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Morning Markets: Wet weather supports EU crops in absence of US values


US markets are closed today for the President’s Day holiday leaving the focus on European values.


Friday saw US values fall due to fears of reduced crop exports and technical selling ahead of the long trading break, while European wheat and rapeseed contracts tightened against weather factors threatening to reduce 2020 harvest production.


Coronavirus rumbles on, although its impact on global trade is hard to quantify. Reuters has noted that cargoes of US chicken bound for China have been rerouted to nearby countries because of the outbreak.


Agritel says US farmers are “becoming impatient to see China showing a greater interest for US agricultural farming products” – it adds that significant volumes of French wheat and Ukrainian corn have been purchased by China recently. At the same time, high water levels in the US’s lower Midwestern rivers are said to be slowing barge traffic to bring commodities to export terminals.


The Chicago March 20 wheat contract had rallied in early Friday trading, only to lose ground later and close 1.5 cents down on the day at $5.42¾/bushel. Traders blame technical selling ahead of the US holiday while a “lack of US export development sent a negative tone to the grain markets,” commented Terry Reilly at Futures International.


EU wheat gains early Monday


But Taiwan issued tender for 102,525 tonnes wheat of US grade 1 milling wheat on Friday.


In Europe, the Euronext March 20 wheat position closed Friday up £1.25 at €194.00/tonne and had gained 0.25 in early Monday trading. “Prices were well oriented last Friday due to the weakness of the euro vs dollar,” notes analyst Agritel. “In western Europe, temperatures are abnormally high for the season and the wet weather is persistent in many regions.”


FranceAgrimer reported that crop conditions were degrading in that country, the EU’s biggest wheat producer. The statistician said that only 65% of winter wheat crops were rated good to excellent, compared to 85% at the same stage of 2019. The winter barley good to excellent proportion is 67%. Data on France’s spring barley

plantings shows they were at 16% on February 10th, ahead of the 12% twelve months earlier.


Analysts agree that Europe will harvest a smaller crop in 2020 as a very wet autumn reduced winter cereal sowings. But this could be mitigated by “a remarkably warm winter that has boosted crops in some regions,” Agritel noted.


The CBOT March 20 corn contract ended Friday 1.75 cents lower at $3.77¾ /bu, while the Euronext March position was unchanged at €168.25/tonne, and static in early Monday business.


Brazil’s CONAB agency is predicting a record corn harvest of 100.5 million tonnes in 2019-20, although it adds that exports could drop to 34m tonnes against the previous year’s 41.17m tonnes last year due to low reported stocks.


China opts for Ukraine’s corn


China is reported to have purchased between 200 – 500, 000 tonnes of Ukrainian corn.


In the US, Reuters said that the US Environmental Protection Agency is consulting with the administration in the White House over its biofuel waiver program. In January, a US Appeals Court ordered the EPA to reconsider waivers to oil refineries that gave them an exemption from US biofuel blending laws -this could “drastically reduce the numbers of waivers handed out in the future,” speculates the bureau.


Friday’s trading saw the US March soybean contract close at $8.93¾/bu. The Euronext May 20 Rapeseed contract gained €0.25/tonne to close the day at €399.50/tonne but had lost tis increase early on Monday.


“Rapeseed prices were steady last Friday - the traders are puzzled between lower soybean prices and the recovery of the palm, which started the week slightly up in Kuala Lumpur,” noted Agritel.


Brazil’s Abiove has estimated that country’s soybean crop at 123.7m tonnes, up 900,000 tonnes from its previous 122.8m tonnes figure. But it has reduced likely exports to 73.5m tonnes from last month’s 75m tonnes. Agroconsult predicts a 126.3m tonne Brazilian soy harvest.


India curbs protein crop imports


Futures International reports USDA baseline estimates of the US 2020‐21 soybean crush of 2135, and 2170 for 2021‐22. “That’s a lot of expansion they have pencilled in.”


An Indian trade body has warned that a good pulse crop harvest in India, coupled with government measures to curb overseas purchases, could lead to that country cutting pulse commodity imports such as chickpeas by as much as 60% to 1m tonnes in 2020-21, in a move to protect domestic prices. India is the world’s largest consumer of protein-rich pulses, so such a move would have an impact on protein crop values in originators such as Australia, Canada and Russia.


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