Markets

Daily Market Wire 13 December 2018

Lachstock Consulting, December 13, 2018

Higher for grains and soybeans.

  • CBOT wheat was up 5.5c to 526.5c
  • Kansas wheat was up 6.5c to 511.25c
  • Spring wheat was up 7.75c to 583c
  • CBOT corn was up 0.5c to 385.25c
  • Matif corn was up 1.5 to  €176.25,
  • Soybeans were up 5c to 920c,
  • Winnipeg canola was down C$0.40 to $485.10,
  • Matif canola was up €0.50 to €369.50,
  • Dow Jones was up 235.77 to 24606.01,
  • Crude oil was down 1.1pc to $51.09 per barrel
  • AUD 0.7224
  • CAD  0.7491
  • EUR 1.138.

Wheat

Wheat markets overcame the negative USDA data of yesterday and instead focussed on global flat prices, which continue to rally. Matif Wheat was up 1.75€ to 206.25€, Black Sea Wheat was down -0.5$ to 247.5$ and the Ruble was up 0.09% to 0.015. Flooding in Argentina continues to delay harvest and poses some quality concerns. The trade is long around 8.5mmt of paper length there and not in a rush to sell their position given the importance there to the global balance sheet. Egypt’s GASC purchased 3 cargoes of Russian wheat at values $6 above the tender price last week. In Russia ongoing phyto issues are reducing demand from Asian consumers, but prices continue to rise from less quality conscious demand. An exporter meeting is scheduled in Russia for the 21st of December and the rumour mill suggests that they will place a 34mmt limit on wheat exports. Assuming similar monthly export pace there, this is supportive world wheat prices beyond mid Feb. With prices in Argentina showing consistent strength and likely to be sold out by March, the world wheat consumer is only really left with Aussie, the US and Canada, so we expect to see ongoing convergence in these prices which is supportive of CBOT and HRW calendar spreads. This doesn’t consider any potential for obscure demand from China or maybe even India, given the drought stress they are currently enduring. Wheat momentum is building, so the slowdown in Christmas liquidity may not be ideal for some consumers

Corn

Corn finished fractions higher trading a 3.5 cent range. Lacking a story of its own corn tried to follow wheat and beans but this couldn’t sustain. The corn market has good potential from a demand point of view with China’s talk of ethanol production increases, as well as its low global relative value. But the market is unwilling to support corn until it gets some demand confirmation.

Soybeans

Beans found support from Chinese demand, the government to government purchases have begun with 1.2mmt done with more demand on the way, market chatter suggests up to 5mmt this week. Whilst this is a step in the right direction, the US market still needs to find a lot more Chinese demand if it’s to have any material impact on their balance sheet. Soybean Meal was up US$1.9 per tonne and Soy oil was up 0.08 points

Australia

Aussie cash markets were stronger yesterday as short-term squeezes prompt Dec/Mar inverses across WA and the East Coast. The Jan ASX contract jumped $6 as the shorts are forced to exit positions heading into delivery. We have seen a noted interest for Victoria road/rail sites and the lack of availability here is the catalyst for that squeeze. Weather wise the forecast is increasing for the East Coast with 25-50 mm forecast across major growing areas in QLD, Vic and NSW. This should see further sorghum selling and could encourage some southern grower selling for harvest stock. In areas still harvesting it will cause delays and potential quality downgrades. Any price drop from quality downgrades shouldn’t sustain given the tightness in the East Coast balance sheet and low supply of feed wheat.

Source: Lachstock Consulting

 

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