Analysis 10/12/2020

European market

Slight rebound on cereal prices was seen yesterday in the wake of Chicago, while rapeseed rose by around 4 €/t on all Euronext contracts, correcting the downturn at the beginning of the week.

December 2020 contract for wheat closes today and the March contract becomes the closest one. On the physical markets, the fundamentals held up well and the market was active for the 2021 harvest deliveries, mainly for barley. Many producers have already started their contracts for the 2021 harvest, taking advantage of relatively sustained prices compared to recent years.

On the international scene, the USA sold yesterday 257,071 t of corn to Mexico.

Coceral published its first production estimates for the 2021 production for the EU, including the UK. The organisation's estimate for next year's soft wheat production is displayed at 143 Mt, compared with 127.9 Mt in 2020. This is the consequence both of an estimated increase in future yields, but also of an increase in acreage. Agreste estimated this week the common wheat area in France at 4.7 Mha. This figure will most certainly be revised upwards in the next publications. Coceral's estimate of EU barley production 2021 is down to 61.5 Mt from 63.1 Mt this year.

In corn, there is little change in the Coceral estimates, with a first production estimate for next year at 63.1 Mt compared to 62.8 Mt this year.

Rapeseed bounced back yesterday in the wake of palm and canola prices. It should be noted that Russia is in the process of imposing export taxes of up to 30% on sunflower. Palm oil prices have not changed much this morning before today's MPOB report.

American market

All products showed a net rebound on Chicago yesterday, in a context where traders are correcting the decline of the last few days ahead of tonight's USDA report.

The latest bearish elements, mainly the rains in South America and the production estimates in Australia, now seem to be integrated and the markets are once again turning to the demand dynamics on the international scene.

China continues to lead the way, with the Chinese authorities' production estimate of 260.67 Mt of corn, a figure that appears overestimated by traders.

Funds were net buyers yesterday for 17,500 lots of corn, 9,000 lots of soybean and 13,000 lots of wheat.

 

Black Sea market

Russian President Vladimir Putin sees the rise in the prices of sugar, sunflower oil, bread and flour as an attempt to bring domestic prices into line with world prices, he declared during a meeting on economic issues. He expects concrete measures to be taken to combat the current negative price dynamics.  Following this speech, the forthcoming increase in the export tax on sunflower seed from 6.5 to 30% seems inevitable.