Due to Martin Luther King Day, US markets were closed yesterday.
However, despite the closure of Chicago, Euronext was able to take advantage of favorable fundamentals to start its week off well.
Matif wheat, so, firmed €4.25/t, with ongoing support from the Russian tax situation and the new Algeria tender.
Despite high prices, indeed, Algeria’s OAIC is back tendering again for late Feb wheat.
In its last tender, the country only had bought 300 000 tonnes.
It seems, that the international demand in cereals doesn’t see stop,
despite Russia implementation export duty of 25 €/t from Feb 15 then 50 €/t from March.
Europe, in fact, continues to record a sustained rate of exports, estimated at 13.6 Mt since July 1st., ie a clear advance compared to the three-year average (12.2 Mt) and the next carry-over stock could be displayed on low levels before the arrival of the next crop from July.
And with the strength in Russian values flowing into EU markets, there are some thoughts that US wheat may work too.
In add, we haven’t seen Egypt’s GASC back yet on the market.
Due after cancelling last week’s tender, indeed, many believe, that they are looking for a board sell-off to try and re-buy.
Argentina’s wheat exports are also getting some interest with bulls pushing the story about possible export restrictions, citing the brief corn exports interference in December and Argentina’s poor wheat crop this season.
Rumors also evoke discussions in Argentina to establish a quota of 8.5 Mt.
Currently, the French origin seems competitive on the international market but volumes are stretched, and so, in this context, prices soared yesterday on Euronext again.
Also Australian markets that had helded firm through yesterday, was up.
The March ASX, in fact, closed higher at $299.50/t, despite not quite yet breaking the $300/t level again, though!
Obviously, the strong Chinese demand is still a key element for higher prices.
In 2020, chinese corn and wheat imports amounted to respectively 11.3 Mt and 8.38 Mt.
These volumes caused both by the repletion of stocks and reconstitution of the pig herd are outstanding.
Also european corn imports are struggling to accelerate (8.9 Mt) mainly due to a lack of Ukrainian availability.
As of yesterday, Ukraine has exported in total 1.5 Mt of grains.
In detail, 264,000 tonnes of wheat, 110,000 tonnes of barley and 1,115 Mt tonnes of maize have been loaded.
This brings, of course, the volume of maize exported since the beginning of October to nearly 10 Mt.
However, in January 2021, Ukraine will be far from repeating the record shipment reached last year, with more than 4.5 Mt loaded in January 2020.
Weather maps the rest of this week are very dry for Argentine soybean areas, but are bringing fairly uniform 50+ mm outlooks into next week.
There’s still nothing concrete on the Aussie weather maps for future moisture.
Chances of some storms in central NSW appeared on the extended runs but there’s poor confidence in those developing at this stage.
Also Black Sea region weather maps have not good news, taking a colder turn again.
Recent models put lower lows and again raised winter kill concerns.
Despite some warming bias in weekend models, temperature forecasts cut colder again last night.
On the politics hand, with the US presidential inauguration in two days time, there’s more focus shifting to the proposed new stimulus bill and how much more will be tacked on.
Many are optimistic about the immediate increase in consumer spending as cash gets printed, but overall economic concerns remain in the shadows after recent large unemployment numbers.
The Covid pandemic continues to cause concern, with German lockouts being extended again until mid-February.
Large protests took place in the Netherlands against lockdowns.
The US Dollar is steady at 1.2090 vs. Euro and 73.75 vs. Rouble.
Crude oil is stable at 52.20 $/b in NY.
We therefore look forward to how the markets will evolve today, with the US reopening.
