Price movements mixed in Friday trading.
- Chicago wheat December contract down 0.25 cents per bushel to 483.5c;
- Kansas wheat December contract down 3.75c to 399.75c;
- Minneapolis wheat December contract down 1.75c to 505.5c;
- MATIF wheat December contract up €0.75 per tonne to €170.25;
- Corn December contract up 1.5c to 368.75c;
- Soybeans November contract up 3.25c to 898.75c;
- Winnipeg canola November contract up C$2.70 to $449.80;
- MATIF rapeseed November contract up €0.75 to €383.50;
- Brent crude December contract down $0.16 per barrel to $60.22;
- Dow Jones index up 37.07 to 27,219.52 points;
- AUD weakened to US$0.6869
- CAD weakened to $1.3238
- EUR strengthened to $1.1074
Wheat, soybeans and corn
Market movements were mixed in Friday trading to end a week in which the Chicago December contract gained 22.5c/bu, not something expected when considering the USDA’s September crop report was generally a snooze-fest for wheat.
Global markets also trying to define a bottom, with both MATIF and Black Sea values making gains over the week.
There has arguably been a sentiment shift in the corn pit, and now the market is back to trading anecdotal tweets from growers suggesting the yield the USDA has forecast isn’t there. Additionally, Donald Trump’s fingers and thumbs returned to Twitter to indicate the Renewable Fuel Standard is likely to increase, arguably designed to return faith to the wavering Republican heartland.
Soybeans found some more China buying, and the debate now is about whether those sales will occur with or without a tariff.
We have been talking about the danger of a complacent market, with corn positioning is short, Trump searching for support via adding mandated demand to the balance sheet, and the China-US relationship saga finally showing some signs of hard-to-measure progress.
The US December 2019 corn contract is now 16.5c/bu off the lows, while November 2019 soybeans are just under 50c/bu higher.
The Australia market showed a shift in sentiment last week, with ASX wheat pushing higher every day that excludes rainfall across the majority of the grainbelt. Friday saw some moisture appear on the back end of forecasts, and the market reassessed the risk premium it had been building. At A$106/t over Chicago futures, the Aussie market had arguably got ahead of the problem, but that is not to say the problem won’t catch. On Friday, a $90/t premium to export parity was seen as a little punchy.
It is hard to know how much of the recent strength had been via growers washing out contracts as they either cut for hay or open the gate to livestock. Interestingly, canola basis has not nearly been as aggressive yet that is the one crop that is clearly in trouble.
Source: Lachstock Consulting
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