European market
As expected, the US central bank increased its main interest rate by 25 basis points last night. Despite a positive statement concerning the strength of the US economy with a low unemployment rate and sustained growth, the Fed remains worried about a persisting lack of inflation. In reaction, the dollar lost some ground vs the euro and is dealing around 1.1820 this morning.
European operators, and especially French, are of course closely monitoring the exchange rate, crucial for the export activity which is especially challenging this season due to the number of competitors. FranceAgrimer has cut its estimation of French wheat exports toward third countries by -400 000 t, betting now on a volume of 9.5 Mt for this marketing year. However, the downward revision of supplies due to lower surfaces is reducing availabilities and the report stock is now seen in decline from last month at 3.24 Mt. For the corn, the ending stocks are also seen lower than in November at 2.62 Mt due to an increase of consumption. Report stocks of barley and durum wheat have been revised up due to a drop of export potential.
The oilseed market is under pressure again due to a further decline of veg oils. On Euronext, the rapeseed February 2018’s delivery is now trading on lowest levels since last June.
American market
Wheat and corn prices in Chicago were slightly rising yesterday, one day after USDA’s statement. Traders have welcomed the sale of 120 000 t of US HRW wheat to Algeria on Tuesday. This sale is easing traders’ fears about the level of competitiveness of US origins in this part of the world, reinforced by the fall of prices initiated in October. Yesterday’s rebound has been caused as well by some short covering trades, usual at this period of the year. However, prices remain close to lowest levels recorded this year.
Despite of the small increase of corn yesterday, prices are also staying on cheapest levels of the season. This situation provokes some interest from the animal feed sector and from the ethanol industry in USA.
Soybean market is testing its technical support zone in Chicago close to one-month lows, still pressured by the continuous decline of palm oil and also by a stiff competition from South American origins. Brazilian exports in 2017 have reached a record and previsions of next years’ output should comfort the potential of this country. ABIOVE has revised up its estimation of production to 109.5 Mt.
Black Sea market
From the start of December, we can note a regain of interest for the Ukrainian corn. Thus, about 120 000 t have been or will be loaded from Ukrainian harbors in this period. This market is offering a positive premium of +2 to +3 $/t to producers who previously asked for an export certificate. Exporters are also planning shipments in January and February and this should allow Ukraine a good level of business with China. From the start of the marketing year, 650 000 t have been sold to this country on a total of 3 750 000 t.