Markets

Daily Market Wire 18 August 2020

Lachstock Consulting, August 18, 2020

Future rallied, dollar fell.

  • Chicago wheat December contract up US16.75c/bu to 526.25c;
  • Kansas wheat December contract up 12.75c/bu to 448.5c;
  • Minneapolis wheat December contract up 7.75c/bu to 520c;
  • MATIF wheat December contract up €2.25 to €182.50;
  • Corn December contract up 6.75c/bu to 344.75c;
  • Soybeans November contract up 16.5c to 915.25;
  • Winnipeg canola November up C$2.10 to C$486.90;
  • MATIF rapeseed November contract up  €1.75/t to €377.75;
  • Brent crude October contract up US$0.57 per barrel to $45.37;
  • Dow Jones index down 86 points to 27,845;
  • AUD firmer at $0.72;
  • CAD firmer at $1.323;
  • EUR firmer at $1.187.

Market rally

Off to start the week with a bang – Chicago closed up 16 3/4¢ to 526 1/4¢, KC +12 3/4¢ to 448.5¢, Minny +7 3/4¢ to 520¢, and Matif +2.25€ to 182.5€ on the earlier close. Corn ended up 6 3/4¢ to 344 3/4¢ and beans +16.5¢ to 915 1/4¢ (Matif +1.75€, WInnipeg +$2.1).  Crude oil was also up, with WTI trading around $42.9/Brent $45.4 while the DOW dropped 86 points.  The USD has finally broken sub 93 (92.8 close on the index) with the AUD firming to 72.¢, the CAD $1.323, and the EUR $1.187.

There were plenty of theories around as to the reasons behind the rally. Some attributed it to last week’s Derecho* weather, others to China business and others simply figuring we’ve hit a near term bottom and needed to add back in some risk premium until there is more confidence in row crop yields.  In respect of the China business theory, we did see two flashed HRW cargos to unknown, expected to be China, and there are rumours of more. Regardless, we rallied and the question now is whether the market can continue to do so into tomorrow.

Yield picture inconsistent

ProFarmer crop tour figures coming in from today have varied widely between the routes, with estimates in SD up to 184.6 bu/acre (vs 164 type average estimates from prior tours) but more mixed early results in Ohio where the key description for fields was “inconsistent”.  More tour guesses will be trickling out through the rest of the week, and there are plenty of guesses about what they’ll call the Iowa situation.

Speaking of Iowa, the USDA confirmed over night that they will be surveying in Iowa about the impacts there and potentially including such results in the next Sept crop report.  Everyone has their own view on where corn and bean yields will end up, but any surprises from the tour will help bias future changes.

Russia/Ukraine wheat up, corn down

Ukrainian wheat and barley harvest are both nearly complete with only a few percent of the crop left to cut, and Russian crop estimates continue to slowly trend upwards with a private there calling 82 MMT for the wheat crop today.  At the same time though, corn crop estimates in Ukraine continue to slide down (given the previously mentioned weather impacts and forecasts there).  Chinese buying interest is reportedly still floating around the market there for barley, but even that has dropped off from prior highs.

*Editor’s note: The word Derecho being used to describe the storm last week, according to Oxford Languages online is pronounced di-RAY-choe, is of late 19th century Spanish origin  and is defined as a storm system that moves a long distance rapidly, bringing winds which can devastate an area several miles wide. Its literal meaning is direct or straight.

Australia

Markets traded slightly weaker on Monday reflecting the improvements in crop prospects.  As some have called it, parts of NSW are starting to look like the Garden of Eden!  New season sales continue to move along, with the improved outlooks helping shift down some sales targets.  The BOM’s latest outlooks are now calling for an exceptionally wheat spring on the east coast which means the market will be keeping an eye out for potential quality risk.

 

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Comments

  1. Ray Marshall, August 18, 2020

    You should mention the detection of Khapra Beetle at a warehouse in Canberra of all places!!! An incursion of these beetles could be serious for the Aust. Grains Industry. Certainly don’t want them in the West . “PREVENTION IS WAY BETTER THAN THE CURE.” Ray.

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