In the past week, the EUR/USD currency pair rose by 0.0087 to 1.0840. The price of US WTI light crude oil increased by 1.62 USD per barrel to 83.16 USD per barrel.

The price of oil decreased on Friday but rose for the fourth consecutive week, remaining close to its highest levels since late April. This is due to hopes for strong fuel demand during the summer and some supply concerns. This week, "black gold" appreciated due to expectations of strong summer demand in the United States, the world's largest consumer. The US Energy Information Administration (EIA) reported a massive reduction in inventories last week by 12.2 million barrels, compared to economists' expectations of a 700,000-barrel decrease. Data from the United States on Wednesday showed that the number of initial jobless claims increased last week, and the number of unemployed also rose, which analysts believe could accelerate the reduction of interest rates by the US Federal Reserve and support the oil markets. Regarding supply, Reuters reported on Thursday that Russian oil producers Rosneft and Lukoil will sharply reduce oil exports from the Black Sea port of Novorossiysk in July. Meanwhile, Saudi company Saudi Aramco lowered the price of its flagship Arab Light crude oil, which will be sold in Asia in August, to 1.80 USD per barrel above the average price of Oman/Dubai crude, highlighting the pressure faced by OPEC producers as non-OPEC supplies increase.

Over the previous week, Chicago September SRW wheat futures rose by 17 cents to close at $5.90 1/2 per bushel.

In the past week, CBOT September corn futures increased by 3 cents to close at $4.10 1/2 per bushel.

Throughout the past week, Chicago August soybean futures went up by 32 3/4 cents to close at $11.66 1/4 per bushel.

Accumulated US export sales for the week ending June 27.

*Source: USDA

Weather:

In the past week, rainfall in the US continued, though not in significant amounts. Canada remained dry. There were showers in Western Europe. It also rained in the Balkans. Ukraine had no rainfall, while in Russia, there were some showers in the southern regions. India experienced heavy rainfall, while China had moderate rain in some areas. Australia, Brazil, and Argentina saw little precipitation.

Over the next 10 days, temperatures in the US Corn Belt will stay below 30 degrees. By the end of the period, they will rise to +35 degrees. Rainfall will be minimal. In the US Wheat Belt, it will be quite warm with minimal rainfall. Canada will also experience warm weather without rain. In Western Europe, there will be moderate temperatures and light to moderate rainfall. Around Hungary, temperatures will be very high with no rainfall. The Balkans will see particularly hot and dry weather. Ukraine will also experience hot and dry weather, as will Russia. India will have moderate rainfall. In China, high temperatures will be accompanied by moderate to heavy rainfall. Indonesia and Malaysia will see moderate to good rainfall. In Australia, there will be moderate rainfall in the west and light rain in the south and east. In Brazil, temperatures will drop, with good rainfall expected in the southern parts. Argentina will see negative temperatures but remain dry with no rainfall.

Rainfall in the US Corn Belt will be minimal for a second week. By the end of the period, temperatures will rise to +35 degrees, and crops will start to suffer. In Western Europe, corn crops currently have no problems. In the Black Sea region, the next 10 days and beyond could be fatal for spring crops due to the hot and dry weather. Markets will definitely react. Wheat crops in Australia should be in good condition, but in Argentina, drought has reappeared, causing problems.

GRAIN EXPORTS:

* US (September- August)

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

Wheat and soybean exports from the United States are weak, while corn exports are moderate. Weekly export sales of US wheat are exceptionally good. The low prices speak for themselves, and buyers recognize that they are indeed low. However, sales of corn and soybeans from both crops are weak. At the end of the season and the beginning of the next, wheat exports from Ukraine and Russia are good, not excellent but good. Corn exports from Ukraine are at a high level at the end of the season.

On Friday, grain prices rose after sell-offs on Wednesday. Stock markets reached new historic highs. Metals remained stable, while energy markets slightly declined.

Wheat: On Friday, wheat futures in Chicago and Paris increased. For the week ending on 27.06.2024, US wheat export sales were 805,318 tons (667,173 a week earlier and 405,763 a year earlier), export commitments were 6.90 million tons (4.62), weekly exports were 308,553 tons (323,135 and 306,182), and since the beginning of the season, they totalled 1.27 million tons (1.06). Japan purchased 129,660 tons of wheat from Australia, Canada, and the United States. The harvesting campaign of soft wheat in France started, with 58% of the crops in good to excellent condition (-2% for the week).

Spring wheat in the United States is developing well, and a good harvest is expected. Yields of winter wheat are also very good, meaning the US will have a good production. However, this means only 1 million tons more wheat than the current forecast, which is not much for the market.

Corn: On Friday, corn futures in Chicago and Paris increased. Weekly export sales of US corn were 357,152 tons (542,177 and 251,693), export commitments were 53.74 million tons (39.04), weekly exports reached 894,422 tons (1,177,179 and 707,456), and since the beginning of the season, 44.18 million tons (34.96). Weekly sales of soybeans from the new crop were 311,538 tons (139,298 and 418,031), totaling 3.53 million tons for the new season (3.57). Sales of the new corn crop are weak. In June, Brazil exported 850,892 tons of corn (-17.74% compared to June 2023).

The condition of corn crops in the United States worsened a week earlier. Rainfall now is present but not sufficient. Temperatures have been moderate so far, and everything was going well. However, over the next 10 days, we will see very high temperatures and even less rainfall. Only some places in the Corn Belt will have moderate rain.

Soybeans: On Friday, the soybean complex in Chicago, rapeseed futures in Paris, and canola futures in Canada increased. Weekly export sales of US soybeans were 228,379 tons (282,868 and 131,156), export commitments reach 44.79 million tons (52.47), weekly exports were 304,077 tons (391,907 and 209,424), and since the beginning of the season, 41.17 million tons (49.31). Weekly sales of soybeans from the new crop were 150,310 tons (101,780 and 592,813), totaling 1.38 million tons for the new season (3.94). Sales of soybeans from the new crop are very weak, even weaker than the current season, which was poor. Sales of soymeal were 212,946 tons, and soyoil sales were 16,473 tons. In June, Brazil exported 13.947 million tons of soybeans (+1.47%).

News from Friday indicates that French wheat could be the weakest in the last eight years. At the same time, old crop stocks will be at a 19-year high, which will stabilize exports. The harvesting campaign has now started, and we will be gathering data on yields and the crop every day.

The winter wheat harvesting campaign in the Black Sea region is progressing significantly, adding new feed for livestock and new milling wheat to the market. Uncertainty has arisen in Ukraine and Russia regarding yields. An official statement from the Rostov region in Russia noted an average grain yield of 3.46 tons/hectare, compared to 4.44 tons/hectare the previous year. Meanwhile, SovEcon raised its forecast for Russia’s wheat production by 3.4 million tons to 84.1 million tons this week. The information is quite contradictory. In the regions of Russia where wheat could still be influenced by rainfall, it has been raining until now. Spring wheat in Russia will suffer from a lack of rainfall and high temperatures in the coming days. These news pieces led to the closing of short positions in the markets during the week and a rise in prices.

The euphoria over good wheat yields in the Krasnodar region of Russia has passed. It is not the same everywhere. Around Volgograd, the yield is at an average level. Further north, in the center and the Volga region, yields are very varied. In some places, the decline reaches 40%. Markets certainly reflected this in the last days of the past week. The forecast for hot and dry weather in the Black Sea region was also an important factor in the increase. The quality of wheat from France and Germany will not be high because prolonged rains have damaged the crops. The market will be looking for quality wheat, and all eyes are now on Canada. So far, there are no major problems there; there has been little rainfall, but the wheat is good. An important moment is the production in Australia and Argentina. While Australia produces a more stable production, Argentina is greatly influenced by La Niña, which is now occurring, and there has been no rain in Argentina for several weeks.

The combination of a weakening dollar, if it continues, along with new strong demand for US wheat due to production problems in France, Ukraine, Russia, India, and China could create the perfect storm in this market, and we might see significantly higher prices by the end of July. Demand for wheat has shifted to the US because of low prices and abundant supply there. Meanwhile, the main suppliers from the Black Sea – Russia and Ukraine – are facing production problems, and Ukraine has logistics issues.

Dry weather in the Black Sea region will significantly reduce the new corn production. The four producing countries, Ukraine, Russia, Romania, and Bulgaria, are experiencing high temperatures and lack of rainfall precisely when the crop needs a lot of moisture.

The US presidential elections are approaching. There is still a chance that the current presidential candidates from both parties might not be the ones on the ballot. The chances of the current president, Biden, being on the ballot are diminishing due to vitality. On 19.08.2024, the Democratic Party will hold a national convention, and this issue will be resolved then. These elections will test the democratic values of the United States. Everyone hopes that the country will handle it as it always has. The market will be unstable, and at some point, this will raise prices to levels suitable for selling.
In June, the U.S. economy again created slightly more jobs than expected, although the unemployment rate increased. According to data from the Department of Labor, nonfarm payrolls increased by 206,000 during the month, exceeding Dow Jones experts' expectations of a 200,000 increase. However, in May, the increase was 218,000. Unemployment in the country unexpectedly rose to 4.1%, the highest level since October 2021, sending mixed signals to Federal Reserve representatives considering their next monetary policy move. The forecast had been for the unemployment rate to remain stable at 4%. Coupled with moderate price increases in May, today's data confirm that the disinflationary trend in the United States is back on track after inflation sharply accelerated in the first quarter. The American currency weakened following these data. It is highly likely that the Fed will lower interest rates by 0.5% in September. The decline in the US currency supported the Chicago market. After the strong decline in quotations and the dollar's drop, American grain is very competitive. This is evidenced by the large wheat sales in the past two weeks. The wheat market has definitely hit bottom and is now trending upwards.

On Friday, July 12, 2024, the USDA will release data from its July report. We will see higher corn acreage in the United States, and it is crucial whether there will be a simultaneous reduction in expected yields to keep the production forecast unchanged. It is important what the forecasted wheat production will be in Canada, Ukraine, Russia, India, and China.

With 91.475 million acres planted and a current yield estimate of 181 bushels/acre, the production will reach 384 million tons, exports are estimated at 56 million tons, and ending stocks are expected at 59.5 million tons. With a yield of 179 bushels/acre, the production will be 379 million tons, exports are estimated at 56 million tons, and ending stocks are predicted at 55.3 million tons. With a yield of 177 bushels/acre, the production will be 375 million tons, exports 56 million tons, and ending stocks 51.1 million tons. In all cases of normal crop development, ending stocks are slightly above or well above 50 million tons, which is quite a lot. If it completely stops raining until the end of August and the yield is 170 bushels/acre, the production will be 361.4 million tons, and stocks will be 37.5 million tons, which is a good number for price growth. However, July forecasts indicate a higher likelihood of rainfall. This summer, the weather in China has been predominantly dry, as noted by the Chinese themselves. The country may resort to increased corn imports, likely from Brazil and Argentina. An additional 5 million tons above the forecasts could happen, providing further support for the global market. Certainly, deliveries from Ukraine, Russia, Romania, and Bulgaria will be lower. Overall, summarizing the events, the corn market is likely to remain neutral at these price levels.

Changes in FOB prices of major exporters in recent days:

During the week, FOB crop prices reversed their trend and moderately increased, with a few exceptions.

Wheat: FOB wheat prices rose except in Ukraine. The FOB price of Bulgarian wheat is 232 USD/ton (+6 USD/ton for the week and +13 USD/ton a week earlier). The FOB price of Russian wheat with 12.5% protein is 219 USD/ton (-18 for the week), and wheat with 11.5% protein is priced at 208 USD/ton (-17). The FOB price of Australian milling wheat is 257 USD/ton (+1 for the week and +3 a week earlier), wheat with 10% protein is priced at 254 USD/ton (+1 during the week and +3 a week earlier), and Australian feed wheat is 232 USD/ton (231 a week earlier). Some prices have not been updated following market changes at the end of the week.

Corn: FOB corn prices rose except in Ukraine. During the week, the FOB price of Brazilian corn increased by 3 USD/ton to 175 USD/ton (-10 a week earlier).

Soybeans: FOB soybean prices increased slightly. The FOB price of Brazilian soybeans rose by 3 USD/ton during the week (-5 a week earlier) to 446 USD/ton. The cheapest now is Argentine soybeans, but the price is likely to see a positive correction.

At the end of the week, oil prices worldwide rose, some significantly.

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