Markets

Daily Market Wire 1 July 2019

Lachstock Consulting, July 1, 2019

Wheat and corn markets tumbled in Friday trading, but oilseed values rose in response to USDA estimates for US summer-crop plantings, which have lifted corn area at the expense of soybeans.

  • Chicago wheat July contract down 20.6 cents per bushel to 527c;
  • Kansas wheat July contract down 16.4c to 451.4c;
  • Minneapolis wheat September contract down 7.2c to 554.2c,
  • MATIF wheat September contract down €2 per tonne to €180.25;
  • Corn July contract down 19.6c to 420.2c;
  • Soybeans July contract up 12c to 899.6c;
  • Winnipeg canola November contract up C$3.90/t to $455.9;
  • MATIF rapeseed August contract down €0.75/t to €364.25;
  • West Texas crude oil up US$0.90 to $59.40;
  • Dow Jones up 74 points;
  • AUD higher at $0.703;
  • CAD lower at $1.308;
  • EUR higher at $1.137.

Corn

Friday’s USDA June US Acreage Report caused some wild market movements, with grains sold off heavily after the USDA published a figure for intended corn area that was well above market expectations. Much of the discussion since the report has focused on the time elapsed since the survey was done in early June, and this helped markets pick up a few cents from the lows.

Corn briefly traded limit down, and the big moves were heavily to the downside. 

Survey results released Friday pegged intended corn acres at 37.1 million hectares (Mha), sharply above average ideas around 34.8-35.2Mha – and were beans correspondingly low at 32.4Mha versus ideas in the 34.0-34.4Mha range. 

However, this survey was conducted at the start of June, and in what was in many ways a different world given weather in the Midwest.  Comments from the USDA after the data release fell much in this vein too, and noted that while they trust their methodology, they intend to resurvey much of the corn and soybean area to account for the impact of the weather.  These survey results will be out with the August report, and this adds to the potential volatility in that report, which should also begin to show the first in-season weather impacts on yield.  No-one is fully confident in where final areas will end up, but intentions may well end up a long way from the final planted reality. 

The USDA also updated its grain stocks figures on Friday, and these showed slightly tighter than expected corn stocks at 132.1Mt and soybeans at 49M.

Amid meetings between the US President Donald Trump and China’s President Xi Jinping, the USDA announced flash soybean sales to China of 544,000t. The market cannot yet tell if this purchase was fundamental business, or politically motivated.

Wheat

The USDA’s updated wheat area was in line with expectations, at some 18.5Mha, with spring wheat seen at 5.0Mha, 100,000ha below earlier survey indication, and final wheat stocks that were close to expectations at 29.1Mt.

The European Commission has cut its estimate for Europe’s wheat crop by 1.5Mt to 142.3 Mt in response to extreme summer heat, and raised the corn estimate by 1.1Mt to 69.3Mt.  Europe’s heatwave has continued, and set a number of new records, with forecasts for later this week for even higher temperatures for southern and central Europe. Slightly cooler maximums in parts of Germany and the Baltic States will be a relief to crops.  Harvest in the Black Sea so far has continued to show good yields and acceptable quality.

In the US, its Hard Red Winter wheat harvest has been producing variable yields and quality, including low protein levels, as fieldwork expands further into Kansas.

Australia

Rainfall of 15-25 millimetres or more is forecast across the Western Australian wheatbelt this week, but lower amounts are expected in the lower Great Southern and South West regions, and there are slightly improved forecasts for eastern states.

However, falls forecast for the east are far from what growers would like to see as conditions continue to deteriorate across New South Wales.

Source: Lachstock Consulting

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