Markets

Daily Market Wire 14 September 2022

Lachstock Consulting, September 14, 2022

Commodity markets overnight Tuesday moved in fractions, but macros driven by US inflation news saw the Dow Jones Industrials Average down 4pc and the US dollar sharply firmer. The Australian dollar fell 2pc.

  • Chicago wheat December contract up US1.75 cents per bushel to 860.5c/bu;
  • Kansas wheat December contract up 6.75c/bu to 933.75c/bu;
  • Minneapolis wheat December contract up 4.75c/bu to 931.25c/bu;
  • MATIF wheat December contract up €0.75/t to €336.25/t;
  • Black Sea wheat December contract up $3/t to $323/t;
  • Corn December contract down 3.25c/bu to 692.75/bu;
  • Soybeans November contract down 9.5c/bu to 1478.75c/bu;
  • Winnipeg canola November 2022 contract was up C$1.70/t to $801.40/t;
  • MATIF rapeseed November 2022 contract up  €1.75/t to €606.50/t;
  • ASX Jan 2023 wheat contract up A$14.50/t to $417/t;
  • ASX Jan 2023 barley contract unchanged at A$310/t;
  • AUD dollar weaker at US$0.673.

International

US stock markets dived yesterday because inflation was higher than expected in August. It had been hoped that price pressures might have eased more quickly on the back of lower fuel prices. The Dow Jones Industrials Average index lost 1,276 points, about 4pc.

The US consumer prices index rose by 8.3pc in the year to August, down on July’s 8.5pc – but missing forecasts of a drop to 8.1pc. Although gasoline prices fell by 10pc, the cost of housing, food, and medical care all rose.

According to Brazil’s grain exporters association, the corn export figure for the week ending 17 September is expected to be 1.9Mt, which would put total exports so far in marketing year  2022, since 1 March, to 22.3Mt. In 2021, Brazil corn exports totalled 20.6Mt on the back of lower supply. This year, corn exports may reach 41Mt reflecting a record harvest. The corn marketing year in Brazil runs from March to February.

France’s Farm Ministry reduced its forecast for this year’s drought-hit corn crop by 1Mt yesterday to 11.33Mt, the smallest crop since 1990. “A decline in planting, linked to the surge in fertilizer and gas prices, has been coupled with a sharp drop in yields caused by drought,” the ministry said. Its 2022/23 common wheat production forecast was lifted 200,000t, to 34.1Mt (35.4mt previous year). Total barley production forecast maintained at 11.4Mt (11.5Mt). Rapeseed production forecast was increased by 200,000t, to 4.5Mt (3.3Mt).

Ukrainian farms in almost all regions have started sowing winter wheat for the 2023 harvest, seeding 141,000 hectares, or 3.5pc of the expected area, the agriculture ministry said on Tuesday.

Despite recent heat and drought stress in southern China, the country’s ag ministry kept its production estimate of this year’s corn crop at 272.56Mt, as yields in northeastern areas are expected to be strong.

Concern is mounting in the US as railroads are preparing for the increasing likelihood of a labour strike starting on Friday. The American Trucking Associations, has asked lawmakers to be prepared to intervene because, facing a shortage of 80,000 drivers, it said a rail disruption would create havoc in the supply chain and fuel inflationary pressures across the board.

Australia

Local new crop markets suffered a lack of buying appetite yesterday and bids were again a touch weaker. Current crop protein wheat in eastern Australia was bid firmer, H2 grade trading at prices around $425-430/t track.

The Bureau of Meteorology has declared a La Niña event is underway in the Pacific Ocean and communities in eastern Australia should be prepared for above-average rainfall over spring and early summer. Most models forecast this event to be weak to moderate in strength, likely to peak during spring and ease during summer. La Niña is not the only driver influencing this wet outlook because in the west there is a significant negative Indian Ocean Dipole (IOD) event underway, the influence of which is not expected to reduce until late spring or early summer.

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