Markets

Daily Market Wire 17 May 2022

Lachstock Consulting, May 17, 2022

Markets closed sharply higher, with some wheat contracts locking limit up.

  • Chicago wheat July contract up US 70cents per bushel to 1247.5c/bu;
  • Kansas wheat July contract up 70c/bu to 1352c/bu;
  • Minneapolis wheat July up 60c/bu to 1385c/bu;
  • MATIF wheat September contract up €21.75/t to €438.25/t;
  • Black Sea wheat July contract up $16.75/t to $415.75/t;
  • Corn July contract up 28.25c/bu to 809.5c/bu;
  • Soybeans July contract up 10c/bu to 1656.5c/bu;
  • Winnipeg canola November 2022 contract up C$5.20/t to $1104.80/t;
  • MATIF rapeseed November 2022 contract up €8.75/t to €866.25/t;
  • AUD dollar firmed to US$0.697.

International

India’s export ban and subsequent purchase of Indian wheat by Egypt was the catalyst for the market to add in some more risk premium just as the ink was drying from the USDA’s latest guess on how we add this thing up. Super high level. The USDA has Russian exports at 39 million tonnes (Mt), Ukraine at 10Mt, normally 19-20Mt or so, so let’s call it 9Mt short of normal. Add in India as a non-traditional exporter for 8.5Mt of exports and things look sort of okay.  The Indian announcement, albeit not definitive, reaffirms the inability for this market to find a level of comfort and highlights that balance sheet assumptions are just that. The US wheat crop is still being made – post the close last night the USDA indicated that the winter wheat crop is a woeful 27-per-cent good to excellent. Additionally, Europe is dry and getting hot for the next 10 days. The one area that looks amazing – the Black Sea – still carries the uncertainty of export performance. This is challenging. The function of the market is to balance supply and demand and right now it’s solving for demand erosion. Simply we have to find the point that wheat demand takes a hit;  the low-hanging fruit is China. USDA has China in for 9.5Mt of imports which to some extent could be switched to corn.  Storms throughout large parts of France will provide some relief to the moisture shortages but heat forecast for the next 10 days is of concern.

Australia

With crops struggling to be planted on time in parts of central New South Wales due to the wet conditions, yield penalties will start to come into play the longer it takes for paddocks to dry out, and a swing into wheat and barley becomes more likely

Weekly rainfall totals greater than 50 millimetres were recorded over much of eastern Australia, and the far south-west corner of Western Australia.. According to the Bureau of Meteorology, monthly and annual daily records were exceeded for many sites in Queensland and inland NSW, with weekly totals being over two to eight times greater than the average monthly total for large parts of Queensland.

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