During the past week, the EUR/USD currency pair fell by 0.0122, reaching 1.0418. Meanwhile, the price of US WTI light crude oil rose by $4.32 per barrel, closing at $71.24 per barrel.

Oil prices increased on Friday, marking a weekly gain of over 4%, as tensions between Russia and Ukraine escalated. This month, Moscow reported producing around 9 million barrels per day, despite reduced output caused by import bans related to the invasion of Ukraine and supply restrictions imposed by the Organization of the Petroleum Exporting Countries and its allies (OPEC+).

At the same time, growing crude oil and gasoline inventories in the United States, along with forecasts of oversupply next year, are capping price increases. Against this backdrop, on Thursday, China, the world's largest crude oil importer, announced new measures to stimulate trade, including support for energy imports, amid threats from Donald Trump to impose tariffs on foreign goods imported into the United States.

Over the past week, March SRW wheat futures in Chicago rose by 10 3/4 cents to close at $5.64 3/4 per bushel.

For the previous week, Chicago March corn futures remained unchanged at $4.35 1/4 per bushel.

Throughout the past week, CBOT January soybean futures fell by 15 cents to close at $9.83 1/2 per bushel.

Accumulated US export sales for the week ending November 14.

*Source: USDA

Weather:

Over the past week, the weather in the United States remained warm with rainfall. In Western Europe, there were light showers. Russia and Ukraine experienced unseasonably warm weather, with much-needed rain at the end of the week. The Balkans saw unusually heavy rainfall. In Australia, there was also rainfall, but moderate. Good precipitation continues to fall in Brazil and Argentina.

Over the next 10 days, temperatures in the Corn Belt of the United States will drop from -15°C in the central areas to -25°C in the northern parts. Precipitation will be minimal, with the possibility of no snow cover. In the US Wheat Belt, temperatures will also be low, with light rainfall. In Western Europe, mostly positive temperatures are expected with almost no rain. The Balkans will still have positive temperatures with light precipitation. In Ukraine and Russia, temperatures will hover around 0°C, with little to no rain, except for moderate rainfall in southern Russia. Weather in India will remain warm and dry. No rainfall is expected in China. Good precipitation continues in Indonesia and Malaysia. In Western Australia, it will be dry and warm, but the south and especially the west will see heavy rain. The quality of the new wheat crop is beginning to decline. Brazil will experience widespread moderate rainfall. In Argentina, there will be heavy rainfall in the north and south, with lighter rain in the central regions. For now, precipitation is lacking only in Russia and Ukraine, but it is already cold there, and the crops are no longer developing.

GRAIN EXPORTS:

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

Wheat export from the United States remains very weak, corn exports are moderate, while soybean exports are excellent, which is typical for this season. Weekly export sales of all three crops from the United States were excellent. Wheat exports from the EU continue to lag behind last season. Russia is exporting around 1 million tons of wheat weekly. Wheat and corn exports from Ukraine are at relatively good levels. However, Ukraine's exports are likely to start declining rapidly, followed shortly by Russia's.

Last week, the IGC published its November report on the state of the global grain balance for 2024/25.

Key points from the report include:

IGC  -  November 2024

Overall, wheat and corn stocks have declined to their lowest levels in the past four years. Conversely, soybean stocks have increased significantly.

Wheat – On Friday, wheat futures in Chicago and Paris declined. The strengthening U.S. dollar continues to suppress markets. In France, 90% of the planned soft wheat areas have been sown (compared to 73% a week earlier and 73% a year ago). Of these, 88% are rated in good or excellent condition (compared to 83% a year ago). Following a month of rainfall in the US Wheat Belt, the good and excellent condition ratings rose by 5 percentage points in just the past week, reaching their highest level in five years. However, there are still areas planned for sowing where delays persist, and many may ultimately be replaced with spring crops. Western Australia is on track for an unexpectedly large wheat production of 10.33 million tons, which is 1 million tons higher than the September forecast. Rainfall occurred last week and is expected in the upcoming week, although the wheat quality is likely to be moderate. Analysts project India’s new wheat production for 2025/26 at 112.4 million tons, a 1% decrease from the previous estimate. Rainfall over production areas is nearly normal, but temperatures are slightly higher. So far, crops are in good condition, but the critical period for the production will be from January to April.

Corn – On Friday, corn futures in Chicago and Paris fell. Pressure from neighboring wheat markets and the US dollar’s appreciation to its highest level since November 2022 contributed to the decline.

Soybeans – On Friday, soybean and soymeal futures rose in Chicago, while soyoil futures in Chicago, rapeseed futures in Paris, and canola futures in Canada declined. The USDA reported a private export sale of 198,000 tons of soybeans to an unknown destination.

Currently, there is no weather threat to corn and soybean crops in South America, including Argentina. Weather conditions remain stable, and no immediate risks are anticipated until mid-December, even if rainfall abruptly stops. Brazil’s second corn crop sowing is unlikely to face delays. USDA forecasts for soybean and second corn crop yields in Brazil may be conservative, potentially underestimating the production. In November 2023, dry conditions in Mato Grosso raised soybean prices by 1.25–1.50 USD/bushel, but rainfall beginning on November 20, 2023, caused prices to steadily decline through February 2024. Presently, Brazil’s crop development is at an exceptional level not seen in years. In Argentina, conditions are also perfect, but with the growing season just starting, significant changes could occur if rainfall stops.

The USDA's initial estimates for Brazil’s 2024/25 growing season project a 3% increase in acreage compared to 2023 (+13% above the five-year average). The yield is estimated at 3.57 tons/hectare (+7% and +4%, respectively), corresponding to a production of 169 million tons. However, this figure could quickly reach 175+ million tons under favorable conditions.

Upcoming week – The U.S. will observe holidays this week, and holiday sales will serve as an important barometer of consumer strength amid mixed economic signals. Stock markets performed strongly during the past week, reaching post-election levels. Meanwhile, the conflict in Ukraine has intensified, with new Ukrainian strikes on Russian military targets. Negotiations appear increasingly unlikely without further escalation. Speculation suggests former President Trump might lead future talks, but the details and outcomes remain uncertain.

Brazil and China continue to sign numerous agreements, including initiatives to facilitate Brazilian agricultural exports to China. China's alignment with Brazil's pro-Chinese president has enabled measures to reduce imports of U.S. products, strengthening China’s position for independent supply chains and enhancing its leverage in potential future trade wars.

The U.S. is expected to increase scrutiny on heavily processed grain-based foods, aiming to shift consumer habits and push global development towards reduced consumption of highly processed foods.

Currency – The U.S. dollar surged aggressively last week. This typically acts as a headwind for commodity prices, keeping them within a low range. However, strong export sales during the week mitigated some of this impact.

Despite Brazil's close ties with China, Chinese buyers returned to the US soybean market last week. Mexico also made its largest purchase of US corn in six years. Despite strong soybean export sales from the United States, prices fell due to prolonged rainfall in Brazil and excellent crop conditions. At the same time, soybean processing in Brazil is expected to increase, raising domestic demand and reducing export availability.

Oils – Recent data revealed that palm oil stocks in Indonesia are recovering, causing a sharp global decline in oil prices. Soyoil prices also fell but remained above the mid-October lows.

Let’s consider what might happen after the new presidential administration takes office. It has been announced that significant tariffs on Chinese imports will be implemented. However, it is unlikely this will occur in a straightforward manner. Instead, groundwork will likely be laid for new negotiations, with results emerging in a few months. Compromises between the two sides will almost certainly be made out of necessity and eventually accepted and implemented. The United States can only push so far, as the trade balance heavily favors China. In response, Asian buyers may reduce their purchases of corn from Brazil and Ukraine, as well as soybeans from Brazil, simply because they cannot utilize such large quantities of grain.

The global balance of supply and demand will not be directly affected by these shifts since trade flows will adjust: one set of buyers will replace another, and previous buyers will turn to alternative suppliers. Following the example of Indonesia and Brazil, the U.S. is likely to expand its use of biofuels to reduce stocks of grains and oilseeds. This strategy has proven highly effective in the two pioneer countries, leading to stable price increases for oils.

Changes in FOB prices of major exporters in recent days:

During the week, FOB prices around the world moved in mixed directions.

Wheat – FOB wheat prices increased, breaking a prolonged streak of declines. The FOB price of Bulgarian wheat reached 239 USD/ton (+10 USD/ton for the week and -2 USD/ton the week prior). The FOB price of Australian milling wheat is at 240 USD/ton (+4 for the week and -7 the week prior), wheat with 10% protein is priced at 232 USD/ton (+3 during the week and -5 the week prior), and Australian feed wheat is at 202 USD/ton (198 the week prior).

Corn – FOB corn prices saw slight changes. The FOB price of Brazilian corn remained stable at 210 USD/ton (-5 the week prior). U.S. and Argentine corn prices remain significantly lower than those of other major exporters like Brazil and Ukraine.

Soybeans – FOB soybean prices declined, except in Brazil, where the export season is winding down. The FOB price of Brazilian soybean prices increased by 19 USD/ton (-14 the week prior) to 418 USD/ton.

In the past week, global oil prices reversed their upward trend and declined.

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