Markets

Daily Market Wire 1 February 2022

Lachstock Consulting, February 1, 2022

Wheat fell sharply, while corn dipped and oilseeds firmed.

  • Chicago wheat March contract down US25cents per bushel to 761.25c/bu;
  • Kansas wheat March contract down 21c/bu to 781.25c/bu;
  • Minneapolis wheat March down 13.75c/bu to 906.5c/bu;
  • MATIF wheat March contract down €12.75/t to €266/t;
  • Corn March contract down 10c/bu to 626c/bu;
  • Soybeans March contract up 20.5c/bu to 1490.5c/bu;
  • Winnipeg canola May 2022 contract up C$1.60/t to $1002/t;
  • MATIF rapeseed May 2022 contract up €5.25/t to €715.75/t;
  • ASX March 2022 wheat contract A$4/t firmer at $374/t;
  • ASX Jan 2023 wheat contract $2.50/t weaker at $362.50/t;
  • AUD dollar firmer at US$0.707.

International

In other markets Black Sea wheat was down US$7/t, and soybean meal firmed 2pc. The Dow Jones Industrials Average firmed 1pc.

Wheat was in risk-off mode, influenced by Russia indicating it did not intend to invade Ukraine.  Regardless of the outcome, last night’s price action shows what is driving price,  and it’s not fundamentals. Rain has fallen through the US plains but it is also about to get bitterly cold through the SRW belt, right down to Texas is forecast to see minimum temperatures drop to minus 15-18 degrees Celsius.

The USDA flashed news of more soybean sales to China. This, along with more private analysts cutting estimates for South America’s soybean crop, fuelled buying. AgRural cut its estimate from 133.4 million tonnes (Mt) to 128.5Mt, citing continuing high temperatures and scant rainfall.  From a global vegoil balance-sheet perspective, palm oil has one eye on the COVID case growth in Indonesia. Indonesia is bracing for a third wave of infections as the Omicron variant drives a surge in new cases.

Technically, soybeans are overbought ; the Relative Strength Index highlights the recent investment which now needs to be justified. Export sales will be watched closely and, as we have seen with wheat, bulls need feeding. The freight market found some support on Monday, but not before reaching 12-month lows last week and rounding January 2022 off with the biggest monthly decline in two years. Labour shortages in Australia are causing supply disruptions in iron ore trade which is flowing into lower demand for freight. Australian accounts for 60pc of China’s iron ore imports, while Brazil supplies 20pc.

Australia

A mixed bag of local trading activity yesterday kicked off the week, with values slightly firmer on the boards through wheat and barley markets.  Canola was a focus yesterday through the market, as one major buyer stepped back in, and up-country sites ticked over $800/t again. A small volume traded late on Clear Grain Exchange at $890/t in the Portland zone in Victoria.

Weather continues to look wet for large parts of Queensland, and along the NSW border region, with a widespread 50 millimetres forecast, while down is expected to get a dry run for the next eight to 10 days.

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