Wheat markets fell sharply in overnight trading.
On Friday, many traders were anticipating higher prices on the back of the export taxes decided in Russia.
But, the weekend rumors that said a russian tax of €25/t will be exist within a quota set at 17.5 million tonnes (Mt) on all grains, not been accepted and may still change.
Infact, only out-of-quota exports would be incur a tax of more than €100/t.
In addiction, the plan is for the quota to only apply from 15 February, which leaves two months for pre-quota exports to be executed.
However, the essential part of this tax will be passed on to the farm gate price, so the producers will be the big losers in this measure.
So, its effect on the international scene was limited, since it is the prices paid to producers, and therefore domestic prices, that will be impacted more.
Consequentially, Euronext and Chicago prices yestarday retreated sharply and it should be noted that the impact on the domestic market was not long in coming!
Infact, Black Sea cash markets saw domestic bids weakened by the tax value early on too, but saw some support later, with the 15 February date confirmed and interest in filling/covering short-term loadings to beat the tax.
However, some questions are still in play about how the Russian farmer will react the tax, and if they will shut off selling at discounted prices.
On the international scene, Egypt is taking advantage of this decline to launch a new wheat tender today.
It will be interesting to see the origin chosen and the volume contracted; the competition seems wider than usual.
Shipments are scheduled from 1 to 15 February, so before the implementation of Russian taxes. In the last tender, Egypt bought 170,000 t of wheat sourced from Black Sea region.
In the US, export inspections had 900,000t of corn, 2.4Mt of soybeans, and 261,000t of wheat, with corn and soybeans as expected, and wheat less than expected.
On sorghum, 192,000t loaded for China.
Wheat exports from the EU have now reached 11.61 Mt, representing a decline of -17% from last year to date.
Barley exports amount to 3.48 Mt (-8%) and corn imports to 7.56 Mt (-23%).
France remains Europe’s main wheat exporter, despite the poor harvest in 2020. Wheat exports to China currently stand at 1.32 million tonnes.
South American weather forecasts contain some rain for southern Brazil, but worries exist for Argentina, with next to no rain across extended outlooks.
Instead, Rain kept falling in Australia, across the Darling Downs and northern New South Wales yesterday, but was still fairly light overall to the west of the Great Dividing Range.
More follow-up showers are forecast into Wednesday and Thursday, and then again into the weekend.
Harvest is still plugging along, with more spots starting to finish up, and the focus fully into central Victoria.
In this context, the soybean increased, due tight supplies before the arrival of the Brazilian crop.
Corn prices were little changed, with ethanol stocks in the US continue to grow.
On oilseeds hand, rapeseed prices gave up some ground yesterday, while canola and palm progressed.
So, yesterday, financial funds were net buyers of 8.500 lots of soybean and only 500 lots of corn.
However, they were net sellers of 17.500 lots of wheat.
This morning the markets are once again worried about the consequences of new restrictive measures decided in many countries to deal with the pandemic.
So we can see, the dollar that is not moving much at 1.2150 against the euro and 73.50 against the rouble and operators are split on consequences of a no deal concerning Brexit and its impact on the European economy.
Oil also stabilised at 46.50 USD/barrel in New York.
We will see tonight the end of the session.
