European market
Another day of decline on grains was seen yesterday, and mainly on Euronext in wheat. The improving weather conditions and the decrease in Chicago after last week's USDA report influence the prices in Europe. The break of the 5 $/bu level on Chicago generated sales from chartist analysts despite competitive prices on the international scene for the French origin.
Although the euro’s rise in recent days is also a factor of decline, the situation seems to be stabilizing around the 1.1270 this morning against the dollar. The same trend is visible in crude oil posted at 37.35 $/barrel in New York.
On the international scene, Taiwan is buying just over 88 000 t of milling wheat from the USA and Japan buys just over 76 000 t from the USA or Australia.
Rapeseed prices find some support in the firmness of canola. Wet conditions in western Canada, in the province of Alberta, are penalizing spring seeding and expected acreage could be revised downwards. In India, the rains are also on the agenda at the moment, giving some optimism for the beginning of spring sowing.
In France, the return of the high-pressure area expected over the weekend should allow the start of the first feed barley harvests.
Nevertheless, the situation remains fragile in all markets, in a context where new outbreaks of the pandemic have been observed in China and where the situation still does not seem to be under control on the other side of the Atlantic.
American market
Wheat prices in Chicago fell again sharply, in a context of significant crop progress in the USA. Moreover, from a technical point of view, breaking the 5 $/bu support led to speculative sales.
The agricultural commodities market is also showing uncertainty about the demand, in a context where the coronavirus pandemic does not seem to have had its last word.
The anticyclonic conditions in the USA are certainly favourable for wheat harvests but create a climatic risk for corn. Note that on this last product, the funds have a very large short position, which can be reduced by buying back positions in the case of adverse weather conditions.
Funds yesterday were net sellers in wheat for 7,500 lots, soybeans for 2,500 lots, and corn for only 1,000 lots.
Black Sea market
Russia's Ministry of Economic Development is considering to increase export duties on sunflower. The proposal of the document, which must be ready by 15 September, provides for the tax to be raised from 6.5% to 20% from February 2021. These measures are linked to the fact that during the current season, sunflower exports from the country have increased sharply, reaching 1 Mt. The government has already put in place measures banning the sunflower exports until the end of the season. This ban may be extended until August 31, 2020.
Note, that Russia is the world's second largest sunflower seed producer and second largest exporter of sunflower oil after Ukraine.