Markets

Daily Market Wire 4 November 2021

Lachstock Consulting, November 4, 2021

Offshore futures weakened. Australian firmed.

  • Chicago wheat December contract down US10.5c/bu to 781c/bu;
  • Kansas wheat December contract down 7.5c/bu to 790.75c/bu;
  • Minneapolis wheat December down 31.5c/bu to 1044c/bu;
  • MATIF wheat December contract down  €3.25/t to €289.50/t;
  • Corn December contract down 9c/bu to 564c/bu;
  • Soybeans January contract down 12c/bu to 1244.25c/bu;
  • Winnipeg canola January 2022 contract down C$0.10/t to $990.70/t;
  • MATIF rapeseed February 2022 contract down €3.75/t to €692/t;
  • US dollar index was down 0.2 to 93.9;
  • AUD firmer at US$0.747;
  • CAD firmer at $1.238;
  • EUR firmer at $1.161;
  • ASX wheat January 2022 up A$5.50/t to $345/t;
  • ASX wheat January 2023 up $2/t to $363/t.

International

What goes up. Chicago wheat fell 10.5usc/bu to settle at 781usc/bu, Kansas wheat came off 7.5usc/bu while Minni was the biggest loser, falling 31.5usc/bu. Matif wheat also found some selling, printing down EUR$3.25/mt. Black Sea wheat was quoted USD$0.50/mt higher while ASX wheat lifted  A$5.50/t to settle at $345/mt. Corn was not immune to the selling, falling 9usc/bu to settle at 564usc/bu. Interestingly, Chinese corn futures were higher yesterday. Soybeans came off 12.5usc/bu, meal rose USD$3.60/st while bean oil fell 0.96usc/lb. Malaysian palm oil lifted 2pc and settled just short of the recent contract highs. The Aussie went home at 0.7450 while the Dow added 105 points. Crude oil was off USD$3.05/bbl while the Bloomberg commodity index fell 1pc.

Global fertilizer prices show no signs of abating and the subsequent impact on global grain production for the upcoming seasons is now firmly in focus. The US Gulf Granular Urea price hit a fresh high of US$720/st while the Morocco DAP mkt also printed a new high of (oddly) US$720/mt. While rainfall will be the ultimate driver of yield, the fact China and now Russia have undertaken steps to limit or even stop exports has enticed toilet-paper-style buying. Joc O’Rourke, the CEO of Mosaic Co. believes Chinese fertiliser exports should normalize after next year. While contrarian to the current view his timeline does little to help both hemispheres’ croppers for the upcoming growing season. China accounts for around 30pc of urea, sulphate, and phosphate global trade.

US ethanol production increased again, beating estimates, and printing the second highest daily production figure. Highest daily production was in Dec 2017. Unlike last week however, ethanol inventories also increased to 20.13mbbl, above the average guess of 19-19.94 mbbl.

The Baltic Dry Freight Index fell again yesterday, now some 44pc off the highs printed only last month. This aggressive fall has primarily been driven by a lack of activity amid sluggish China corn and soybean imports.

China currently has more provinces fighting Covid-19 outbreaks since the Wuhan outbreak in 2019. The Covid-zero approach are seemingly not arresting the spread, even with drastic measures.

Australia will publish September international trade data today. Analysts expect $12.2bn balance of trade surplus, down from $15.07bn in August.

The US Federal Reserve said it would be rolling back the asset purchase program this month. Despite 2- and 5-yr treasury notes firming on the news, the USD index fell over the session. Technically the Australian dollar has something for everyone.  I read two technical analyses of overnight moves. One said buy, one said sell. This is not an opinion piece, but I say we retest the 0.7412 low. Tune back in tomorrow.

Australia

Yesterday’s Melbourne Cup race carnival saw the Victorian trade out of action for the day. Cash wheat bids were a touch firmer in northern and central NSW as protein bids rose $4-5/t. Barley and canola bids were also higher.

Harvest pace continues to ramp up along the east coast. GrainCorp reported strong receivals at 1.5 million tonnes all commodities while in South Australia the Viterra system has received 43,500t and WA CBH 760,000t.

Rain pushing through South Australia and Victoria today is expected to slow harvest progress, particularly in the north east of SA.

 

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