Tuesday’s agricultural futures markets were mostly lower; settlements as follows.
- Chicago wheat July contract down 7.25c/bu to 435.25;
- Kansas wheat July contract down 3 to 394;
- MATIF wheat May contract down €0.250 to €183.25;
- Minneapolis wheat May contract down 7.75c to 490.25;
- Corn July contract up 0.75 to 362.5;
- Soybeans July contract down 6.25 to 860.75;
- Winnipeg canola May contract down C$1.40 to 438.10
- MATIF rapeseed May contract unchanged at €370;
- WTI crude oil June contract up $0.41 to 63.91
- Dow Jones closed up 38.52 to 26,592.91;
- AUD up to 0.7053;
- EUR up to $1.11258;
- CAD up to $1.338;
Another day, another down print for wheat. Chicago wheat was down 6.5usc/bu while Kansas and Minni were down 3usc/bu and 0.5usc/bu respectively. Corn managed to buck the trend, finishing .75usc/bu higher while beans continued its downward projection finishing down 6.75usc/bu. Winnipeg canola fell CAD$3.7/mt while Matif canola settled EUR0.75/mt lower on the day. Outside markets saw a higher close for the Dow Jones, up 38 points while Crude also snuck slightly higher.
The Aussie is stuck at 0.7050 while the EUR firmed slightly. Fundamental news was lacking overnight allowing wheat to print new contract lows. It’s a rob-Peter-to-pay-Paul kind of deal in the US – the excessive moisture negatively impacting soft red winter and causing spring wheat planting delays has been extremely beneficial for the Hard wheat areas. Most clearly reflected in the fact HRW is trading well below SRW. In a “normal” basis year, a boundary condition on this spread maybe 20-25usc/bu which would reflect the cost of getting the better wheat to the SRW delivery network. However, with the disparity in basis levels this spread could conceivably continue to trade wider.
Its hard to find a compelling reason for wheat to rally today – yes SRW is wet and yes we are well behind the required planting pace in Spring wheat – however, production gains in HRW certainly dent this argument. Today, the only real hope for wheat is corn. Given the size of the short and the planting delays, compounded by an extremely wet forecast corn could find a reason to force the weak short out. This is still a “what if” market however and, based on the northern hemisphere wheat balance sheet in isolation it’s hard to see what gets wheat excited.
Australia rain hopes trim premiums
Domestically the much anticipated rains have started to move across the east coast. At the time of writing some falls cracked 20mm but were largely out of the cropping belt. The EP in SA got between 10-15 mm while Vic was generally under 5mm. The market has sold a decent amount of risk premium leading into this event so falls need to satisfy the position
Source: Lachstock Consulting