Markets

Daily Market Wire 24 April 2020

Lachstock Consulting, April 24, 2020

Markets were mixed.

  • Chicago wheat May contract up US4¢/bu to 547¢;
  • Kansas wheat May contract down 4.5c to 485.5¢;
  • Minneapolis wheat May contract down 1.75c to 505¢;
  • MATIF wheat May contract down €4 to €199.25;
  • Corn May contract up 1.75c/bu to 319.25¢;
  • Soybeans May contract up 4.5¢/bu to 839.25¢;
  • Winnipeg canola May contract up $C3.30 to $457/t;
  • MATIF rapeseed May contract up €4/t to €370.25;
  • Brent crude June contract up US$0.96 per barrel to $21.33
  • Dow Jones index up 39 points to 23515;
  • AUD firmer at $0.6373;
  • CAD firmer at $1.4070;
  • EUR weaker at $1.0778.

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Markets

Markets were mixed overnight. Chicago was up 4¢ to 547¢ (+2.5¢ N), KC -4.5¢ to 485.5¢, Minny -1 3/4¢ to 505¢, and Matif down four euros to 199 1/4€.  Corn was up 1 3/4¢ to 319 1/4¢ while beans picked up 4.5¢ to 839 1/4¢ (Matif up four euros, Winnipeg up $3.3).    The AUD continues to gradually firm to 63.8¢, the CAD $1.405, and the EUR $1.078.

Coronavirus and the associated economic worries continue to weigh on the macro picture, with new figures out of NYC suggesting that potentially 1 in 5 individuals there has had the virus (with most asymptomatic).

May futures delivery is approaching and futures price quotes will roll to a later month from Monday.

Markets remain excited about the potential for Chinese government restocking, but had a hard time holding up with little indication that anything yet is happening.  If the rumoured figures are right, it’s a significant step towards offsetting lost ethanol-based US corn demand and in fulfilling Chinese trade deal commitments. The question remains when, and if, they will start buying.

Saudi Arabia’s SAGO is back in the market for wheat and bringing some hopes that we might see more HRW business in the mix given timing and old crop EU tightness. Ramadan began today.  Export weekly sales figures were released, Wheat was 400,000t combined current crop and new crop, corn was 727,000t, and beans were 345,000t. Slightly disappointing volumes, but no real surprises on the mix of sales for grains, mostly regular trade activity, although another 9,700t of US pork sales to China were confirmed.  A flash confirmed yesterday’s rumour on additional soybeans, 272,000t were sold to China.

Egypt started buying locally harvested wheat from farmers into government procurement.  Normally this would bring a brief slowdown in GASC purchases, but recent tenders and purchase intentions have some expecting continued import purchases during harvest.

Morocco was calling their grain crops down nearly 50pc y-o-y, wheat production reduced to 2.4Mt caused by drought and would open the tariff rate quota (TRQ) provisions on imports.

Russian crop ideas are also continuing to come down with the recent weather, though there is some improvement to the extended weather maps. Further reductions in private estimates suggests there would be more to come.

What’s the next step for grain markets?  We’re into weather windows. Black Sea weather worries remain. The fundamental destruction from coronavirus is well known, though ideas and estimates will evolve through coming weeks with the dynamic situation. We’re back to Chinese demand rumours again. It’s been hard to pull a bull story off with the coronavirus situation wreaking global havoc, but if the Chinese demand eventuates and weather problems continue we may well be looking at one.  The problem is finding the confidence in both situations to make that call and markets will closely be appraising both situations into coming weeks.

Wishing a safe and healthy Anzac Day to all, from the staff at Lachstock.

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Australia

Aussie markets are mostly unchanged to end the week – quiet trade into the Anzac Day weekend and little demand.  Weather maps continue to gradually improve with more chances of 20+ mm across the majority of Victoria and southern NSW in the last runs – just about perfect conditions for crop establishment if it comes.

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