European market
Cereal prices are consolidating at current levels in the expectation of better visibility on harvest results. In barley, the harvests are accelerating remaining heterogeneous in terms of yields, but overall with satisfactory quality, which will enable France to meet the various specifications of international demand without any worries.
On the currencies side, the same consolidation is seen, with the euro posted this morning at 1.1230 against the dollar and crude oil at 39.10 $/b in New York.
On the international scene, Japan bought just over 100,000 t of milling wheat from the USA, Canada and Australia as usual. Activity remains very quiet and tenders are rare.
Palm oil is stable this morning on Kuala Lumpur. While demand on the international scene is on the rise again, fears of a second wave of epidemics are generating precautionary sales. Improving weather conditions in Canada are causing canola prices to decline, impacting rapeseed prices on Euronext.
The European Commission has revised sharply down its estimate of EU wheat production to 117.2 Mt compared to last month's estimate of 121.5 Mt and last year's estimate of 130.9 Mt. The Commission's estimate for France is only 30.3 Mt, which is at the low end of the expectations. The Commission is, therefore, revising downwards its estimates for exports to third countries to 25 Mt, compared with 34 Mt for the MY 2019/20. Barley production is unchanged from last month at 56.1 Mt, while corn production is revised upwards to 71.9 Mt.
Corn prices were stable on Euronext despite a sharp decline in Chicago.
American market
Yesterday in Chicago corn prices marked a sharp decline. The beneficial rains on the corn belt add pressure to an already heavy market. The funds accentuate their already historically high net short position.
Soybeans continue to find support in Chinese demand. The latter bought in addition to the American origins, 8.86 Mt from Brazil in May, the highest level in the last two years.
Corn exports were on the low end of the expectations range for corn but satisfactory for wheat.
Traders will be cautious ahead of USDA's quarterly stocks and acreage report released next week on June 30. Traders are expecting corn acreage at around 95.2 M acres and soybeans around 84.7 M acres.
Funds were net sellers yesterday for 25,000 lots of corn and 3,000 lots of soybeans. They were net buyers for 2,500 lots of wheat.
Black Sea market
Each year, at the beginning of the season, the Ukrainian authorities sign a memorandum with exporters on wheat exports, with traders agreeing not to exceed the volume limit and the state agreeing to leave the rules of the game unchanged.
Based on production estimates at 25.75 Mt, the authorities plan to limit wheat exports for the 2020/21 season at 17.2 Mt compared to 20.2 Mt for the season just ended. Until recently, the Deputy Minister of Agriculture was considering a limit of 14.9Mt. In view of the good crop recovery following the heavy rains in May, negotiations between the two parties are continuing before the agreement is signed, potentially next week.