Markets were mixed.

• Chicago wheat July contract up US0.5¢/bu to 502.25¢;
• Kansas wheat July contract down 2.5c to 451.75¢;
• Minneapolis wheat July contract down 0.25c to 508¢;
• MATIF wheat September contract down €2.50 to €184/t;
• Corn July contract down 0.75c/bu to 317.5¢;
• Soybeans July contract down 2.5¢/bu to 837¢;
• Winnipeg canola July contract down $C0.80 to $470.70/t;
• MATIF rapeseed August contract up €3.50 to €370/t;
• Brent crude July contract up US$1.94 per barrel to $31.13
• Dow Jones index up 377 points to 23625;
• AUD weaker at $0.6438;
• CAD weaker at $1.4092;
• EUR weaker at $1.0814.

Markets

In the wheat pits Chicago settled up 0.5 usc/bu closing at 502.25usc/bu, Kansas was -2.5 usc/bu lower to settle at 451.75usc/bu, while Minni softened -0.25 usc/bu to go out at 508usc/bu. Corn fell -0.75 usc/bu to go out at 317.5usc/bu while Beans were down -2.5 usc/bu to settle at 837usc/bu WCE Canola softened -0.8 CAD/mt closing at 470.7CAD/mt with Matif Canola finishing higher by 3.5 Eur/mt. In outside markets the Dow Jones gained 377.37 points, Crude was up 0.16 bbl the Aussie was -0.0006 points lower to settle at 0.64613, the CAD softened -0.0004 while the EUR fell -0.0002.

I’m always impressed with a market that can have a 2 or 3 standard deviation move in one session then finish close to unchanged the next – the market indicating they got it just right the first time. It’s a mixed bag from a fundamental perspective. There’s some talk of heat sneaking into the back end of the Russian forecast which was largely offset by comments from Andrey Sizov Jr, MD of SovEcon consulting who suggested it is very unlikely Russian production will fall below last year, 74.5 million tonnes, despite challenging conditions in the southern belt.

There is some decent demand popping up.  Morocco has imported 38pc more this year than over the same period last year due to drought. Ethiopia has 600,000t in open demand and is close to booking the business. China US Phase 1 talk continues to bubble away despite the COVID-19 finger-pointing and President Trump’s refusal to walk away from comments indicating the virus may have be man-made. Americans are also back in their SUV’s which is starting to get the ethanol industry back on the tools. This will stop the rot in the corn market which has had every possible bit of bearish new thrown at it. The corn market is an interesting risk reward prospect given the crop is going in and a full season of weather risk is still in front of the market.

Rationalising the trade flow impacts as the world still grapples with COVID is a difficult proposition. The ongoing Australia barley tariff announcement is yet another example of how agricultural trade flows and farm gate pricing will be affected by political positioning. The sleeper in global ag values is the potential implication if China does not comply with its Phase 1 commitment. What does the US do if China continue to drag their buying feet? Trump has stated that he won’t be renegotiating and history would suggest a swift and deliberate rebuttal to anything but compliance.

Australia

Australia ends the week with a very frosty start through the south, with temps  reaching below 4 degrees. Markets wise, barley has now started to rebound across the boards after the early blood bath at the start of the week. Bids and offers remain largely apart on new crop but it still seems to be finding a level. For example, looking at new crop December track barley in WA and SA, back of envelope calculations put Saudi Arabian Gulf around a USD $192/t CNF vs Russian or Argy at USD $200/t CNF. Wheat markets were softer yesterday on both new and old crop, new crop off $4-5/t around the zones. Eastern Australia ASX wheat and barley Jan-21 contracts settled off a couple yesterday at $305/t for wheat and $223/t for barley.

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