All grain prices went up in Chicago on Tuesday. Prices in Paris increased, too. Changes were mostly minimal.

The EUR/USD currency pair went down to 1.0704. Light oil went down to 51.92 USD/barrel.

US trade deficit grew in 2016 up to its highest level since 2012 due to export decreasing more than import, Reuters reported. However, the deficit shrank in December, which was a signal for the increased demand for American goods abroad. The deficit grew by 0.4 per cent to 502.3 bln dollars in 2016. The Ministry of Trade reported that trade deficit with Mexico was on the rise while trade deficit with China shrank.

Traders in Chicago covered short positions yesterday prior to the issuing of USDA’s February report. There is news of drier weather in South America. Rain in that region is inevitable, though, and it will fall at the weekend. Soybean harvest has been put off in Brazilian state of Mato Grosso due to the rain, which will not lead to new floods.

Yesterday’s important news: FranceAgriMer projected lower corn stocks in France at the end of 2016 – 2017 by 300,000 tons down to 2.3 mln tons. Wheat stocks in France were increased by 150,000 tons up to 2.75 mln tons. USDA reported a new export sale of 128,000 tons of current yield corn to Japan.

Drought and winterkill have caused minimal damage to wheat in the USA so far. Damaged areas are local and will not affect the final result. Winterkill damage is limited in the Black Sea region, too, because of the snow blanket available. The winter-long low-temperature period is a bit alarming. The snow blanket has been melting for the past few days which puts crops in danger of freezing as a result of future temperature drop. There is no snow at all in some parts of Southern Ukraine. There is another scenario, of course, which includes the end of winter coming earlier than usual and no serious temperature drop anymore.

Farmers in the USA are about to decide what grain sorts are to be sowed in spring and time is running out. The current soybean/corn price ratio is over 2.5, which favours soybean. There has been a notable index decline for the past few weeks. Another option might be a reduction in spring wheat areas in favour of, let’s say, soybean. This will be another boost to wheat price increase in 2017. Spring of 2017 will be interesting and full of surprises!!!

Large wheat producers will reduce production worldwide with the USA, where the drop will be the biggest, leading the pack. There will be some growth in France, but Russia will be decreasing. Yield drop in the USA may reach 10 mln tons. Growth in France will be 10 mln tons while decline in Russia will be about 5 – 6 mln tons.

Analysts expect USDA will project the following corn, soybean and wheat ending stocks in the USA during the current season: corn 59.31 mln tons, soybean 11.15 mln tons, wheat 32.01 mln tons. Corn stocks worldwide will be 220.43 mln tons, soybean 80.93 mln tons and wheat 153.13 mln tons.

FranceAgriMer projected lower corn export from France in the current season down to 4.895 mln tons (-19.7%) as well as lower barley export of 4.485 mln tons (-41.6%). The agency went on to decrease its wheat export forecast, too. The latest forecast has been decreased by 35,000 tons upon the January one to 11.01 mln tons, which is a 46.4% drop on the previous season.

AgRural analysts projected higher soybean production in Brazil in 2016 – 2017г from 103.3 mln tons to 105.4 mln tons. 402,000 tons of wheat were exported from Brazil in January 2017, which is twice as much as last year. Export was 112,600 tons in December 2016. Wheat yield in the country has been 6.7 mln tons (+21%) in the season, but low-quality wheat share is on the rise, too. Wheat export from the country will grow to record 1.8 mln tons compared with the previous record of 1.32 mln tons st in 2014. 525,500 tons of wheat were imported in Brazil in January compared with 507,500 tons a year earlier and 506,000 tons in December 2016. Argentina hold a 67% share of the total import.

Palm oil stocks in Malaysia dropped by 10.7% at the end of January compared with the previous month down to 1.49 mln tons, which is the lowest level for the past five months. Palm oil production in the country decreased by 9.1% during the month down to 1.34 mln tons, which is the lowest level since the beginning of April 2016. 1.29 mln tons of palm oil were exported from Malaysia in January (+1% compared with December 2016). The relatively weak export was due to main clients such as India and China shifting to soybean oil purchase instead of palm oil.

Soybean price – Soybean futures in Chicago went 6 – 7 cents/bushel up yesterday. Analysts expect USDA will project in its February report 104 mln tons soybean yield in Brazil with a 2.5 mln tons lower soybean yield in Argentina.

Corn price – Corn futures in Chicago went 4 – 5 cents/bushel down yesterday. It is expected USDA will project 87 mln tons corn yield in Brazil with 36.5 mln tons corn yield in Argentina.

Wheat price – Wheat in Chicago went 6 cents/bushel up yesterday. Ethiopia demands 400,000 tons of wheat while Japan 111 522 tons.

Markets are currently quiet. There is no alarming news, demand is steady and everything is going as planned!!!