Agri- Commodities: 18-22/11/24

Grain markets began the week on strong footing, building on Friday's gains. Wheat prices led early, driven by geopolitical developments, including U.S. approval for Ukraine's use of American weapons for limited strikes in Russia. Soybeans and corn followed suit, both posting gains of over 1%. However, Russian wheat prices remained under pressure, with IKAR reporting a $2 drop to $226/ton for December FOB shipments, well below the recommended price. Meanwhile, export data painted a mixed picture—U.S. wheat inspections lagged expectations, but soybean and corn shipments showed strength, supporting bullish sentiment. Winter wheat conditions in the U.S. also improved to 49% good/excellent (G/E), a notable jump from the previous week.

On Tuesday, wheat prices reacted to reports of Ukraine's use of ATACMS missiles against Russian facilities, prompting a modest war risk premium. However, much of the early gains were pared back by session’s end. In contrast, soybeans faced headwinds from robust forecasts for Brazil's 2025 crop, now expected to reach a record 167.7 million metric tons (mmt). EU soft wheat exports rose to 8.79 mmt, though still behind last year's pace, while Ukraine projected a notable 9% expansion in wheat sowing area for 2025. Market sentiment was further clouded by escalating rhetoric from Russian President Vladimir Putin, who issued nuclear threats in response to Western support for Ukraine.

Middle of the week, wheat prices staged a recovery after early losses, supported by heightened caution over the ongoing Russia-Ukraine conflict. Oilseeds weakened, with rapeseed prices falling by 1.7%, driven by speculative fund activity. Private sales of over 400k tons of soybeans to China and unknown destinations highlighted demand resilience. Meanwhile, reports of Siberian farmers pivoting from wheat to more profitable crops such as soybeans and legumes underscored ongoing economic pressures in Russia's agricultural sector. The market also noted increasing short positions in MATIF milling wheat, contrasting with record-long positions in rapeseed, reflecting divergent speculative sentiment across oilseeds and grains.

On Thursday, a weaker euro lent support to MATIF wheat, which edged higher, while U.S. corn and soybean prices declined. Oilseeds faced significant pressure, with rapeseed plunging nearly 4%, as funds reduced long positions. The International Grains Council (IGC) revised its global wheat production forecast for 2024/25 down by 2 mmt to 796 mmt, while raising its corn estimate by 1 mmt to 1,225 mmt. Export activity continued, with robust U.S. weekly soybean sales surpassing expectations, while wheat and corn sales remained steady. Amid rising geopolitical tensions, Putin announced the use of Russia's new "Oreshnik" missile, though this had limited immediate impact on grain markets.

Soybeans recovered from oversold conditions on Friday, while wheat prices softened due to a lack of fresh bullish news. Corn closed marginally lower. In France, soft wheat planting surged to 90% completion, well ahead of last year, with conditions rated at a robust 88% G/E. Turkey announced a tender to export 150k tons of feed barley, signaling sufficient domestic supply and a focus on freeing storage capacity. Funds extended net long positions in corn but added to short positions in soybeans and wheat, highlighting a shift in speculative focus. The weakening EUR/USD, driven by recessionary pressures in the Eurozone, added to the mixed sentiment.