The wheat market is still depressed and is struggling to rebound. On the other way around, the rapeseed continues to rise. After losses recorded earlier in the week, rapeseed prices soared again yesterday on Euronext to mark a new historical high on the February 2022 delivery at 724.75 €/t. The severe European and global tension on this product is taking over following the rebound observed on the vegetable oil market for both palm and soybean oil.
Yesterday, the European Commission readjusted upwards its production estimates for the current 2021/2022 campaign:
Soft wheat +0.2 Mt to 130.6 Mt
Maize +1 Mt to 69.4 Mt
Barley +0.2 Mt to 52 MT
The current downturn in international wheat prices still favours the return of importers on the market. Iran bought 500 000 t, South Korea 60 000 t, the Philippines 110 000 t and Jordan 60 000 t. A wheat tender from Turkey for 320,000 t is still in progress.
The European Central Bank was highly anticipated yesterday. It raised its inflation forecasts and announced that it will start reducing its asset purchases under the PEPP at the end of March 2022. However, Christine Largarde remains very cautious due to the uncertain health and economic context in Europe. A rate hike in the Eurozone is still considered "very unlikely" for 2022, in contrast to the US where the Fed is considering 3 rate hikes. However, the Euro/Dollar has recovered since the beginning of the week to test its highs for a month and the strong resistance zone of 1.1360 to 1.1380.
Corn and soybeans continue to evolve in a very narrow price range and still benefit from some support. Traders are still waiting for new elements, especially a better understanding of the production potential in South America. The good weather conditions until now are becoming worrying in the area from the south of Brazil to the north of Argentina. The market is therefore mixed and hesitant.
Weekly US maize export sales have been buoyant last week with the inclusion of the recent exceptional sale to Mexico. The volume is at the top of expectations with 2.7 Mt cumulated for the old and new marketing years. Soybeans are strengthening thanks to the rebound of soybean oil.
Funds are buying again on all commodities in Chicago thanks to the decline in the dollar. They bought 6,000 lots of corn, 10,500 lots of soybeans and 8,500 lots of wheat.
US wheat is regaining some support with growing concerns about the expanding water deficit in the Great Plains. The condition of HRW wheat is further deteriorating due to recent strong and hot winds. In addition, weekly US wheat export sales have recovered to 650,000t, well above expectations.