European market

A certain weariness is starting to set in on the markets when it comes to dealing with the Middle East file. Between the calm observed on Friday, the resurgence of tensions over the weekend and yesterday’s announcement of a new round of negotiations in Pakistan, operators seem to be running out of patience. Given their strategic importance in the region, energy markets remain under pressure, but grains are showing more detachment.

Wheat on Euronext managed to close in positive territory, above the symbolic 205 €/t level on the September contract. Beyond the drop in the euro/dollar parity below the 1.18 threshold, markets were factoring in some concerns coming out of the US Plains. Elsewhere around the world, crop conditions remain broadly adequate, even if the rainfall deficit is starting to be felt in Western Europe. In the absence of rain over the next ten days, crops could start to suffer.

Over the longer term, the issue of acreage will arise for the 2027 harvest, in a context of rising costs, notably for fertilizers and GNR. The first effects could be felt in Australia, where farmers already have to make trade-offs for sowings in the coming weeks. By September, the same issue will arise for producers in the Northern Hemisphere, which could unsettle balance sheets.

For its part, rapeseed has managed to move back above 490 €/t on the August Euronext contract. The vegetable oils sector remains supported and is bringing a touch of firmness to the whole complex.

American market

Long awaited by operators, the USDA’s crop conditions report once again highlighted the concerns surrounding winter wheat. The percentage of winter wheat rated in good to excellent condition continues to decline and now stands at 30 %. This represents a drop of 4 points from the previous week and is below market expectations, which averaged 33 %. These elements are supportive for HRW wheat, which is still trading at the highest levels of the contracts.

At the same time, producers are busy sowing spring wheat, soybeans and corn. Fieldwork progress stands at 12 %, 12 % and 11 % respectively. The issue of acreage remains at the heart of operators’ concerns, and it will still take time before definitively challenging the USDA projections from its latest survey. Indeed, the rise in input prices, notably fertilizers, could still encourage farmers to adjust their acreage, mainly to the detriment of corn in favor of soybeans.

For their part, export inspections came in line with expectations:

Corn: 1.7 mn t
Soybeans: 749,000 t
Wheat: 518,000 t

In Argentina, the USDA attaché announced yesterday a record corn production of 61 mn t. This figure is up by 11 mn t from last year and, above all, 9 mn t higher than the level announced in the USDA’s latest monthly report.

Black Sea market

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