Markets

Daily Market Wire 23 August 2021

Lachstock Consulting, August 23, 2021

Market continued cheaper. The oilseeds retreated between 1pc and 3pc, corn greater than 2pc and wheats less than 2pc.

  • Chicago wheat December contract down US14.5c/bu to 728.25c/bu;
  • Kansas wheat December contract down 12.5c/bu to 715.75c;
  • Minneapolis wheat December contract down 2.25c/bu to 902.25c;
  • MATIF wheat December contract up €0.75/t to €244.50/t;
  • Corn December contract was down 13.75c/bu to 537c;
  • Soybeans November contract down 29.25c/bu to 1290.75c;
  • Winnipeg canola November contract was down C$25.90 to $864.90;
  • MATIF rapeseed November contract down €6.50/t to €557.50/t;
  • US dollar index down 0.1 to 93.5;
  • AUD unchanged at US$0.714;
  • CAD weaker at $1.283;
  • EUR firmer at $1.170;
  • ASX wheat September contract up A$1/t to A$356/t;
  • ASX wheat January 2022 up $2/t to $352/t.

International

In the wheat pits Chicago settled down -14.5 usc/bu closing at 728.25usc/bu, Kansas was -12.5 usc/bu lower to settle at 715.75usc/bu, while Minni softened -2.2 usc/bu to go out at 902.25usc/bu. Corn fell -13.75 usc/bu to go out at 537usc/bu while Beans were down -29.25 usc/bu to settle at 1290.75usc/bu WCE Canola softened -25.9 CAD/mt closing at 864.9CAD/mt with Matif Canola finishing lower by -6.5 €/mt. In outside markets the Dow Jones gained 225.96 points, Crude was down -1.29 bbl the Aussie was -0.003 points lower to settle at 0.71159, the CAD softened -0.0017 while the EUR gained 0.0018

High prices create the need for solutions. Algeria is positioning to take Russian wheat, something they haven’t done since 2016 when they introduced some quality standards that Russia simply couldn’t hit.

French quality downgrades are also behind this decision given Algeria has been the main milling wheat buyer of French production. Matif wheat futures are clearly showing the problem with deliverable quality, forcing the Sept v Dec price differential to rally by €25/t over the course of last week.

EPA Guessing Game: The main catalyst for Friday’s weakness was the rumour the EPA would be recommending lower biofuel mandates which would eat into corn and beanoil demand. But after the trading session there was another rumour pretty much indicating the opposite. It is fair to say the market is a little sensitive to this talk given how impactful this would be to ending stocks.

The Pro Farmer crop tour pegged the national corn crop at 177bu/ac while they thought beans would be 51.2bu/ac. The higher estimates will weigh on price but really take a back seat to the EPA talk.

The set up remains – wheat is tight and now has a bunch of quality problems, corn is all over the shop, being pulled by better finishing conditions and the uncertainty about which direction the EPA biofuel mandate will take. China buying has been spooky. There has been plenty of enquiry but little in the way of actual business.

Australia

While the east coast wheat belt has had a cracking season, many areas are keen to see some more moisture.

Finally we are seeing some decent falls forecast in the back end. Walgett is set for an inch with similar amounts forecast for the majority of the NSW belt. SA and the Vic Mallee are looking for around half of that over the next 15 days.

The outlook for the Australian dollar has, for me at least, been more about the strength of the USD rather than $A weakness. With the east coast lockdown and extended protests over the weekend it does make sentiment hard to shift. Even with some $US weakness into the weekend the $A felt heavy and more outlooks have a 70 target rather than looking for upside. The CBA manufacturing purchase index will be released today, a print unlikely to add meaningful support to the battler.

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