Markets

Daily Market Wire 22 May 2020

Lachstock Consulting, May 22, 2020

Wheat closed mostly higher and other markets fell ahead of the US long weekend.

  • Chicago wheat July contract up US2.25c per bushel to 516c;
  • Kansas wheat July contract up 1.25c to 454.5c;
  • Minneapolis wheat July contract down 2.5c to 518c;
  • MATIF wheat September contract up €2 to €190/t;
  • Corn July contract down 1.75c/bu to 317.75¢;
  • Soybeans July contract down 11.75¢/bu to 835¢;
  • Winnipeg canola July contract down $C5.40 to $467.20/t;
  • MATIF rapeseed August contract up €1.75/t to €374.50/t;
  • Brent crude July contract up US$0.31 per barrel to $36.06;
  • Dow Jones index down 102 points to 24474;
  • AUD weaker at $0.6541;
  • CAD weaker at $1.4004;
  • EUR firmer at $1.0929.

Markets

In the wheat pits, Chicago settled up 2.25 cents per bushel to close at 516c, and Kansas was 1.25c higher at 454.5c, while Minneapolis softened 2.5c to 518c. Corn fell 1.75c to 317.75c, while soybeans dropped 11.75c to settle at 835c, and Winnipeg canola dropped C$5.50/t to $467.20. MATIF canola finishing lower by €1.75/t. In outside markets, the Dow Jones gained 369.04 points, Crude was up 0.43 bbl the Aussie was -0.0032 points lower to settle at 0.656444, the CAD rallied 0.0055 while the EUR fell 0.0029.

One session to go before the Memorial Day long weekend. It’s the biggest barbecue weekend of the year.

Crop conditions polarising

Russian and EU crop conditions dominate the headlines ahead of [Government of France primary industries organisation] Agrimer’s much anticipated French crop condition report.

Twitter is a great example of how polarised the market is becoming purely on Russian production levels. Leading into the last few weeks 76-77 million tonnes production estimate was probably the line. Over the past 48 hours it seems many in the market are taking the under. Add to this some ordinary results out of the early US virtual wheat tour and the market finds some support. There are also some swings and roundabouts on the weather front with some better moisture in Germany while Russia rainfall has been falling short of the soaker it needs.

Corn tussle

I imagine, and with some knowledge, that the US corn grower loves a little schadenfreude when it come to the hedge fund community. Yes, the fundamentals are bearish and yes, corn ending stocks have ballooned to gargantuan levels. However, like a Rocky movie, this is the fight the US corn grower loves. Funds are short and the US grower has the unfair left/right combo of a loan program and insurance support that can get them to the 12th round. Not enough to win but certainly allows the grower to play the waiting game. It won’t just be ethanol that can trigger a seemingly irrational rally but it can certainly light the fire. Crude is set to post its fourth consecutive higher weekly close as the US market gets back in the car. Price has done the work, especially in the US market, taking drilling rig counts from 772 on 17 March to 339 on 12 May. Combined with world oil production cuts led by OPEC, the US crude market is drawing fast. Higher crude price and lower corn has returned the ethanol margin from a 7usc/gl loss to a 12usc/gal profit.

Australia

Locally, we saw new-crop markets tick a fraction firmer yesterday through the south with ASW1 delivered markets up $3-4/mt on the bids and offers. Barley remained relatively unchanged for the day across the grower bids. ASX January barley settled $6/t higher at $230/t and Eastern Australia (WM) wheat settling at $303/t was up $2.50/t.

Canola also continued to march a little higher on new crop with values around $600/t track Vic and NSW $604/t.

Rain fell through NSW and Qld, reports saying it was patchy but a widespread 5-15mm. A good top-up through northern New South Wales and southern Queensland would see planters get going again over the weekend to continue their Plant20 campaign. We hope to see some rain push through the Western Australian cropping belt over the weekend and into early next week.

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