The EUR/USD currency pair was down to 1.0684. Light oil went up to 52.49 USD/barrel.

“The American Oil Institute registered the second biggest rise in history“, an OANDA representative reported in Singapore. The increase amounted 14.2 mln barrels in the week prior to February 3 up to 503.6 mln barrels compared with the expected 2.5 mln barrels.

The market in Chicago reacted to the statement that American soybean is still a strong competitor to the currently harvested Brazilian soybean. Soybean demand remains high worldwide. Demand is expected to go further up after the end of the Chinese New Year celebrations. Soybean from Brazil is slow to reach the markets despite the fast harvesting in the country. The yield is excellent as the most common estimates are for 104 mln tons, with some even predicting 106 mln tons. Another reason for stocking soybean in Brazil, i.e. lowered sales on behalf of the farmers, is the strong national currency, which now marks a 19-month peak. We can conclude that soybean demand currently remains high with pressure from South America not very strong. The current situation brings US soybean back on the market due to Brazilian soybean being harvested at the moment. We can certainly expect soybean rise in the USA and price drop in Brazil until parity is restored so that sales from South America will be good. Soybean ending stocks decrease is also likely in the USA.

Wheat and corn prices were boosted by the market. USDA’s February report is expected today.

Ethanol production in the USA decreased by 6,000 barrels per day during the past week compared with the previous week down to 1.055 mln barrels per day. Stocks are grew by 215,000 barrels up to 22.09 mln barrels.

Corn price at the Dalian (China) Stock Exchange went up by 0.4% to 1,600 yuan/ton despite the decreased forecast for corn consumption in China. Chinese agency CNGOIC projected 0.5 mln tons higher corn consumption in China up to 197.6 mln tons. Corn fodder demand will be growing following government measures which will restrict the import of various cultures in the country. In January, the authorities increased the import tax on DDGA from the USA. Demand has grown by 21.5 mln tons to 176 mln tons compared with 2015 - 2016. Corn demand has been growing in China for the past few weeks. The governmental measures are causing effect. It is interesting to see how solvent Chinese farmers will be following the corn price decline in the past 1 – 2 years. Will that make the government intervene and increase farmers’ funding?

465,100 tons of sunflower oil were exported from Ukraine in January 2017 at a total of 354.71 mln USD. India with 179,760 tons or purchase equaling 137.1 mln USD, The Netherlands with 42,510 tons - 32.44 mln USD and Iran with 40,600 tons - 30.95 mln USD were the main buyers. Growth is significant and this does not allow the oil to increase in price, i.e. there is supply and demand, but the latter is not as high as we would like to see.

India has purchased 5.1 – 5.2 mln tons of wheat since the beginning of the current season, which is a peak level for the past 10 years. Over 1 mln tons of wheat were imported in the country in January 2017 alone with import reaching 400,000 tons since the start of February. Australia and Ukraine were the main suppliers. Ukrainian wheat is currently trading at 210 – 212 USD/ton C&F while the Australian is at 215 – 220 USD/ton C&F. The Premium class wheat is at 235 – 240 USD/ton C&F. Purchases will go down to 200 – 300,000 tons of wheat in the next months.

Ukraine is doing a good job with the export, despite the cold weather. India is still on the market, but the projected good yield of grains is making demand shrink. It is a pity that a main season-long buyer will leave the market in the new season. The Ukrainians will have to look for new markets.

In the current season, American farmers’ profit will go down by 8.7% upon 2016 to 62.3 bln USD. The decline follows a 4-year trend. Profit was 123.7 bln USD in 2013. Farmers’ debt is expected to grow by 5.2% more in 2017. The profit, though not very high, is some kind of consolation.

Wheat futures in Chicago had a minimal rise yesterday. Weekly export wheat sales from the USA are expected at 300 – 500,000 tons from the current yield and 25 – 100,000 tons from the new yield. Wheat export from Brazil was 1,254,817 tons in 2016 compared with 441,088 tons in 2015. 25.326 mln tons of wheat were exported from Russia in 2016 compared with 21.234 mln tons in 2015.

Soybean futures in Chicago went up by 14 – 16 cents/bushel yesterday in the wake of the new USDA report. Export soybean sales from the USA are projected at 500 – 800,000 tons + 100 to 250,000 tons, soybean meal 100 – 300,000 tons and soybean oil 5 – 20 000 tons. 6% of soybean areas in the Brazilian state of Parana have been harvested with 17% a year earlier. 97% of soybean areas are in a good condition. Celeres estimates soybean production in Brazil at 105 mln tons. Palm oil production in Malaysia is expected at 19 mln tons.

Corn futures went up by 2.25 cents/bushel in Chicago yesterday. Export corn sales from the USA are expected at 800 – 1,000,000 tons + 0 to 150 000 tons. 2.81 mln tons of corn were used for ethanol production in the USA during the past week. Celeres projects a corn yield in Brazil of 97.71 mln tons (first harvest 33.78 mln tons + safrinha 63.92 mln tons). The outcome is extremely high and, if achieved, the markets will respond with price decrease.