Markets

Daily Market Wire 21 September 2022

Lachstock Consulting, September 21, 2022

Grain markets firmed overnight.

  • Chicago wheat December contract up US63.25 cents per bushel to 893.75c/bu;
  • Kansas wheat December contract up 53.25c/bu to 963c/bu;
  • Minneapolis wheat December contract up 41c/bu to 959.25c/bu;
  • MATIF wheat December contract up €13.50/t to €339.25/t;
  • Black Sea wheat December contract up $7.25/t to $324/t;
  • Corn December contract up 13.75c/bu to 692/bu;
  • Soybeans November contract up 17.5c/bu to 1478.75c/bu;
  • Winnipeg canola November 2022 contract was down C$1/t to $785.60/t;
  • MATIF rapeseed November 2022 contract down  €3.25/t to €574.75/t;
  • ASX Jan 2023 wheat contract down A$1.80/t to $416/t;
  • ASX Jan 2023 barley contract unchanged at A$310/t;
  • AUD dollar weaker at US$0.669.

International

Officials installed by Moscow in the occupied Ukrainian regions of Luhansk, Donetsk, Kherson and Zaporizhzhia which represent around 15% of Ukrainian territory have announced plans to hold a “referendum” on formally joining Russia. The votes will begin on Friday and go for five days. These moves are widely seen as a prelude to annexation and a potential escalation of the war. Annexation would send a signal that Putin is prepared to defend the territory as if it were Russia, potentially with nuclear weapons. Russia set an annexation precedent when it took control of the Crimean Peninsula in 2014 which came after a referendum that was widely dismissed as a sham in the West, but which Putin has used to justify his threat that he was ready for war if Ukraine sought to retake the peninsula by force

Putin was meant to give a major speech to the country on Tuesday — only to later postpone it until Wednesday without explanation

Margarita Simonyan, editor-in-chief of the pro-Kremlin RT TV station, wrote: “Today a referendum, tomorrow recognition as part of the Russian Federation, the day after tomorrow strikes on Russian territory become a full-fledged war between Ukraine and NATO and Russia, untying Russia’s hands in every respect.”

Ukrainian Foreign Minister Dmytro Kuleba denounced the referendum as a sham and tweeted that “Ukraine has every right to liberate its territories and will keep liberating them whatever Russia has to say.”

US National Security Adviser Jake Sullivan said Washington rejected any such referendums “unequivocally,” and the European Union and Canada condemned the plan. EU foreign policy chief Josep Borrell said the bloc and its member states would not recognise the outcome of the referendums and would consider further measures against Russia if the votes went ahead

The grain export corridor is looking more fragile by the day and if the war escalates it is hard to see how it will be extended beyond November

In his speech to world leaders in New York the head of the UN António Guterres has said “Let’s have no illusions. We are in rough seas. A winter of global discontent is on the horizon, a cost-of-living crisis is raging, trust is crumbling, inequalities are exploding and our planet is burning,” he told the assembly. “We have a duty to act and yet we are gridlocked in colossal global dysfunction. The international community is not ready or willing to tackle the big dramatic challenges of our age.”

China’s soybean imports from Brazil fell 31% in August from a year earlier, according to customs data. China’s total soybean imports in August fell 24% y/y, while shipments in the first eight months were down 9%. Corn imports from the US were 1.78mmt in August, down from 2.93mmt a year earlier, while shipments from Ukraine were just 209 tonnes in August, compared with 301kt a year ago

China’s spending on Russian energy products hit a record $8.3 billion last month, as the world’s top importer continues to expand its reliance on Moscow for supplies of crude, oil products, gas and coal

Australia

Local markets found a bid late in the day yesterday for in-system grain on old crop, with Clear Grain Exchange trading a bit over 6,000mt for the day. New crop markets were a touch softer through the bid side on wheat and barley by $3-4/mt, and canola continued to soften by $5-10/mt, but liquidity remains thin. Gains on the US futures overnight are set to see basis here weaken further again as crop outlooks remain positive for another bumper Aussie harvest. Although there are  concerns around water logging in NSW, it feels like a one-for-one result where we take the cream off the crop in some areas we seem to add a bit in other places around the country

A widespread rainfall event starting today across Southern QLD, NSW and VIC is likely to cause more headaches for saturated area

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