Over the past week, the currency pair EUR/USD rose by 0.0146 to 1.2166. The price of US WTI crude oil increased by 1.32 USD/barrel to 64.90 USD/barrel.

Oil prices have risen for a second week in a row as investors rely on rising energy demand given the rising commodity prices, with strong trade data in China highlighting the ongoing recovery of the global economy from the coronavirus. The rise in oil prices reflects the general rise in commodity prices, which raised the Bloomberg Commodity Spot Index to its highest level since 2011.

For the past week, CBOT July SRW wheat futures prices rose by 27 cents to close at $7.61 3/4 a bushel.

Over the previous week, Chicago July corn futures prices closed at $7.32 1/4 a bushel, up 59 cents.

For the past week, the prices of July soybean futures in Chicago increased by 55 1/2 cents to close at $15.89 3/4 a bushel.

Chicago fund positions (futures + options) for the week ended May 04:

*Source: CFTC

Accumulated US Export Sales for the week ended April 29:

*Source: USDA

There has been low rainfall in the United States over the past week. In Western Europe, the situation was similar. Drought began to be felt on the Balkans. In Ukraine, the humidity is at relatively good levels so far. The humidity is good in the southern parts of Russia, but there is much to be desired in the center parts. In Brazil, the drought is deepening in the central parts of the country. Favorable conditions are expected in Argentina throughout the next week. Over the next 10 days, there will be precipitation in places in the US Corn Belt, but not in large volumes. In some areas, night temperatures will drop to -1 degrees. Precipitation in the US Wheat Belt is expected over the coming week. It will remain dry in the areas with spring wheat. In Canada, the drought is deepening. This could lead to a significant reduction in wheat and canola production estimates in Canada. In Western Europe, cool weather with light rainfall is predicted. Exceptions will be areas in Germany where it will rain a lot. Weather will be warm without precipitation on the Balkans and in Ukraine. Rainfall is expected in the southern and central parts of Russia. Large proportion of the areas will remain without precipitation in the central regions of the country. It will rain in the southern and eastern parts of Australia. The western part of the country will remain dry. Weather will remain hot and dry in central Brazil. There will be precipitation in places in the southern regions. There will not be any rainfall in Argentina in the coming week.

GRAIN EXPORTS:

* US (September - August)
* Russia, Ukraine and EU (July - June)

Russia was on holiday during the week and exports were probably not very strong. Exports from Ukraine are at a very low level after the rise last week. Exports from the United States are at a good level but export sales for the previous week were not strong.

On Friday, China bought 1.36 million tons of US corn from the new crop. Private exporters also sold 87,000 tons of corn from the old crop and 102,000 tons of the new corn crop. The USDA is expected to lower its forecast for the 2020/21 corn production in Brazil by 5.8 million tons to 103.2 million tons. The lowest expectations are for a corn production of 99 million tons in Brazil. It is believed that China has already bought 5-6 million tons of US corn from the new crop. There are still 12 million tons of corn to be exported to China, but this will definitely happen by the end of the season. Given China's actions, some analysts estimate that China will have corn stocks of only 50 million tons, compared to 196 million tons expected by major analysts.

On Friday, corn futures prices in Chicago rose again mainly due to significant Chinese purchases and dry weather in Brazil. The forecasts for the corn production of over 100 million tons in the United States will only be achieved if there is a sufficient rainfall from now on. However, the weather forecast does not show significant precipitation over the next 10 days, ie. until May 18. If weather remains dry until the end of the month, the corn production is expected to be within the range of 85-90 million tons. It is this perspective that is driving markets up. We can no longer expect China to cancel any purchases from the United States by the end of the season or to transfer them to the next because these deals are made at much lower prices.

Brazil is usually the world's main corn exporter over the period of July - September. From October onwards, the countries of the northern hemisphere - the United States and Ukraine - take over. With this development of the rainfall situation and the growing domestic consumption of corn in Brazil, the country will be able to export a maximum of 20 - 22 million tons of corn at high prices. This means that there will be an export potential loss of 15 - 17 million tons of corn from Brazil. Where will this amount come from? Mainly from the United States and a little from Ukraine. Luckily, the United States are expected to have ending corn stocks of 32-35 million tons and the US could easily export another 10-13 million tons at high prices. Corn exports from Ukraine are going quite slowly and the country will probably end up having an additional 2-3 million tons to export in order to fulfill the memorandum. In this situation, the ending corn stocks in the United States will be within 23 - 27 million tons, which is considered low. The new corn crop will be very important for stabilizing the stock level. So far, the sowing campaign of corn in the United States is going quite fast and is expected to exceed 70% by the end of the coming week. The weather is not very warm and there is less precipitation, ie. the weather is not too dry. One month ago, Chinese authorities launched a process to redirect corn consumption in feed by replacing it with wheat. However, large quantities of the new corn crop are already being bought from the United States. For 2019/20, the feed consumption of wheat in China was 15 million tons and for 2021/22 it is projected at 35 million tons.

Over the past week, the corn market was a key driver for the whole sector and it set the rate of appreciation of other soft commodities. Corn prices are now at an 8-year high. The growth is historic because the price has doubled in less than a year. On Friday, the US currency fell sharply which additionally boosted to prices.

During the week, drought in the northern United States kept wheat prices low. Drought in the northern states of the United States and Canada will definitely lower wheat yields in these regions. There are already intentions to reduce the wheat areas and increase soybean and corn areas. The transition will be supported by high crop prices, which will provide a profit for farmers even at not very good yields.

The Statistical Office of Canada reported wheat stocks in the country as of 31.03.2021 of 16.231 million tons compared to 18.781 million tons as of 31.03.2020, the lowest level for the last 5 years. ICAR has lowered its forecast for the Russian wheat production in 2021 to 79 million tons. The condition of wheat crops in France continues to deteriorate, but so far the condition estimates ​​are well above last year's levels.

During the previous week, soybean prices rose along with corn prices. The low level of soybean stocks in the United States and good demand for soybeans were the key reasons for the price growth. On the other hand, oil prices remained high which supported the oil segment. It is important to note that palm oil performed strongly and reached new peaks during the past week. The price of other vegetable oils either remained unchanged or slightly decreased. As prices rise, we can see a reduction in soybean processing in the world.

The Statistical Office of Canada reported canola stocks in the country as of 31.03.2021 of 6.572 million tons (-37%). Soybean stocks also fell to 1.967 million tons (-30%). Canola prices in Canada rose to a new record of 1,000 USD/ton.

In Argentina, 50% of the soybean areas have been harvested compared to 78% a year earlier. So far, a soybean production of 43 million tons is expected, but yields seem to be above expectations and we will probably see an increase. The sowing campaign of soybeans in the United States is going at a very fast pace and may exceed 50% this week.

Commodity prices around the world are generally rising. Insufficient rainfall around the world is further pushing prices up. During the week, palm oil prices increased rapidly. There is now a new rise in the prices of corn and soybeans in China - against the background of very strong imports not only of these two crops, but also of wheat, sorghum and others. In April, 7.45 million tons of soybeans were delivered to China, which is 11% more than in April 2020. The growth is due to delayed supplies from Brazil, which had a problem with loading in March and delays in the harvesting campaigns. Authorities in China have announced that they are successfully handling the food production in the country. It was stated that wheat crops are in very good condition - above 2020 levels with increased wheat areas.

In April, 922,000 tons of meat were imported to China, which is 6.9% more than in April 2020. Grain imports are not enough to meet the consumption of meat and more is imported. China is expected to maintain the import levels of all crops in 2021/22. However, markets are now closely monitoring the situation to determine at which price levels demand will decline. For now, prices on the physical market are lagging behind the stock market prices. How high can prices go? In 2012 (after the drought in the USA) the price of corn reached 8.25 USD/bushel and soybean price reached 18 USD/bushel. If something in the US goes wrong over the next 3 months, current crop values ​​may seem very cheap even if more acres are sown in the United States than the USDA forecast from March.

On 12.05.2021 (Wednesday), the USDA will publish its May report on the state of the world's grain balance in 2021/22 which will be the first forecast for the new season. Until then, prices will adjust according to the expectations of the report.

Changes in FOB Prices of key exporters:

For another week, FOB prices of crops around the world continued to rise. There were a few exceptions, but overall the growth was significant.

Wheat - During the past week, FOB wheat prices continued to rise for the fifth consecutive week. Black Sea wheat price remained unchanged, but this may have been due to the holidays in Russia and Ukraine. The FOB price of Black Sea wheat continues to lag significantly behind wheat prices of other major exporters. The difference to the nearest price of French wheat is 17 USD/ton. This time, Australian wheat with delivery in June was priced at 295 USD/ton.

Corn - Throughout the past week, FOB corn prices continued to rise rapidly. The FOB price of Brazilian corn with delivery in August, ie. new crop, continued to rise this time by 40 USD/ton to 303 USD/ton.

Soybeans - Over the previous week, there was an increase in FOB soybean prices. The FOB price of Brazilian soybeans rose by 26 USD/ton to 577 USD/ton.

Black Sea crop prices (compared to the previous week):

FOB prices of Russian wheat remained unchanged. However, the prices of the new crop have risen significantly. Prices of barley and corn from the new crop also rose. Sunseed oil prices have fallen but the price of the new sunseed oil crop remained stable.