MATIF wheat made only small gains but its market was shut by the time the fireworks really set US markets alight. Prices rallied hard in the US overnight. Soybean oil futures gained 5 percent, US wheat futures gained at least 3 percent, US corn gained 3pc nearby but rallied 5pc in the deferred months reflecting new crop concerns for US corn. Soybeans followed a similar pattern. Canola and brent crude gained 3pc. The US dollar index fell to a 1-month low.
- Chicago wheat December contract up US29.75/bu to 686.75c/bu;
- Kansas wheat December contract up 26.75c/bu to 806c/bu;
- Minneapolis wheat December up 25.75c/bu to 838c/bu;
- MATIF wheat December 2023 up €1.75/t to €240.75/t;
- Black Sea wheat December up US$0.50/t to $251.25/t;
- Corn September 2023 contract up 25c/bu to 570c/bu;
- Soybeans November 2023 contract up 52.25c/bu to 1292.25c/bu;
- Winnipeg November canola contract up C$21.10/t to $693/t;
- MATIF rapeseed November 2023 up €7/t to €448.50/t;
- ASX January 2024 wheat down A$3.70/t to $389.30/t;
- ASX January 2024 barley down $10/t to $318.50/t;
- AUD dollar gained 88 points to US$0.6884.
International
It’s dry…who knew?
The US corn belt has been waiting for the pattern to change – the inverse of Australia. El Niño has become an El Not-yet-o with the US row crop belt wearing the brunt of the adverse conditions. Most of the corn belt is set to get around 25pc of normal rainfall for the next 15 days which adds another 2 inches to the deficit. Additionally, the heat has added to the draw and seemingly has forced the market to readjust the yield estimate. The USDA is sitting like a shag on a rock at 181.50bu/ac. With 84 million acres in the ground and many now predicting 172bu/ac yield the market is looking at a >750mbu shortfall from the USDA.
Wheat is corn, but with a fund short. As per the last update the CFTC had managed money and other reportables sitting short just over 100k contracts. The shortest position held since at least 2005/06. Corn sits short 30k contracts but, it’s worth noting the longest they have been this time of the growing season has been just over 360k contracts. If they wanted to push the envelope they have all the bullets/dry powder/fuel in the tank.
The Argentine drought is biting. The Rosario Exchange cut beans another 1Mt to 20.5Mt, some 58pc lower than first growing season estimates this year. Wheat was held at 16.5Mt – only 3.6Mt above last year’s shocker.
While the market doesn’t really care – the Russians are still frustrating the Ukraine export path. More noise around the Russians putting a stop to the corridor.
Stratégie Grain, the independent crop estimator from the EU cut 1.3Mt from the EU wheat crop forecast given the dryness in Germany and Poland, along with concerns over the Russia spring crop.
Markets are funny things. Two days ago we had a similar weather forecast, basically the same positioning and the market dropped 5usc/bu. Today, we are killing the crop and rationing supply. Positioning in Ag markets has been a red flag for months and we have been sick of hearing our own voices. When it matters, it really matters, and it feels like wheat still has some cleaning up to do.
Australia
Local markets remained largely unchanged and continued to track sideways, liquidity slowed up on both current and new crop.
Minimal rain overnight, the 8-day forecast is calling for a top up of 15-50mm on most cropping areas except Qld, NNSW and central WA.
Focus on the recent merger of Bunge and Viterra and local market implication.
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