Grain prices in Chicago went through various changes on Wednesday as wheat went up. All grains prices went up in Paris with rapeseed the top riser.

The EUR/USD currency pair went up to 1.0697. Light oil increased to 48.40 USD/barrel.

For the second time in three months, the Federal Reserve (Fed) increased its benchmark interest rate by a quarter of a point amid rising confidence that the economy is going through a big growth. Investors are expecting signals as to how aggressive the Central Bank’s moves will be.

At Chicago stock exchange yesterday, a wave of closing short position was felt as a result of increased wheat demand worldwide – there have been huge auctions in the past few days. The strengthened Chinese currency has considerably affected the markets. The anticipated increase of the interest rates in the USA was important news yesterday.

According to official information, soybean processing in the USA was 3.87 mln tons in February, which was 0.09 mln tons lower than the market estimates and 2.3% lower than the February 2016 index. USDA projects a volume of 52.77 mln tons of soybean processing in the USA throughout 2016 – 2017. Low index levels are required in the next few months for this result to be achieved. Soybean meal production in February was 3.356 mln tons while export was 738,825 tons.

The fast soybean harvesting in South America is still burdening the trade, keeping in mind the situation in Brazil. As of March 14, 2017, 56% of soybean areas in Brazil have been harvested, which is faster than last season’s tempo and exceeds the average level for the past five years. 88% of the areas in Mato Grosso have been harvested while the percentage for Parana is 59%. Those two are the biggest and second biggest soybean producer states in the country.

Egypt bought 415,000 tons of wheat yesterday including 300,000 tons from Russia, 60,000 tons from Ukraine and 55,000 tons from France. Wheat from Russia, Ukraine, Romania, France and the USA was offered. The lowest auction wheat price came from Ukraine – 208.25 USD/ton C&F. The lowest FOB price was for American wheat 189.60 USD/ton. The price remained unchanged compared with the previous auction. The best C&F offers were:

- 60,000 tons of Ukrainian wheat at 195.00 USD/ton FOB + freight 13.25 USD/ton, a total of 208.25 USD/ton C&F.

- 60,000 tons of Russian wheat at 195.90 USD/ ton FOB + freight 12.39 USD/ ton, a total of 208.29 USD/ ton C&F.

- 60,000 tons of Russian wheat at 197.00 USD/ ton FOB + freight 12.50 USD/ ton, a total of 209.50 USD/ ton C&F.

Between the start of the season and now, 30.83 mln tons of grains have been exported from Ukraine including 13.97 mln tons of wheat, 4.7 mln tons of barley and 11.91 mln tons of corn. 2.7 mln tons of sunflower oil were exported from Ukraine in the first half of the season, which is 23% more than the previous year. Overall export of 5.2 mln tons (4.5) is expected before the end of the season.

According to a Rusagrotrans, 3.9 – 4 mln tons of grain will be exported from Russia in March versus 3 mln tons in the previous forecast. The forecast is 140% higher than March 2016. Wheat export estimate was increased from 2.3 mln tons to 3 – 3.1 mln tons, barley estimate was increased from 100,000 tons to 150,000 tons while corn estimate is up from 550,000 tons to 650 – 700,000 tons. Such monthly volumes are typical of the autumn months of the season. Russian export will be intensive in March mainly due to the increased wheat demand in Egypt.

4.75 mln tons of wheat were imported in Brazil between August 2016 and February 2017 according to information from Trigo & Farinhas Consultancy. Import has increased by 59% versus the previous year. Wheat imported from Argentina is much cheaper than the local production. The price difference between the Argentinian and Brazilian wheat in Sao Paulo, which is the Brazilian centre of wheat consumption, reached 23.5 USD/ton.

Last week, ethanol production in the USA grew by 23,000 barrels a day up to 1.045 mln barrels daily. Ethanol stocks in the USA decreased at the end of the week by 90 000 barrels to 22.766 mln barrels. Ethanol production in the USA has remained at over 1 mln barrels daily for the 20^th consecutive week.

There is no news of new export sales of corn from the USA which exceed 100,000 tons per deal. Interestingly, China keeps buying American corn not because of lack of corn, but rather because of lack of good quality corn. The fact that few quality corn lots can only be found in China comes as a surprise. China is on the barley market too. There is something wrong with grain stocks in China. They appear to be of poor quality rather than missing at all.

There is a lack of corn on the world market. This is the result of the poor 2016 safrinha yield in Brazil. The country is currently struggling to export anything. The first corn yield in Brazil, which is smaller in volume, is usually used domestically, while the second one is exported. Ukraine is currently not a strong corn exporter due to reduced stocks.

There have been more and more Brazilian soybean price discounts versus American soybean price. Brazilian soybean supply is growing as the harvest advances.

Corn price – Corn futures in Chicago went up yesterday. American corn export sales in the last week are estimated at about 700,000 – 1,000,000 tons from the old yield and 0 – 200,000 tons from the new yield.

Soybean price – Soybean futures in Chicago went down by 1 – 1.25 cents/bushel. A new cargo logistics terminal is to be completed at the Brazilian port of Santos. It will increase the port capacity by 20%. Export American soybean sales are expected at 400 – 600,000 tons from the current yield + 0 – 200,000 tons from the new yield. Soybean meal sales will be 150 – 300,000 tons + 0 – 50,000 tons. Soybean oil sales will be 5 – 20,000 tons + 0 – 20,000 tons.

Wheat price – Wheat futures in Chicago went up by 4.75 – 8 cents/bushel yesterday. There are fears that following a temperature drop to minus 9 degrees in the Midwest of the USA, about 10 – 15% of the SRW wheat will be damaged. Export sales of American wheat are expected at 250 – 450,000 tons + 25 – 200,000 tons.