Rice porridge.
Powerful technical events on the exchange - the expiration of contracts yesterday and expected on Monday - caused a serious change in the number of open positions.
Agricultural futures fell by 151 thousand open interest at once (2.38%), for all instruments - by 1,379 thousand contracts, which is 15%. Such a collapse was determined by options. The number of open interest for them decreased by almost 1/3.
According to the key interest rate, the loss is 2.8%.
In the week, after such a technical fixation, we can expect increased activity of traders, and therefore high volatility.
External for the agricultural market - oil benchmarks fell by 2.7% - 3.12%. Experts associate such a rebound with the beginning of discussions on the possibility of exporting oil from Kurdistan via a pipeline to Turkey. Perhaps this partially halted the rise that followed the decline in Kazakh oil exports due to problems at the CPC
And, of course, the tariff changes announced by the US President and the retaliatory measures of the countries affected by them worsen the prospects for global oil demand, and also increase the likelihood of accelerating inflation.
For the second session in a row, such a complex set of technical and external factors for the agricultural market dictated the best strategy - to wait it out. Serious movement occurred only in raw rice quotes. A drop of 2.5% at once.
The reason was the announcement of the Indonesian government's decision to stop rice imports in the first half of this year to support the self-sufficiency policy being implemented. This coincided with the restructuring of the rice import policy by the Philippines.
The pressure on quotes is increasing due to a decrease in global demand for rice due to the projected increase in production in producer countries under expected favorable weather conditions and record reserves in India - 60.9 million tons. In addition, the Indian rupee rate continues to decline, after the Central Bank's decision to reduce the discount rate, which coincided with a decrease in the dollar index this week.
Recently, the National Committee for Rice Policy and Management of Thailand approved three measures to support rice farmers: compensation for part of the costs of storage in their own grain storage facilities, subsidies to factories for long-term storage of rice, and coverage of the costs of managing rice purchasing points.
Well, the main factor putting pressure on the rice market is the approaching release of the winter-spring crop to the market in March.
The dollar index, with positive talk about the introduction of import duties in the United States, will most likely begin to adjust upwards.
The profile factors will not be fully worked out at once. Therefore, next week, based on a set of clearly “bearish” profile factors, we can consider an upward correction of rice quotes unlikely, but also a continuation of the decline.
A factor common to all raw grain cargoes is the growth of the Supramax index over the past week. An increase of 20 points to 886, this is the third week of growth in a row. If we consider the average cost of delivery from the Black Sea region to North Africa, the Middle East, China - 28 dollars / t, the increase in freight costs will be 1.4 dollars / t.
We consider the introduction of a grain export tax in Brazil next week (1.8%) and a significant, almost 9 dollars / t (25%) reduction in the export duty on wheat in Russia to be acute profile factors.
We believe that the market will begin to work out these changes on Monday, respectively, by reducing demand prices for wheat at loading ports and increasing offer prices for soybeans. #Russia #ExportDuty #Wheat #Brazil #Soybeans #Rice #PriceFall #India #RupeeRate #Stocks #Thailand #SupportRice_Industry #Indonesia #Suspension #RiceImports