Grains prices in Chicago went straight up on Wednesday with soybean at the top. In Paris, rapeseed and wheat were on the rise while corn went down.

The EUR/USD currency pair went up to 1.0621. Light oil increased to 53.07 USD/barrel.

Crude oil prices went down on Wednesday after the growth during the session in the USA. This was the result of increased American supply being higher than expected. American Petroleum Institute reported late on Tuesday of a 9.9-million-barrel growth in American crude oil supply in the week prior February 10. Analysts had projected increase of only 3.25 mln barrels.

Grains prices went up in Chicago yesterday following the news of the weakening American currency and growing fear of inflation in the USA. In many of the world’s exporter countries national currencies grow steady, domestic prices fall and farmers are unwilling to sell at the moment. Growth in Brazilian and Russian currencies is a good example; they have grown by 23 – 25% on their levels from a year ago. However, denominated in Russian ruble wheat prices have dropped by 30% while soybean in Brazil have decreased by only 10%. Currencies will be a major factor in the following months. Russian ruble reached the level of 56.45 rubles per dollar yesterday, which is the highest level since July 2015. There has been a 6% increase since the beginning of the year. Russia is a major competitor for the American wheat and ruble strengthening immediately increases the prices in Chicago. The Russians have wheat excess, but farmers are not that aggressive so that they could cause a drop in prices worldwide.

Spring wheat has a considerable share of the total wheat areas in Russia. Farmers are willing to change the traditionally wheat areas with other grains. This, matched with smaller areas in the USA, will boost prices in 2017 – 2018. Two out of three top wheat exporter countries in the world are expected to report much smaller production.

Official data on soybean which has been processed in the USA in January reads 4.36 mln tons or 0.27 mln tons over the market projection. The news has boosted soybean price in Chicago.

Ethanol futures went up in Chicago yesterday following news of production decline. There was a weekly drop of 15,000 barrels per day down to 1.04 mln barrels. However, there was a weekly increase in stocks of 415,000 barrels up to 22.5 mln barrels. Corn consumption for ethanol production was over 110 mln bushels for five weeks in a row before it dropped to 109.2 mln bushels last week.

Wheat price increase affected corn price too. USDA reported an export sale of 229,000 tons of corn to Japan. On four of the first ten work days in February, USDA reported export corn sales from the USA of more than 100,000 tons.

A law bill has been discussed in Mexico which will redirect corn purchases from the USA to Brazil. Investors believe this is quite unlikely and economically speaking it is almost impossible. Brazil will have a large corn yield. This, however, cannot increase its export potential enough to allow Mexico to import corn from this country only. Brazil will have to deal with its domestic stocks first and then consider export. If Mexico starts buying from Brazil, Brazilian prices will rocket sky-high. Meanwhile, the USA is offering a lot of corn at affordable prices combined with low transport costs. This kind of change is currently impossible. If American-Mexican relations deteriorate even further, it is possible that Mexico will make a fraction of its buying from South America.

Wet weather conditions in Argentina facilitate grain growth. Rainfall is not abundant, but still there is some. Most rainfall is expected at the weekend. The excellent soybean growth as well as the quick safrinha start are the highlight of the day in Brazil.

Ethanol import in China will go two-thirds down in 2017 versus 2016 following the introduced import restrictions. The import will be only 300 mln litres versus 853 mln litres in 2016. Ethanol production in China will reach 3,550 mln litres in 2017, which makes a 12.6% growth on a yearly basis. Production is expected to rise to 6,335 mln litre before 2020.

India is looking forward to a strong grain production year. Indian farmers will harvest 271.98 mln tons of grain in the new season. The result will be higher than the previous record of 265.04 mln tons set in 2013 – 2014. The forecast comes from the country’s Ministry of Agriculture. The previous two seasons were plagued by drought. Grain yield in India was 251.57 mln tons in the last season. Wheat, rice and oilseeds yields will break the records in the current season. Wheat yield will reach 96.64 mln tons (92.29 mln tons in the previous year), which will be 0.79 mln tons more than 2013 – 2014. In the current season, the Indian government is planning to buy 33 mln tons of wheat from farmers versus only 22.96 mln tons in the previous year. The buying campaign will start in April. The strong wheat yield will not increase stocks, but at least it will reduce the need for import. We should, however, keep in mind that this is government information and it has been much higher than reality for the last two years.

35.1 mln tons of grains were exported from Argentina in 2016 (+40% versus 2015), Senasa reported. Corn export reached 22.9 mln tons breaking the 2013 record of 20.3 mln tons. Compared with 2015, corn export has grown by 33%. Wheat export reached 8.9 mln tons, which is +204% more than 2015. The high growth is due to the fact that export wheat and corn taxes were revoked at the end of 2015. Reforms in the country are really fruitful. The country has become an even bigger corn and soybean producer and exporter worldwide.

There has been no decline in the price of white Argentinian premium wheat APW despite the record wheat yield level in the country. ABARE’s latest grain estimate for the country is at 35.1 mln tons. This estimate is 2 – 3 mln tons higher than the previous one and 45% over last year’s level. Wheat price is steadily over 210 USD/ton FOB West Australia. The market has already registered the record yield and the new figures have been on traders’ minds for some time now. Latest data states that, as of February 14, 2017, the price of APW to be delivered between April and June is 213 – 215 USD/ton FOB West Australia, which is 3 USD/ton over the price of February 10, 2017. The price was affected by the growing price in Chicago.

Soybean price – Soybean futures in Chicago had a considerable increase. Export soybean sales form the USA will be within the margin of 500 – 750,000 tons from the current harvest and 50,000 tons from the new harvest. Soybean meal sales are being projected at 150 – 350,000 tons and soybean oil 8 – 30,000 tons.

Corn price – Corn futures in Chicago jumped by 3.5 – 4.5 cents/bushel yesterday. Weekly export corn sales from the USA are expected between 900 and 1,100,000 tons + 0 – 150,000 tons.

Wheat price – Wheat in Chicago was on the rise too yesterday. Winter wheat in the USA was boosted by the unlikely warm weather in the country for the past few days. This brings fears of a premature growth and winterkill hazard. Export wheat sales from the USA are expected at 300 – 500,000 tons for old grains and 0 – 50,000 tons for new ones. There are current market offers of over 100,000 tons from Japan, Morocco, Jordan, Ethiopia and Taiwan.

There is no current growth or decline catalyst on the market. Price levels are steady. This is due to high demand considering the big stocks.