Over the previous week, the currency pair EUR/USD fell by 0.0070 to 1.1865. The price of US WTI crude oil rose by 1.11 USD/barrel to 75.16 USD/barrel.

Oil prices rose to about $75 a barrel after OPEC+ postponed a long-awaited decision to increase production levels. A jump in prices is expected if the group fails to reach an agreement. The alliance was forced to postpone the decision on the output after the United Arab Emirates blocked the deal. Prior to the failure of negotiations, the group had reached a preliminary agreement to increase production by 400,000 barrels per day each month from August to December to meet growing demand as economies recover from the pandemic.

Over the previous week, CBOT September SRW wheat futures prices rose by 12 cents to close at $6.52 3/4 a bushel.

Throughout the past week, Chicago December corn futures prices increased by 60 1/2 cents to close at $5.79 3/4 a bushel.

During the previous week, the prices of November soybean futures in Chicago rose by 125 1/4 cents to close at $13.99 a bushel.

Chicago fund positions (futures + options) for the week ended June 29:

*Source: CFTC

Accumulated US Export Sales for the week ended June 24:

*Source: USDA

Last week, there was rainfall in the central and eastern parts of the US Corn Belt. Drought remained in the west and northern states of the United States and Canada. There was no rainfall in Western Europe and temperatures were high. In the Black Sea region, weather was warm with precipitation. It rained in Australia. Weather was dry in Brazil and parts of Argentina. Over the next 10 days, weather in the US Corn Belt will be warm with precipitation in places. Weather in the US Wheat Belt will be hot with little rainfall. In Canada, cool weather with expected moderate rainfall. In Western Europe - cool weather with precipitation. On the Balkans, weather will be warm to hot with almost no precipitation. In Ukraine, warmer weather with moderate rainfall. In Russia - gradual warming with moderate rainfall in the south. Light rainfall is expected in Indonesia and Malaysia. In Australia - moderate rainfall in places. In the central parts of Brazil, weather will be hot and dry. In the south, weather will be cool with minimal precipitation. No precipitation is expected in Argentina. In Canada, the drought is deepening. There are no problems in Europe so far. In Australia, weather conditions are excellent for the new wheat crop. In Brazil, weather will be generally dry and the damage to the corn crops will deepen. In Argentina, normal weather conditions for the development of the new wheat crops.

GRAIN EXPORTS:

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

Exports of all crops from the United States are weak. Export sales of wheat and corn - new and old crop - were also weak. Last week, China purchased soybeans from the new crop from the United States. Russia's wheat exports are good for the end of the season.

During the previous week, the key driver of the market was the report on the quarterly stocks as of 01.06.2021 and the crop areas for 2021 in the United States.

Wheat stocks in the United States as of 01.06.2021 were 22.95 million tons, which is slightly below expectations. Wheat areas in the United States for 2021 reach 33.683 million acres compared to 30.1 million acres in the March estimate and 33 million acres now expected from the market.

In the United States, the harvesting campaign of winter wheat continues. Yields and quality are good. The problems with spring wheat continue and are expected to be partially solved with the expected rainfall in the northern states. In general, the wheat production in the United States will be within 49-50 million tons. Wheat productions will be excellent - this is indicated by the first yields. There is a high probability that the wheat prices in the new season will be lower than last year.

In 2021, China will import up to 12 million tons of wheat, which is over 40% more than in 2020 and this would be the highest level for the last 25 years. This is mainly due to the growing consumption of wheat for feed in the country and the heavy rainfall that has worsened the quality of the wheat production. According to some estimates, the authorities have sold more than 45 million tons of wheat from the state reserve. 38 million tons of this amount were used for feed. Authorities stopped wheat tenders in May and they are not likely to resume soon.

Wheat crops in Australia and Argentina are in very good condition. There is now heavy rainfall in Australia, something that has not been seen in recent years.

As of June 1, 2021, corn stocks in the United States were 104.4 million tons, which is slightly below the average expected value. Corn consumption in the United States over March-May was 93.98 million tons. In 2021, corn areas in the United States are projected to reach 92.692 million acres, which is below the average expected market value of 93.78 million acres. Private analysts predict that the corn yield in the United States for 2021 will be in the range of 175 - 176.48 bushels/acre. If the yield is at the highest expected level, corn production will reach 380 million tons. There are fears that China will import much less corn in the new season than current forecasts and the reduction is expected to reach up to 6 million tons. According to the USDA attache in China, total corn imports in the country will be 20 million tons. There are other forecasts for higher exports to China of up to 30 million tons. It is still unclear what China will do. The corn production in Ukraine is expected to be huge and corn exports are predicted to be 8 million tons more than in 2020/21.

A record 8.48 million tons of corn were exported from the United States in May. Total corn exports reach a record 54.6 million tons since the beginning of the season. To reach the annual forecast of the USDA, monthly exports should be 5.93 million tons on average over the period of June - August. The weak corn production in Brazil and the expected restrictions of the Brazilian authorities from August will also have an impact on the corn market.

Private analysts continue to lower their forecasts for the second corn production in Brazil. After the latest declines, the total corn production is projected at 87.93 million tons in the worst scenario. We will see frost damage in the southern regions. Given this, forecasts could be further reduced to 85 million tons. The more optimistic forecasts are for corn production of up to 94-96 million tons. Brazil will create problems in terms of world corn supplies and this will be noticed in August. For now, Brazilian corn prices are falling in line with the first quantities of corn entering the domestic market, but this will only be a temporary factor.

As of June 1, 2021, soybean stocks in the United States were 20.86 million tons. Soybean consumption in the United States over the period of March-May was 21.6 million tons. In 2021, soybean areas in the United States will be 87.555 million acres compared to the expected 89.1 million acres. So far, there is a consensus among analysts for a yield of 50 bushels/acre, which will result in a soybean production of 118.5 million tons. With a yield of 49.8 bushels/acre, the ending stocks of soybeans in the United States are expected to fall to 1.9 million tons. With soy, the balance is very tight and even 1 bushel/acre can have a significant impact and change the whole situation. In May, soybean exports from the United States were 1.27 million tons and since the beginning of the season they add up to a total of 58.48 million tons. In order to reach the annual forecast of the USDA, the monthly export should be 1.19 million tons over June-August, which may not happen given the low current rates.

During the week, the prices of all oils in the world rose significantly. The exception is the price of sunseed oil in the Black Sea region, which has grown minimally. India is expected to buy a lot of oil over the period of July-August given the increased consumption after the pandemic. For this reason, import taxes were reduced. At the same time, Indonesia and Malaysia have significantly increased palm oil production after the good rainfall in recent months.

The corn market will depend entirely on rainfall in the United States. Forecasts suggest that they will improve in the coming weeks and are likely to decline by the end of July. Rainfall from mid-July onwards will be crucial for soybeans.

Changes in FOB Prices of key exporters:

Over the previous week, crop prices in North and South America rose and decreased in Europe.

Wheat – As for FOB wheat prices, market differentiation has increased - very cheap European wheat and expensive American wheat. During the week, the FOB price of Australian wheat with delivery in July rose by 4.25 USD/ton to 288 USD/ton FOB.

Corn - Over the previous week, the FOB price of Argentinian corn rose by 20 USD/ton, but it remains much cheaper than competitors’ prices. The FOB price of Brazilian corn with delivery in August increased by 20.75 USD/ton to 254.75 USD/ton FOB.

Soybeans - During the past week, FOB soybean prices rose significantly. The difference between the price of American soybeans and the price of Brazilian corn is now 11 USD/ton. The FOB price of Brazilian soybeans rose by 35 USD/ton to 555 USD/ton.

Export prices Black Sea, USD/mt (compared to the previous week):

Over the past week, FOB prices of wheat and barley in the Black Sea region fell minimally. Prices of corn from the new crop rose sharply. The FOB price of sunseed oil has fallen.

It should be noted that barley and wheat yields in the Black Sea region are good and this is suppressing prices in the region.