Markets

Daily Market Wire 18 October 2019

Lachstock Consulting, October 18, 2019
Canola continued to soften, wheat lifted sharply, corn and beans were up fractions.
  • Chicago wheat December contract up 12.25c to 525.5c;
  • Kansas wheat December contract up 6.25c to 431.25c;
  • Minneapolis wheat December contract up 1.5c to 552c;
  • MATIF wheat December contract up €1.25 to €181.25;
  • Corn December contract up 3c to 394.75c;
  • Soybeans November contract up 3.5c to 931.5c;
  • Winnipeg canola November contract down C$3 to $457;
  • MATIF rapeseed November contract down €1.50 to €380.25;
  • Brent crude December contract up 49c to $59.91;
  • Dow Jones index up 23.90 points to 27025.88 points;
  • AUD strengthened to US$0.6832;
  • CAD strengthened to $1.3133;
  • EUR strengthened to $1.1127;

In the wheat pits Chicago settled up 12.25 usc/bu closing at 525.5usc/bu, Kansas was 6.25 usc/bu higher to settle at 431.25usc/bu, while Minni rallied 1.5 usc/bu to go out at 552usc/bu. Corn gained 3 usc/bu to go out at 394.75usc/bu while Beans were up 3.5 usc/bu to settle at 931.5usc/bu WCE Canola softened -3 CAD/mt closing at 457CAD/mt with Matif Canola finishing lower by -2 Eur/mt. In outside markets the Dow Jones fell 0 points, Crude was up 0.58 bbl the Aussie was 0.0067 higher to settle at 0.6822, the CAD softened -0.0066 while the EUR gained 0.0052

Strong Russian wheat

Here’s an example of the power of the grower, and the power of the techs, regardless of the fundamentals.

We have previously pointed out (celebrate the wins) that the Russian grower has disdain to sell wheat when the FOB market breaks under US$190/t FOB – this year has confirmed this theory with values snapping back above $200/t FOB.

Kazakhstan is the main driver of this strength as they cover their own short crop with Russia supplies – an unusual event but makes sense in the context of their expanding flour export program.

Argentina price setter

It’s funny how trading patterns replicate themselves in different markets and jurisdictions.

Argentine wheat production has been under the pump with lack of rainfall and high temps.

This isn’t currently being reflected in their pricing with FOB and CnF offers still suggesting the trade is comfortable in their ability to find the grain to cover their sales or merchandise the long.

From what we understand all of the export licenses have been taken up so the trade is 100pc committed to participating – what we don’t know is how much of the export license commitment has been covered by the grower.

Yes, they have an exportable surplus, even if production falls to 18 million tonnes (Mt) (USDA 20.5Mt) but growers tend to be reluctant to sell when conditions are deteriorating.

The reason we watch this so closely is they are the discount kings through Nov to Jan/Feb as they have to clear wheat before corn and soybean harvest.

As Russian values tick higher Australian export prospects become defined by how low and long the Argy program can go.

Should relativities change the Qld end user may find increased competition from the Asian consumer.

Australia barley heavy work

Aussie markets continued to slide lower putting markets down $7-10 from the start of the week.

Barley being hit the hardest it now flags some interesting points around values and when you sit down and do the numbers Aussie barley is not far off from export pricing and finding demand into Thailand and China if we continue to see more downside, although the trade is still understandably nervous about selling into China.

Current WA FOB values are around a US$205/t and Port Lincoln very similar value, which, on paper at least, puts us about US $5-10 away from finding export demand into those homes.

Then you throw Saudi into the mix and we are US $20-25 away.

Australia harvest weather

Forecast now remains dry for large parts of country, scattered showers still predicted for the later regions of Victoria.

Harvest continues to roll on in the north and could be all wrapped up by middle of November, while South Australia gears up with some warmer temps to hit mid-to-late next week across the state.

Viterra sites across the west coast and Upper Eyre Peninsula have started receiving barley with average protein results running at 13.6pc.

 

 

 

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