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YEAR ROUND COMMENT ON THE GLOBAL GRAIN AND OILSEEDS MARKETS

 

CASH MARKET WRAP: China wheat, corn buying redresses Covid hit


Published March 2020 by Tim Worledge, AgriCensus

 

 

Wheat
In a week to remember for the markets, wheat emerged with its head above the water as cash demand around the world supported the trade as capital markets were sold off hard.

 

China was the big mover this week, with talk of it picking up its first wheat cargoes from the US since 2017 along with new crop positions from France, while opportunistic buying from the Middle East and Africa saw cut price Black Sea cargoes booked too.

 

Tenders also played their part, with deals for durum in Algeria and Tunisia, while Tunisia also bought milling wheat along with South Korea and Japan.

 

At origin, nearby prices generally trended downwards over the week, as Russian 12.5% slipped $1/mt to $205/mt FOB Novorossiysk, Ukrainian 11.5% slipped 50 cents to $201/mt FOB HIPP, US SW fell $5.50/mt to $221.75/mt FOB PNW, and Argentinian 12% was down $1/mt to $218/mt FOB Up River.

 

The EU was the exception, where rallying Paris futures, a weaker euro, and growing logistics headaches fed into higher outright prices – as French 11.5% was up $11.25/mt to $214.75/mt FOB Rouen and German 12.5% was up $7.25/mt to $215.50/mt FOB Hamburg.


Corn

Another week with a familiar pattern saw corn futures under pressure for much of the week, as fears over the spread of Covid-19 crystallised into catastrophic projections of declining road fuel demand.

 

Against that, the US ethanol sector became the main focus of fears, as any fall in oil demand will likely drag down demand for the biofuel and cut out a substantial bedrock of US corn demand.

 

While it was too soon to tell the scale of the impact, the urgency of the situation was underscored by industry voices calling for financial support and a collapse in CIF barge premiums as corn flowed from the ethanol plant to the river.

 

US Gulf CIF barge basis slump, sending the assessment from $16625/mt to $151/mt, equating to a basis drop from 55 cents to 48 cents as the slowdown hit domestic corn.

 

However, rumours circulating that China had stepped into the market to buy US corn provided some support for both basis values and corn futures, with the confirmation that China had bought at least 750,000 mt of corn through the latter stages of the period drawing support to values.


Soybean
Large amounts of volatility were the key trait in the futures market, with rising basis premiums the main characteristic of the cash markets this week.


The May soybean contract was changing hands at $8.51/bu in pre-trading Friday at time of press, up 30 c/bu from a low of $8.21/bu reached on Monday, when markets fell amid heightened coronavirus fears.


In the cash markets, Brazilian origin and CFR China premiums were the first to respond to the fall in futures at the beginning of the week, rising by 5 c/bu across the curve from Monday.


On Friday, basis premiums pared back gains but a sharp rise in futures because of a planned Up River port shutdown in Argentina announced Thursday, followed by a nationwide curfew in the country announced Friday cushioned flat prices.


The Agricensus APM-6 CFR China marker for May shipment was assessed at $364.50/mt Thursday, up $7.25/mt from the low reached Monday but $1.75/mt below value last Friday.


Brazilian paper Paranagua prices for May were assessed at $331.75/mt Thursday, up from the low of $327/mt hit Monday.


And in the US, following weeks of virtually flat basis premiums amid limited demand, Gulf and PNW premiums rose by 9 c/bu and 5 c/bu respectively on Thursday amid rumours of imminent Chinese purchases.


Prices for May shipment out of the US Gulf and PNW were assessed at $337.75/mt and $351/mt respectively, up from $329.50/mt and $344.75/mt on Monday.


 

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