ODA Market Highlights - 08/03/2019

The USDA report has little effect on prices.

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Today's news focused mainly on the USDA report. In wheat, despite revising the U.S. export target lower (-1MT) and seeing gains in U.S. 2018-2019 stocks, prices in Chicago climbed after the report was released. Given the market's reaction, traders seemed to expect more negative numbers. Global inventories were also revised higher. Euronext wheat finished down for the last session of the week as the euro-dollar exchange rate picked up.

In the international wheat trade, Turkey launched a call to tender for 290KT (late March-early April delivery), the Philippines bought 40KT of Australian wheat (May delivery), and Algeria bought 300KT of durum wheat (April delivery).

French export figures for January were released. A total of 529KT of wheat was exported to non-EU countries and 652KT went to Europe. Cumulatively from July to January, French wheat exports to non-EU countries grew 14% over the 2017-2018 campaign.

Maize prices in Chicago were near equilibrium as the European session ended. U.S. exports were revised lower (-2.1MT), which led to an increase in 2018-2019 ending stock. In contract, global inventories was revised downward due to higher consumption.

In oilseeds, soya prices fell on the market despite U.S. soya sales of 1.16MT to China. Indeed, Chinese imports of soya in February totaled 4.46MT, or 17% less than February 2018, which pressured soya prices. In today's report, the USDA cut Chinese crushing by 1MT due to the spread of African swine fever. Global production was revised 900KT lower, mainly in Brazil (-0.5MT) and Paraguay (-500KT), to 116.5MT (higher than traders expected). At the same time, Argentina'sministry of agriculture estimates 2018-2019 soya production will be 54MT (the USDA estimates 55MT).

On the oils market, palm oil prices sank in the wake of crude. Crude oil plummeted because of disappointing Chinese imports of crude in January. Soybean oil also fell.

In Europe, Coceral estimates 2019-2020 production at 18.5MT, or 6% less than 2018-2019. Even with declines by the soya complex and oils, rapeseed prices finished at equilibrium. We also note an agreement reached at Saiplo ended the strike.