Wheat and corn prices remained steady in Chicago on Tuesday while soybean price went down. Grains prices went down in Paris with rapeseed being the top mover.

The EUR/USD currency pair went down to 1.0609. Light oil went down to 47.72 USD/barrel.

OPEC increased its oil production estimates for 2017 outside the cartel after American schist companies increased their activity in response to the higher prices. The new estimates predict that non-OPEC countries will increase their production by approximately 400 thousand barrels daily this year up to an average of 57.7 mln barrels daily, OPEC announced in their monthly report.

Wheat and corn prices remained steady in Chicago yesterday. Demand from China boosted corn prices. Soybean prices matched the fall in oil prices. Oil remains №1 at the world markets pushing down the grain oil market worldwide. Saudi Arabia announced yesterday their intention to increase oil production to over 10 mln barrels daily after non-OPEC countries take full advantage of the restrictions introduced a few months ago.

Fresh news from South America is in short supply. Weather conditions remain very good there and there is no reason we should worry about any damage.

Temperatures in the USA will be high with limited rainfall. Rain is expected in some parts of Nebraska, Kansas and Oklahoma in the next few days, but it is not clear how well soil humidity will be preserved. The dry weather forecast for April remains despite the rainfall.

The latest USDA report states that winter wheat crop condition in the southern parts of the Great Plains of the USA is getting worse due to the drought. 40% of the crops in Kansas have been in excellent condition for the past week versus 43% a week earlier. The combination of high temperatures and low soil humidity in this period has a negative effect. The drought in Oklahoma is even worse and 42% of the crops (43%) are in good or excellent condition. Crop condition in Texas is getting better, but still remains relatively poor – 35% (34%).

There are rumours on the market of at least 3 lots of corn with a total volume of 195,000 tons which will be exported to China from the Western Coast of the USA. This will be the biggest American corn purchase which China will have made since 2013. According to other calculations, the volume in question is 500,000 tons. China has huge corn stocks, but demand for and import of high quality grain will be rising. USDA reported an export sale of 120,000 tons of 2017 – 2018 corn from the USA to Mexico.

Massive South American corn supply is expected in the next 4 months. As a result of this, the price of river transport in the USA is decreasing. Big corn export from the USA is more and more unlikely in the summer, which will not give us the chance to see a re-run of the summer of 2016. The same goes for soybean in the USA.

AgRural reported that, as of March 9, 2017 56% of soybean areas in Brazil have been harvested, which is 4% higher than the previous year and 9% more than the average index for the past five years. In the biggest soybean producer state in the country – the state of Mato Grosso - 88% of the areas have been harvested with an average of 70%. 88% of the planned safrinha areas have been sowed, which is 5% higher than the average level.

World wheat supply is currently quite high. However, all big importers (Algeria, Tunisia, Saudi Arabia and Egypt) have made in the past 15 days or are yet about to make huge purchases. This exhausts cheap wheat supply, so its price is gradually rising. Depleted Ukrainian wheat stocks are a good example and the country can now offer only more expensive wheat. Only 66,600 tons of wheat have been exported from Ukraine in the past week. There are huge stocks of wheat in Russia, but they need to be transported from the central parts of the country, so their FOB price will rise.

During the current marketing year, Egyptian authorities have limited to a minimum the use of private storage areas for grain storing. 2 mln tons of last year’s 5-mln-ton wheat purchases were probably speculative. State storage areas in Egypt have a capacity of 4.2 mln tons of grain. During the new campaign, the government is planning to buy 4.5 mln tons of wheat from the farmers. Egypt’s state company GASC is obviously bound to be on the wheat market until the end of the 2016 – 2017 marketing year.

American farmers are preparing to sow huge areas of soybean in 2017. A survey among farmers, carried out by Allendale, shows that soybean areas are to increase by 6.5% versus 2016 up to 88.825 mln acres. USDA has projected areas of 88 mln acres, whereas Informa has projected 88.02 mln acres. Soybean areas will be much larger than last year, but production is likely to decrease even with normal weather conditions until the end of summer. The yield is estimated at 112.6 mln tons versus 117.2 mln tons in 2016. Informa projected yield of 115.1 mln tons as a result of 1 bushel/acre higher production.

Corn areas have been projected at 90.02 mln acres, which is 3.99 mln acres lower than 2016 and nearly matches the USDA forecast. Corn yield will decrease by 33 mln tons. Informa projected corn areas to be harvested will be 83.428 mln acres and 361.2 mln tons of yield.

Wheat areas will be 45.97 mln acres and yield will decrease by 12.3 mln tons to 50.6 mln tons.

The overall balance is favourable for price growth for all grains as long as demand does not decrease worldwide.

Corn price – Corn futures in Chicago went up by 1 cent/bushel yesterday. South Korea is looking for 65,000 tons of corn and Taiwan needs 40 – 65,000 tons. China has probably purchased 195,000 tons of corn from the USA. USDA reported an export sale of 120,000 tons of corn to Mexico, but only from the new harvest. Demand is far from going down. The question is who is willing to sell corn and that might be South America.

Soybean price – Soybean futures in Chicago went down by 6.75 – 7 cent/bushel yesterday. Soybean production in Brazilian state of Mato Grosso is 10% higher than last year.

Wheat price – Wheat futures in Chicago remained steady yesterday. Japan is trying to purchase 146,455 tons of wheat. Egypt wants to buy 55,000 tons of wheat from the USA.