General market aspects
The dollar revalues this week, which negatively affects grain prices. Rising tensions in the Gaza Strip have led to financial instability. During the previous weeks, the dollar showed weakness, and rate cuts led to the net purchased position in corn, wheat and soybeans of financial speculators exceeding 68 million tons, approaching the limit of the recent range (70 million tons) .
In Argentina, the free dollar continues to decline, which has reduced the contribution of the export dollar to grains to just over 5%. Currently, this mechanism provides US$17/tonne in soybeans and US$9/tonne in cereals, compared to almost US$40 and US$15/tonne when the gap was larger. The National Meteorological Service (SMN) projects below-normal rains until December, when wheat needs crucial rains to define its yield, as does the planting of corn and soybeans, in soils that currently show a lack of moisture.
Military
The USDA reported soybean stocks 200,000 tons lower than the market expected, indicating greater consumption than anticipated by operators. Despite the increase in prices, demand is still active. Last week, the United States reported 1.4 million tons of soybeans committed for export, which represents 35% of the total that the USDA estimates that the United States will export this year, an advance compared to previous years, Romano indicates.
The United States has reached 26% of harvested soybeans, exceeding market expectations by two points. Although the harvest could put downward pressure on prices, this effect seems to be discounted in the market. Hedge funds bought back 3.5 million tonnes of soybeans in the week ending October 1, although the net position remains sold at approximately 8 million tonnes.
Expectations of rain in Brazil could alleviate the situation in dry areas, where planting had been delayed, which had raised concerns about the start of the campaign. In addition, a formal motion was presented in the European Union to postpone by one year the entry into force of the provision that requires certifying agricultural goods as deforestation-free. Soy flour has begun to reverse its upward trend, since the imminent entry into force of this provision could complicate supply in Europe.
Corn
The USDA reported stocks as of September 1 of 44.8 million tons, 2 million less than analysts expected, suggesting more active consumption. In the United States, 21% of the corn crop has already been harvested, and the pace of harvest is beginning to increase, which could put pressure on prices in Chicago.
North American corn exports reached almost 1.7 million tons last week, an excellent volume. China purchased 198,000 tons of US corn on Friday. In the week ending October 1, the funds repurchased 4 million tons of corn, and their net position remains at 12 million tons sold, with the possibility of continuing to take profits, although levels considered normal are already being reached. .
withholdings corn exports grains dollar reserves
North American corn exports reached almost 1.7 million tons last week.
Depositphotos
Consulting firm SOVECON estimates that Ukraine will produce 1.1 million fewer tons of corn in the 2024/25 campaign due to dry weather conditions, projecting a production of 23.5 million tons, compared to USDA estimates of 27 million tons.
In Argentina, the lack of rain has delayed the planting of corn, which advanced only 3 points last week, standing slightly above 13%. Entre Ríos, the south of Santa Fe and the northeast of Buenos Aires are the areas with the greatest progress, while the rest present a significant delay. Argentine export declarations included an additional 3 million tons, bringing the total to 33 million tons, suggesting a slight shortage of merchandise. Of this total, 30 million tons would be originated, but of these, 7 million are to be fixed, which could drive local prices upward.
Wheat
The lack of rain continues to complicate the planting of winter wheat in Russia, where it is estimated that the country could limit its exports in anticipation of a smaller harvest for next year. In Australia, the combination of frost and lack of rain has reduced production expectations, which had been estimated at 30.4 million tons, but now there is talk of 27 to 29 million tons.
Recently, a drone attack on a port in Ukraine has boosted wheat prices. In Argentina, concern about the lack of rain is palpable, as wheat is losing yield potential. Although the rains would begin this week, widespread rainfall is expected to arrive somewhat late to positively affect the crop.