Markets

Daily Market Wire 16 August 2021

Lachstock Consulting, August 16, 2021

Oilseeds and wheat rallied more than 1pc. Corn market time.

  • Chicago wheat December contract up US9.5c/bu to 774.25c/bu;
  • Kansas wheat December contract up 4.25c/bu to 755c;
  • Minneapolis wheat December contract up 10.5c/bu to 929.5c;
  • MATIF wheat December contract up €5.50/t to €254.25/t;
  • Corn December contract was down 0.25c/bu to 573c;
  • Soybeans November contract up 24c/bu to 1365c;
  • Winnipeg canola November contract was up C$10.90 to $894.30;
  • MATIF rapeseed November contract up €11.50/t to €567/t;
  • US dollar index down 0.5 to 92.5;
  • AUD firmer at US$0.736;
  • CAD unchanged at $1.252;
  • EUR firmer at $1.180;
  • ASX wheat September contract up A$9/t to A$346/t;
  • ASX wheat January 2022 up $4.50/t to $343/t.

International

Markets had some clear air to digest the USDA report ahead of a much-needed weekend. The problems in the world wheat balances are not going away and the function of the market now is to find the price level that can solve some of the problems. The setup of most markets has been hand-to-mouth buying amid COVID-born uncertainty.

The clearest example of how this manifests itself in price has been the huge backwardation in freight markets. This then becomes cause and effect – pricing forward vessels becomes somewhat difficult as vessel owners are being rewarded for pricing late. This makes it more difficult for the consumer to get the cover they need and mitigate the risk that is clearly evident in grains.

The container market is also far from normal. Constant interruptions at the port have stifled container availability. Ningbo-Zhoushan port in China, one of the busiest container ports, shut indefinitely as one of the workers tested positive for COVID.

The latest Malaysian Palm Oil Board figures clearly show the impact COVID is having. Supply fell sharply as plantations struggled to find the workers needed to harvest the palm. This has far reaching implications for the global vegoil balance sheets which are already painfully tight.

Rosario Exchange pegged the Argy wheat crop for 2021-22 at 20.1Mt vs USDA at 20.5Mt. They also indicated the Argy grower will plant 16.4mha of soybeans with production anticipated to be 49Mt.

Australia

NSW this past week has received some nice growing weather and crops are starting to move after slow winter. While parts of Victoria are living on week-to-week rainfall, NSW has enormous potential once crops grow out of the water logging seen in parts of the state.

Cereal markets on the east coast struggled to keep pace with international rallies and basis came under pressure. Traders commented they were surprised by the lack of selling from the grower when cash wheat prices reached above A$300/t at local site on the east coast last week.

WA wheat belt, Corrigin, received 300mm rainfall from 1 May till now, compared with the average of 160mm. Over the same period Goondiwindi has had 205mm vs average of 120mm.

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