Markets

Daily Market Wire 13 March 2019

Lachstock Consulting, March 13, 2019

Grain and oilseeds futures markets were sharply higher overnight, settlement prices as follows.

  • CBOT Wheat May contract was up 24.5c to 453c
  • Kansas wheat May contract up 22.5c to 442.75c
  • Corn May contract up 3.75c to 365.75c
  • Soybeans May contract up 7c to 897c
  • Winnipeg canola May contract up C$2.50 to $458.30
  • MATIF rapeseed May contract up €1/t to €360
  • Dow Jones down 96.22 points to 25,554.66
  • Crude oil April contract up $0.08 to 56.87
  • AUD up to 0.7090c,
  • CAD up to 1.337c,
  • EUR up to 1.129c.

Market commentary

Grains spiked up overnight, with wheat leading the charge and pushing up almost US30¢/bu at the highs – Chicago closed +24¢ to 452 ¼¢, KC +21¢ to 441 1-4¢, Minny +12¢ to 558 ½¢, and Matif was +3€ to 184 ¼.  Corn markets picked up 4¢ to 365 ½¢, while beans were up 7¢ to 896 ¾¢.  Matif rapeseed has continued to push up, closing +1€ to 360€ while Winnipeg canola bounced on the back of beans strength – up $3 to $458.3.  The Dow is off 55 points today, while crude has continued to pick up slowly – +14¢ on both boards to $56.9 Texas/$66.7 Brent.  Global currencies continued to firm slightly against the USD, with the AUD up to 70.9¢, CAD to $1.337, and EUR to $1.129.  Chinese trade talks are back in the headlines again, with comments from US trade representative Robert Lighthizer suggesting that they are in the final weeks of working out a deal – with the major caveat that they may not have a deal if issues are not resolved.  Clear as mud, yet again, but continuing to suggest that little progress has been made on covering the divides.

Corn prospects improve, bean area likely trimmed

Looking forward, crop forecaster Informa is calling for US bean acres at 85.5 million, down 500,000 from their Feb estimate.  They’ve pushed corn acres to 91.7, up slightly from 91.6 previously.  Down south into Brazil, CONAB (the local ag department) has pushed their production estimates of corn up to 92.8 million tonnes (Mt) (vs prior 91.7 Mt) and cut their bean estimate from 115.3 to 113.5.  Much of the bean crop is already harvested (a local analysis group estimated it at ~52pc complete late last week) but the safrinha corn crop is still in vegetative stages and won’t be harvested until May/June/July.  Rain across Argentina has also helped corn crops there according to local comments – and good fill is expected in later planted corn areas.    Similarly, crop conditions in the southern US prairies did come out after our wire yesterday – noting improvements in conditions in Oklahoma and Kansas.  Conditions at this point are not well related to final yields, but continue to reflect the benefit that crops have seen from the last few weeks of moisture.

Wheat sees emerging weather markets

There’s been little new in the “news” department to spark the rally, but with the existing fund short positions, but with existing fund positions shorts there was little to stop today’s rally – the question will be whether we see follow through in the money flows into Wednesday’s trading sessions.

On the demand side there, Reuters reported the EPA submitted a proposal to make formal changes to US ethanol blending rules tomorrow that would allow summer-sales of E15 gasoline (effectively increasing the “blend wall” on ethanol and boosting baseline potential ethanol demand)– in time for adoption for summer 2019.  Algerian wheat tender results should be out tomorrow – and should be filled with French wheat at current prices.  Meanwhile, heavy storms across the central US are gaining headline traction today, with forecasts upping precipitation outlooks towards 12” of snow in parts of the northern plains (more into South Dakota than North Dakota though) and flood risks expanding across the western corn belt in Iowa/Nebraska.  Logistics are already squeezed across the Midwest after recent weather, and this will do little to ease delays in barge and rail markets – in addition to expanding the risks for prevented plant acres in US row crops.

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