Markets

Daily Market Wire 18 May 2022

Lachstock Consulting, May 18, 2022

Seven per cent day trading ranges saw wheat markets give ground in early trade, then recover, to close in positive territory between zero and two per cent firmer.

  • Chicago wheat July contract up US 30cents per bushel to 1277.5c/bu;
  • Kansas wheat July contract up 15.75c/bu to 1367.75c/bu;
  • Minneapolis wheat July up 8.5c/bu to 1393.5c/bu;
  • MATIF wheat September contract unchanged at €438.25/t;
  • Black Sea wheat July contract up $0.25/t to $416/t;
  • Corn July contract down 8.75c/bu to 800.75c/bu;
  • Soybeans July contract up 21.5c/bu to 1678c/bu;
  • Winnipeg canola November 2022 contract down C$9.70/t to $1095.10/t;
  • MATIF rapeseed November 2022 contract down €5/t to €861.25/t;
  • AUD dollar firmed to US$0.703.

International

Markets are twitchy and they are trading massive price ranges.

Reports that India reaffirmed they will still sell wheat but under their terms. Govt entity to govt entity transactions are still in scope. The Indian Government directive should be clarified in the next few days. Pakistan is looking to buy 0.5Mt. In an announcement India confirmed it will allow export of wheat shipments awaiting customs clearance, a significant concession almost 2Mt presently is sitting in limbo.

USDA predicts Ukraine will export 10Mt wheat next marketing year. Current pace should be some barometer for their ability to hit these targets. UkrAgroConsult pegs Ukraine’s ag exports at 1.3-1.5Mt for May.

Structure becomes more important with the market sitting at contract highs. The funds are long but that only tells part of the story. As we saw yesterday, should there be an inkling of reason that the story isn’t all bullish as the weak longs will head for the door. We are in for more volatility.

If you have been reading this for a while you will know I am a little focused on Chicago wheat-corn spreads. Ag markets are very good at pricing supply side changes. A frost, an export ban, etc, get priced fast and hard. Demand side changes take a long time to manifest in official data which is something we are experiencing at the moment. Feed consumers that have the ability to switch to lower cost inputs would be doing so. However, this can take a while to materialise. With wheat-corn at over US$5/bu and all the growing risk in front of the US corn grower this seems extreme and will force the US domestic feeder, at a minimum, to increase corn in the diet.

Australia

Strength to strength, local wheat values yet again firmed with the same theme continuing to drive the market. Delivered Geelong/Melbourne wheat was up again; ASW1 and SFW1 prices bid around $500-505/t. Northern feedgrain markets gained another $5-10/t.

Barley continues to gain as it just gets harder to get hands on stocks. Price quotes were around $480/t delivered Geelong/Melbourne and delivered Downs.

New crop canola markets gained some ground with bids up $5-10/t. WA grower bids were around $1220/t FIS Kwinana.

Congestion and port vessel waiting times at all Western Australian ports and most in the east, worsened again this week. Average wait times at Kwinana have increased from 20 days last week to 23 days this week, with 10 vessels anchored. Wait times in Brisbane have increased from 13 days last week to 21 days this week. Over 4 million tonnes of grain currently is listed on Australia’ shipping stem for May. It is a huge task to get this crop out the door before the next, potentially big, crop hits the bin.

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