The US President inauguration is less than 24 hours away, and markets looking to see how the new administration will handle the transition – incoming officials have already announced intentions to repeal a number of Trump policies but the biggest question for markets is how the stimulus will work out.
Rumours about more blending exemptions for US oil refineries to come before the inauguration have not yet seen anything happen.
So, volatility remained very present during the sessions, with many profit-taking and a rebound in the Eurodollar that weighed on the prices trend.
The tight fundamentals, however, kept cereals close to stability, while the oil seed complex, suffered important losses in the face of improving weather conditions in South America, with the Malaysian palm fell back heavily into the red due to a sharp slowdown in national exports since the start of the month and with the rapeseed that followed the down trend.
Optimism about South American soybean crops, in fact, continues to gradually move through the market.
Even though weather maps aren’t much wetter, there is still a ~40+ mm outlook across the next week and a half for Argentine bean areas.
Private estimates are wide-ranging, but at very least the cuts to forecast production have stopped coming.
Early Brazilian bean harvest increased pace slightly, the delayed planting having spread out the early maturity spots.
However, it is still too early to call anything on yields, and we should start seeing more field work with early February.
In the meantime, soybean prices are back below 14 $/bu, even if on the international scene, demand remain strong with the USA sold yesterday 132,000 t of soybeans to China, 128,000 t of corn to Japan and 100,000 t of corn to Israel.
Just a note, with this sold to Israel, USA made 455,000t total YTD to that market and it’s the first time in a while US corn has worked there in style.
Even weekly exports data were very strong last week, with soybean exports with a total at 2,058,399 t, corn at 876,774 t, wheat at 276,898 t, milo/sorghum at 159,000t, with China as primary destination.
Wheat that had helded better through overnight, weakened later in the session to join row crops and settling closer to unchanged.
European markets, instead, with disorganized US market after its extended Martin Luther King Day weekend, yesterday opened with a sharp rise of wheat price on Euronext to lost all of its gains at the end of the session.
The prices, in particular, have fallen the most in the 2021 harvest, because the stocks for the start of the next season could be higher, due to export restrictions for the current season.
Traders are waiting to see whether or not the Ukrainian government decides to limit its corn exports to 22 Mt, given that to date, they have exported around 11 Mt.
The decision is expected to be taken on 25 January.
Black Sea weather maps are taking a warming bias again, and so far no major winter kill impacts have been reported.
Snow cover reportedly is sufficient to cushion most of the cold impacts.
Russian export tax is an other factor to watch.
Black Sea origination markets (Ukraine, EU and Black Sea) reportedly are lagging the FOB rally on wheat, and yet they are still managing to get more tonnage booked, but the question remains as to how russian farmers will react to the new tax regime, as soon as the normal window opens for spring sales of farmer’s residual tonnes.
Aussie values were firm on short covering from the trade to fill export programs.
South Australian and Victorian bids in particular were supported yesterday.
Jan ASX east coast wheat futures lifted above $300/t again, settling at $302.8/t
The market is also still watching Argentina with concern, where an export quota on wheat could also be imposed.
Algeria’s call for tenders for wheat ends today and operators will be closely watching the volume chosen.
Loading is scheduled for 14 to 28 February.
However, in order to limit speculation, the Chicago Stock Exchange decided to increase security deposits on futures contracts even if yesterday the funds were net sellers for 25,000 lots of corn, 20,000 lots of soybeans and 2,500 lots of wheat.
The dollar is at 1.2070 against the euro and at 73.70 against the rouble this morning.
Crude oil is stable at 52 $/barrel this morning in New York.
The dollar index is 90.5.
