Futures gapped higher on bullish USDA news. The US dollar index was down half a point to 90.0
- Chicago wheat March contract up US30.25 cents per bushel to 665c;
- Kansas wheat March contract up 28.5c/bu to 622.5c;
- Minneapolis wheat March contract up 14.75c/bu to 620.75c;
- MATIF wheat March contract up €6.50/t to €224.50;
- Corn March contract up 25c/bu to 517.25c;
- Soybeans March contract up 45.75c/bu to 1418.25c;
- Winnipeg canola March contract up C$14.10/t to $686.90;
- MATIF rapeseed February contract up €1.50/t to €441.50;
- Brent crude March up US$0.92 per barrel to $56.58;
- Dow Jones index up 60 points to 31,069 points;
- AUD firmer at $0.777;
- CAD firmer at $1.271;
- EUR firmer at $1.221
- Agricultural markets blew up higher overnight after a bullish USDA corn stocks report, and related yield cut, and supportive soybean figures
- Chicago wheat settled up 30 1/4¢, KC +28.5¢, Minny +14 3/4¢, and Matif was up 6.5€ on the earlier close.
- Corn closed up limit on the futures (+25¢ with new limits for tomorrow’s session at 40¢) and beans +45 3/4¢. Matif rapeseed was +€1.5, Winnipeg +$C14.1. Both are looking to open firmer again in the overnights.
- USDA overnight published reports galore, including US stocks, winter wheat acreage, and of course a regular World Agricultural Supply and Demand Estimates report. Corn stock came in well below expectations, US corn yield was cut to 172 bu/acre, from 175.8 prior, and corn total disappearance was higher than expected.
- US winter wheat seeded area was somewhat above expectations with SRW at 6.2 million acres for a total winter wheat of just under 32 million acres
- Markets have been pushing new multi-year price highs on corn in recent weeks, and the surprise cut in stocks has started new talk that we could see world corn carryout fall again. Demand rationing is a possible future question, but not yet noted in sufficient quantities to offset the tighter situation
- South American weather concerns remain in play. Argentine weather maps biasing slightly wetter in the current runs but questions about current impacts remain.
- Egypt’s GASC cancelled the tender prior to the USDA reports after seeing sharply higher prices. But it’s probably not very happy to have done so, given subsequent board moves and firmness in Black Sea region cash prices.
- Black Sea wheat markets remain very firm with speculation about the possible Russian tax increases and no indications that the Russian farmer has blinked and accepted weaker prices
- More moisture in the form of snow is on the maps for Russian winter wheat areas, which should help provide some insulation to the crops after it falls. Currently uncovered fields remain at risk in the cold snap.
- Aussie markets were quiet yesterday in the lead up to the reports, with grain origination ongoing but interest localized to cover existing demand
- The Western Districts harvest is about wrapped up, with good harvest conditions letting it rip along
- We’re still looking at another burst of rain across the Downs later this week, but that inland storm system that was on the extended maps yesterday has started weakening out – the joys of long run models.
Source: Lachstock Consulting
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