher than the last time. However, this increase must include the fact that the payment is 180 days and not spot.
FranceAgriMer published its June report yesterday, again revising upwards its EU wheat export estimates outside the eurozone to 13.45 Mt vs 13.3 Mt last month, an increase close to 40% compared to last year. The end-of-season stock is displaying at 2,764 Mt, against 2,864 Mt estimated last month and 2,492 Mt last year. In barley, the ending stock is also revised down to 1.7 Mt compared to 1.85 Mt estimated last month and 1.33 Mt last year. Finally, in corn, the ending stock is displayed at 2,069 Mt, down from the previous month to 2,207 Mt and 2,090 Mt last year.
The euro remains firm at 1.1375 this morning against the dollar. The crude oil is slightly falling to 38.50 $/barrel, on the wake of a weekly increase in stocks in the USA.
As for the weather, rains are expected today and tomorrow in most regions before the return of drier weather for the following days, which should allow a real start of the winter barley harvest. The prices of the latter change little, due to a lack of dynamism in export, mainly to China, which prefers less expensive sorghum.
American market
Yesterday markets evolved little on Chicago, cautious before the USDA report tonight, which will be published at 6 p.m. CET.
Soybeans still find support in export sales to China, with American soybeans more competitive than those from Brazil, whose availability is shrinking. Argentina, meanwhile, is finishing its soybean harvest of 50.7 Mt, while wheat planting is done at about 40% but the water deficit is starting to worry farmers.
Corn prices remain penalized by the prospect of a record crop in the USA and favourable weather conditions.
Wheat rebounded on its support zone of 5.00 $/bu tested on Tuesday.
The funds were net sellers yesterday for 8,000 lots of corn and net buyers for 1,500 lots of soybeans and 1,000 lots of wheat.
Black Sea market
The yesterday’s GASC tender confirms for the second time the competitiveness of the Black Sea origins for this destination in the first half of the season. If Ukrainian origin had been chosen last week, Russia is a winner of this tender characterized by a 180-day payment. Once again, the GASC purchased 120,000 t, bringing the volume contracted in new crops to 240,000 t. A year earlier, the cumulative volumes bought by the GASC for the first 2 tenders amounted to 480,000 t.
In the past two years, Russia has accounted for more than half of the purchases by the Egyptian public buyer. During the season just ending, French and Ukrainian origins managed to increase their market share towards this destination by 6% to 14% and 8% to 16% respectively. Romania maintained its contribution to the supply of the GASC unchanged at 18%. There is no doubt that each of these origins will want to consolidate its position. The competition at the start of the season promises to be strong.