Last week, the EUR/USD currency pair decreased by 0.0010 to 1.0693. The price of US WTI light crude oil increased by $2.68 per barrel to $80.73 per barrel.

Oil prices fell on Friday but recorded a second consecutive weekly gain amid signs of improving demand and decreasing oil and fuel inventories in the United States, the world's largest oil consumer. The seasonal increase in demand, as shown by the latest data from the US Energy Information Administration (EIA), the renewed conflict between Israel and Hezbollah, and the hurricane season could keep prices high during the summer. The EIA data also indicates a reduction in US crude oil inventories by 2.5 million barrels for the week ending June 14, bringing the total to 457.1 million barrels, compared to analysts' expectations of a 2.2 million barrel decrease. Other new data from the US, showing a decline in new unemployment claims, weighed on oil prices. This could prompt the Federal Reserve to maintain interest rates unchanged for a longer period.

Over the previous week, July SRW wheat futures in Chicago declined by 51 1/4 cents to close at $5.61 1/4 per bushel.

For the past week, CBOT July corn futures decreased by 15 cents to close at $4.35 per bushel.

Last week, Chicago July soybean futures dropped by 19 1/4 cents to close at $11.60 1/2 per bushel.

Accumulated US export sales for the week ending June 13.

*Source: USDA

Weather:

Over the previous week, the weather in the United States was moderately good with normal temperatures and rainfall in the US Corn Belt. Rainfall continued in Western Europe. The Balkans experienced drought and heat. Good rainfall occurred in Ukraine and Russia. In India, the monsoon rains, which were delayed this year, have begun, and there was also rainfall in Australia. Weather in South America remained dry.

For the next 10 days, temperatures in the US Corn Belt will be moderate, even low, with warm conditions only in some northern states. Some places will experience rainfall. In Canada, temperatures and rainfall will be moderate. In Western Europe, temperatures will be moderate with light to moderate rainfall. The Balkans will see very hot and dry weather. In Ukraine, weather will be warm with almost no rainfall. In Russia, southern regions will have moderate temperatures with new rainfall, while central areas will be cool and dry. In India, the week will start with hot and dry weather, followed by lower temperatures and the onset of rainfall. In China, hot weather with rainfall will occur at the beginning of July. Indonesia and Malaysia will have moderate rainfall. In Australia, moderate rainfall is expected in the west and light rainfall in the east. Central Brazil will experience hot and dry weather, with light rainfall in the south. There will almost be no rainfall in Argentina. Moisture issues are already present in the Balkans, Australia, Brazil, and Argentina. For now, major production areas in the Northern Hemisphere have sufficient moisture.

GRAIN EXPORTS:

* US (September- August)

* Russia, Ukraine and the EU (July- June)

The weekly corn exports from the United States are very strong, but wheat and soy exports are weak. Weekly export sales of wheat are good, but new corn crop and soy sales are very weak. Wheat exports from Russia and Ukraine continue to be very strong.

Wheat – On Friday, wheat futures in Chicago and Paris decreased. During the week ending on June 13, 2024, US wheat export sales amounted to 589,695 tons (339,264 the previous week and 109,664 the previous year), export commitments were 5.43 million tons (4.06 million), weekly exports reached 363,637 tons (260,529 and 155,913), and since the start of the season, exports have totalled 634,760 tons (595,771). Taiwan purchased 104,150 tons of wheat from the United States. FranceAgriMer reports that 62% of wheat crops in France are in good and excellent condition (83% a year earlier).

Corn – On Friday, corn futures in Chicago and Paris decreased, except for the August contract in Paris. Weekly US corn export sales amounted to 511,432 tons (1,056,111 and 35,988), export commitments were 52.84 million tons (38.65 million), weekly exports were 1,481,696 tons (1,248,952 and 668,316), and since the start of the season, exports have reached 42.11 million tons (33.65 million). Weekly export sales of new corn crop were 93,640 tons (69,463 and 47,149), with a total of 3.07 million tons for the new season (3.03 million). On Friday, South Korean importers purchased 66,000 tons and 132,000 tons of corn, likely from South America. The condition of the corn in the United States remains almost unchanged and is the best in the last 6 years. However, China is experiencing problems with rainfall, with 35% of the crops developing under high temperatures and drought conditions. On June 28, 2024, the USDA will publish a report on the acreage of various crops in the United States. There is a possibility that the market might add a risk premium and prices may rise before the report.

Soybeans – On Friday, soybean and soymeal futures in Chicago increased, while soyoil futures were mixed. In Paris, rapeseed futures mostly decreased, while rapeseed futures in Canada increased. Weekly US soybean export sales amounted to 556,453 tons (377,098 and 457,543), export commitments were 44.33 million tons (52.11 million), weekly exports were 340,951 tons (215,341 and 387,766), and since the start of the season, exports have reached 40.53 million tons (48.91 million). Weekly export sales of soybeans from the new crop were 83,975 tons (3,020 and 168,770), with a total of 1.12 million tons for the new season (3.33 million). Weekly soymeal sales were 178,814 tons, and soyoil sales were 20,862 tons. According to a forecast by the Ukrainian agricultural group Agrarian Council, the rapeseed production in Ukraine in 2024 will reach 4.2 million tons (4.7 million in 2023). Analysts expect the FOB price of rapeseed in September-October to exceed 500 EUR/ton, and farmers who have not yet sold are advised to wait.

Markets have shifted their focus to the weather in the United States, largely overlooking Russia and Ukraine. In the US, conditions will be quite warm, but soil moisture is sufficient, so the risks to the new crop are currently considered minimal. In Russia, there has also been significant rainfall. Temperatures have dropped, reducing stress in the south. In the central regions, it remains cool and wet. There are no precise yield data for wheat in the southern regions due to high moisture content in the grain. Harvesting is underway, but data is lacking. It is estimated that yields have declined by about 15-18% compared to last year, with reductions possibly exceeding 20% in the south due to drought. Currently, Russia is exporting large quantities of wheat each week, as is Ukraine, calming markets with a steady supply. It is anticipated that, after a few months of active exports, the supply from the Black Sea region will increase, and prices will rise, depending on consistent demand.

During the week, it became evident that drought in North Africa has destroyed a large portion of wheat crops. Morocco is expected to become a major wheat importer, ranking sixth in the world. Wheat markets are influenced by the rapid harvesting campaign and good yields in the United States. There are no current concerns about corn, which is abundantly available, with prospects for a good new crop.

Data from the Pacific Ocean indicates that La Niña is not yet emerging, even in its initial stages. It will not affect Northern Hemisphere crops this season, potentially impacting the Southern Hemisphere later in the year.

The first presidential debate in the United States will be on June 27, 2024. Markets will begin positioning for the upcoming presidential elections, leading to a complex and heated summer.

On Friday, the most important USDA report of the new season – the report on crop acreage – is expected. Corn acreage is forecasted to be around 91 million acres (94.64 million in 2023). With an expected yield of 181 bushels/acre, the production would be 383 million tons. In 2023, the yield was 177.3 bushels/acre, a record. With this yield, corn production would be 375 million tons, the most realistic result. This would keep the corn balance stable even with reduced exports. Currently, US weather does not suggest surprises, but if the yield reaches 174 bushels/acre, the production would be 368 million tons, reducing ending stocks and supporting corn prices for the new season. Soy acreage is expected to be around 86.5 million acres (83.6). With a yield of 52 bushels/acre, the production would be 122 million tons, greatly easing the balance in the United States and globally. A yield of 50 bushels/acre would result in 117 million tons, with little change, as the global soybean balance largely depends on South America, with Brazil expected to produce over 160 million tons of soy in 2025. Wheat acreage will be 47.5 million acres (49.6).

According to a forecast by Abiove, the growth in soybean areas in Brazil is expected to be driven by the demand for biofuels rather than by demand from China. The demand for biofuels is becoming an increasingly important factor for the expansion of soybean acreage in Brazil at a time when China is striving to reduce its dependence on foreign supplies, according to Abiove. Soybean acreage in Brazil has been increasing by 1 million hectares annually in recent years to meet Chinese demand, but this growth cannot continue without a shift towards biodiesel. It is expected that China will maintain imports of 100 million tons from all major suppliers—Brazil, the USA, and Argentina—with increasing competition among them. Brazil produces the most expensive soybeans among the three countries, and only its large export capacity and geopolitical interests direct China towards it. Generally, Argentina and the USA can sell more cheaply if necessary. In the United States, the demand for biodiesel is growing very quickly, with policies aimed specifically at addressing soybean surpluses. In 2024/25, soybean areas in Brazil will increase again despite weak farmer margins due to falling soybean prices. Sowing of the new crop begins in mid-September. Under normal conditions, the production potential will be high. In 2023/24, drought and floods reduced the production by about 12 million tons from initial expectations. Abiove is even considering a production of 170 million tons, which would be a significant increase and a substantial production.

What can we expect? In the coming weeks, the extent of the damage to wheat crops in Russia will be clarified. Markets will find reasons for prices to rebound, but we will see by how much and when. We will monitor rainfall in the United States, where July is crucial for corn. Markets will certainly react to any deviation from optimal weather conditions.

Changes in FOB prices of major exporters in recent days:

During the week, FOB crop prices decreased for yet another week, and significantly so.

Wheat – FOB wheat prices declined for the fourth consecutive week. The FOB price of Bulgarian wheat with 11.5% protein is 213 USD/ton (-9 USD/ton for the week and -20 USD/ton the week before). The FOB price of Russian wheat with 12.5% protein is 238 USD/ton (-2 for the week), and wheat with 11.5% protein content is priced at 227 USD/ton (0). The FOB price of Australian milling wheat is 253 USD/ton (-6 for the week and -6 the week before), wheat with 10% protein is priced at 250 USD/ton (-7 for the week and -5 the week before), and Australian feed wheat is 228 USD/ton (235 the week before). There is a slump in the market, and for now, we are just waiting for news.

Corn – FOB corn prices decreased. During the week, the FOB price of Brazilian corn fell by 6 USD/ton to 182 USD/ton (+3 the week before).

Soybeans – FOB soybean prices went down again. The FOB price of Brazilian soybeans decreased by 10 USD/ton during the week (-1 the week before) to 438 USD/ton.

Last week, oil prices worldwide continued to rise.

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