Markets

Daily Market Wire 11 July 2022

Lachstock Consulting, July 11, 2022

Friday’s markets firmed.  US wheat prices gained 6pc.

  • Chicago wheat December contract up US54.75 cents per bushel to 906.5c/bu;
  • Kansas wheat December contract up 56c/bu to 953.5c/bu;
  • Minneapolis wheat December contract up 57.25c/bu to 1003.5c/bu;
  • MATIF wheat December contract up €16.25/t to €345/t;
  • Black Sea wheat September contract up $5.25/t to $364/t;
  • Corn September contract up 27.25c/bu to 623.5c/bu;
  • Soybeans November contract up 31c/bu to 1396.5c/bu;
  • Winnipeg canola November 2022 contract up C$6/t to $855.10/t;
  • MATIF rapeseed November 2022 contract up €3.50/t to €695.50/t;
  • ASX July 2022 wheat contract up A$2/t to $405/t;
  • ASX Jan 2023 wheat contract up $5/t to $420/t;
  • AUD dollar weaker at US$0.685.

International

Chicago Dec-22 wheat settled on Friday at US 906.5c/bu. A week earlier, on 1 July, the price had been similar, but during the intervening 4 trading days it had traded to a low of 805.25c/bu amid an epic tug of war between fundamentals and flow.

Open interest in Chicago wheat has been a good reflection of how brutal the clean out has been given that the 2021 average OI was a hair under 400k contracts and currently there is just over 280k contracts open.

US weather conditions have been dry and hot which is absolutely the worst case for the corn crop as it enters the pollination window. Global balances simply cannot add up with a US corn yield below 174bu/ac. This means that anything short of a perfect end to the season would require markets to factor considerably more risk premium into price.

Putin was pretty vocal about the fact the war was just kicking off and the prospect of an export corridor is all but behind us. Everything that is bullish today has been around for the past few weeks. French conditions had another down week, rated now at 63pc good-to-excellent, a drop of 26pc from May. EU weather is hot which is not great for EU corn which is also in the pollination window

USDA crop reports will publish on 12 July and will have a significant bearing on markets.

Australia

Local values found some reasons to firm late in the week. Wheat prices lifted A$5-10/t, new and old crop. Barley firmed a fraction and canola new season grower bids firmed by $10-15/t.

GIWA released its first 2022 winter crop production forecasts last week and have pegged this year’s wheat crop at 10.15 million tonnes (Mt) compared with 12.89Mt last year. Canola production is forecast at 2.84Mt (3.13Mt last year) and barley at 5.25Mt (6.37Mt last year). The reported noted that “the unprecedented warm conditions in June have pushed crops along to be at growth stages well ahead of where they would normally be at this time of the year. Crops generally look better than last year in many of the southern regions due to the advanced development. Crops are in very good shape in the southern regions although the northern regions are getting desperate for a drink and rainfall in the next week will be crucial in maintaining current grain yield potential. Climate models have suggested for a while the 2022 winter and spring in Western Australia will be drier than average and this is still the case”

The 8-day forecast is looking relatively dry for Qld, while most cropping regions in NSW are forecast to pick up 5-10mm. Most of Vic, SA and WA are all forecast to receive varying totals of between 5-15mm with some areas up to 25mm.

 

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