Wheat price in Chicago went up on Monday, followed by the corn. Soybean was down, but the three grains did not change much. Prices went up in Paris with rapeseed leading the trend.

The EUR/USD currency pair went down to 1.0602. Light oil decreased to 52.92 USD/barrel.

In January, OPEC oil production dropped by 890 thousand barrels per day on a monthly basis, the cartel announced in its monthly report. This was the confirmation that the member countries comply with the agreement for production reduction. Information from secondary sources also confirms that the reduction, agreed on November 30, is going as planned.

Wheat price went up in Chicago yesterday as farmers’ sales were rather slow. Soybean ended the day declining following the balance between demand and supply as well as the positive news of the new South American crop. Weather conditions in Argentina are still a liability. Rainfall in some of the drier parts of the country at the weekend had a positive effect on the crops. However, new rain is expected in the recently flooded areas.

In the long term, the bird flu epidemic in China will result in reduction of soybean meal and corn demand. About 30% of the birds in Guangdong Province are infected with the virus.

Corn in Chicago was in the black in Chicago yesterday following the strong export demand in the past few weeks. Weekly export checks on corn from the USA were 1.256 mln tons versus 1.124 mln tons a week earlier. USDA announced an export sale of 101,600 tons of corn to an unspecified buyer.

Record soybean crop is expected in South America. The market remains unchanged despite the price rise as nobody is willing to sell. This situation is the result of the steady world demand which is likely to remain for a few more months. Soybean import in China was 7.66 mln tons in January, which is a huge 34% more than January 2016. If the soybean import pace remains in China until the end of 2016 – 2017, the total amount of import will be 88 mln tons, which is 2 mln tons higher than the USDA forecast. Traditionally, soybean import in China is strong in the next months. The Ministry of Agriculture of China expects soybean import in China will mark only 3.3% growth in 2016 -2017 versus 2015- 2016. Meanwhile, the USA expects soybean export growth will rise by nearly 6% for the same period up to 59.5 mln tons. Soybean processing companies in China keep a margin of 0.24 USD/bushel versus 0.31 USD/bushel a week earlier and 0.78 USD/ton a year earlier.

Still, the Chinese have an alternative source and that is Brazil. 911,800 tons of soybean were exported from Brazil in January, including record 745,400 tons to China. Analysts consider current soybean futures high keeping in mind the new soybean yield in South America. Sales from the USA remain surprisingly high considering the new soybean yield in Brazil. This keeps the price in Chicago high.

Corn price remains steady due to the high export demand and traders’ concerns that corn areas in the USA will be reduced in 2017. The current soybean/wheat price ratio is just over 2.5, but it has been declining in the past few weeks. Corn supply in the USA is very high, but world demand is on the rise. A large corn area reduction in the USA now will change the situation worldwide dramatically.

Things are clear with the wheat. Demand is high, even very high, but the big stocks are still keeping the situation under control. Problems are expected, which will push the price up. Currently, the drought in the wheat belt of the USA is the main issue. In fact, we now have spring temperatures of +15+25 degrees Celsius in Texas, Kansas and Oklahoma. There is no rain, however, and this will be the problem in the next few weeks. The projected new season reduction of wheat areas in the USA may result in lower wheat supply. Generally, it is hard to predict a huge wheat stock decline worldwide, but the reduction will affect only the amount which is for sale and not the long-term stocks.

725,200 tons of grain were exported from Ukrainian sea ports between February 4 and 10 versus 639,900 tons a week earlier. The export included 231,000 tons of wheat, 432,100 tons of corn and 62,100 tons of barley. India with 112,800 tons, Spain with 109,100 tons and  Egypt with 60,600 tons were the biggest buyers.

417,200 tons of grain were exported from Russian sea ports between February 3 and 9 versus 375,400 tons a week earlier. The export included 339,900 tons of wheat, 65,500 tons of corn and 11,800 tons of sunflower. Egypt with 126,700 tons, India with 105,100 tons and South Korea with 58,000 tons.

Information from Russia states that 23.088 mln tons of grain were exported from Russia between the beginning of the season and February 8, 2017 versus 23.109 mln tons a year earlier. Wheat export was 17.939 mln tons (+4.5% upon 2015 – 2016г), corn export was 2.993 mln tons (+30.0%) and barley export was 1.996 mln tons (-42.3%).

Demand for grains from Russia and Ukraine remains high. The level was the same back in 2015 – 2016. With this export tempo, it is quite unlikely for Russia to lower its wheat stocks.

9.0 mln tons of wheat were exported in Canada in the first 27 weeks of the current season, which is 19% lower than the previous year, CGC reported. Soft wheat export dropped by 21% to 6.9 mln tons while hard wheat export went down by 13% to 2.2 mln tons.

Snowstorm in the USA restrict the export from the country, namely delivery to ports in the Gulf of Mexico. Asian buyers turn to alternative suppliers such as China, Australia and Russia. Attempts for delivery from Brazil and Argentina will take much longer than the three countries mentioned above.

Wheat price – Wheat futures went up in Chicago yesterday. American wheat export checks went down by 55% to 307,506 tons versus last week, but this is 20% higher than last year’s corresponding week. Since the start of the season, export has been +3.64 mln tons higher than the previous year. ABARES reported that this season’s wheat yield in Australia is 35.13 mln tons – a new record. USDA projected a 33-mln-ton yield.

Soybean price – Soybean futures went down by 4.25 – 4.75 cents/bushel in Chicago yesterday. Weekly American soybean checks were 1.145 mln tons, which is 69% of last week’s amount and 34% less than last year’s corresponding week. 18% of soybean areas in Brazil have been harvested with an average level of 11%. ABIOVE estimate Brazil’s soybean production at 104.6 mln tons versus 101.7 mln tons in December.

Corn price – Corn futures in Chicago went slightly up yesterday. Last week’s corn export from the USA was 1.255 mln tons (+11.8% and +180%). Since the start of the season, export has been 10 mln tons higher than last year (+72%). Since the start of the season, sorghum export has been only 59% of last year’s amount.