The EUR/USD currency pair rose to 1.0383, while the price of West Texas Intermediate (WTI) crude oil fell to $73.33 per barrel.

Oil prices increased on Monday as the U.S. dollar weakened. This follows a streak of five consecutive sessions of gains, driven by optimism for rising demand due to colder weather in the Northern Hemisphere and expectations of additional fiscal stimulus from the Chinese government to revive the struggling economy in the Asian nation. Meanwhile, traders are awaiting key data, including the minutes of the Federal Reserve's latest meeting, set to be released on Wednesday, and the U.S. employment report, expected on Friday.

Sentiment is weighed down by disruptions in Iranian and Russian oil supplies, as Western countries intensify sanctions. The administration of U.S. President Joe Biden plans to impose further restrictions on Moscow due to its war in Ukraine, focusing primarily on limiting Russia’s oil revenues.

Yesterday, March wheat futures in Chicago increased by 11 1/4 cents to $5.40 1/2 per bushel. Wheat futures increased in Chicago but declined in Paris. In Kansas, 47% of wheat crops were rated in good to excellent condition (compared to 56% in mid-December and 43% a year earlier). For the week ending January 2, 2025, U.S. wheat export inspections reached 412,342 tons (up from 369,101 tons the previous week but below 501,910 tons a year earlier). Since the beginning of the season, 12.72 million tons of wheat have been exported (compared to 10.17 million tons last year). Meanwhile, Indonesia may limit imports of feed wheat to support domestic corn producers.

Yesterday, CBOT March corn futures rose by 7 cents to $4.57 3/4 per bushel. Corn futures also increased in Chicago but fell in Paris. Weekly U.S. corn export inspections totaled 847,463 tons (down from 907,565 tons the previous week and 1,092,362 tons a year earlier). Since the start of the season, 16.24 million tons of corn have been exported (compared to 13.04 million tons last year). In December, Brazil exported 4.266 million tons of corn, a 29.64% decline from December 2023. According to Safras & Mercado forecasts, Brazil’s 2025 corn production is expected to reach 134.84 million tons (up from 125.56 million tons in 2024). Exports are forecasted at 43 million tons (up from 37.891 million tons), imports at 1.7 million tons (up from 1.4 million tons), and total consumption at 135.49 million tons (up from 126.28 million tons).

Yesterday, Chicago March soybean futures went up by 6 cents to $9.97 3/4 per bushel. Soybean and soyoil futures increased in Chicago, while soymeal futures fell. Rapeseed futures rose in Paris, but canola futures declined in Canada. Weekly U.S. soybean export inspections amounted to 1,284,970 tons (down from 1,643,202 tons the previous week but up from 1,040,799 tons a year earlier). Since the beginning of the season, 29.96 million tons of soybeans have been exported (compared to 24.31 million tons last year). In December, Brazil exported 2.004 million tons of soybeans, a 47.65% decline. According to APK-Inform, Ukraine processed 1 million tons of sunseed in December, a 17% decrease from November and the lowest level for the month since 2014. The declining sunseed oil prices in recent weeks have forced factories to halt sunseed processing and shift to soybeans.

The reduction in Brazil’s corn and soybean exports is significant, with much higher volumes recorded a year earlier. This is partly due to a weaker corn harvest and high domestic demand. However, Brazil is preparing for a massive soybean production, which is becoming increasingly realistic. The first corn production is expected to be good due to sufficient rainfall, but planting for the second corn crop has not yet begun, making current projections uncertain. Nevertheless, forecasts suggest excellent yields for both crops. If all goes well, Brazil’s harvests will flood markets in 2025. Analysts are now focusing on Argentina, where crop conditions are rapidly deteriorating due to dry weather, high temperatures, and the critical pollination phase for corn. Early varieties are currently being pollinated, with planting reaching 87% of planned areas. Initial expectations for corn and soybean productions were between 52 and 55 million tons. However, due to the impact of La Niña—although initially deemed mild—the potential reduction in yields could be 5–7 million tons for each crop. December rainfall in Argentina was only one-third of the usual amount. Rainfall in the United States is also inadequate, insufficient for the development of wheat crops, and soil moisture reserves are virtually nonexistent.

It is becoming increasingly clear that global grain production heavily depends on biofuel consumption, driven by government mandates for using grains and oilseeds as raw materials in this sector. Governments aim to strike a balance: ensuring farmers can sustain production while keeping food prices low for the electorate. Periods of price surges will be rare until a new balance in the sector is achieved.