ODA Market Highlights - 12/01/2018

The USDA and the Euro Apply Pressure

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Today's main news was the publication of the USDA's three reports: the first on U.S. winter wheat acreage, the second on U.S. quarterly grain inventories, and the usual report on global overviews.
On grain markets, the figure for drilled winter wheat acreage sharply pressured the market. While it is very close to last year and represents the second lowest acreage since 1909, it is significantly above expectations. Traders were disappointed.
In reviewing the remaining grain reports, we note a decline in Australian wheat production last year and another increase in Russian production this year.
The euro advanced quite sharply, hitting a three-year high. After yesterday's ECB report, the governmental agreement in Germany this morning strongly supported the euro. Indeed, strengthening Europe is at the center of the new German coalition. The euro-dollar exchange rate now exceeds 1.21, breaking the important resistance at $1.20, which put significant pressure on European markets.
On the oilseeds complex, after falling sharply for much of the day (as much as -5/T) due to another increase in the euro-dollar exchange rate, rapeseed's downward slide slowed as the session ended on Euronext following an uptick in the soya complex in Chicago.
Prices for soybeans, soya meal, and soybean oil finished the day higher after several U.S. reports were released. Quarterly soya inventories as of 1 December were 1Mt below market expectations due partly to a downward revision in production. According to the monthly report, exports were revised lower, as expected, leading to a rise in the U.S. ending stock.
At the global level, not surprisingly, the USDA revised Argentinean soya production lower and raised Brazilian production.