Markets

Daily Market Wire 9 December 2021

Lachstock Consulting, December 9, 2021

Wheat values weakened in overnight trading, soybeans gained and canola-rapeseed diverged 1pc each.

  • Chicago wheat March contract down US14 cents per bushel to 794.5c/bu;
  • Kansas wheat March contract down 15.5c/bu to 812c/bu;
  • Minneapolis wheat March down 1.25c/bu to 1035.25c/bu;
  • MATIF wheat March contract down €4.75/t to €287;
  • Corn March contract up 1.25c/bu to 587.25c/bu;
  • Soybeans January contract up 10.75c/bu to 1261c/bu
  • Winnipeg canola January 2022 contract down C$12.90/t to $1010.70/t;
  • MATIF rapeseed February 2022 contract up €11.25/t to €707.50/t;
  • US dollar index was unchanged down 0.4 points to at 95.9 points;
  • AUD firmer at US$0.718;
  • CAD steady at $1.265;
  • EUR firmer at $1.1344;
  • ASX wheat January 2022 up A$2/t to $412/t;
  • ASX wheat January 2023 up $2/t to $388/t.

International

In pre-WASDE report position-squaring, wheat found an offer but there is a litany of fundamentals that are still simmering underneath the market. This is where fundamentals and order flow don’t necessarily comply with one another. Despite the compelling fundamentals, being long historically high flat price ahead of the holiday season can lose its appeal. Add it the uncertainty surrounding the Russia/Ukraine feature bout, and it makes sense the “weak” long finds the exit. For the most part, we are dealing with knowns. Balance sheets are pretty much set, with the exception of quality, and we are in merchandising mode. The unknowns are Russian export quotas, military action and, as always, China. If the ideas around a 9-million-tonne (Mt) export quota they are still on track, basis current pace, to export circa 33-35Mt, and USDA has called it 36Mt, which is manageable. Military action and China fall-out is less manageable. The recent announcement that US diplomats will be boycotting the winter Olympics has the potential to (excuse the pun) snowball

US President Joe Biden, along with a handful of NATO allies, are planning a meeting with Russia in an attempt to deescalate the tension between the two Black Sea neighbors. The dispute has evolved from the Ukraine’s accession to the NATO, along with the west providing offensive weaponry to neighboring countries.

South American weather, and specifically northern Argentina and southern Brazil, is getting some attention. For the moment, conditions are “swings and roundabouts” with better conditions in other parts of the growing belt largely offsetting the dry areas.

Australia

Projections suggest Australia will run out of the diesel additive AdBlue by February. This can be linked back to the delays in Nord Stream 2 and the subsequent natural gas shortage impacting urea production, coupled with China limiting exports. The scary part is that US President Joe Biden has already suggested that, should the Russians take the fight to the Ukraine, one of the first reactions would be for the West to pressure Germany to turn off the tap.

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