Markets

Daily Market Wire 23 July 2019

Lachstock Consulting, July 23, 2019

Most grains and oilseeds futures settled lower on Monday.

  • Chicago wheat September contract down 15.25 cents per bushel to 487.25c
  • Kansas wheat September contract down 10.75c to 429.25c,
  • Minneapolis wheat September contract down 8c to 521.25c,
  • MATIF wheat September contract down €2.25 per tonne to €174.75;
  • Corn September contract down 8.5c to 422.25;
  • Soybeans August contract down 13.25c to 888.25c;
  • Winnipeg canola November contract down C$2.60/t to $447;
  • MATIF rapeseed August contract up €0.25 to €374.25;
  • Brent crude September contract up $0.79 per barrel to $63.26;
  • Dow Jones up 17.70 points to 27,171.90;
  • AUD weakened US$0.7033c;
  • CAD weakened to $1.3125;
  • EUR weakened to $1.121

Market news

Monday disappointed across the board in the US, with generally supportive corn/bean weather forecasts in the US pressuring row crops and a dearth of other supportive news keeping pressure across the complex.  Chicago wheat gave up 15 ¼¢ to 487.25¢, KC -10 ¾¢ to 429.25¢, Minny -8¢ to 521.25¢, and Matif off 2.25€ to a 174 ¾€ on the earlier close.  Corn dropped 8.5¢ to 422 ¼¢ and soybeans closed -13 ¼¢ to 888.25¢ (Winnipeg -$2.6 to $447, matif up a quarter of a euro to 374.25€).  Crude oil bounced amid continuing concerns about the Iran situation (and new sanctions on a Chinese company transporting Iranian crude did not help sentiments), with WTI up nearly half a buck to $56.1/barrel and Brent to $63.3.  The DOW closed nearly unchanged (up 18 points) while the AUD is trading off slightly to 70.3¢, CAD at $1.312, and the EUR at $1.121. 

Chinese/US trade talks remain in limbo, and although there appears to be an attempt to push stories of Chinese sales interest (noting headlines in Chinese news reports to that fashion) there has been no follow through seen in the US cash trade as of yet.  On that same note, a violent weekend in Hong Kong amid pro-democracy protests there is re-elevating concerns over a potential Chinese crackdown there.

Following the weak session today, Egypt’s government grain buyer GASC is back in the market (surprise surprise – hoping for a deal!) for another late August boat.  With the ongoing rationing of crop ideas in Russia, noting that many more private estimates are moving closer to the USDA’s 74 million tonnes (Mt) July estimate of Russia’s crop, prices will be closely watched.  Meanwhile, Ukraine’s wheat harvest continues to roll with government figures there pegging total harvest to date at 16.9Mt and barley up to 6Mt (slightly over two thirds complete across the two in aggregate).  Defying some expectations for an improvement after last week’s heat, US crop condition figures were out for row crops, showing corn national figures off 1% good/excellent to 57%, and beans unchanged at 54%.  This is still well below last year’s levels (and “normal”), and will continue to pressure many of the generic black box yield models down.

On a non-production note, more details are expected to be released this coming Thursday on the USDA’s next MFP (“Trump Payment”-  some had expected an update last Thursday, which was not forthcoming) which is expected to significantly help cash flow needs and should ease pressure to sell old crop grains in the US corn belt.  France is also back into the government assistance game, asking the EU to make early payments to the tune of €1 billion to French farmers amid the ongoing heatwave/drought.  There’s also been word that a number of French cooperatives intend to group together in their export activities in an attempt to retain market share amid the increasing presence of Black Sea grain in the market.  We’re not at all sure how this will help French wheat compete (unless they use the market share to pressure down domestic French prices towards levels that are more competitive internationally), but it does make for an interesting dynamic as post-harvest tenders approach.

Australia

Lachstock will be at the AGIC grains conference next week and happy to catch up with anyone attending.

Source: Lachstock Consulting

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