Markets

Daily Market Wire 21 May 2020

Lachstock Consulting, May 21, 2020

Wheat lifted 2-3pc.

  • Chicago wheat July contract up US15¢/bu to 513.75¢;
  • Kansas wheat July contract up 11.75c to 453.25¢;
  • Minneapolis wheat July contract up 12.25c to 520.5¢;
  • MATIF wheat September contract up €3 to €188/t;
  • Corn July contract down 1.75c/bu to 319.5¢;
  • Soybeans July contract up 4.25¢/bu to 846.75¢;
  • Winnipeg canola July contract up $C0.30 to $472.60/t;
  • MATIF rapeseed August contract up €2.50/t to €376.25/t;
  • Brent crude July contract up US$1.10 per barrel to $35.75
  • Dow Jones index up 369 points to 24576;
  • AUD firmer at $0.6565;
  • CAD weaker at $1.3936;
  • EUR firmer at $1.0960.

Markets

In the wheat pits Chicago settled up 15 usc/bu closing at 513.75usc/bu, Kansas was 11.75 usc/bu higher to settle at 453.25usc/bu, while Minni rallied 12.25 usc/bu to go out at 520.5usc/bu. Corn fell -1.75 usc/bu to go out at 319.5usc/bu while Beans were up 4.25 usc/bu to settle at 846.75usc/bu WCE Canola rallied 0.3 CAD/mt closing at 472.6CAD/mt with Matif Canola finishing higher by 2.5 Eur/mt. In outside markets the Dow Jones fell -390.51 points, Crude was up 1.53 bbl while the Aussie was 0.0066 points higher to settle at 0.65966, the CAD softened -0.0043 while the EUR gained 0.0005.

Russian wheat crop deteriorates

Markets were firm across the board as a few of the areas of concern lined up. Russian Ag Minister, Dmitry Patrushev indicated in a statement that, due to challenging conditions during the winter-spring period, crop conditions have deteriorated in a number of areas which could lead to cuts as large as 30pc to production.

The Russian news aligned with a lack of meaningful moisture on the EU side and a bearish start to the virtual HRW crop tour. IKAR consulting in Russia cutting its production forecast for Russian wheat to 76.7million tonnes and flagging more potential cuts sent markets off to rework their global balance sheets.

While there are certainly areas that warrant risk premium in this market, the fact US futures markets outperformed the areas that are driving the concerns, ie Matif wheat, tells you there is plenty of positioning still working itself out there. Corn is further evidence of this, a 3.3bbu carryout failed to push the market to the next level lower.

Exporter logistics issue looms

While we focus on usual fundamentals for this time of year we have to deal with the added impact of COVID-19 and the unknown implications for global supply chains. Both Brazil and Russia are still in the eye of the COVID-19 storm with Russia announcing that there have been a bunch of deaths that were labelled as something else, and the case growth in Brazil surged to 15,000 per day. Given the impact of these two countries on global trade in wheat, corn and beans any subsequent tightening or restrictions will only support price. Offsetting this however are the subsequent currency moves. The Brazilian Real is extremely weak against the US dollar.

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Australia

Locally, markets seem to have found some ground now in the middle of the week through the trade on new and old crop. Grower bids pushed lower again on new crop barley in SA getting down to $213/t levels while Vic grower bids were a fraction firmer. There was also some trade activity on Clear Grain Exchange over the past 2 days with some small parcels going through on barley in Vic at $245/t track range. Liquidity still feels slim while the market brings the bid and offers together. ASX wheat July contract was off hard on the settle while other old crop wheat markets have remained relatively unchanged through the south.

Widespread rain pushed through NSW and into southern Queensland and through the Darling Downs with more expected on the way.

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