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PRICE FORECAST WEEKLY from 21 to 25 of September 2020

Grain market:

The results of wheat supply tenders to Egypt and Turkey can be considered as a lopsided game. Prices rose by 14% in a month, from $ 206 to $ 235 per ton, and this is against the backdrop of a huge harvest. What can push prices up, other than collusion among competitors?

First and obvious staff: coronavirus and an increase in the number of infections. Who knows whether quarantine will be introduced in ports in late autumn or winter, as it was already in the spring of 2020, because of which it will not be possible to replenish grain stocks. So, we need to buy now, while everything is calm.

The second and unobvious: since 2011, the La Niña effect in the Pacific Ocean was remembered only in passing. However, on September 10, the US Climate Prediction Center stated that the phenomenon can be considered formed.

La Niña usually brings above average rainfall to Australia and Southeast Asia, which can lead to flooding. May dry out southern United States in winter. Arable land in Argentina may become drier and drought is possible in parts of Brazil.

Aware, one can understand the concern of grain importers who are ready to succumb in such circumstances to blackmailing sellers.

Price forecast weekly from 14 to 18 of September 2020

Grain market:

The USDA report was released on Friday.

What we see: the gross yield of wheat increased by 0.58% to 770.49 million tons, which is a bit unexpected if we proceed from the messages that we received during August. If they harvest just that much, it will be a world record. For Russia, the forecast remains the same: 78 million tons.

The forecast for the gross corn harvest has been reduced to 1162.38 million tons. Despite the decline in the forecast, the numbers continue to be record highs for humanity. For the USA, the forecast was immediately reduced by 10 million tons, which was expected, but nevertheless, in fact, became an unpleasant surprise for the market.

Price forecast weekly from 7 to 11 of September 2020

Grain market:

Exporters on September 3 offered Egypt at the next tender wheat at $ 225 per ton and more. As a result, out of 11 participants, the product was purchased from one. This is actually a failure. The Egyptian government urges traders not to bury themselves. The $ 20 price hike in two weeks irritates the largest buyer. Prices have reached a pain threshold and the exporter is not willing to pay more.

There are problems with corn in China. There is an internal rise in prices for it, which creates the preconditions for large purchases from abroad, primarily from the USA. This fact should support the market for the main forage crop.

We are waiting for the next USDA report on 11 September. It is expected that the volume of gross harvest in the current season for wheat and corn will be adjusted downward.

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Price forecast weekly from 31 of August to 4 of September 2020

Grain market:

Wheat prices in the Black Sea region went up. Exporters raise their bid prices because of the constant demand for food from Egypt and Turkey.

it can be said that that FOB prices for Russian wheat have consolidated above $ 210 per ton. However, the volume of the harvest is such that while there are doubts that demand will remain at a constantly high level, since it can be satisfied without problems. However, France’s failure this year opens a window of opportunity for the Black Sea region countries to export wheat in the amount of 15 million tons.

In the meantime Russian wheat quality analysis shows a drop and the share of 5th grade wheat is bigger compared to last year.

Price forecast weekly from 24 to 28 of August 2020

Grain market:

China’s still buys food from the United States. In addition, there is a high demand for French wheat by African countries. These facts support the market.

Most likely, FOB prices in the Black Sea region will remain at $ 200 per ton and will not fall below, thanks to concerns about the second wave of the virus. Importers do not want to find themselves in a situation where ports are plainly closed, and food in the country is coming to the end, as it was at the spring. Therefore, stocks will be replenished by all import dependent countries ahead of schedule.

Price forecast weekly from 17 to 21 of August 2020

Grain market:

The USDA report showed a slight drop in gross wheat harvest by 0.43% to 766 million tons, and an increase in the corn crop by 0.67% to 1171 million tons. Markets were waiting for slightly better figures for wheat, as apart from the failed Europe, the rest of the regions were doing quite well.

After a severe flood due to incessant rains China will be forced to increase food imports, as part of the crops suffered from river flooding.

Comrade Xi addressed the nation with a message if not to save, then to be prudent about food. This means at least a reduction in portion sizes in Chinese restaurants. There is no hunger problem, but the losses due to the flooding force the CPC to give recommendations to the citizens, which in China’s conditions is tantamount to an order that cannot be ignored.

The Egyptian tender ended in deals with suppliers at $ 206 plus $ 15 freight, $ 4 below what we saw two weeks earlier. This fact will restrain the growth of prices on the exchange.

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Price forecast weekly from 10 to 14 of August 2020

Grain market:

Judging by the results of the Egyptian tender, where the companies managed to sell wheat from the Black Sea region at $ 212 per tonne, there is support from buyers in the physical market. However, if in August it becomes clear that there will be an extremely large amount of grain, many importing countries will prefer to take a break from a couple of weeks to a month in order to wait for more favorable prices.

We are waiting for the release of data from the USDA on August 12. Judging by what is happening on the exchange market, traders believe in high gross receipts, as prices go lower and lower. The situation is especially dramatic for corn, where the market is determined to visit the price levels of the early 2000s.

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Price forecast weekly from 3 to 7 of August 2020

Grain market:

Data on good prospects for the harvest in Russia did not allow the wheat market to grow, however, the chances for the price movement upwards still remain. The bulls have a couple more weeks, after which the new harvest will force the current quotes to go down.

The crop acreage for grain and leguminous crops in Russian farms of all categories in 2020 is estimated at 47.981 million hectares (46.66 million hectares a year earlier), including 29.421 million hectares of wheat against 28.092 million hectares last year. Russia may reach the level of 80 million tons of wheat by the end of the current season, which is 3-4% higher than the estimates of early July.

The USDA on Thursday confirmed that Chinese buyers made their largest US corn purchase at 1.937 million tons, despite rising tensions between Washington and Beijing. This kept the feed crop market from falling sharply. However, the downtrend for corn still remains due to favorable weather forecasts for the coming days.

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Price forecast weekly from 27 to 31 of July 2020

Grain market:

The International Grains Council has reduced the production of cereals (wheat and coarse grains) in 2020/21 by 13 million tonnes from the previous month to 2,225 million tonnes. The decrease in the estimate was due to a decrease in the gross harvest of wheat in the USA, the EU and Russia and due to a decrease in the gross harvest of corn in the United States. Nevertheless, these data are still record-breaking. There is no need to talk about any serious recession.

The wheat market is showing growth down to the active demand for grain from the importing countries. They are in a hurry to hedge themselves against aggravation of the situation with coronavirus next year. Whether it will be possible to solve the problem with the infection by universal vaccination is still a very big question.

Note that against the background of a fall in the gross grain harvest in Western Europe, Russia and Ukraine have good export prospects this year.

Price forecast weekly from 20 to 24 of July 2020

Grain market:

The flooding in China could have a significant impact on cereal prices. The emergency scale is enormous, 2 million people have been evacuated. It’s not clear how much crops and warehouses were affected. But the Celestial Empire has already purchased 1.7 million tons of corn from the United States. It is possible that we will see the demand for supplies of other types of food from Beijing.

The market is in a bullish trend typical for the current season, which should fizzle out in two to three weeks. After that prices will decline. This established order of things can be disturbed by weather deterioration at the moment of the crop harvesting. If cataclysms become widespread, we may not see a drop in prices in the second half of August.

We note constantly worsening forecasts for the wheat harvest in Europe. France now is the «chief» here, the spring forecast has been reduced from 39 to 30 million tons. A drop in the harvest is predicted in Bulgaria and Romania. Ukrainian and Russian grain will be in good demand this season.

Price forecast weekly from 13 to 17 of July 2020

Grain market:

The USDA report was published. The forecast for gross wheat harvest in the world is reduced by 0.53%, in the USA by 2.85%, which is significant. The market continued to grow after the release of data, which persuade us on the reality of reaching the level of 545.0 cents per bushel on the Chicago stock exchange.

Gross harvest of corn reduced by 2.13%. This is a bullish fundamental signal, but the market was expecting an even greater drop in crop volumes, therefore we saw a pullback on Friday.

Forage crop prices may suffer due to lower demand for expensive meats amid falling incomes. So far, the situation with prices for corn is not as optimistic as for wheat.

Price forecast weekly from 6th to 10th of July 2020

Grain market:

On Friday, the 10th, we are waiting for the release of the USDA report. The market can receive powerful doping for growth in the event of a decrease in forecasts for the gross harvest of grain.

Disturbing news comes from Europe. It is expected that 27 countries of the European Union and the United Kingdom, which left the block in January, will harvest 131.3 million tons of soft wheat in 2020, according to the average forecast of analysts and traders surveyed by Reuters.

As a result, production will be closer to the dry 2018 level of 128.3 million than last year’s 147 million, according to estimates by the European Commission.

The expectation of a decrease in gross harvest may contribute to higher grain prices in the coming weeks. Judging by what we see on the charts, July can be a bull month.

Price forecast weekly from 29th of June to 3rd of July 2020

Grain market:

On Thursday the European Commission has significantly lowered the forecast for this year for a wheat crop in the EU again, reducing its expected production to 117.2 million tons from 121.5 million a month earlier.

The projected production of the soft wheat in the 2020/21 season is now more than 10% lower than the previous year’s crop of 130.9 million. At the end of May, the Commission already lowered the forecast for soft wheat harvest by more than 4 million tons. This month, both the area and estimates of soft wheat yields in the EU have been adjusted downward.

Despite the negative news from Europe, the market isn’t yet able to turn up, although this probability remains, since we do not see an extremely sharp drop in quotations, which can be interpreted as doubts in the camp of sellers about the possibility of significantly selling the grain market.