European cereals recorded mixed performances yesterday, depending on the contracts.
The operators were awaiting in particular the results of the last Algeria’s OAIC tender results out late last night saw them buy a reported 630,000t of wheat at levels in the US$313/4/t range, similar to the prior tender.
Optional origin as always, but calculations suggesting it will be a mix of EU and Argentine.
In the meantime, european prices took advantage of a withdrawal of the eurodollar parity to remain in the green in the near term.
The US Federal Reserve, indeed, as expected, yesterday confirmed its ongoing intention to keep rates low through the stagnating economy, gaving no firm timelines about any changes through the coming year.
In this context, the dollar is posted this morning at 1.2090 against the euro and 75.75 against the rouble.
The US dollar index rose slightly.
As results, wheat posted litle gains, despite a sluggish news session, and the release of the Aussie report on grain and feed update by US Agency.
Rapeseed, on the other hand, accelerated in the green, in the wake of a booming Canadian canola.
Strong international demand and the reduction in stocks across the Atlantic have indeed driven prices on the Winnipeg Stock Exchange to their highest level in nearly 13 years.
Also palm oil, rose by more than 3% yesterday in Kuala Lumpur.
Note that the markets are closed today in Malaysia.
Despite the international demand remains very strong, mainly about for soybeans and corn for American origins destined for China with new sales that have seen China bought 680,000 t of corn and 132,000 t of soybeans to China, followed further sale of 126,500 t of beans to an unknown destination, yesterday, Chicago prices were consolidated after the increase earlier that week that erased the previous week’s losses.
Some analysts estimated Chinese corn imports this year could be at around 26 Mt, more higer then 19 Mt forecast by US Ag, while soybean imports in the next season could be around 110 Mt.
In the meantime the same analysts estimates Brazil’s soybean crop at 128 My, well below the US Agency or others analyst that figures of around 133 Mt.
This confirms, if there were still any need, that one of the main price drivers on the demand side is China.
The fundamental context remains very tense, however, the price levels raise many questions among buyers.
In fact, for exemple, despite Chinese purchases continue to give a support corn prices, (the country has contracted 200 million gallons of ethanol for the first half of 2021, according to ADM), corn prices fell in Chicago, and this just in function of the announcement of a further reduction in ethanol production across the Atlantic last week.
In fact, markets were very hesitating yesterday.
The flow of cereals to Russian ports is intensifying.
Ahead of the entry into force of export taxes, with the first round of measures for wheat from 15 February, yesterday, we have seen more than 70 ships were waiting to load at the Sea of Azov with the queues of lorries to access the ports that are getting longer with sometimes up to 20 km waiting to unload.
Seen this, maybe anyone is working HRW against it after the rally last week, so US wheat finished less than 1pc lower.
While Aussie markets settled with the ASX east coast WM futures higher by about 2 ½ per cent at $305/t yesterday, bouncing back with the global move.
Speaking of Argentina, talk is once again doing the rounds about an export cap there, potentially as low as 10Mt.
Brazil’s trucker strike is still set to start 1 February, and an oil refinery workers’ union has promised to support the strike.
However, this strike’s been well expected by the market, but this certainly this rapresents great timing with the soybean export program just ready to hit gear.
So, as we can see, funds continue to play an important role in the short-term price structure.
Tonight we will see how the sessions close.
