Market review -24.12.2019
Active demand supports corn prices in Ukraine
March corn futures in Chicago for the week remained almost unchanged at $ 152.75 / t, supported by increased competition between American and Ukrainian corn amid active corn exports from Brazil.
Over the week, US corn exports decreased by 44.6% to 387.188 thousand tons, and since the beginning of the season it amounted to 7.627 million tons, compared with 17.02 million tons at the same date last year. Traders understand that it will be possible to activate exports in the second half of the season only if prices decrease, especially after a new crop from South America enters the grain markets.
An additional factor of pressure on prices was the results of tenders by South Korean processors. South Korean NOFI announced a tender for the purchase of two lots of corn for delivery in April, which it planned to purchase at a price of $ 210 / t CIF, while the lowest bid prices were $ 212 / t CIF. But NOFI refused to purchase after news of the purchase by a competitor, MFG, of a batch of Ukrainian corn from Cargill with delivery in April at a price of $ 209.7 / t CIF.
In Argentina, 62.8% of the planned area is sown with corn, which is 8.6% higher than the same indicator last year. But due to drought in certain regions, experts from the Buenos Aires Grain Exchange reduced their corn crop forecast for 2020 from 48.3 to 46.6 million tons, compared with the USDA December forecast of 50 million tons.
Brazil for the week slightly reduced corn exports from 0.6 to 0.5 million tons, and as a whole in December sold 3.2 million tons.
Ukraine is also actively exporting corn. Traders believe that 4.5 million tons will be sold in December and 3.1 million tons have already been exported as of December 20. Since the beginning of the season, the country shipped 10.6 million tons of corn, which is 36% more than the same period last year. . On the eve of a long weekend, when buyer activity is traditionally declining, traders are buoyantly buying corn, as a result of which demand prices at the port rose by $ 2-3 / t to $ 162-163 / t for December and $ 164-165 / t for January deliveries. But the hryvnia prices remain at the level of 4480-4550 UAH / t due to the gradual strengthening of the hryvnia.
In addition to China and Iran, the European Union is actively importing Ukrainian corn. According to the European Commission, over the week the EU imported 371.4 thousand tons of corn, and from the beginning of the season - 10.2 million tons, which is 1.6% higher than the corresponding figure in 2018. Ukraine's share in European imports increased to 43.7%, while Brazil's share fell to 45.8%.
Wheat prices remain stable before Christmas
In the absence of fundamental factors, the wheat market this week will remain stable, and traders will close short positions ahead of the holidays.
The pace of wheat exports from the US and the EU is quite high, and a warm winter contributes to the development of winter wheat crops.
The last pre-holiday day, the French wheat market completed with a plus. Amid active wheat exports from the EU and rising Russian wheat, traders made speculative purchases. Tuesday and Friday will be short business days, and exchanges will not work on Wednesday and Thursday.
The March wheat futures on MATIF yesterday rose 0.75 € / t to 187 € / t or $ 207.33 / t, whereas exactly a year ago they were trading at 206 € / t or $ 235.9 / t.
The decline in prices for European wheat led to a sharp increase in exports from the EU, which in the current season is 67% higher than last year and amounts to 13.4 million tons.
The Chicago stock exchange began the week with speculative sales. After updating last week with prices of a 6-month high, investors closed contracts for the 4th session in a row.
Weekly export sales exceeded expert expectations and amounted to 578.458 thousand tons, and since the beginning of the season, exports amounted to 14.2 million tons, which is 15% higher than in 2018 at this date.
March wheat futures in the US fell:
$ 1.01 / t to $ 198.23 / t for soft winter SRW wheat in Chicago ($ 192.35 / t a year ago),
$ 1.38 / t to $ 168.47 / t for hard winter HRW wheat in Kansas City ($ 187.21 / t a year ago).
Rise in price by $ 0.18 / t to $ 197.40 / t hard spring HRS-wheat in Minneapolis ($ 208.7 / t a year ago).
Over the week, Russia reduced wheat exports to 567 thousand tons, and since the beginning of the season it sold 20.2 million tons, which is 14% lower than the corresponding figure of the previous year.
On the eve of long holidays, buyers are in no hurry to buy Russian wheat with protein 12.5% at a high price - 220 $ / t FOB, although last year at the same date prices were 235-238 $ / t FOB