Markets

Daily Market Wire 21 April 2020

Lachstock Consulting, April 21, 2020

Wheat/corn spread widened as crude fell.

  • Chicago wheat May contract up US15.25¢/bu to 548.75¢;
  • Kansas wheat May contract up 16.5c to 495.25¢;
  • Minneapolis wheat May contract up 4c to 510.75¢;
  • MATIF wheat May contract up €5.25/t to €203.75;
  • Corn May contract down 8c/bu to 314.25¢;
  • Soybeans May contract down 6¢/bu to 826.5¢;
  • Winnipeg canola May contract down $C3 to $453.10/t;
  • MATIF rapeseed May contract up €0.25/t to €372.25;
  • Brent crude June contract down US$2.51 per barrel to $25.57
  • Dow Jones index down 592 points to 23650;
  • AUD weaker at $0.6345;
  • CAD weaker at $1.4127;
  • EUR firmer at $1.0863.

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Markets

Wheat spiked to start the week with Chicago ending up 15 1/4¢ to 548 3/4¢, KC +16.5¢ to 495 1/4¢, Minny +4¢ to 510 3/4¢, and Matif up 5.25€ to 203.75€.  Most of the move has been attributed to headline trading off the Russia situation, though fundamentals are unchanged.  It’s a rare day in which wheat and corn price diverge so widely.  Row crops collapsed with contagion from crude, corn ending down 8¢ to 314 1/4¢ and beans -6¢ to 826.5¢ Matif rapeseed was up a quarter euro on the earlier close, though Winnipeg dropped three bucks.  Crude oil fireworks set off with a pre-delivery logistical squeeze on longs in WTI. The front month traded down $55 (yes, down $55) to close at negative $37.6/barrel for the first time in history, up from lows of $40 in the red.  One more day of trading on contract, so that leaves a $57/barrel nominal monthly carry into the next month futures. Don’t we all wish we owned storage tanks in Cushing?  Lachstock sure does right now… Brent was also under pressure, though more normalized without the delivery squeeze and ended off $2.5/barrel to $25.6 while the DOW dropped 592 points.  The AUD is trading around 63.3¢, the CAD $1.413, and the EUR $1.086.

Global markets have been relatively quiet so far, with all eyes on the crude drama today. However, coronavirus shutdowns remain a global problem, and in the meat industry there are still more packing plant shut downs. JBS recently shut another ~10% of US pig kill capacity.  Beef remains under significant pressure, the board down another two bucks today for feeders.  Nebraska slaughter houses are still no bid in many areas even as some feeders look to turn over more lots prior to spring.  On that note, some details about the latest ag support payments have begun trickling out from the USDA. Formulae are based around 85pc of row crops’ price losses since the start of the year and will be calculated forward towards October. While a big deal to farmers and ranchers receiving the checks, the exact details are something of a non-event to the market.  They will help ease any short term cash-flow-driven sales pressure once the payments hit.

USDA crop progress figures had national corn planting at ~7pc, up 4pc from last week, with a slow start in the “I” states. Soybeans were 2pc planted in this first week of reporting, and milo was at 19pc, Kansas only just starting.  Winter wheat conditions were off sharply, with good-to excellent (G/E) ratings down 5pc, though still good in general at 57pc. There’s more discussion about confirmed frost damage across much of western Kansas, while spring wheat was up to 7pc complete though mostly only in the PNW.  Meanwhile, export inspections were as expected for wheat and beans, 470,000t and 540,000t respectively, and a little low on corn, 684,000t.  Two of the recent China sales did ship on milo, there was one PNW bean boat to China in the mix, and we finally got a durum boat out of the Great Lakes.

Australia

Aussie markets have held mostly offer side only, with liquidity low and the trade stepping back from the bid side on the front end.  There was some June-onwards demand.  Weather maps have pushed a little wetter for Vic/SA into the next week, but nothing spectacular yet.

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