Daily Market Wire 17 May 2019
Grain futures were two to three per cent firmer overnight, oilseeds rose by smaller increments:
- Chicago wheat July contract up 18.25c/bu to 467;
- Kansas wheat July contract was up 14.75c/bu to 416.75;
- Minneapolis wheat July contract up 11.5c/bu to 526.75;
- MATIF wheat September contract up EUR1.75/t to 173.75
- Corn July contract up 9.5c/bu to 379;
- Soybeans July contract up 4.25c/bu to 839.75;
- Winnipeg canola July contract up $C5.50/t to 447
- MATIF rapeseed August contract up EUR1.25/t to EUR364.25
- Dow Jones gained 214.66 points to close 25,862.68
- Crude oil June contract up 0.85 USD/bbl to $62.87.
- AUD down to 0.6892,
- CAD down to 1.3461
- EUR down to 1.1175
Sentiment flips downtrend
Sentiment in markets is a fascinating thing. There are 1000 different sayings to explain any different price outcome, each as vague and ambiguous as the next – however, when a market turns its amazing how it uncovers previously ignored fundamentals. This rally is primarily a corn story but, as the market summaries will attest, it’s also a wheat story – and further to that it’s now a global wheat story. Reports of hot and dry in Russia and production estimates in Hungary being trimmed are fuel to a planting delay fire. WA is also making the news tapes as balance sheets look at ways to tighten rather than trying to out do the competition with the highest carryout.
Abandonment and bailout
Make no mistake – this is a genuine problem and one we have not seen to this extent. HRW is now in the gun with the mature southern crops in Texas and Oklahoma about to have 5 to 7 inches. Soft Red Winter will undoubtedly be damaged and abandonment will be historically high. Talk overnight about a “bail out” for the US soybean grower in the form of a floor price type program to compensate for the trade dispute create more focus on Soybean planting – in reality we could do with a few less acres going to beans so mandated support is the last thing we need.
In conversations over the last few days the question is raised – will the weather problems in the US effect global markets, particularly in wheat. The USDA still has 24.5 million tonnes of exports out of the US this coming marketing year or 47% of production (based on the May WASDE) so it actually doesn’t take much of a production cut to start to tighten a previously comfortable balance sheet.
Locally the old crop markets showed some signs of life albeit difficult to pin down. Offers have stopped chasing bids lower and spot load demand is evident through Victoria. Weather maps continue to be decisive – rain for SA and Vic, not much else for the rest of the growing regions. WA got a sprinkle through the great southern but 5mm is a tease, not a long term help. We have time in Australia, but there is nothing more frustrating than reading about how wet it is in the US while our weather maps throw up clear skies.
Source: Lachstock Consulting