Markets

Daily Market Wire 24 February 2020

Lachstock Consulting, February 24, 2020

Futures settled lower on Friday.

  • Chicago wheat March contract down 9¢/bu to 551¢;
  • Kansas wheat March contract down 5.25¢/bu to 468.5¢;
  • Minneapolis wheat March contract down 3.5¢ to 526¢;
  • MATIF wheat March contract down €1/t to €195/t;
  • Corn March contract down 1.5¢/bu to 377¢;
  • Soybeans March contract down 2.25¢/bu to 890.5¢;
  • Winnipeg canola March contract down C$1/t C$458.30/t;
  • MATIF rapeseed May contract down €1.25/t to €400/t;
  • Brent crude April contract down US$0.58 per barrel to $58.50;
  • Dow Jones index down 228 points to 28998;
  • AUD weaker at $0.6590;
  • CAD unchanged at $1.325;
  • EUR firmer at $1.083.

Market news

Wheat gave up the ghost on Friday in the US, with Chicago closing down nine cents to 551¢, KC -5 1/4¢ to 468.5¢, Minny -3.5¢ to 526¢, and Matif -1€ to 195€ on the earlier close.  Corn dropped a cent and a half to 377¢, and beans were down 2 1/4¢ to 890.5¢ (Matif -1.25€, Winnipeg -$1 to 458.3).  March delivery is rapidly approaching – first notice day on Chicago come Friday (US time).  Crude oil also eased off again on ongoing economic contagion worries – WTI hit $53.4, Brent $58.5, and the DOW gave up 228 points.  The AUD’s continued to fall sharply amidst the Chinese economic worries, hitting 65.9¢ currently, the CAD $1.325, and the EUR $1.083.

Time to see how macro markets react this week, with coronavirus cases now in rapid expansion mode in Italy, South Korea, and Iran and concerns emerging about non-reported cases elsewhere. Updated Chinese manufacturing data is due out later today, which may provide some better insight into the economic impact the extended quarantine/movement restrictions.  With cases ongoing, work restrictions have kept rolling forward. The end of last week saw Hubei (Wuhan) area factories told not to resume activities before March 11.  More domestic Chinese government pork reserves are being sold off, the third round being announced Friday and indications that they’ll continue to sell more in impacted areas in an effort to control prices.

Trade activity ended the week relatively quietly, other than the futures price action.

The weekly Commitment of Traders report from the Commodity Futures Trading Commission (CFTC) showed further wheat length and fewer shorts for funds in both Chicago and KC. The report is based on data from February 18, that is, post blow up, pre collapse.

No word on Saudi Arabia SAGO wheat tender result yet, but they should come out early this week, Monday there.

Markets are looking increasingly towards new season Black Sea and EU crops, with continued optimism about Russian wheat outlooks in the currently mild weather. Some of the first new crop boats are starting to trade to destination. It was reported that a boat was sold to Indonesia late last week, following previously reported new crop barley sales to China.  No real surprise on the values there, but a reminder about the coming global cash inverse with new season harvest.

The US weekly export sales report was slightly better than expected on corn, 1.25Mt, but weaker than hoped on both wheat and beans.  There’s no evidence yet of reported sorghum business to China, and still not flashes, though that is likely yet to be booked back from global offices to the US.

Australia

Further rain in eastern Australia has pushed > 100 mm in spots of central/northern NSW, further boosting soil moisture there and continuing to spur new crop optimism.  We’re still a long way from any harvest bearing in mind hard to cut what hasn’t yet been planted, but the outlooks are far, far better than they were even a month ago.  Domestic markets are still heavier on the ask than the bid, but still slowly picking up some liquidity.

 

 

 

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