Markets firmed Friday and, the US dollar index steadied at 90.9, with strong optimism in premarket chatter today with the vaccine rollouts.
Coronavirus vaccines are now into roll-out mode in the US after emergency approval and shipments reportedly started moving out from warehouses early today.
In meantime, markets were choppy on the end of last week, with rumors on possible implementation of export duties in Russia that could be decided today and this is boosting wheat prices higly.
Theories abound, but the latest on Saturday was a ~2200 ruble tax (the equivalent of 27 $/t) was rumoured, with a second step up if export pace exceeded quota.
The implementation date is also still in question, and will be a critical factor of uncertainty for early 2021 exports.
So, two essential points will have to be monitored: the amount of the tax, of course, and its date of entry into force.
Such a decision is aimed to curb food price inflation on the Russian market.
But the details are not disclosed yet and traders are anticipating a sharp rise in prices on the international market in a context of thin liquidity in this end of year.
However, local operators should support the taxes so, farmers should see the purchase price of wheat fall by the amount of the tax.
The measure is aimed to fight inflation on agri-food products in Russia.
A meeting of ministers is to be held this morning to formalise or not these measures that would come in addition to the export quotas set at 17.5 million tonnes for the period 15 February / 30 June 2021.
In Old Continent, we’re now 19 days from the end of the Brexit process, and the concerns about a no-deal event are looking more likely.
The negotiations in Brexit are still in a deadlock and are creating a further context of volatility.
A no-deal will have major consequences on the business on both sides of the Channel.
Weekend talks there failed once again and, returning to end of November levels, Euronext wheat prices for the 2020’s crop jumped, by +5 €/t on Friday.
The Eurodollar is stable at 1.2130 and the rouble remains firm at 72.90 vs. Dollar.
The health crisis is adding to this gloomy environment.
On the weather market hand, weather maps are starting to look a bit wetter into the month end for central Russia with the last GFS runs showing up to an inch for some wheat areas.
Still dry further towards the Volga and South though.
So, on Friday there was already pressure on the Russian domestic market.
There are some better forecasts for northern Argentina this week with chances for a widespread inch and a half or so.
Argentine wheat harvest was pegged at 53.5pc complete late last week by Bolsa, the Argentine Agricultural Exchange, reporting slightly better yields in recently cut areas but still predicting an overall crop under 17Mt in their estimate.
Southern Brazil also has some great rains on the maps for this week, and there’s a widespread event forecast into next week for more northern soybean areas.
Indeed, new rains in Brazil should limit prices’ increase.
Coastal rains in Qld – Australia – are still supposed to bring a little more inland this week, but so far we’ve only seen a couple of mm anywhere west of Dalby.
The physical business all over the world, is slowing down as the end of year is approaching.
The dynamics of Chinese imports remain one of the main drivers of the market in the coming weeks.
In this context, soybean and corn recorded some small gains.
The rapeseed was little changed on Friday while canola was up again in Canada.
This morning, the palm is dealing higher in Kuala Lumpur.
Veg oils are benefitting also from the crude oil good orientation.
So, funds were very busy on the wheat market, and bought 18.500 lots.
They were also net buyers in 7.500 lots of corn and 6 500 lots of soybean.
Aussie wheat and barley showed some strength again on the cash boards, wheat up $2-3/t across most port zones.
WA wheat in particular pushed up with stronger bids later Friday by some $7-8/t.
More regional wheat sales are being reported, with news wires catching wind of the Philippines tender – values reported in the low $260s per tonne landed.
Aussie canola markets along the east coast finished the day down $3-4/t.
This week we have a new news, with hog futures will be launching in China on the Dalian Corn Exchange come the first week of Jan.
