Markets

Daily Market Wire 1 July 2021

Lachstock Consulting, July 1, 2021

Limit-up corn lead other markets firmer following release of USDA US stocks and plantings reports.

  • Chicago wheat September contract up US33.25c/bu to 679.5c;
  • Kansas wheat September contract up 32c/bu to 659c;
  • Minneapolis wheat September contract up 35.25c/bu to 849.75c;
  • MATIF wheat September contract up €6.50/t to €209.25/t;
  • Corn September contract up 40c/bu to 599.25c;
  • Soybeans September contract up 90.5c/bu to 1408c;
  • Winnipeg canola November contract up C$17.10/t to $811.70;
  • MATIF rapeseed August contract up €5/t to €531.25/t;
  • US dollar index up 0.3 to 92.4;
  • AUD weaker at US$0.749;
  • CAD unchanged at $1.240;
  • EUR weaker at $1.185;
  • ASX wheat July contract unchanged at A$292/t;
  • ASX wheat January 2022 down $1/t to $301/t.

US stocks and area reports

The stocks report has a history of volatility – yesterday’s report didn’t disappoint. Headline changes are as follows:
Corn area 92.7 million acres, +1.56 million acres from March, 1 million acres below average estimates
Beans area 87.6 million acres, unchanged from March, 1 million acres below average estimates
All wheat area 46.7 million acres, +0.34 million acres from March, 0.76 million acres above average estimates
Winter wheat area 33.69 million acres, +0.66 million acres above average trade guess and 0.61 million acres above March
Corn stocks @ 4.11 million bushels (mbu) vs. 4.144mbu expected. • Bean stocks @ 0.767mbu vs. 0.787mbu expected
All wheat stocks @ 0.844mbu vs. 0.859mbu expected.

Market comment

The market reaction to the stocks report tells you everything – corn and beans have the main part of the growing season in front of them and now have little to no wiggle room on yield. Add to this the fact that many of the major producing states have had less than an ideal start to the season which leaves the market to do the job it is designed to do – ration demand. The report was actually a little bearish for wheat in isolation but, the potential of increased feeding, both domestically and internationally due to a lower corn crop will keep wheat in step with the corn market.
Another interesting input was the breakdown of acres with the main gainers being the states in which conditions are under the pump. Minnesota, North and South Dakota were the big gainers over the March print and are, on average, running around 30-70pc of normal rainfall for the growing season.
Where to from here?
Every weather update and every crop condition report just got a little more important. Volatility will remain a feature for Ag markets and, given the spec had a manageable position leading into the report, there is plenty of room to add. While the old trading adage of “nothing cures high prices like high prices” will eventually be right, despite last night’s limit move, Dec Corn is still over 50usc/bu off the high set in May.
With the AUD breaking over the session and the wheat futures rally – the AUD swap gained over AUD$15/t.

Australia

Local markets were quiet again yesterday. New and old crop wheat/barley grower bid prices were relatively unchanged. Canola continued to gain strength. New crop WA and east coast grower bids were up $15-20/t. We also saw GM spreads crunch into -$5-10/t under non-GM through the SA port zones, Victoria and Port Kembla.
Northern NSW and southern QLD the forecasts are still calling for 25-50mm. With a lot of the country through those areas already having a full profile, we could see some water logging and some more issues to the balance of the sorghum crop to be harvested which potentially gets abandoned due to this next weather event.
Later wheat planting is continuing in northern NSW. Summer crops are harvesting late and growers are seeing opportunity to use their full moisture profile to plant a small percentage of extra wheat area.

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