Daily Market Wire 20 November 2018

Lachstock Consulting, November 20, 2018

Lower for grains and oilseeds.

  • CBOT wheat down -8.25c to 498.5c
  • Kansas wheat down -8.5c to 474.25c
  • Spring wheat up 0.25c to 571.5c
  • CBOT corn down -2.5c to 362.25c.
  • Matif corn was down €1.5 to €173.25
  • Soybeans down -18.5c to 873.75c,
  • Winnipeg canola down C$3.70 to C$473.20,
  • Matif canola down €3 to €370,
  • Dow Jones down -396.05 to 25017.17
  • Crude oil up 1.3pc to $57.17
  • AUD down 0.5pc to $0.7290,
  • CAD down 0.2pc to .758
  • EUR up 0.3pc to 1.145


All hope for positive US China trade developments were squashed at the APEC meeting. The only way was down for beans given that it had climbed to monthly highs on speculation of a positive outcome. Next stop from a technical point of view is -26 cents, which should happen if the trade dialogue continues as is. Soybean Meal was down US$-5.4 per tonne and Soy oil was fractions below unchanged. Weekly Soybean inspections were 1.05mmt which was above market expectations.


The Chinese barley antidumping rumours became official yesterday, coinciding with tough talk at the APEC meeting. China has brought Australia into the fold of trade wars with some thinking that its nothing to do with barley and more to do with Australia’s rejection of China’s 5G technology. Regardless of the motivation, barley prices were hit the harvest in WA, where prices dropped -$20 but recovered to finish -$10. Prices there are now ~-$10 below replacement from the last Saudi tender and we expect to see a higher price in the next tender as global stocks tighten. China’s investigation will not conclude until May 2020, so its unlikely to impact exports this season. Feels like the market is overreacting here and failing to recognise fair value.


Wheat sold off with nothing new on the demand front and more potential on the supply front, despite no production increases. Pakistan are considering allowing the exports of 3mmt of wheat with a subsidy which would undercut world wheat prices at $217 FOB, the quality is questionable, but it will add pressure regardless. SRW wheat is now just 12 cents off its 10-month lows. Matif Wheat was down -3€ to 196.75€, Black Sea Wheat was up 0.5$ to 232.5$ and the Ruble was up 0.77pc to 0.015. Weekly US wheat inspections were 504,000t.The Saudi tender for 495,ooot of wheat Jan, Feb Mar is likely to be all Baltic origin with US wheat well overpriced. Russian values held up okay despite the sell off in the US, this could be positive for the US demand profile


Corn finished with mild losses in a low range session. Weekly Corn inspections were 797,000t which was below market expectations. Corn is beginning to look expensive on wheat, but this could continue if sentiment in wheat doesn’t turn around soon.


Cash prices in Australia were lower yesterday with harvest pressure increasing in SNSW and Vic. The lack of a consumptive bid seems to have caught traders off guard as selling activity in WA makes national limit management difficult, forcing them to hit the bid. Given that the balance sheet has not changed significantly, this seems unsustainable as we are still finding export homes out of WA. Weather wise we are looking at 15-20 millimetres in SQld and NNSW which will assist sorghum production and likely see increased selling from the trade.


Source: Lachstock Consulting



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