Markets

Daily Market Wire 23 February 2024

Lachstock Consulting, February 23, 2024

Markets were mixed, tending easier.

  • Chicago May 2024 wheat up US1.25c/bu to 579.25c/bu;
  • Kansas May 2024 wheat down 3c/bu to 571.5c/bu;
  • Minneapolis May 2024 wheat down 6c/bu to 655.5c/bu;
  • MATIF wheat May 2024 up €2.75/t to €200.25/t;
  • Black Sea wheat futures has not quoted since 11 August 2023;
  • Corn May 2024 down 5.75c/bu to 418.5c/bu;
  • Soybeans May 2024 down 12.5c/bu to 1152.5c/bu;
  • Winnipeg canola May 2024 down C$2.80/t to $581.30/t;
  • MATIF rapeseed May 2024 down €6.25/t to €416/t;
  • ASX March 2024 wheat down A$5.50/t to $333.50/t;
  • ASX May 2024 wheat down A$3.50/t to $337.80/t;
  • ASX March 2024 barley unchanged at A$298.50/t;
  • ASX May 2024 barley unchanged at A$304.50/t;
  • AUD dollar up 7 points to US$0.6558.

International

Chicago wheat has managed to hold onto Tuesday’s gains as the wider market weighs up the spec short verses spring weather. Some reports indicating dryness throughout parts of the US and Canada highlight that we are entering the business end of the season for US wheat. Additionally, it highlights the need for spring planting conditions to perform as balance sheets look to restock. 

Planting weather in the US combined with gross margin calcs will have a meaningful bearing on value. Right now, the world hates corn – funds are record short and even rumors of China buying didn’t move futures. History suggests things are pretty split. Since 2010, from now until the end of July, there has been 6 up years in the Dec contract averaging 77usc/bu and 8 down years averaging -53usc/bu. However, there have only been 2 years that the funds have been short at this time of year which makes the structure of the market extremely interesting. 

Matif wheat traded to its lowest level in more than three years as the pressure from yet another large Russian crop weights on global values. Russia wheat traded down to US$218-224/t FOB as SovEcon reported Russia’s desire to place a floor in the market, something it could easily do given their dominance over other exporters. 

Citadel’s commodity trading business made more than $4b according to a Bloomberg article. One of the world’s largest hedge funds, Citadel’s Energy Marketing group and their European gas and power desk were the main contributors. 

Latvia’s parliament banned the import of agricultural products from Russia and Belarus, making it the first EU country to prohibit imports due to Russia’s military activity. Latvia imported $304 million worth of Russian agricultural products in the first 10 months of 2023. President Biden is also set to introduce new sanctions on Russia.

Australia

Locally, the grind continues with wheat trading down A$4/t on the ASX, to finish at $337/t for May. This is the lowest point since Oct 21. For now the marketplace is at a standstill. Growers are reluctant to step into any sales and the consumer seems to have enough cover for now. The exporters are in pause waiting for refreshed of demand from Asian buyers. 

Status quo has not been a common phrase with the grain markets over the last few years, so this begs the question who blinks first? 

Good rain is on the way for the WA wheat belt whilst Vic/ SNSW have been sweating it out in the recent heat wave. 

The Jan inflation print is due out on the 28th with year-on-year inflation expected to print 3.5pc vs 3.4pc in Dec. Monthly retail sales will also be watched (out on the 29th) with economists looking for a 1.7pc kick vs last print of -2.7pc. If this materialises, this would be the highest retail sales since Nov 2021.

 

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