Both on Euronext and CBOT, the first session of the year was quite choppy.
In fact, prices for major Chicago-listed wheat, corn and soybean contracts ended in disarray on Monday after rising sharply overnight and in previous sessions.
So, while corn and soybeans was still continuing its run, starting the new year just like they had end 2020 with strong gains to new six-and-a-half year highs, noting in preopening the soybean prices that jumped until by 30 cents/bushel, a weakness, in the stock market, has tainted the evolution of grain prices.
In fact, Wall Street lost some 2% at midday, anxious about the rise in Covid-19 cases but also about the double senatorial election of Georgia (south), which is held on Tuesday.
It could hold the key to the positioning of Congress in relation to the White House.
In addiction, on wheat and corn , the high prices reached during the night have, during the day, caused some profit-taking.
Regarding corn, which ended down 0.05%, the Chinese agriculture minister called for China to devote more hectares to cereals to ensure food security.
So, the bushel of wheat (about 27 kg) for delivery in March ended at $ 6.4200 against $ 6.4050 on Thursday, the last session of the year, up 0.23%.
A bushel of corn (about 25 kg) for delivery in March ended at $ 4.8375 against $ 4.8400 on Thursday, down 0.05%.
The bushel of soybeans (about 27 kg) for January delivery ended at $ 13.1650 from $ 13.1525 at the last close, gaining 0.09%.
This is the sign of current high uncertainties on the various markets.
However, we note that financial funds are still holding a very long net position in corn and soybean and this is creating a context of volatility.
On the fundamental side, Argentina announced that it had suspended corn export licenses for the months of January and February. At the same time, the climatic conditions in the country remain particularly dry and hot and thus hamper the end of planting of soybeans and corn.
Argentina will likely see some scattered showers/thunderstorms in some of its driest areas, but no general soaking rain is expected, and temperatures will remain on the warm side, reports World Weather Inc.
It expects limited rainfall and warm temperatures over the next two weeks and this just to maintain concerns for central and eastern crop areas.
Operators will closely follow the first soybean harvest results in northern Mato Grosso too.
In fact, we expect that volatility should remain high in coming weeks in a context of uncertainties on the actual Brazilian soybean output.
The estimations are currently around 130 Mt.
In addiction, the Argentine grain inspectors’ union Urgara announced its members would continue to strike over the weekend after failing to reach a deal on wages.
So, the weak cereal harvest in Europe in 2020 , combined with drought in Latin America, Argentine strike, massive purchases by China, first for barley, then for other grains, and the export restrictions announced by Russia , the world’s largest exporter of wheat, could give the bullish tempo, also on corn.
In fact, in the week preceding Christmas alone, China bought 133,200 tonnes of wheat, 492,000 tonnes of corn, and also loaded 161,000 tonnes of sorghum.
In addiction, Argentina announced last week of a sharp slowdown in its exports, adding other pressure.
The country has in fact just stopped its cereal export licenses until the end of February 2021date in order to reduce inflation. In addition, the strike by customs officials is already complicating port loading.
The only potentially negative point, but which is not yet weighing on prices, is the influence of avian flu in Europe that could be reduce the consumption of corn in animal feed.
The wheat is a follower for the time being.
In fact, winter wheat futures was up 2,75 cents.
Euronext started the year more quite, even if seeking new gains, building season highs for wheat and rapeseed.
So a tonne of common wheat increased by 1.00 euros on the March deadline to 214.25 euros and 1 euros on that of May at 211.50 euros.
Rapeseed prices rose too, supported by petroleum and palm oil.
In fact, a ton of rapeseed increased by 3,25 euros on the February deadline to 421.50.
The rapeseed market is doing very well, it was a little volatile before the end of year holidays, but now the curve follows that of cereals.
While, palm oil rose sharply on Monday in Kualu Lumpur, from 124 ringgits to 3,724 ringgits per tonne.
Inespected, the ton of corn on the January deadline, closing the session fell to 200 euros, but today, it’s jumping by 18 euros.
On the physical market, the business remains subdued with a progressive resumption after the end of year break.
On the last wheat Algerian tender, despite the fact that origins are optional, we can anticipate that OAIC will retain wheat sourced from Germany, France and Argentina on the back of displayed prices.
Russians have exported more than 30Mt of cereals since the start of the season, setting a new activity record for a first half of campaign. Last year, this figure was 25Mt against 29Mt in 2018/19, the previous record.
Russian operators are expecting a more pronounced drop for January with potentially 2.5Mt of wheat shipments.
With the introduction of duties, the premium for Russian wheat has increased in comparison to Ukrainian or European wheat, limiting the appetite of usual buyers for this origin.
For the moment, the euro remains on an upward trend against the dollar, and is dealing at 1.2296, the ruble is at 74,51 this morning.
Oil prices, are declining at 47.62 $/barrel in New York.
