Markets

Daily Market Wire 16 April 2020

Lachstock Consulting, April 16, 2020

Markets mostly weaker, US dollar firmer.

  • Chicago wheat May contract down US8.5¢/bu to 540.25¢;
  • Kansas wheat May contract down 4.25c to 479.5¢;
  • Minneapolis wheat May contract down 7c to 514¢;
  • MATIF wheat May contract down €2.25/t to €194.75;
  • Corn May contract down 6.75c/bu to 319.25¢;
  • Soybeans May contract down 5¢/bu to 842¢;
  • Winnipeg canola May contract up $C2.20 to $459.40/t;
  • MATIF rapeseed May contract down €0.25/t to €369;
  • Brent crude June contract down US$1.91 per barrel to $27.69
  • Dow Jones index down 445 points to 23504;
  • AUD weaker at $0.6320;
  • CAD weaker at $1.411;
  • EUR weaker at $1.091.

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Markets

Down and down, although wheat did manage to pick up some towards the end of the session to cut the mid-session lows – Chicago ended down 8.5¢ to 540 1/4¢, KC -4 1/4¢ to 479.5¢, Minny -7¢ to 514¢, and Matif was off two and a quarter euros to 194.75€.  Corn gave up 6 3/4¢ to 319 1/4¢ (leaving Z just over 342¢…) and beans dropped a nickel to 842¢ (matif off twenty five euro cents to 369€, Winnipeg +$2.2 to $459.4).  Crude oil has finally settled sub $20, with WTI ending the day at $19.9/barrel (Brent $27.7) as demand worries continue to well outweigh the recent production cut agreement by OPEC.  The DOW ended down 445 points, giving up yesterday’s gains.  The AUD’s slightly weaker at 63.2¢, the CAD $1.411, and the EUR $1.091 as the dollar index firms slightly to 99.5.

GASC is back to buy wheat for delivery late May/early June, predictably hoping to see better cash prices after the board collapse.  We’ll see how that works out for them. Export restrictions are still in play in old crop, where the delivery timing of this tender is aimed, so availability is still actually limited even though cash prices nominally have eased.

New season weather worries have eased slightly with some better forecasts for parts of Russia, although it’s still up in the air to a certain degree with model runs still shifting.  Rains the other day were light and scattered, but a bit more on the forecast wouldn’t hurt them at all.  Crop failure in Russia would worry markets severely, but the chances of failure are limited given the better models outlook.

There are more spots of worry in the US, lingering drought monitor problems across a little bit of western HRW, plus recent frost event recently and it’s drier than ideal in Europe.

Rosario Grain Exchange cut Argentina’s beans estimate last night by a million tonnes after dry weather.  Brazilian beans continue to flow and price in style though, so it’s a relatively minor impact to lose a little in Argentina at this point.

US ethanol production has continued to set new lows, with figures out overnight dropping sub-600,000 barrels per day, almost half of what they would “normally” be.  If oil remains this low, ideas on production from here are far from pretty… how much lost corn demand can we see?  Reportedly some plants are still able to lock in a good margin with the firm DDG markets, but they’re few and far between, reflected in idled plants.  Carries are widening, cash markets are reporting very limited activity domestically, though there are rumours about more China business, and it’s been hard for the board to envision an optimistic story here until demand recovers. Meat markets did firm a little last night, but fundamental activity there is still a mess.  The new season corn crop is going in as we speak, and there will inevitably be weather worries, but to date it’s all about the demand destruction happening on a massive scale.

Australia

Australian weather maps remain dry which is great for field work, but parts of SA and WA in particular could certainly use a drink.  Still there’s lots of optimism going into planting.  Old season markets continue to be discussed around the trade, with ongoing debates about what demand remains uncovered and how much unsold grain there is to be found.  The AUD weakness should help some today.

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