Market review -14.02.2020
Even if the fears linked to the coronavirus do not regain their climax of the end of January, doubts nonetheless return to the financial markets this weekend. Indeed, the establishment of a new detection and reporting system in the Chinese province of Hubei revealed 15,000 new cases yesterday. This brings the total number of patients to more than 60,000 cases for nearly 1,400 deaths.
European grain prices find support through the continued fall of the euro dealing now at 1.0830, its lowest level since April 2017. The euro/dollar has thus fallen by -2.7% for a month. If we take current prices as a base, then such a depreciation of the euro allows prices to rise by 5 €/t for wheat and 10 €/t for rapeseed.
The weak euro coupled with the good European export dynamic of the past few weeks have made it possible for prices to remain their levels on Euronext. And this despite falling prices on the Black Sea and in Chicago.
The most optimistic operators in the United States still hope that China will implement the trade agreement signed on January 15, which takes effect on Saturday, February 15. This encourages the buying of short positions on the soybean complex. This element also brings a touch of firmness to an oilseed world which is once again marked by the defeat of palm oil. Prices in Kuala Lumpur have thus lost 10% in 10 days and are coming back to test their recent low point at 2600 ringgits/t.
In South America, the recent rains further strengthen the production prospects. In Brazil, Agroconsult has raised its forecast of soybean production by 2 Mt to 126.3 Mt. While in Argentina, the Rosario stock market has raised its harvest estimate to 55 Mt of soybeans and 50 Mt of corn.
A sharp increase in the number of new cases of coronavirus in China yesterday cooled the market in Chicago. However, only wheat and corn prices have been affected while the soybean market remains supported by funds purchasing their positions before the theoretical implementation this Saturday, February 15, of the trade agreement signed with China.
The technical correction, therefore, continues on wheat in Chicago with prices at the lowest for almost 2 months and this despite good weekly export figures of 643,100 t, appearing at the top of expectations.
In corn, weekly export sales fall for the first time in 4 weeks below the 1 Mt level, which, while production prospects improve in Argentina, weighs on prices.
Soybean prices meanwhile ignore the upward correction in production in Brazil and Argentina and disappointing US export sales over the past week at 645,000 t.
In this context, the funds sold yesterday in Chicago about 9,500 lots of corn and 4,500 lots of wheat while they bought 9,500 lots of soybeans.
Black Sea market
Producers are finishing their preparations for the spring campaign. The profitability allowed by the different crops remains one of the essential elements when deciding on the rotation for the following season. Corn and sunflower are often at the top of the most profitable crop rankings.
Thus, again this year, the sunflower areas in Ukraine as in Russia should experience new respective highs. The lead that Ukraine traditionally had relative to Russia in terms of production is decreasing, with the two countries nearly at the same level for the position of the world's leading sunflower producer.
source Agritel Inl