Over the past week, the EUR/USD currency pair declined by 0.0134 to 1.0363.

US WTI light crude oil fell by $2.13 per barrel to $72.53 per barrel.

On Friday, oil prices dropped slightly. As of February 1, the U.S. is imposing a 25% tariff on goods from Canada and Mexico. The information was confirmed by White House spokesperson Caroline Levitt. She also added that a 10% tariff will be applied to Chinese goods but was unable to specify whether there would be any exceptions to the new tariff rules. At this stage, there is no information regarding tariffs against the EU, despite previous warnings.

A day earlier, Donald Trump commented that he had not yet decided whether to impose tariffs on oil imports from the two neighboring countries, stating that everything would depend on whether they "treat the U.S. properly."

Economists in the United States fear that the measure will fuel inflation, as the trade war could drive up the cost of imported goods. This concern is echoed by the Federal Reserve (FED), which has chosen to wait and assess the impact of the new tariffs on the economy before considering another interest rate adjustment. There is also a risk that trade flows may shift or even come to a halt due to the tariffs. The expectations are that Trump’s measure will significantly impact the automotive and energy industries.

Over the previous week, CBOT March SRW wheat futures rose by 15 1/2 cents to close at $5.59 1/2 per bushel.

For the past week, Chicago March corn futures declined by 4 1/2 cents to close at $4.82 per bushel.

Throughout the past week, March soybean futures in Chicago fell by 13 3/4 cents to close at $10.42 per bushel.

Accumulated US export sales for the week ending January 23.

*Source: USDA

Weather:

Over the past week, precipitation in the United States was scattered, with a lack of snow cover in the US Wheat Belt, and low temperatures damaging crops. In Europe, conditions were not too cold, with precipitation in some areas. India experienced insufficient rainfall. Australia saw light rainfall. In Brazil, rain fell across the entire country. In Argentina, good rainfall was recorded in the north, while the central and southern regions saw only light precipitation.

Over the next 10 days, the US Corn Belt will experience cold temperatures with snowfall. The US Wheat Belt will see warm and dry weather. Western Europe will have relatively warm temperatures for the season, with no precipitation. In the Balkans and Ukraine, temperatures will be slightly above 0°C with no precipitation. Russia will experience cold weather with light snowfall. India will have moderate temperatures with no precipitation. China will remain cold and dry. Indonesia and Malaysia will see moderate rainfall. Australia will have warm weather with minimal precipitation. In Brazil, rainfall volume will decrease but will not stop entirely. In Argentina, warm weather will persist, with light to moderate rainfall in some areas.

Overall, conditions in the Northern Hemisphere are developing with limited precipitation and no critically low temperatures. Brazil continues to receive rainfall, while Argentina's situation remains uncertain, with periods of drought occasionally interrupted by moderate rainfall.

GRAIN EXPORTS:

* US (September- August)  /  * Russia, Ukraine and the EU (July- June)

U.S. wheat and corn exports remained strong, while soybean exports declined. EU wheat exports continue to lag behind last year, with the gap now reaching 7.2 million tons. Russian wheat exports are around 500,000 tons per week, which is a low level. Ukrainian wheat exports have fallen below 200,000 tons, while corn exports remain moderate at around 550,000 tons.

On Friday, wheat futures in Chicago and Paris declined after a strong week. The reason for the drop was the U.S. president’s statement that over the weekend, tariffs would be imposed on imports from Mexico, Canada, and China. Russian wheat exports are expected to decline sharply due to limited domestic supply and low export profitability. For the entire 2024/25 season, exports are projected at 42.8 million tons (-0.9 million from the previous estimate and down from 52.4 million in 2023/24). January exports are expected to be 2.1 million tons, the lowest level since 2022. Wheat crop conditions in European Russia are poor. While the correlation between current crop conditions and final yields is not absolute, it is still relevant. Rainfall in the southern regions has been minimal, and the lack of snow cover increases the risk of winterkill. Additionally, the use of domestic seed varieties this year may contribute to lower yields.

On Friday, corn futures in Chicago and Paris declined. Once again, the U.S. administration and the new tariffs were to blame, signaling the start of a trade war. U.S. corn export sales have reached 43.29 million tons, covering 70% of USDA’s annual export forecast (compared to a 66% historical average). The Buenos Aires Grain Exchange rates 28% of Argentina’s corn crops in good to excellent condition (-2% from the previous week), while 22% are in poor condition (+2%). The exchange expects good rainfall in February in Argentina, reinforcing analysts' forecasts for a soybean production of 49.6 million tons and a corn production of 49 million tons. Soybean planting is complete, and corn planting has reached 98.7% of the planned areas. However, the current deterioration in crop conditions is not a positive sign, though there is still time for recovery.

On Friday, soybean and soymeal futures in Chicago declined, while soyoil futures rose. The price of the current rapeseed crop in Paris declined, but the price of the new crop rose, and canola futures in Canada declined. USDA is expected to report U.S. soybean processing in December at 5.92 million tons, with soyoil stocks at 1.734 billion pounds. U.S. soybean processing was 5.71 million tons in November and 5.56 million tons in December 2023. Demand for soybean oil in the U.S. is increasing due to biodiesel, which is driving up processing capacity and soybean consumption. U.S. soybean export sales have reached 42.683 million tons, covering 86% of USDA’s annual forecast (compared to an 84% historical average). The Buenos Aires Grain Exchange rates 20% of Argentina’s soybean crops in good to excellent condition (-2% from the previous week), while 28% are in poor condition (+2%). Cofco has reaffirmed its commitment not to import soybeans from Brazil that were grown on deforested land after 2008.

Most Asian markets were closed last week due to Lunar New Year celebrations. The Federal Reserve did not change interest rates this week. The Fed stated that further confirmation of persistently low inflation is needed before additional rate cuts, likely in the second half of the year. The Personal Consumption Expenditures (PCE) index for December, released on Friday, showed a 2.6% year-over-year increase, in line with expectations but still above the 2% target. Core PCE reached 2.8%, also matching expectations. Personal income and spending rose by 0.4% and 0.7%, respectively, in line with forecasts. On Saturday, U.S. President Trump imposed a 25% tariff on imports from Mexico and Canada and a 10% tariff on Chinese goods. These new tariffs will create inflationary pressure in the U.S. The uncertainty surrounding tariffs and the policy decisions associated with them will provoke retaliation from affected countries, disrupt supply chains, and shake up markets, with issues only just beginning. Friday’s sell-off was part of a broader risk-avoidance sentiment, particularly after the market rally of the last two weeks.

Although corn and soybeans in Chicago declined on Friday, this does not mean the corn rally is over. U.S. corn ending stocks have been significantly reduced by USDA this season. Corn prices are now 1 USD/bushel higher than a year ago, translating to roughly $200 per acre more in revenue for Illinois farmers. Over the past few months, U.S. corn stocks have been lowered by 500 million bushels (12.7 million tons). Given these stock levels, what should the price of corn be? Current forecasts suggest that U.S. farmers will plant 2 million more acres of corn in 2025, keeping ending stocks roughly the same as this year at just over 38 million tons. If farmers plant 4 million more acres, stocks could rise to 46–48 million tons. Under this scenario, soybean acreage would decline by 2 million acres. This situation is keeping soybean prices high, despite potentially record-breaking soybean production in South America. Another factor supporting soybeans is the vegetable oil market, where soyoil is replacing palm oil due to the latter's high price. Palm oil production in Indonesia and Malaysia is not growing as fast as demand, particularly due to its use in biodiesel. Soyoil demand remains strong, not just in the United States but globally. Soyoil was further supported on Friday by new US tariffs on canola imports from Canada. Canada will now have a surplus of rapeseed and its processed products. Trade flows are becoming increasingly disrupted, which could benefit certain markets, but only if U.S. agricultural products remain somewhat isolated from major global consumers.

With these new tariffs in place, imports to the U.S. from Mexico and Canada are expected to drop by 70%, while imports from China could decline by nearly 40%. Mexico will face significant economic challenges due to its heavy reliance on U.S. trade. Many Canadian factories that previously exported to the U.S. may be relocated elsewhere. As for China, Trump is likely using tariffs as a pressure tactic to force a trade deal.

Wheat and soybean markets held up relatively well on Friday, while corn was more uncertain. Brazil’s soybean harvest is progressing slowly but steadily. Markets are closely watching the South American harvest and China’s purchasing activity. Weak crude oil prices last week put pressure on grain markets. The EU announced tariffs on fertilizers and agricultural products from Russia and Belarus, aiming to penalize Russia for the war in Ukraine. However, this move will increase fertilizer costs for EU farmers.

Currently, the market is facing significant and long-term turbulence related to shifting trade flows, upcoming difficult negotiations to resolve trade disputes, and the relocation of production capacities to different countries. Bulgarian farmers are likely to benefit from these developments despite the associated risks. Consumers worldwide may begin stockpiling wheat, corn, and sunflower oil due to the many uncertainties surrounding future changes. Additionally, low global stocks of corn, wheat, and sunflower will tighten supply and push prices higher. India’s wheat production is also at risk, as forecasted low rainfall in February could reduce yields, leading to increased imports to stabilize domestic prices, which are already at record-high levels.

Changes in FOB prices of major exporters in recent days:

FOB Prices of Agricultural Commodities Increased This Week

Wheat

FOB wheat prices rose for the second consecutive week. The FOB price of Bulgarian wheat reached 241 USD/ton (+3 USD/ton for the week and +5 USD/ton the previous week). The FOB price of Australian milling wheat stood at 227 USD/ton (-5 USD for the week and +3 USD the previous week), while 10% protein wheat was priced at 222 USD/ton (-3 USD for the week and +1 USD the previous week). Australian feed wheat was priced at 195 USD/ton, down from 198 USD/ton the previous week. After several weeks of increases, Australian wheat prices have started to decline.

Corn

FOB corn prices continued to rise this week. The FOB price of Brazilian corn increased by 24 USD/ton to 232 USD/ton (unchanged the previous week).

Soybeans

FOB soybean prices in the United States increased, while prices in Brazil and Argentina declined. The FOB price of Brazilian soybeans fell by 6 USD/ton (+4 USD the previous week) to 376 USD/ton. Brazil is currently harvesting its soybean crop, with expectations of record yields. U.S. soybeans remain significantly more expensive than Brazilian soybeans, with the price gap widening to 41 USD/ton.

Vegetable Oils

Global vegetable oil prices remained largely unchanged over the past week.

Export prices Black Sea, USD/mt (compared to the previous week):