Markets

Daily Market Wire 21 October 2019

Lachstock Consulting, October 21, 2019
Grain and soybeans markets on Friday were mixed, canola continued to soften.
  • Chicago wheat December contract up 6.75c to 532.25c;
  • Kansas wheat December contract up 2.5c to 433.75c;
  • Minneapolis wheat December contract down 7.5c to 544.5c;
  • MATIF wheat December contract unchanged at €181.25;
  • Corn December contract down 3.75c to 391c;
  • Soybeans November contract up 2.5c to 934c;
  • Winnipeg canola November contract down C$3.30 to $453.70;
  • MATIF rapeseed November contract down €2.75 to €377.75;
  • Brent crude December contract down 49c to $59.42;
  • Dow Jones index down 255.68 points to 26770.20 points;
  • AUD strengthened to US$0.6857;
  • CAD strengthened to $1.3131;
  • EUR strengthened to $1.1162;

In the wheat pits Chicago settled up 6.75 usc/bu closing at 532.25usc/bu, Kansas was 2.5 usc/bu higher to settle at 433.75usc/bu, while Minni softened -7.5 usc/bu to go out at 544.5usc/bu. Corn fell -3.75 usc/bu to go out at 391usc/bu while Beans were up 2.5 usc/bu to settle at 934usc/bu WCE Canola softened -3.3 CAD/mt closing at 453.7CAD/mt with Matif Canola finishing lower by -3 Eur/mt. In outside markets the Dow Jones fell -230.8 points, Crude was down -0.16 bbl the Aussie was 0.0033 higher to settle at 0.68546, the CAD softened -0.001 while the EUR gained 0.0046.

Market news

The wheat market keeps on trucking with futures and Black Sea values all marching higher on Friday night. Saudi is looking to buy wheat which added to the strength. The wheat rally has been a triple threat from a futures perspective. The market was short, the cash market is strong and international values keep ratcheting higher – at some point the seller has to decide if we have put in enough risk premium – the short answer to this question will be the HRW grower. China produced 31.81 million mts of pork in the first 9 months of 2019 which is down 17.2% year on year. While this doesn’t correlate with the official hog heard reduction numbers given the lag (ie infection spread throughout 2019) its interesting to overlay feed use in China, specifically soybean meal. Its not an exact science – increases in competing protein production such as chicken will mask the implied hog feed reduction – and numbers out of China are always going to be somewhat debatable.

Some more twists in the China / US trade soap opera – post what is being billed as the most constructive meeting so far which, according to the Trump camp included the commitment to buy 40-60b of US Ag products, seems like it has some work to do. China bought around 1.2MMT last week from Brazil – a big purchase for this time of year. The combination of the trade dispute with AFS has understated the impact of reducing the US’s relevance to China. Brazil was coming off a huge crop and was happy to be the main supplier. We have a long way to go for the Brazilian soybean crop but it will be watch closely give a slightly slower planting pace to kick off the year – this time last year they had 28.8% of the soybean crop in the ground – this year they are sitting at 18.7% – some work to do.

Australia

Aussie markets remained relatively unchanged on Friday, while canola on the east coast saw bids dropped by $5-6. Temps set to rise for the week throughout most of the country and the forecast remains dry with western Victoria still forecasted to receive upwards to 10mm in the next 8 days. Headers through Victorian Mallee will start to roll on barley within the next 10 days as the market awaits feedback around quality and yields.

 

 

 

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