Markets

Daily Market Wire 15 December 2023

Lachstock Consulting, December 15, 2023

US wheat gained and other markets eased. ASX eastern Australia wheat eased 2 percent. Dow record eclipsed previous 4 Jan 2022 high and US dollar index executed 3-day dive. Brent crude price gained 3 percent. 

  • Chicago March 2024 wheat up 10.5c/bu to US615.75c/bu;
  • Kansas March 2024 wheat up 4.5c/bu to 636.5c/bu;
  • Minneapolis March 2024 wheat up 3.75c/bu to 717.25c/bu;
  • MATIF wheat March 2024 down €4.50/t to €223/t;
  • Black Sea wheat futures has not quoted since 11 August;
  • Corn March 2024 down 0.25c/bu to 479.25c/bu;
  • Soybeans May 2024 up 5c/bu to 1345.25c/bu;
  • Winnipeg canola May 2024 down C$3.30/t to C$671.80/t;
  • MATIF rapeseed May 2024 down €3.50/t to €435/t;
  • ASX January 2024 wheat down A$7.30/t to $385/t;
  • ASX January 2024 barley unchanged at A$320.10/t;
  • AUD dollar up 38 points to US$0.6699.

International

Nothing cures low prices like low prices. Or is that high prices? You get what I mean. US futures markets have been a rollercoaster over the past few sessions. Wheat futures price initially was pulled from the lows by export sales as the market took this as the sign that values had become too cheap. Markets started to apply a price risk premium only to give most of it back under the idea that the export business was all done at the absolute lows and that the rally had rationed demand. Roll forward to this week’s export sales report and the market was sent back to the drawing board. The US needs to do 230kt/week to hit the current USDA target. This week it did an impressive 1.49Mt. China accounted for most of this, purchasing 1.12Mt of SRW wheat. 

This purchase of SRW significantly has eaten into the carry out. It also has a massive effect on the calendar spreads so next years planted area will become a focus. 

After a flush of selling from Argy the anticipated wheat tax increase has somewhat tempered activity. 

Saudi is looking for wheat and it will be interesting to see if it could work from Australia. Reports that the milling quality from Russia on the higher grades has not been performing supports the recent East Africa purchase of Aussie milling wheat. Saudi took virtually no Aussie last year and one boat the year before so, should they purchase Aussie, it would be at the expense of a traditional customer of Aussie grain. 

Iron ore is expected to stay above US$100/t for the next 2 years according to UBS – something treasurer Jim Chalmers is happy about, reckoning it will be the driver to take the May budgeted A$13.9b deficit to a manageable $1.1b deficit.

Australia

Wheat values in WA held ground yesterday, defying both lower offshore futures and 100pt appreciation in the A$. Traded values were A$415/t FIS for APW1, $430/t FIS for H1 and some FED1 went through at a very strong $400/t FIS. 

The east coast was not so lucky with values succumbing to the weight of the higher A$. Interestingly it was the higher grades that took the biggest beating with H2/APW down $4-5/t on the cash boards. ASX also suffered, the Eastern Australian wheat January 2024 trading down $5/t to close at $385/t, close to the previous lows of AUD$380/t. 

Protein spreads have become interesting post the rain with Melb/Geel SFW trading -35 to –40 dollars under APW.

 

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