Markets

Daily Market Wire 16 January 2019

Guest Author, January 16, 2019
Grains fell sharply overnight, and European rapeseed was the only oilseed to show strength.
  • CBOT wheat down 3c per bushel,
  • Kansas wheat down 4c,
  • Minneapolis wheat down 3c,
  • MATIF wheat down €1 per tonne,
  • Corn down 6c,
  • Beans down 8c,
  • Winnipeg canola down C$4/t,
  • MATIF rapeseed up €1.5/t,
  • Dow Jones up 104 points,
  • West Texas crude oil up $1.50 to $52 per barrel,
  • AUD weaker at US$0.718,
  • EUR weaker at $1.139,
  • CAD weaker at $1.329.

Wheat

Wheat has taken a beating in its past two sessions, with various justifications floating around, from longs exiting after loosing faith in the rally to fundamental notes that US wheat is not quite competitive into all export channels against Russia. After the sell-off, Lachstock thinks Hard Red Winter wheat is about US $3 per tonne away from French wheat into Egypt, but a lot depends on the depth of availability at these basis levels in the US, and in the Russian crop, which is drying up but still available, albeit at a higher flat price. Meanwhile, Russian and Ukrainian crop conditions continue to look positive for the next season crop, though this could change as spring arrives, and the southern plains of the US have not reported any significant winter-kill events.

Oilseeds

The National Oilseed Processors Assocation crush figures for US beans came in stronger than expected at 171.8 million bushels, a new record, but headlines out of China have flipped ideas about US-China trade talks. Disease problems in pork herds in China continue to circulate in discussions, with its Ministry of Agriculture reporting nearly 1 million pigs have been culled,  a small dip in the total population, but generating a lingering concern that culls could expand. In South America, weather stress remains a concern in parts of Mato Grosso and surrounding areas in Brazil. Its early bean harvest is rolling along faster than a year ago in the dry weather, but there is still time to see further losses in later areas where bean pods are mid-fill. The EU and Argentina have apparently reached a deal to settle the biodiesel dispute which will effectively set a price floor on biodiesel exports to the EU if the deal is confirmed.

Australia

Sorghum worries on later crops out west are starting to get some more discussion in the market,  and we have starting to see some support in other grain prices in the Darling Downs too. While irrigated crops are mostly in good shape, dryland cotton crops are under similar stress to sorghum, and cottonseed prices have jumped as supply outlooks get cut. East-coast cash markets further south are still not quite trading import parity from Western Australia, but there are several boats set to arrive in Brisbane and Newcastle later this month.

 

Source: Lachstock Consulting

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