Futures markets managed to find some buying overnight with fresh new-month interest across most of the ag complex.
- Chicago wheat up 7.25 cents per bushel to 436c;
- Kansas wheat up 6c to 400c;
- Minneapolis wheat up 5c to 512c;
- Corn up 6c to 368.5c;
- Soybeans down 2.25c to 851.75c;
- Winnipeg canola down C$4.8 per tonne to $436.40;
- Crude oil down to US$63.60 per barrel;
- AUD settled at $0.7015.
US wheat futures were driven by weather, both in the US and in Europe. The US forecast is cold and wet – certainly not ideal for the end of the Soft Red Winter growing season, and even more concerning for the corn and spring wheat plant. The US has had an amazing run of very low (relative) prevent plant area over the past few seasons; this year now looks to break that trend. If you looked back to 2013, the farmer couldn’t plant just over 3.5macs which would move the needle on the balance sheet should we hit something similar this year. This becomes more important when we consider the size of the fund short, and the fact one third of the US consumption is inelastic via mandated ethanol production.
While the market has grown tired of trade negotiation talks between China and the US, it does seem that we are getting closer to a resolution. Round nine of the talks in Beijing were being billed as productive, with round 10 happening in Washington next week; some are suggesting this will be the definitive meeting. This is becoming the only light of hope for the bean market amid uncertainty around absolute demand erosion caused by the African Swine Flu that has ripped through the Chinese pork industry.
Domestically the rains have fallen and are still on the way. Victoria received 10 to 25mm while southern NSW managed between 10-30mm. Even in northern NSW falls of 5-10mm maybe enough to get some crop in the ground. More on the way.
Source: Lachstock Consulting