European market
After reaching their highest levels since July 2023 for wheat (September expiry), November 2023 for corn (June expiry) and August 2023 for rapeseed (August expiry), prices corrected yesterday. European wheat even completely reversed the sharp rise that had characterised the start of the week. The violence of these movements can be explained by the high level of activity among financial operators, who are adjusting their positions in response to recent market developments.
The main focus is on the state of the Russian plain, where water shortages and frosts have been devastating. Although some of the damage has already been done, forcing local analysts to revise their production estimates to below 90 Mt, the weather has not said its last word. It will even rule the roost, both on Euronext and Chicago, but for the time being, models are diverging as to what precipitation is expected next. Nevertheless, uncertainty is still the order of the day, and this will keep the markets busy.
On the physical side, activity is much less buoyant, with demand for the time being timid, both on the domestic market and internationally. As the end of the season approaches, operators are waiting to see more clearly how competitive the various origins are for the 2024/25 season.
Without the help of soybean and palm oil, European rapeseed failed to come close to the €490/t mark on the August futures date, and corrected like all the other markets.
American market
Following the state of South American production, US corn market operators are continuing to adjust their estimates. It has to be said that the Brazilian and Argentine floods will have an impact on US export dynamics. All eyes were on CONAB, which had just raised its production estimate for Brazil by +0.7 million tons to 111.64 million tons. While this figure is still a long way off the 122 Mt announced by the USDA, it is worth noting that the downward revision trend that began a few months ago has come to an end. On the soybean front, the USDA is forecasting production of 147.68 million tons, up +1.2 million tons on the previous publication.
Yesterday, the USDA reported an exceptional sale of 405,000 tonnes of corn to Mexico.
The crop tour season got underway in the United States, with a focus on the Kansas crop tour. For the first day, the consensus is for an average yield of close to 50 bu/acre, well above last year’s estimates for the same region. While wheat growing conditions will be under close watch, the weather in the Corn Belt will be just as important, with rain slowing down seeding work.