Wheat and corn prices went down on Tuesday while soybean price increased. The changes were minimal. Corn and rapeseed prices in Paris remained steady, but wheat price went down.

The EUR/USD currency pair went up to 1.0800. Light oil decreased to 47.34 USD/barrel.

Oil prices jumped on Tuesday in the hope that OPEC’s production reduction agreement will be extended to any time after the end of June, Reuters reported. Moreover, high demand may gradually eliminate the oversupply at the global markets. Reuters reminds that OPEC and other big producer countries agreed to reduce supply by almost 1.8 mln barrels daily between January and June of this year so as to balance the market.

Wheat futures in Chicago had another decline following hope on the market that rain is soon to start in the USA’s Midwest. Rainfall will not be abundant, but it will slow down the process of damaging the crops following the long drought. Thus new rainfall will be expected. Crop condition evaluation is much lower than last year and positive change is not expected. The evaluation of crop condition in Kansas, Oklahoma and Texas worsened in the past week.

The current weather forecast predicts rain in the beginning of the next week as well as wetter April.

The announcement of the new rules for mixing biofuels into standard ones is expected in the USA. The market expects a stop in the development of the processes for a higher mixing level.

A slow start of the corn sowing in the USA is awaited. Generally, there is no ground for the new yield to be much higher than the previous one plus a subsequent price rise.

South America is the key soybean factor and there is no reason to worry there.

On the whole, things are looking up with the wheat in the Northern hemisphere. The only visible problem so far is the drought in the central parts of the USA. There are no problems in the EU, Russia, Ukraine and India. The situation in China is unclear, as usual. What we can see is that the country is increasing the import of good quality wheat and corn.

15% of the planned sowing in the Black Sea region is completed. Rain is expected in France in the next few days, which will dispel all suspicions of some sort of drought.

According to Agroconsult's March forecast, this season's soybean yield in Brazil will be record high at 111 mln tons. The February forecast projected 107.8 mln tons. Increase in the April forecast is quite possible. Oil World analysts are inclined to think that soybean yield in Brazil might reach 109 mln tons. The current forecast is of 105 mln tons. USDA projected a yield of 108 mln tons. The current forecast is over the usual 105 mln tons now and the new ones will go over 110 mln tons. Who will buy soybean from Brazil?

According to information by SEA, rapeseed yield in India will reach 7 mln tons in 2017, which is 20% more than the previous year. Rapeseed areas will be 9.3% larger up to 7.06 mln hectares. Rapeseed and soybean yield growth will lead to the decrease of oilseed oil import in the country.

On March 23, 2017 Turkey will carry out an auction for the purchase of 99,000 tons of barley fodder. Russia has been excluded from the list of possible suppliers. The situation is quite likely to change very soon.

In the oilseed oil sector, there is a change for the good with Indonesia. The USDA representative in the country projected 36.5 mln tons of palm oil produced in 2017 – 2018, which is +2.5 mln tons more than last year. The growth is due to rainfall levels going back to normal after El Niño hit the area. The meteorological service of Japan predicted a 40% possibility of El Niño occurrence in the summer of 2017. Despite the improvement, the forecast on palm oil export from Indonesia remains rather modest – growth of only between 0.5 mln tons and 25.5 mln tons. In 2014 – 2015, the production of palm oil in Indonesia was 33 mln tons and export was 25.96 mln tons. At the end of 2017 – 2018 palm oil stocks in Indonesia will be 2.93 mln tons or 74% growth in the current year. There are disputes in the country about the environmentally friendly usage of agricultural land. This slows down the recovery of a part of the crops which leads to a decline in production growth potential. Palm seed trade dropped by 20% in 2016. A tree usually yields after the third year of its planting. Maximum yield is achieved when the tree is between 7 and 18 year old and it only lives for 25 years.

Sunflower production in Ukraine will decrease in 2017 due to the need for farmers to complete the sowing turnover. USDA’s Ukraine representative projected a 2.5-mln-ton decline down to 11.2 mln tons while areas will be reduced by 14% to 5.2 mln ha. Sunflower areas in the country grew rapidly in the spring of 2016 following the winterkill on autumn crops in the winter of 2015 – 2016. As a result, large areas became vacant and ready to be sowed with sunflower and corn. In view of the steady sunflower production situation in the country, it can be assumed that a top level of production has been achieved and it will remain like this for a longer period of time. Sunflower production decline will lead to 19% growth of soybean areas up to 2.2 mln ha. Compared with 2016, rapeseed areas have also grown rapidly to 0.899 mln ha. Following the drop in the sunflower yield in Ukraine, decline in the export of sunflower oil is expected too, from 5.35 mln tons in 2016 – 2017 to 4.2 mln tons in 2017 – 2018. Sunflower meal export will go down by 1 mln tons to 3.9 mln tons. In the new season, sunflower oil price will definitely go up on the world market which will lead to sunflower price increase. The market will surely be stiff and prices will exceed this season’s ones.

The combination of the conditions in Indonesia and Ukraine will not allow oilseed prices to go down despite the big soybean yields.

Corn price – Corn futures in Chicago went down by 1.75 – 2.5 cents/bushel yesterday. There is a big discrepancy in analysts’ estimates on corn yield in Brazil – from 88 mln tons to 98 mln tons. Everybody projects the corn yield in Argentina at 37 mln tons.

Soybean price – Soybean futures in Chicago went up by 2 – 5 cents/bushel yesterday. The forecast on Soybean yield in Argentina remains quite high at 55 mln tons. March soybean import in China is estimated at 6.5 mln tons.

Wheat price – Wheat futures in Chicago went down by 1 – 3 cents/bushel yesterday.