Markets

Daily Market Wire 12 May 2021

Lachstock Consulting, May 12, 2021

Grain and oilseed markets mostly rebounded in overnight trading.

  • Chicago wheat July contract up US11.25c/bu to 741.75c;
  • Kansas wheat July contract up 7c/bu to 710.5c;
  • Minneapolis wheat July contract up 17.25c/bu to 770.5c;
  • MATIF wheat September contract up €3.25/t to €226.75/t;
  • Corn July contract up 10.5c/bu to 722.25;
  • Soybeans July contract up 27.25c/bu to 1614.75c;
  • Winnipeg canola July contract down C$43.60/t to $932.30;
  • MATIF rapeseed August contract up €11.25/t to €543.25/t;
  • US dollar index up 0.2 to 90.4;
  • AUD weaker at US$0.781;
  • CAD weaker at $1.212;
  • EUR steady at $1.213;
  • ASX wheat July contract down AU$5.50/t to $314.50/t;
  • ASX wheat January 2022 down $7.50/t to $317/t.

International

Ahead of the USDA WASDE report due out tonight, the pre-report profit take was a one-session deal apparently.  Some of the moisture slated for the plains fell out of the forecast. A report from Brazil’s CONAB, as well as the May WASDE, will be out tomorrow, so the fireworks are still to come.

One of the key numbers the market will be watching is the Brazilian corn production figure. USDA is currently sitting on 109 million tonnes (Mt), while the street is ranging from the low to mid 90s. Interestingly, the average trade guess as to where the USDA will end up is 103Mt, with the low print being 100Mt. The report then becomes a game of expectation management rather than what the trade thinks the actual number is.

Dr Cordonnier, one of the more followed crop forecasters, and one that focuses more on South America, lowered his Brazilian corn number to 97Mt from 100Mt last week. Conversely, he increased his soybean crop estimate by 1Mt to 134Mt and left his Argentinian soybean crop at 45Mt.

While this report will be all about corn, the implications for global wheat balance sheets could be significant. Cuts in corn production and potential increases in global demand have to be satisfied somehow. The easy solution is via substitution to wheat feeding. This then adds a level of pressure to both balance sheets. In the past, the USDA has been slow to move, particularly on the demand side.  This may have caught up to them, with China corn demand seemingly unstoppable. Flashes for new crop keep coming, so the China new-crop demand number will be of particular interest.

Australia

Local markets were weaker across the board yesterday on new-crop wheat, barley and canola. Canola track values were down AU$10-15/t and ASX Jan 22 wheat settled the day out at $317/t, with smalls trading over the day. Current-crop values were relatively unchanged and we continued to see those small parcels hit the market and trade.

Current-crop up-country domestic bids have started to push a little firmer on wheat, while the port export bids have remained steady.

The eight-day Bureau of Meteorology forecast has scattered showers for Western Australia and north-east Victoria. There is nothing substantial to keep growers confident on planting activity through South Australia, and Victoria’s Wimmera and Mallee districts.

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