Markets

Daily Market Wire 13 August 2021

Lachstock Consulting, August 13, 2021

WASDE news saw wheat and corn lift 2pc to 3pc.

  • Chicago wheat December contract up US25.5c/bu to 764.75c/bu;
  • Kansas wheat December contract up 28.75c/bu to 750.75c;
  • Minneapolis wheat December contract up 18.5c/bu to 919c;
  • MATIF wheat December contract up €9/t to €248.75/t;
  • Corn December contract was up 14c/bu to 573.25c;
  • Soybeans November contract up 1c/bu to 1341c;
  • Winnipeg canola November contract was down C$5.60 to $883.40;
  • MATIF rapeseed November contract up €2.50/t to €555.50/t;
  • US dollar index up 0.1 to 93;
  • AUD weaker at US$0.734;
  • CAD weaker at $1.252;
  • EUR unchanged at $1.174;
  • ASX wheat September contract up A$2/t to A$337/t;
  • ASX wheat January 2022 up $3.50/t to $338.50/t.

International

Chicago wheat rallied 25.5usc/bu to close at 764.75usc/bu, Kansas put on 28.75usc/bu to settle at 750.75usc/bu while Minni was the laggard, only adding 18.5usc/bu. Matif wheat increased €9/mt to settle at €248.75/mt. Corn rallied 573.25usc/bu, soybeans were basically unchanged at 1341usc/bu and canola was mixed with Matif up €2.5/mt but WCE falling CAD$5.60/mt. In outside markets, the Dow added 15 points, crude was unchanged and the AUD went home at 0.7332

The USDA released its Aug estimates overnight with a few twists and turns. This report was largely going to be about wheat but, as the numbers reflect, there is still plenty of uncertainty around the corn balances. The two major changes that were extreme compared to the trade estimates were the Russian wheat crop and corn yield. The USDA cut a massive 12.5 million tonnes (Mt) off the Russia wheat crop which is beyond aggressive and is now probably under the trade estimate. Secondly the USDA took the axe to corn production, cutting yield from 179.5bu/ac to 174.6bu/ac. After a few demand-side adjustments, that put ending stocks at 1.2bbu.

Here are the numbers:

Wheat

US 21/22 total wheat ending stocks -38mbu @ 627mbu (644mbu expected). HRW 369mbu, HRS 119mbu, SRW 105mbu, SWW 51mbu, Durum 20mbu.

US 21/22 Production @ 1.697bbu (1.723bbu expected). HRW 777mbu (806), HRS 305mbu (325), SRW 366mbu (363), SWW 214mbu (194), Durum 35mbu (35).

Global 21/22 wheat ending stocks -12.6Mt @ 279.06Mt (288Mt expected) –

Global 21/22 wheat production -15.5Mt @ 776.91Mt. Argentina 20.5Mt (unch), Aust 30.0Mt (+1.5), Canada 24.00Mt (-7.5), EU 138.6Mt (+0.4), Russia 72.5Mt (-12.5), USA -4.134Mt to 46.18Mt & Ukraine 33Mt (+3.0).

Corn

US 21/22 Corn ending stocks 1.242bbu (1.297bbu expected).

US 21/22 Production @ 14.750bbu (15.004bbu expected) – US 21/22 Yield @ 174.6bu/ac (177.6bu/ac expected)

20/21 Brazil production -6.0 @ 87Mt (88.72Mt expected). Brazil exports -5Mt @ 23Mt.

Beans

US 21/22 ending stocks 155mbu (159mbu expected).

US 21/22 Area unch. Production @ 4.399bbu (4.375bbu expected), Yield @ 50.0bu/ac (50.4bu/ac expected).

Global 21/22 bean ending stocks +1.6Mt @ 96.15Mt.

China 21/22 bean imports -1Mt @ 101Mt.

What now? I have to say I’m a little confused. Normally, I could almost cut and paste my normal response after a USDA report – “they still have lots of work to do in these numbers”, or “the trade will have much tighter numbers than what the USDA have thrown up” so forgive me for being a little caught off guard. This report has created massive sensitivity to any future problems and highlights that timing is everything. The Asian wheat consumer can now ill afford a late harvest out of Australia, and the 22Mt of Aussie exports now look conservative.

Australia

Local new crop markets continued to firm yesterday across the board. We saw APWMG WA FIS bids up to A$5-7/t to $360/t FIS KWI, while east coast values were a touch stronger by $2-3/t $340/t track Vic APW. Canola was up $10/t through the new crop grower bids WA $885/t FIS KWI Zone and $845-850/t east coast. Barley firmed over the trading day as well by a buck or two. Suspect more strength in local markets today with the moves from global markets overnight with the Aussie move on wheat up $10-15/t.

Aussie grain continues to be very attractive on the export grids for new crop as we are again the cheapest origin; however, ocean freight continues to rally, and the ability to fix a vessel for Jan + is the limiting factor. As stated above the USDA latest report had Australia in for 22Mt of wheat exports up 1.5Mt from the last report.

Weather maps for the next eight days look to be relatively dry across the Aussie cropping belts, with some light scattered showers through southern parts of WA and western Victoria. This also allows growers to continue getting on crops with the balance of spraying and spreading, also will help some of the water logging country to dry out.

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