Markets

Daily Market Wire 2 October 2019

Lachstock Consulting, October 2, 2019
Monday’s markets were mixed.
  • Chicago wheat December contract up 3 cents per bushel to 498.75c;
  • Kansas wheat December contract down 3.5c to 411.5c;
  • Minneapolis wheat December contract down 11.5c to 533;
  • MATIF wheat December contract up €0.5 to €175.25;
  • Corn December contract up 4.5c to 392.5c;
  • Soybeans November contract up 13.5c to 919.5c;
  • Winnipeg canola November contract up C$0.90 to $452.20;
  • MATIF rapeseed November contract down €1 to €386;
  • Brent crude December contract down $0.36 per barrel to $58.89;
  • Dow Jones index down 343.79 points to 26573.04 points;
  • AUD weakened to US$0.6707;
  • CAD strengthened to $1.3220;
  • EUR strengthened to $1.0931;
In the wheat pits Chicago settled up 3 usc/bu closing at 498.75usc/bu, Kansas was -3.5 usc/bu lower to settle at 411.5usc/bu, while Minni softened -11.5 usc/bu to go out at 533usc/bu. Corn gained 4.5 usc/bu to go out at 392.5usc/bu while Beans were up 13.5 usc/bu to settle at 919.5usc/bu WCE Canola rallied 0.9 CAD/mt closing at 452.2CAD/mt with Matif Canola finishing lower by -1 Eur/mt. In outside markets the Dow Jones fell 0 points, Crude was down -0.48 bbl the Aussie was -0.0046 lower to settle at 0.67027, the CAD softened -0.0018 while the EUR gained 0.0034.

Markets and trade

Wheat gave up chasing corn overnight amid better weather forecast for the spring wheat belt along with the realization that US wheat is simply overvalued compared to competing origins.Corn kept on trucking into what is becoming the October WASDE show down. The range of yield estimates keep getting wider, FCStone putting out a 169.3bu/ac estimate last night, up from their last guess of 168.2bu/ac. The likelihood is that the Oct report is a fizzer but the fact the USDA went back and revised last year’s yield has many thinking they will want to be conservative with this year’s crop, especially given how late it is.

In the background the bean market has the same narrative however, given how sensitive the US balance sheet is to yield, beans could quickly start driving this market.

The unknown risk surrounding yet another face-to-face with the Chinese trade delegation shouldn’t be forgotten. The market has almost become immune to these talks given the lack of progress and, with a decent amount of assumed demand lost via ASF there is a complacency surrounding the eventual outcome.

Australia

Locally the market took another leg higher on relatively low volume.

ASX has rallied A$17/t in 3 days although it’s worth pointing out that basis has only rallied $6/t over the same period.

Production prospects are undoubtedly going backwards with anecdotal reports of huge areas being cut for hay. This will always be a hard one to reconcile and the subsequent impact on total production will take some time to calculate.

Rainfall prospects are limited to 5mm and, according to the BOM largely hug the coast.

I’m sure you have all caught up on the RBA’s decision to cut rates and flag further cuts if needed. The banks passing on only part of the cut and the Aussie dollar managing to largely hold ground even with the forward rate outlook remaining heavy.

 

 

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