European market
Operators are awaiting the next USDA report which will be followed mainly on yield estimates, and generally on the forecasts for corn and soybean balancesheet in the US. The main elements for wheat should only confirm what is already in the market, which will not prevent courses to evolve in sympathy with those of corn in particular.
On the international stage, the USDA is canceling a sale of 192,000 t of soybeans to an undisclosed destination. Furthermore, Egypt launched a new wheat for loadings between October 25th and November 4th . It is also to nota Algeria is seeking to buy wheat, for November loadings.
The Ministry of Agriculture revised down its production estimate of soft wheat in France to 34.55Mt against 35.1Mt last month and so closer to the Agritel estimates. The ministry is also revising downwards its estimate corn production estimate to 12.4 Mt from 12.8 last month. Barley production is also revised down to 11.55 Mt against 11.8 Mt estimated last month. Regarding sugar beets, the harvest is estimated at 41.1 Mt against 46.3 Mt last year. All these downward revisions are, of course, the consequence of the water deficit observed since last May. This situation is still going on currently already raising concerns about future plantings for the 2019 crop.
The euro remains slightly below the 1.16 against the dollar, while crude oil remains firm, a consequence of tension in balance sheets with US sanctions against Iran. On the other hand, weekly stocks in the US are revised down.
Rapeseed prices lost some ground yesterday and this despite of the firmness of crude oil and fears on the emerging of crops for the 2019 harvest in Europe. Prices mainly followed the decline of soybean.
American market
Sharp decline in soybean and wheat prices on the eve of the USDA report, essentially driven by the sales of funds. The latter reduced their long positions in wheat and accentuated their short position in soybean.
In wheat, while the global balance sheets remain tight, it is the lack of competitiveness of American origins that is a matter of concern for the moment at least until the Russian origins dry up and may allow US exports to finally to take off in the second half of campaign. In soybeans, the main risk is to see a steep fall in exports, given the import taxes applied by China.
Regarding corn, traders anticipate a downward revision of US yield estimates.
The weekly crop rating displayed 68 % of the corn crop considered as “good to excellent” against 67% last week. Regarding soybean the ratings rose to 68 % “good to excellent” compared to 66 % last week.
Funds were net sellers in soybean for 8 000 lots, for 5 550 lots in conr and in 7 500 lots for wheat.
The USDA report will be released at 18:00 Paris time
Black Sea market
Harvesting works are struggling to progress in Siberia with only 584 000 ha of wheat cut on September 10 according to the Ministry of Agriculture, against 2.9 Mha last year to date. If yields are much higher than last year at 22.7 dt/ha against 17 dt/ ha to date, the question is now what the non-harvested surface will be if climatic conditions do not pick up. In Siberia, history shows that unharvested areas can be displayed at around 20% maximum and up to 30% in the Urals. Thus, Russian production will be influenced by climatic conditions in coming weeks, knowing that the harvest usually ends at the end of October. Another important issue is that the quality of the wheat seems to be penalized by the late rains.
Agritel analysts in Kiev will publish today Black Sea Highlight report with an update of the Black Sea balancesheets and many details on the current situation.
