European market
Wheat prices continued their rebound on Euronext due to bargain buying as prices have recorded their lowest levels of the campaign. However, this move should be limited considering ample supplies.
With uncertainties surrounding the tax reform in USA, the dollar is losing ground vs the euro and this morning the single currency is around 1.1925 against the green back. European operators remain concerned about this monetary evolution, reducing the competitiveness of our origins. From the start of the marketing year, European exports to third countries amounted to 8.5 Mt vs 10.7 Mt last year to date.
International tenders keep rolling at low prices, after Egypt and Algeria at the beginning of the week, Saudi Arabia launched a tender in 480 000 t of wheat.
On a weather point of view, no concerns on the north hemisphere and the attention of the traders is focused on the south hemisphere. In South America, the situation is mixed between the center north who is benefitting from optimum conditions and the south part of the country where the hydric deficit is still in place like in Argentina. Main concern is about the South East of Australia where heavy precipitations are expected while 30 to 50% of the wheat are still in the fields.
European rapeseed market is still under some pressure from the veg oils and the weakness of the Canadian dollar. On canola’s market, traders are waiting for the StatsCan report about the 2017 official canola’s production figure planned on the 6th of December. A Reuters poll is reporting expectations at 20.2 Mt vs last StatsCan estimation of 19.7 Mt seen in September.
American market
Wheat and corn prices in Chicago were torn between short covering from funds with the approach of the end of the month and disappointing weekly export sales. Therefore, despite the decline of US wheat prices during previous weeks only 184 200 t have been sold last week. The situation is similar for corn with 600 000 t of weekly exports, a level below market expectations.
Regarding soybeans, exports were displayed at 943 000 t last week and so in the lower range of trade expectations. The cumulated volumes are lower than last year while the USDA is expecting an increase for this campaign.
The EPA decision to maintain biofuels mandates for 2018 and 2019 at 15-billion-gallon ethanol and 2.1 billion gallons of biodiesel is slightly supporting the market. The lack of volume progression is disappointing bullish operators while the absence of a decrease is reassuring bearish operatives.
Yesterday in Chicago, funds bought 9 000 lots of corn and 1 000 lots of wheat. They sold 6 000 lots of soybean.
Black Sea market
Prices of sunflower retreated by about -10 $/t during last two weeks in Ukraine. This is the repercussion of the drop of veg oil prices and of the fall of palm market due to the increase of the veg oil import tax by India.
Beyond the fact the competition is stiff between crushers to provide grains considering crushing capacities are bigger than the sunflower production itself, other factors could push prices to decrease further. Crushing margins remain very low. Ukrainian oil is currently expensive compared to the one in Rotterdam. Also, inventories in ports are growing quickly, crushers are reluctant to sell on current unprofitable prices.