Markets

Daily Market Wire 1 December 2021

Lachstock Consulting, December 1, 2021

Macro and commodities markets all were lower in overnight moves ranging from 2pc to 5pc.

  • Chicago wheat March contract down US35 cents per bushel to 787.25c/bu;
  • Kansas wheat March contract down 35c/bu to 822.25c/bu;
  • Minneapolis wheat March down 35.25c/bu to 1010.25c/bu;
  • MATIF wheat March contract down €12/t to €285.50/t;
  • Corn March contract down 14.75c/bu to 567.5c/bu;
  • Soybeans March contract down 25.5c/bu to 1226.5c/bu
  • Winnipeg canola January 2022 contract down C$40.30/t to $987.10/t;
  • MATIF rapeseed February 2022 contract down €16.75/t to €644.75/t;
  • US dollar index was down 0.4 to 95.9;
  • Dow Jones industrial average down 2 per cent.
  • Brent crude oil futures price down 5 per cent.
  • AUD weaker at US$0.713;
  • CAD weaker at $1.278;
  • EUR firmer at $1.134;
  • ASX wheat January 2022 down A$10/t to $425/t;
  • ASX wheat January 2023 down $10/t to $400/t.

International

Risk off! Chicago wheat fell 35usc/bu, Kansas 35usc/bu while Minni fell 35.25usc/bu. Matif wheat eased EUR$12/t while Black Sea wheat was off USD$9.75/t. Chicago corn fell 14.75usc/bu. Soybeans eased 25.5usc/bu while bean oil was off 5.28%. Oddly soybean meal was basically unchanged. Matif canola was off EUR$16.75/t with Canadian canola falling CAD$40.30/t. Crude took another beating – down USD$3.23/t or 4.84%. the Dow shed 652 points while the Aussie went out at 0.7131

Global Highlights

 

US Federal Reserve chair Jerome Powell put a spanner in the works as he questioned pulling back on the bond buybacks as inflation bites. He was at pains to remove the word “transitory” when referring to inflation as its clearly here to stay. Global markets saw this as the canary in the coal mine and proceeded to move to risk-off mode in earnest. This is a fundamental shift in the position of the Federal Reserve but not a surprise. US headline CPI on an annual basis had its largest increase since 1990 (figure 1).

Funds are currently as long Kansas as they have been for this time of year. In the KC wheat contract such fund length can create some issues because liquidity tends to dry up in an exit event which can amplify market movements.

As half of NSW drowns, overnight wires are full of reports of bigger Australian production based on the latest ABARES release. This was coupled with the uncertainty surrounding the Omicron virus and subsequent demand erosion.

EU wheat shipments have been a major driver of the strength in wheat markets, particularly Matif. Soft wheat shipments from the EU reached 11.62 Mt as of Nov 28 vs 10.45Mt the same time the previous year. Note these numbers do not include up to date French data which are only complete up to July. Additionally the prior year included the UK before it departed the EU in Dec 2020.

EU barley exports totalled 4.12Mt, compared with 3.43Mt a year earlier with China being the top taker at 1.61Mt.

Australia

East coast wheat cash bids to growers were off $3-5/t yesterday.  SA values printed $3-5/t stronger on all wheat grades with a $20 increase on AGP bids in Outer Harbour zone.

East coast barley bids were firmer by $2-3 and SA was off $3-6 by the end of the day with some harvest pressure affecting bids.

Canola was off hard with bids off $20/t and more pressure expected today with international prices lower last night.

Two more canola vessels appeared on the stem in NSW, taking the total to three, potentially these new vessels may have more up the queue in part due to the problems in the wheat stem. We could be seeing more canola prioritised to the export pathways. In WA 0.1Mt canola November loadings are being rolled into December, so it is now looking like 0.45Mt November.

The receival data from bulk handlers GrainCorp and Viterra were still slow going with harvest delays last week due to weather. Viterra have now cracked over 1 million tonnes with large percentage of receivals being barley. The GrainCorp network has received 4.5Mt.

 

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