Fractional moves in all but corn and soybeans overnight.
- Chicago wheat December contract up 2.5 cents per bushel to 478.25
- Kansas wheat December contract up 0.25c to 400.75c,
- Minneapolis wheat December contract up 1c to 517.5c,
- MATIF wheat December contract up €0.5 per tonne to €171.75;
- Corn December contract down 6.25c to 370.25;
- Soybeans November contract down 11c to 878c;
- Winnipeg canola November contract up C$1.30 to C$450.20;
- MATIF rapeseed November contract up €1.50 at €377;
- Brent crude October contract down $1.82 per barrel to $59.48
- Dow Jones down 800.49 points to 25479.42;
- AUD weakened to US$0.6752
- CAD weakened to $1.3318
- EUR weakened to $1.1144
In the wheat pits Chicago settled up 2.5 usc/bu closing at 478.25usc/bu, Kansas was 0.1023 usc/bu higher to settle at 400.6usc/bu, while Minni rallied 0.897 usc/bu to go out at 517.4usc/bu. Corn fell -6.25 usc/bu to go out at 370.25usc/bu while Beans were down -11 usc/bu to settle at 878usc/bu WCE Canola rallied 1.3 CAD/mt closing at 450.2CAD/mt with Matif Canola finishing higher by 1.5 Eur/mt. In outside markets the Dow Jones fell 800 points, the Aussie was -0.0055 lower to settle at 0.67457, the CAD rallied 0.009 while the EUR fell -0.00329
Grains markets were boring in the context of the macro meltdown with the Dow shedding 800 points and increased conviction of a pending rescission. Pick a data point, any data point and you can justify the sentiment in the wider market.
- Chinese industrial production only rose 4.8pc vs 6pc estimates which represents the slowest output in 17 years;
- 2-year and 10-year US Treasury notes are inverted – last time they did that was in 2007 and;
- the Eurozone industrial production had its worst performance in 3.25 years.
Market sentiment and subsequent capital flow is an amazing thing – no more so than now if you consider the impact of the US and China reaching a trade agreement – how much would that offset the current drag in global markets.
In this environment agricultural products can find support – be it through depressed forex or capital reallocation from under-performing asset classes. This reallocation can also be justified in the context of the recent break, especially in wheat. Kansas wheat has gone from uncompetitive to the cheapest wheat in the world. However – its hard to get excited about extended upside. As with the global wheat balance sheet – its not tight, it’s just less heavy.
US weather is close to ideal with moisture filling in some of the needed areas and continues to alleviate production concerns. The flat price move also adds some support to US competitiveness.
Locally here in Australia turning to weather, scattered showers were well received through WA yesterday, with Wongan Hills receiving 13mm, Merredin 18mm and Lake Grace 20mm. This rainfall event comes in good time for farmers as some crops were starting to see some stress. Aussie markets we are softer here on cereals and still remain wide bid/offer spreads within the trade. Canola markets through Vic have been well bid this week with some August demand around.
Source: Lachstock Consulting
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