The weakening of the Euro continued on Friday | IFCM Hong Kong
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The weakening of the Euro continued on Friday - 12.5.2014

The weakening of the Euro (EURUSD), which began after the ECB announcement on Thursday, continued on Friday. The macroeconomic data in the U.S. and the EU were neutral. Today there is no significant information expected for today, but note that the U.S. Fed regional representative, Charles Plosser, will have a speech at 15-00 CET.

This morning, we saw the neutral indicators of business conditions and business confidence in Australia for March. Tomorrow night at 0-30 CET, we will find out about the data on the Australian real estate market for March and the first quarter. The forecast is neutral. Besides, the government is going to present the budget state for 2014-2015 on Tuesday. It is expected that the deficit would not exceed A$30B.



The Soyb prices rose after the forecast published by the U.S. Department of Agriculture (USDA). Its holdings in the U.S. in the season 2013/2014 are expected to amount to 130 million bushels. It is 4 million less than the preliminary assessment of market participants. The forecast for the world stocks was 2.79 billion bushels less than market expectations and reached 66.98 billion bushels. The forecast for the U.S. stocks in the season 2014/2015 increased to 330 million bushels. However, the increase will only happen in September, when the new harvest starts. Therefore, this positive assessment has not affected the current market price yet.

The Corn prices decreased due to the revaluation of its stocks in the United States. The USDA reduced its forecast for stocks in the season 2013/2014 to 1,146 million bushels (more significantly than expected). However, expectations for stocks in the season 2014/2015 have been increased even more dramatically, up to 1,726 million bushels. Additional negative factor for the stocks was the USDA forecast for average farm prices in the season 2014/2015 at $4,2 per bushel. This is lower than their estimates for the season 2013/2014, which is $4,65 per bushel and below the current futures prices (about $5,1).

The Wheat prices fell contrary to the expected decrease in production. The crop forecast for solid, red, winter (HRW) wheat from the USDA in 2014 was lower than the estimates of market participants and amounted to 746 million bushels. The preliminary data for all grain was reported in Friday's review. Note that the world wheat production in the season 2014/2015 will be 697 million bushels, according to the USDA. It is noticeably smaller than the record harvest for the season 2013/2014 - 714 million bushels. Theoretically, such a prediction can support the Wheat quotations in the future.



The Sugar has been in the neutral trend for several days. Meanwhile, the USDA announced the probable decrease in its supplies to the U.S. market from the U.S. manufacturers by one third to 1.1 million tons due to cut of duties on its import from Mexico. Foreign suppliers from the countries such as Brazil, Thailand, Dominican Republic, Philippines may deliver another 700 tons of sugar from the quota of 1.2 million tones till September.

The Beef (Fcattle) price has risen after reports from India. This country has got the parliamentary elections started. The Hindu National Party proposed to reduce the export of beef to saturate the domestic market. Indian meat is exported mainly to Malaysia, Thailand, Vietnam and Egypt. Results of the elections in India will be announced on Friday. Note that Indian share is 20% of the world beef market. It is the second after Brazil.



As we predicted in our previous reviews, the Coffee prices have the downward correction started. Vietnamese manufacturers have begun implementing the last crop stocks. Now the stocks have decreased to 390 thousand tons, which is one fourth below the average level for 5 years. Thus the importance of this factor has decreased significantly. At the same time the forecast revision for the crop in Brazil has a positive impact on the Coffee prices. Investors believe that the impact of the drought was understated. According to the Fundacao Procafe non-profit agency, the coffee harvest in Brazil may be only 40,1-43,3 million bags (60 kg each). This is much less than the government forecast of 49 million bags and it could be supported in the future quotes.

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