The volatility remains high on agricultural commodities with a major interrogation: is this trend sustainable on a medium or long-term outlook?
Yesterday, most futures gained about 2pc, though European rapeseed dipped slight but, cereals prices, recouped previous day losses.
In Chicago, prices are at their highest levels for last seven years and this bullish trend remains mainly caused by the tightness of corn and soybean balance sheets, increased by a strong Chinese demand, supported mid session, from better Us export sales figures too.
Large US export sales, for this time of year, has seen corn at 1.4 million tonnes (Mt), beans at 0.9Mt, and wheat at 0.222Mt.
The wheat result was slightly disappointing but was overshadowed by row crops.
Bean sales were particularly notable as they included nearly 500,000t of new Chinese sales, not switched from unknown, at a point when Brazilian harvest is already starting to get underway.
There were also 190,000t of new milo/sorghum sales, confirming some expectations from earlier this week when strong rallies in basis were noted across the southern Plains.
On the international market, Japan bought yesterday 116 700 t of milling wheat sourced from USA, Canada or Australia.
So, traders will pay attention today to possible export measures that the Russian government could implement.
In fact, uncertainties remain high about the Russian policy in terms of exports both from Feb 15 and next season.
Now, the major concern for exporting countries is to curb staple goods’ inflation in a context of reduced supply, especially in corn and soybean.
South American weather maps are looking a little better for parts of Argentina with a slightly wetter bias in some runs but moisture, is still on a knife edge though as crops hit peak growing season.
In this context, Argentina’s Rosario Grains Exchange cut its corn crop estimate by 2Mt, though it has pegged wheat at 17Mt, up half a million from prior.
In its monthly report, the IGC revised downward its world corn production estimate to 1 133 Mt, i.e. -13 Mt less than one month ago.
For the wheat, the IGC increased by +3 Mt the global output to 768 Mt.
However, an other social tension is adding, with Brazilian truckers have begun talking about a strike to come in Feb as bean logistics pick up pace leading to peak truck demand.
Complaints about pay are commonplace.
Truckers are also hurt by diesel costs which have been particularly high on account of the weaker Brazilian Real currency this season.
In the meantime, Ukrainian corn market also reporting more aggressive origination interest for probable Chinese sales.
On the politics hand, however, President Trump was impeached for the second time early yesterday morning and markets are slightly worried that a drawn-out impeachment trial could delay stimulus measures being proposed.
Monday will be a holiday in the US, and CBOT/Minny will be closed from Friday’s regular session close until Monday’s night session open.
The dollar has gradually eased off recent highs to hit 90.2 on the index after the US Fed suggested that rate rises would be “no time soon” so, this morning we see the dollar stable at 1.2140 against euro and at 73.30 against rouble.
However, funds were very busy again, having been net buyers in 30 000 lots of corn, 18 000 lots of soybean and 8 500 lots of wheat, causing further rise in US and UE prices on all products.
In fact, Chicago wheat March contract up US9.5 cents per bushel to 670c;
Kansas wheat March contract up 10.75c/bu to 636.5c;
Minneapolis wheat March contract up 11.75c/bu to 640.5c;
MATIF wheat March contract up €3/t to €229.75;
Corn March contract up 9.75c/bu to 534.25c;
Soybeans March contract up 24.25c/bu to 1430.5c;
Winnipeg canola March was up C$3/t to $687.70;
MATIF rapeseed February was down €2.75/t to €439.50.
