Markets

Daily Market Wire 1 April 2019

Lachstock Consulting, April 1, 2019
Corn led US futures markets lower on Friday and wheat followed; Friday’s settlements as follows;
  • CBOT wheat May contract down 6.75c to 457.75c per bushel
  • Kansas wheat May contract down 8.75c to 430c
  • Corn May contract down 17.5c to 356.5
  • Soybeans May contract down 5.25c to 884.25c
  • Winnipeg canola May contract up C$0.10 to $455.30 per tonne
  • MATIF rapeseed May contract down €0.50 to 357.50/t
  • Dow Jones down 32.14 points to 25,625.59
  • Crude oil May contract up US$0.84 to 60.14
  • AUD up to 0.7110c
  • CAD up to 1.335
  • EUR down to 1.122.

Commentary on markets

Grain markets took a beating on Friday’s session in the US, trading off sharply across the board following the USDA’s stocks and acreage reports. With corn running off a cliff, Chicago wheat traded fell 6.75 cents per bushel, Kansis wheat dropped 8.75c, Minneapolis wheat dropped 5.25c to 554.75c, and Matif wheat dropped 25 Euro cents on the earlier close to €185.75 per tonne. Corn lost 17 1/4¢ to 356 1/2, and beans were off 5 1/4¢ to 884 1/4¢.  The DOW rose amid apparent optimism over US talks with China, which will reportedly extend a prior three-month delay on the implementation of further tariffs on US-made cars and parts. Headlines late last week suggested that recent talks have been constructive, though the same has been said before with little progress apparent from an external view.

USDA domestic area and production forecast lifts corn acres

Friday’s USDA report brought far more corn acres than analysts had expected at 37.6 million hectares (Mha),or 92.8 million acres (Mac) versus estimates closer to 36.8Mha, and 1 March stocks figures were around 270 million bushels (Mbu), or 6.86 million tonnes (Mt), higher than expectations. The high stocks figure is raising a number of questions that analysts will be chewing through in the coming days. Was the USDA’s previously published corn yield too low? Will we see a rebound in implied domestic use in the next report? With the high corn area, bean area was about 607,050ha, below the survey estimates at 34.2 Mha versus the survey of 34.8Mha, but stocks were nearly 1 Mt above estimates at 73.75Mt, or 2.71 billion bushels (Bbu), versus 72.94Mt, or 2.68Bbu, expected from the survey. This weighed on the market without a China trade-war resolution.  The USDA’s next World Agricultural Supply and Demand Estimates report will be released a week from tonight, and will take into account all of these stocks figures, leading to some ideas that we could see another corn carry-out of more than 50Mt, or 2Bbu, and 27Mt, 1Bbu on soybeans.

Wheat

On the wheat side, spring wheat areas was below average estimation at 5.18Mha versus 5.42Mha, and durum came in at 566.180ha down from 849,870ha last year, as should be expected because we disregard all the surveys as they never pay attention to durum. We note these figures are all based on late February and early March surveys.  True intentions will have changed since then, and stock estimates precede flood losses. Algeria’s apparently back for another wheat tender, which should price to French wheat in the current market. Looking to the new crop, Black Sea and EU conditions remain largely good, with French wheat reported at around 82 per cent good to excellent, down from 85pc in the same condition the week before. The Russian Grain Union farmer group has suggested its harvest could beat 2017 records, with only 5-6pc of the winter crop in poor condition after the mild winter.

Australia

Rain finally came through in the end this weekend, with 70-100 millimetres and more in some spots of New South Wales and most of the state seeing at least 20-30mm. On the Darling Downs of southern Queensland, falls were a little below forecast, but delivered 30mm or more to many farms. In southwest Queensland and some parts of the western Riverina in NSW missed the rain, but otherwise the coverage was very good. We haven’t seen any significant rain in South Australia for a while yet, but do note that the extended outlooks have better chances for the Eyre Peninsula into next week.

Source: Lachstock Consulting

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