Markets

Daily Market Wire 10 May 2019

Lachstock Consulting, May 10, 2019
Futures markets again were lower overnight;
  • Chicago wheat July contract down US9.5 cents per bushel to 429.5c;
  • Kansas wheat July contract down 5.75c to 397.75c;
  • Minneapolis wheat July contract down 3.25c to 517.25c;
  • MATIF milling wheat May contract up 0.5 to 185.25/t
  • Corn July contract down 11c to 353.25c;
  • Soybeans July contract down 14.5c to 812.75c;
  • Winnipeg canola July contract down C$0.80/t to C$437.70/t;
  • MATIF rapeseed August contract down €1.50/t to €362.50/t;
  • Dow Jones down 138.97 points to 25828.36,
  • Crude oil June contract down 0.42 to US$61.70 per barrel;
  • AUD up to 0.6996,
  • CAD up to 1.3454
  • EUR up to 1.1226.

Market commentary

Once step forward, 3 back – markets dealt with severely as we drift into the weekend and the looming deadline for the next round of tariff increases. You can feel the exhaustion in the wires as the will-they-wont-they negotiations drag on. Clearly the market thinks the latest round of talks will prove to be a dead rubber – pile on huge Russian and EU production and ignore the end-of-days type rainfall in the US.

The US is in danger of becoming an island in this market and its conceivable that US futures find a reason to rally while the global FOB markets break. The planting delays in corn and the weather damage in SRW and, increasingly HRW cant be underestimated. Looking for anecdotal years to this and 2013 stands out, for corn at least. The US couldn’t plant a little over 8 million acres but, in the week equivalent to this in the planting calendar the window opened up and the US farmer put in 45 per cent of the corn crop over 7 days. This seems unlikely based on todays forecast. Yes there is a small gap but its quickly followed by another 2-8inches across much of the corn and wheat belt.

Internationally however, the realisation of a 80-plus million tonnes Russian crop and massive EU production continue to weigh on values. Russian fob (free on board) values are now mid USD$180’s which creates some interest given that, historically, the Russian grower will start to throttle supply should values fall under USD$180/t fob. Certainly not definitive but a good reminder that this huge crop is not a surprise and values have been doing the work to seek out the consumer.

Australia

Domestically more rains for Victoria overnight/yesterday. Most of Vic now has had a good/great opening with some more moisture built into early next week. At the same time the WA outlook is disturbingly devoid of moisture – basically nothing is in the 14-day outlook which puts us into the second half of May – still time but there will be areas desperately needing a drink. Old crop markets are quiet at best. Import margins from WA have moved negative but, for the moment at least, there is ample domestic supply on the east coast. July forward becomes a tug of war between the massive northern hemisphere crop and an east coast balance sheet that still needs imported WA/SA grain.

Source: Lachstock Consulting

 

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