Markets

Daily Market Wire 15 April 2020

Lachstock Consulting, April 15, 2020

Markets were weaker.

  • Chicago wheat May contract down US6.25¢/bu to 548.75¢;
  • Kansas wheat May contract down 11c to 483¢;
  • Minneapolis wheat May contract down 6.5c to 521¢;
  • MATIF wheat May contract down €1/t to €197;
  • Corn May contract down 5.5c/bu to 326¢;
  • Soybeans May contract down 7.25¢/bu to 847¢;
  • Winnipeg canola May contract down $C2.60 to $457.20/t;
  • MATIF rapeseed May contract down €2.50/t to €369.25;
  • Brent crude June contract down US$2.14 per barrel to $29.60
  • Dow Jones index up 559 points to 23950;
  • AUD firmer at $0.6440;
  • CAD weaker at $1.388;
  • EUR firmer at $1.098.

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Markets

A tough Tuesday for grain markets with weakness coming on all fronts.  Among the factors taking their toll were fundamental demand worries, contagion from weaker oil markets and coronavirus shutdown pessimism, despite ideas of a potential economy restart in the US. Commodity markets have been less optimistic than equities.

Chicago ended down 6 1/4¢ to 548 3/4¢, KC -11¢ to 483 3/4¢, Minny -6.5¢ to 521¢, and Matif was off a euro to 197€.  Corn was off 5.5¢ to 326¢, beans -7 1/4¢ to 847¢, and Winnipeg -$2.6 to $457.2 (matif -2.5€ to 369.25€).  Crude oil has bounced a little to start the overnights…. with WTI up to $20.8 after hitting lows just over $20, and Brent at $29.6.  The DOW has firmed though, up 559 points with tech helping a rally up as some in those markets jump onto ideas of a US “restart” to the economy.  Time will tell, but so far there’s been a lot of talk but no clear direction, given the uncertainties of the virus.  The AUD’s around 64.4¢, the CAD $1.388, the EUR $1.098, and the US dollar index has fallen back under 99 again as money moves back away from the safe haven.

Egypt’s GASC was in the market overnight, buying two boats at about a US$250/t C&F type level, which is relatively expensive even when considering the “GASC premium” of associated costs.  The timing window was old crop, pre new-crop-harvest-and-export-restriction-easing.  It’s clearly supported the prices above what Egypt had hoped to see, but given an agenda to build wheat stock there’s likely to be more buying soon.  Prices offered will largely depend on the windows for which Egypt tenders. Domestic Russian prices presently are firm but potentially beneficial moisture is appearing in latest weather forecasts for southern Russia.  Though forecasts are still not what farmers there would like to see, it’s a significant improvement from the drier chances a few days ago.

Markets have finally accepted that there has been some damage from the frost on Hard Red Winter wheat areas, but quantifying that is a challenge and sentiment is consolidating around the idea that the overall impact will be of limited significance by harvest.

Corn demand is getting more discussion recently.  Markets are grabbing continuing weak crude, low petrol and ethanol demand and slowness in meat hurting feed demand.  US energy company Valero said all 14 ethanol plants were either idled or at sharply reduced capacity.  As planting begins in parts of the central corn belt, estimates vary widely about lower corn demand. Even though less DDG available, from lower ethanol production, would support higher direct corn feeding to animals, overall sentiment remains very negative.  Prevent-plant ideas are circulating in some of the wetter areas, but so far there’s no expectation that we’ll end up anywhere close to last year.

Australia

Aussie markets have been under a bit of pressure from the firmer dollar, but overall tight situations still supporting cash old crop.  Victoria in particular remains firm after rallying through recent weeks, with the trade having to push harder to chase farmer tonnes.  New season field work still is slowly pushing into gear with more pre-prays and field preparation.  Some early cereal is being planted, other than cereal-for-forage, but for the most part planting will wait till closer to Anzac Day.

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