European market
As harvest progress, European operators realize the magnitude of the fall in production and consequences on supplies for the 2018-19’s marketing year. The usual harvest pressure has no impact this year and purchasers are especially busy on nearby deliveries. Yesterday, prices recorded another jump, both on physical and Euronext futures. The bullish dynamic is well in place on the wheat and corn contracts with an increase of + 4€/t on 2018’s crop maturities.
In such context, importing countries are back on the market like Algeria who is launching a soft wheat tender for October shipments. French origins should have the quality required to face this demand. The European Commission said yesterday that EU wheat exports to third-countries amounted to 775 000 t from the 1st of July and those of barley to 310 000 t.
The rapeseed market is rising moderately. The drop of production in Europe will be compensated by imports. Rape oil prices are crumbling since the beginning of July following the trend observed on imported palm oil.
American market
Wheat prices in Chicago-traded futures have recorded a sharp rise yesterday and erased the decline move seen by the end of last week. The delivery December 2018 has dealt above 5.70 $/b before losing some ground by the end of the session. Lower supplies in Europe and current difficulties in Australia are justifying this market movement. Until now, the US market was mainly focused on the winter wheat harvests, now achieved up to 85%, and the conditions of spring crops. Yesterday, USDA revised slightly down the crop rating, 78% of spring wheat are considered as good to excellent vs 79% last week.
The corn is continuing its bullish movement and is testing highest levels seen for more than one month. Traders are still watching the evolution of corn conditions who remain unchanged from last week at 72% considered as good to excellent according USDA.
Conditions of soybean are also stable with 70% of crops in good to excellent conditions. Currently, US soybean prices remain very attractive compared to South American origins. Prices are just under levels of resistance, shipments are satisfactory with a regular flow between USA and Europe.
Black Sea market
The trend of a gradual reduction of fobbing costs which started several years ago is continuing. During last three campaigns, a 2.5 to 3 $/t cut of the shipping cost has been achieved in average on a yearly basis. This reduction of fobbing costs is justified by a fierce competition between operators due to the increase in the loading capacity allowed by investments in the port facilities.
In this beginning of campaign, main operators are charging the following amounts: 11 $/t in Odessa, 9 $/t in Nikolayev and less for other ports like Kherson or Berdiansk.
This situation is benefitting to producers who can now be paid close to FOB prices.
