Prices increased yesterday in Chicago; the trend has been fuelled by funds’ purchases and EU and US markets rallied overnight.
So, despite a reduced activity on physical markets, cereals’ futures prices increased sharply and only canola values weakened a litle bit.
Let’s try to explain this attitudes.
To justify this appetite on commodities, traders are mainly mentioning weather concerns in South America.
But this can’t be the only answer.
In fact, yesterday, the Russian Duma passed a law allowing the government to intervene to control the prices of so-called social food products too.
In the past, the state could only take action if prices increased by more than 30% over a certain period of time.
This threshold has now been lifted.
As a result, the authorities now have the right to set maximum prices in one or several regions for a period of 90 days.
The following products are concerned: beef, pork, mutton, chicken, fish, butter, sunflower oil, milk, eggs, sugar, salt, tea, flour, bread, rice, millet, buckwheat, pasta, potatoes, cabbage, onions, carrots and apples.
This law completes the package of measures initiated with export taxes on wheat and sunflower seed in order to curb the inflation of the Russian people’ food base.
It’s certanlly true, South American crop ideas continue to float around, with various estimates about just how much stress has impacted the soybean crops.
Now, most of the worry has shifted heavily to Argentina, although many are hedging their concerns a little after some showers late in the weekend.
But need a more global vision.
In addiction to South America weather forecast and the Russia politics, we must look to marketing strategy will apply in the Black Sea area after this decisions, to China’s puchase and to the Argentina social tensions.
Here, the strikes continue.
And, dockers’ strikes contributes to support prices, mainly the soybean.
A new vote will be held today.
Ag markets have quietened down heading into Christmas; in fact, US export sales data put out overnight, were more reduced from past week, that probably due to the approach of the end of year break.
So, shipments of 397.700 t of wheat, 352.800 t of soybean and 651.100 t of corn have been recorded.
But, in the meantime, China’s COFCO stated in news reports recently that it was expecting China to import 100 million tonnes of soybeans.
And this, of course, supports the whole complex of oilseeds.
So, even if rapeseed prices are little changed after profit takings observed on the canola and following recent days’ sharp rise, the crushing activity remains steady in Canada with 917,992 t crushed in November compared to 931,060 t in October.
And this morning, palm oil prices picked up again in Kuala Lumpur.
In Russia, climatic conditions are currently normal, even if the delayed in vegetative development before winter remains a matter of worries.
Black Sea weather maps are largely unchanged, and cash markets are quieting down there as they look to the extended holiday window: global markets shut for Christmas/New Year, and holidays for celebration of Orthodox Christmas will follow.
But, the Black Sea marketing strategy will depend prevalently from the crop conditions from the end of January to half of February.
Rain in northern Australia came in well above forecasts, with more than 50 millimetres recorded in a large amount of country near Tamworth.
More coastal showers are forecast into early next week, but the system has passed cropping areas.
So, Aussie markets have seen only a little support from global moves, but currently it’s all about execution and interior logistics on the east coast.
Economic rebound is expected in 2021 in many countries thanks to Covid vaccination.
However, according to economists, it will take a few more months before a real recovery can be seen.
Markets will only be open for half a day today and closed tomorrow.
Trading will resume on Monday.
The Eurodollar is still firm at 1.2166 and the rouble is dealing just above 74,73 against the green back.
The crude oil is rebounding at 48.12 $/b in NY.
In this context, yestarday, funds were net buyers in 22 000 lots of corn, 9 500 lots of soybean and 10 000 lots of wheat.
