Markets

Daily Market Wire 2 April 2020

Lachstock Consulting, April 2, 2020

Wheat and soybeans fell around 3 per cent. US dollar strengthened.

  • Chicago wheat May contract down US18.5¢/bu to 550.25¢;
  • Kansas wheat May contract down 18c to 475¢;
  • Minneapolis wheat May contract down 14.75c to 524.5¢;
  • MATIF wheat May contract down €2.75/t to €193.50/t;
  • Corn May contract down 6c/bu to 334.75¢;
  • Soybeans May contract down 23.25¢/bu to 862.75¢;
  • Winnipeg canola May contract down $C3.70 to $465.10/t;
  • MATIF rapeseed May contract down €1.25 to €357.75/t;
  • Brent crude May contract expired;
  • Brent crude June contract down from US$26.35 per barrel to $24.74;
  • Dow Jones index down 974 points to 20944;
  • AUD weaker at $0.6070:
  • CAD weaker at $1.418;
  • EUR weaker at $1.1096

Market news

April Fool’s day did not bring new optimism to the markets overnight. Pessimism about the overall macro situation weighed heavily across all markets. More lock downs are also back on in China, with the supposed recovery looking more questionable to markets.  Chicago and KC both dropped eighteen cents to 550 1/4¢/475¢, Minny -14 3/4¢ to 524.5¢, and Matif off 2.75€ to 193.5€ on the earlier close.  Corn was off six cents to 334 3/4¢, beans -23 1/4¢ to 862 3/4¢, and Winnipeg -$3.7 to $465.1 (Matif -1.25€ to 357.75€).  US crude managed to firm about seventy cents to $21.2 WTI as more bankruptcies and layoffs have started hitting the shale industry, although Brent dropped seventy odd cents to $24.7.  Meanwhile, the DOW collapsed nearly a thousand points to close back under 21k.  The AUD’s around 60.7¢, the CAD $1.418, and the EUR $1.096 with the dollar index slightly firmer.

Meat futures took a particularly hard hit with cattle and hogs all down limit. Trading limits will be expanded tomorrow.  Cash cutout values have been hit with talk about supply builds/demand slowdowns after the recent sales rush.  Slaughter figures were down slightly from the previous week. It would seem packers have managed to shift most of their lost restaurant demand into consumer channels, where demand has firmed, pressuring the situation there.

Corn ethanol crush figures from the USDA were out for Feb finally, and up year on year by about 8 per cent.  The February month data are prior to the crude oil price collapse and reflects the extra ~3.5 per cent processing time from the leap year.  Weekly ethanol production figures showed a massive collapse while stocks built to new record levels. This appears to confirm trade concerns about ethanol demand in the current oil market.  More ethanol shutdowns are also being discussed down in Brazil, for similar reasons.

Algeria is in the wheat market for July meaning the second half of the tender quantity at least will be filled by new crop wheat. USDA recently suggested Algeria’s crops were not as bad as some expected, at least in the eastern edge, that the government might actually be able to cut non-durum wheat imports by a third and that total wheat imports might reduce to 5 million tonnes this season.  Lachstock questions this because dry conditions across North Africa have been one of the few highlights globally in recent weeks.  Tunisia’s regular durum tender, as an indicator of world price, is gaining more attention these days given durum crop risks and USDA comments about low acres.

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Australia

Back locally, nice widespread showers have brought some 10-20 mm of rain across the SA Mallee and Wimmera, improving the stage a bit there for planting.  Falls were a little more patchy into parts of NSW, but more still on the maps to come. New crop markets again continued to slightly soften across the boards with Jan 21 ASX wheat contract traded $345/mt and barley settling at $285/mt. Old crop continues to hold firmer, though with wide bid offer spreads through trade markets.

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