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

The EUR/USD currency pair went down to 1.0756. Light oil went up to 49.44 USD/barrel.

Oil producers in the USA are defending themselves against the falling oil prices – a move which can prolong the process of stopping the global overconsumption of light crude oil. A Wood Mackenzie analysis showed that American companies were quick to sign futures deals for oil delivery at higher prices after the market recovery late last year.

Today will be a big day for the grain markets and the whole grain year – it is the end of the week, the month, the quarter and important news is expected from the USA. There was no important news on Thursday. Markets have been quiet waiting for today. Why is today such a big day?

 It seems like the market is hungry for more and more soybean areas. The question, however, is how much corn and wheat will be substituted for soybean. Today’s forecast is by far not the final one. A lot of producers will listen to it and then head in the opposite direction in the hope of getting a higher price for the deficit commodity.

Export sales of American soybean between March 17 and March 23 were 681,000 tons from the old yield + 315,600 tons from the new yield. The market estimated sales between 450,000 and 850 000 tons. High demand for American soybean is still on and will probably last a bit longer. As of the moment, Brazilian farmers have sold 45% of the 2016 – 2017 soybean yield, which corresponds to the average yearly level, but is still 20% less than last year. The index is considered low keeping in mind the fast harvesting speed. The slow sales tempo is related with the price decreasing, which are currently at their lowest level for the past two years. Sales decline is the result of the Brazilian Real getting cheaper. Sales are expected to go up before safrinha harvesting.

USDA announced an export sale of 165,000 tons of soybean to China.

There are amounts of soybean, but only part of them is on the market. In that case, can we even hope for soybean price growth in South America? It is a tough question. The corn price/wheat price ratio has been decreasing steadily for the past two months reflecting the expectations for an increase of soybean areas in the USA.

American wheat export sales took advantage of wheat price decline and rose rapidly to 464,100 tons + 163,500 tons versus the expected 300,000 – 650,000 tons.

There will be slight rain in some parts of Argentina in the next few days, but no damage will be caused to the harvest. Brazil remains relatively dry and campaigns are advancing at full blast. There will be some rain in Brazil in the middle of next week.

IGC announced yesterday its first forecast on the world grain balance in 2017 – 2018.

1. Grain total – Grain production in the new season will be 2,050 mln tons worldwide versus 2,106 mln tons in the current season. Grain consumption will be 2,079 mln tons (2,072) while ending stocks will be 484 mln tons (513).

2. Wheat – Wheat production will be 735 mln tons (754), consumption - 740 mln tons (737), and ending stocks 234 mln tons (239).

Wheat yield in Russia will be 67 mln tons (72.5), in Ukraine 24.5 mln tons (26.8), in the USA 50.2 mln tons (62.9), in the EU 150.3 mln tons (144.7), in Australia 25.6 mln tons (35.1), in China 128.3 mln tons (128.9), in India 95.5 mln tons (86.0). With wheat, the trend of market rise is breaking. The level of production will be lower than consumption.

3. Corn – Corn production in the new season will be 1,024 mln tons (1,053), consumption 1,044 mln tons (1,038) and ending stocks 205 mln tons (225).

Corn production in Argentina will be 39.8 mln tons (42.5), in Brazil 87.1 mln tons (89.0), in the EU 63.0 mln tons (60.5), in Ukraine 28.5 mln tons (28.0), in the USA 360.0 mln tons (384.8), in China 215.8 mln tons (219.6). Corn will give a momentum to grains trade with a huge decline in ending stocks, which will guarantee its price rise.

4. Soybean – Soybean production in the new season will be 345 mln tons (341), consumption 347 mln tons (335) and ending stocks 35 mln tons (38).

Soybean production in Argentina will be 58.0 mln tons (56.0), in Brazil 110.0 mln tons (107.0), in the USA 114.0 mln tons (117.2). Soybean stocks are on the decrease too, despite yield growth. The situation here seems quite unstable because both the yield and demand are on the rise. Yield is unlikely to grow so fast every year.

5. Rice – Rice production will be 487 mln tons (483), consumption 486 mln tons (482) and ending stocks 119 mln tons (118).

On the whole, the balance looks good and we can expect stabilizing of the prices. A cycle of stocks decreasing and produce price growth is about to start. This will be easily visible in 2018 – 2019.

Corn price – Corn futures in Chicago went up by 1 cent/bushel yesterday. American corn export sales between March 17 and March 23 were 716,900 tons from the old yield (-47% versus last week and -28% versus the average level for the past 4 weeks) and 125,000 tons from the new yield. Corn export was 1,402,800 tons. Peru, Mexico, Japan, Colombia and South Korea were the biggest buyers. The latest estimates on corn stocks in the USA as of March 1, 2017 are 216.67 mln tons and 2017 American corn area estimates are 90.969 mln acres.

Soybean price – Soybean futures in Chicago went down by 4 – 6.25 cents/bushel yesterday. Agroconsult estimated soybean yield in Brazil at 113.3 mln tons. American soybean export sales were 681,000 tons (+15% and +42%) + 315,600 tons. Export reached 951,500 tons. Germany and Mexico were the biggest buyers. Soybean meal sales were 162,600 tons + 1,000 tons. Soybean oil sales were 12,500 tons. The 2017 soybean areas in the USA are estimated at 88.214 mln acres while soybean stocks in the country are estimated at 45.80 mln tons as of March 1, 2017.

Wheat price – Wheat futures in Chicago went down by 3 – 4 cents/bushel yesterday. American wheat export sales were 464,100 tons (+11% and +33%) + 163,500 tons. Export reached 495,400 tons. Saudi Arabia and the Philippines were the biggest buyers. Wheat stocks in the USA are estimated at 44.25 mln tons as of March 1, 2017 while the 2017 wheat areas are projected at 46.139 mln acres.