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WEEKLY SUMMARY WEEK 6

SLOWED EXPORTS FROM RUSSIA SUPPORTS WHEAT MARKET

News from the markets in Bulgaria
• The unusually high temperatures in the last week of January reached 17-18°C in many places in the country, and in some regions of Northern Bulgaria – up to and above 20°C (Vratsa – 22°, Pleven – 2°C, Lovech – 22°C, Veliko Tarnovo – 23°C, Silistra – 20°C), led to the resumption of vegetative processes in autumn crops in some of the field regions of the country, the NIMH reports. The above-average January temperatures also disrupted the dormancy of some tree species.
• After the warm weather for the season, during the next seven-day period, agrometeorological conditions will undergo the change that existed in the second half of the period. The expected cold snap will end the premature vegetation of winter cereals.
• During the period, critical minimum temperatures for wintering agricultural crops are not forecast. The NIMH expert said that more suitable conditions for conducting soil cultivation will be available at the beginning of the period.

European Market Highlights
MATIF wheat rose in three consecutive sessions, reaching 234.50 euros/t yesterday for March futures, supported by a slowdown in exports from Russia, but also by increased exports of French feed barley to Morocco. The price of French barley is approximately the same as that of Romanian or Bulgarian, but transport costs to Morocco are lower. Meanwhile, the European Central Bank cut interest rates for the fifth time since June (to 0.75%) in response to the region’s sluggish economy and inflation close to its 2% target, while maintaining the bloc’s “tight” monetary policy.
• The European corn market received support from wheat and other feed grains, although dark clouds loom over corn prices if the Trump administration imposes 25% tariffs on US imports from Canada and Mexico from tomorrow, exacerbating trade tensions with the two countries involved in massive purchases of US corn. This could be compounded by weaker demand from China, whose imports are currently constrained by large stocks at ports, weak local prices and Beijing’s ongoing efforts to limit purchases from third countries.
• MATIF rapeseed continued its volatile trend, rising by 0.8% for the May contract, helped by some recovery in crude oil prices, but without the support of CME soybeans, which lost 1.6% in March futures, pressured by the prospect of rain in Argentina, where drought has reduced the estimate of the harvest for the past 6 weeks, and weak export sales data in the United States. On the other side of the Atlantic, canola in Winnipeg continued its volatile trading, moving into positive territory, supported by the drawdown of inventories in the coming months.

Highlights from markets in America
• US wheat prices fell 0.5-1.25%, supported by news of Russian and US exports, while corn and soybean prices on the SWOT exchange eased under pressure from improved weather forecasts for South America, where rains are expected to benefit crops in Argentina.
Corn prices fell moderately as traders weighed the likelihood of the Trump administration imposing new tariffs on imports from Mexico and Canada. Soybean prices followed the corn decline with double-digit declines, while soybean meal and oil remained relatively stable.
• USDA data on US exports showed weekly wheat sales rose to 456,100 tonnes, a sharp increase from 164,800 tonnes in the previous week. Corn exports reached 1.4 Mt and were within the market expectations range of 0.850 to 1.8 Mt. In contrast, weekly soybean exports were 438,000 tons, below market expectations of 0.540 – 1.7 Mt and the lowest volume of the season, excluding the Christmas and New Year holidays.
• The Rosario Grain Exchange (BCR) estimates that after the reduction of grain export duties from Argentina last week, corn was the product with the highest traded volume on the local market, supported by the price increase in Chicago, but also by the poor conditions for the new crop in the country. Similarly, Argentine wheat prices rose in the last week for March forward contracts, trading at $205/t DAP, but still remain much cheaper than Black Sea wheat.

Highlights from markets in the Black Sea region

Consulting company SovEcon has lowered its forecast for wheat exports from Russia in the 2024/25 season. by another 900,000 tonnes to 42.8 Mt, citing the “slow pace” of trade this month and the prospect of a 10.6 Mt quota coming into effect from mid-February until the end of the season. This is a sharp drop from 52.4 Mt last season and is still below the three-year average of 44.2 Mt. January exports are estimated at 2.1 Mt, which is 1 Mt below the average and the lowest level since January 2022. In 2024, the volume of Ukrainian agricultural exports to EU member states increased by 3% compared to the previous year, and the EU’s share in total Ukrainian exports reached 52.4%. Spain is the largest importer of agricultural products from Ukraine among European countries, followed by the Netherlands. In contrast, Turkey retains its third place as a destination for Ukrainian products for the third year in a row. In 2025, the prospects for Ukrainian agricultural exports will depend largely on the smooth functioning of the Kiev-controlled sea corridor, as around 90% of exports are currently transported by sea.
• The EU will impose import duties on fertilizers and agricultural products from Russia and Belarus in an attempt to reduce Russian resources to support the war in Ukraine, while European farmers can find other reliable and affordable sources of supply. The European Commission has adopted a proposal to impose duties on goods from both countries, including nitrogen fertilizers. The EC proposal also includes mitigation measures in case EU farmers face significant increases in fertilizer prices. However, we are a bit skeptical to what extent this move will ensure the “food independence” of the EU, and rather it is in favor of the large European fertilizer producers and will affect local farmers.