Grains showed limited activity overnight as markets held mostly fractional gains coming out of the overnight session. In outside markets, the US dollar index continued to rise to a contract high on the Dec futures, while S&P futures and crude oil were modestly higher.
Analyst UkrAgroConsult said on Monday that warm temperatures and rain has slightly improved the condition of Ukrainian winter grain crops, but a significant portion remains in a poor state. A severe drought in the summer and autumn in half of Ukrainian regions has forced farmers to stop sowing of winter grains, leaving concerns of a poor grain harvest in 2016. The share of crops in good condition accounts for 28.1 percent as of Nov. 26 compared with 40.6 percent at the same date in 2014, UkrAgroConsult said in a statement. It said that the share of poor crops rose to 35.6 percent this year from 18.1 percent in 2014. UkrAgroConsult this month cut its forecast for Ukraine’s 2016 wheat harvest by about 8 percent to 17.5 MMT.
Argentina’s incoming government will abolish export taxes on corn and wheat the day after it assumes office and reduce the export tax on soybeans by 5%, designated Agriculture Minister Ricardo Buryaile confirmed over the weekend. President-elect Mauricio Macri won the election last Sunday on a platform of wholesale change. He has vowed to end interventionist measures like these taxes that have hobbled growth in Latin America’s third largest economy. “The wheat and corn taxes will be eliminated from the first day, in line with what we promised,” Buryaile was cited as saying. “The tax on soy will drop by 5% percent from the start of Mauricio Macri’s term,” he added.
S&P futures (ESZ5) was modestly higher overnight. The lull in the stock market is continuing after light trading amid the Thanksgiving holiday left share prices little changed every single day last week. Investors are awaiting reports from pending home sales today to manufacturing data tomorrow and the monthly Labor Department jobs update on Friday. Federal Reserve Chair Janet Yellen will speak to Congress on Thursday and the European Central Bank will hold its last policy meeting of the year.
Crude oil prices (GCLF6 / QMF6) gained ground on Monday, but the overall trend remains bearish on oversupply issued and a strong US dollar. Oil prices have been sliding for over a year since the OPEC opted to keep production high to protect market share and bump out rivals in the U.S. and those outside the cartel. Although there has been rhetoric of late by Saudi Arabia to “stabilize prices”, the general view is that OPEC will maintain the “no-cut” policy. Any changes would be likely determined until after the effect of Iranian oil returning to the market become more apparent in coming months, analysts say.