Markets

Daily Market Wire 10 June 2020

Lachstock Consulting, June 10, 2020

Grain markets closed lower overnight in response to favourable crop conditions.

  • Chicago wheat July contract down US 7 cents per bushel to 504.5c;
  • Kansas wheat July contract down 2.75c to 457.75c;
  • Minneapolis wheat July contract steady at 524.25c;
  • Corn July contract down 6.25c to 327.5c;
  • Soybeans July contract down 1.5c to 863.25c;
  • Winnipeg canola July contract up C$2.80 per tonne to $467.70;
  • MATIF wheat September contract down €1.50/t to €184.50;
  • MATIF rapeseed August contract down €1.25/t to €378.75;
  • Brent crude August contract up US$0.38 per barrel to $41.18;
  • Dow Jones index down 300 points 27,272;
  • AUD lower at $0.6957;
  • CAD higher at $1.3420;
  • EUR higher at $1.1336.

Crop conditions

It’s a rare event to look across the major grain-growing areas in the world and struggle to find anything but good conditions from the US through to the Black Sea and Australia. Rain has fallen where it was needed, prompting favorable conditions, particularly important in the northern hemisphere which is at the business end for winter-wheat production. Spring wheat conditions have snuck through without much fanfare but, according to the latest USDA update, 81 per cent of the crop was rated good to excellent. This compares with the five-year average of around 67pc, and is well above the previous five-year high. The Black Sea has managed to jag some late rainfall, and while the jury is still out on how much this will benefit the poorer areas of the south, it has bolstered the spring crop’s potential. Don’t get me wrong: there is the odd area that may be in the embryonic stages of a potential problem. Parts of the US corn belt need a drink, and some heat is on the way, parts of the EU won’t recover regardless of the late-season rain, and the northern UK wheat belt is beyond repair.

Markets

Egypt’s GASC stepped in after the close, seeking wheat for the 12-22 July, along with a spattering of other demand. The Philippines is looking for some feed wheat, which will give us a decent barometer as to the Aussie market floor. Based on last night’s Aussie dollar, Australia should win this business ahead of Argentina. The past month has been unseasonably dry in the winter wheat areas of Argentina but, according to the 15-day forecast, relief is on the way. If the rain arrives, it should help solidify current production estimates. Predicting the political landscape and how it will effect trade in Argentina is extremely difficult. Reports overnight said the Argentinian Government planned to nationalise the soybean-crushing giant, Vicentin, which recently announced it was bankrupt, a classic example of a country that has had its challenges in agriculture. Australia sources much of its soybean meal from Argentina, which is particularly important to the pork and poultry markets. The plan B at some level is canola meal, which is once again faced with a snug balance sheet both locally and internationally.

Australia

Aussie cash markets were a fraction softer yesterday on the back of the stronger AUD, and we saw bids and offers off $2-3/t on new-crop wheat and barley through the trade, and grower bids were relatively unchanged across most zones. Kwinana APW multigrade wheat has held up at $305/t free in store for the past week, while Port Kembla APW multigrade has been sitting at around $303 track on the grower boards for 2020-21. ABARES June crop report has hit the market this morning with no real market surprises. The increase in planted area since the previous report feels to be the change. We continue to scrape the windscreens in the morning, with cold temperatures through South Australia and Victoria overnight. Forecast maps are showing more confidence in the next rain event due over the weekend. Most cropping areas are expected to receive somewhere from 5 millimetres through WA to 15-20mm in parts of southern Queensland.

 

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