Markets

Daily Market Wire 24 March 2020

Lachstock Consulting, March 24, 2020

Most futures were firmer on Monday.

  • Chicago wheat May contract up US23.25¢/bu to 562.5¢;
  • Kansas wheat May contract up 20.5c to 489.5¢;
  • Minneapolis wheat May contract up 9.25c to 530.25¢;
  • MATIF wheat May contract up €5.25/t to €196.50/t;
  • Corn May contract down 0.25c/bu to 343.5¢;
  • Soybeans May contract up 21.5¢/bu to 884¢;
  • Winnipeg canola May contract up C$5.60/t to $467.50/t;
  • MATIF rapeseed May contract down €0.25 to €348.75/t;
  • Brent crude May contract up US$0.05 per barrel to $27.03;
  • Dow Jones index down 582 points to 18592;
  • AUD firmer at $0.5876:
  • CAD weaker at $1.4480;
  • EUR firmer at $1.0764

Market news

Optimism on the demand front amid global concerns about food availability with coronavirus quarantines helped wheat continue to rally sharply – Chicago ended up 22.5¢ to 561 3/4¢ (off 7 to start the night though), KC +20.5¢ to 489.5¢ (off five), Minny +9 1/4¢ to 530 1/4¢ (off five), and Matif +5.25 to 196.5€ on the earlier close. Corn gave up a cent and a half to 341.5¢ while beans were up 20.5¢ to 883¢ (Matif off a quarter euro to 348.75€, Winnipeg off forty cents to $467.1).  Crude oil has gradually firmed with ongoing value buying to $24.1 WTI / $27.7 Brent but the DOW dropped another 582 points after the US government failed to come to a consensus on an aid package. This despite the US Federal Reserve Bank basically announcing unlimited asset purchases to support values.  The AUD is slightly firmer to 58.9¢, the CAD $1.446, and the EUR $1.077.

A headline circulating overnight, about possible bans on export by Russia or Ukraine, was a red flag to the bulls. The headline was best taken with a grain of salt, though, as it was specific to some end products and was all about keeping local markets well stocked, protecting domestic consumers.  Fear of export bans has been a topic ever since COVID-19 began to spread globally. It’s now shifted towards new crop, the bulls worried or hoping for knee jerk reactions to stock pile consumables if the virus keeps expanding. The likelihood of such actions is doubtful given new crop harvest arriving soon, but it can’t be ruled out. Panic buying and stockpiling has a severe emotional factor at play.

Ethanol demand remains a problem for the corn markets in the US.  The combination of cheaper crude and weaker gasoline demand continues to weigh on ethanol markets. Quarantine is cutting travel and lower demand is causing ethanol plant operators to react by closing plants.  Corn cash markets saw basis slashed through last week, and there were more reports of “no bid” situations today.

Weekly export inspections data were released today. Though they were old sales, that grain was shipped the other week, the figures for corn were reasonably solid, 817,000t, and beans, 571,000t. Wheat exports, at 349,000t, were less positive.

South American logistics in the age of coronavirus are still scaring many, although so far port operations are continuing in both Brazil and Argentina without major hiccups, despite strike worries.  Internal logistics are also reportedly moving smoothly so far, but with lock downs expanding it remains a risk to watch.  Harvest is still pushing along in Brazil, estimates putting bean harvest about two thirds complete. That rate of harvest is roughly normal, although crop ideas are trending slightly lower as harvest advances through more weather stressed fields.  Though South America still will harvest a big crop, any indication of a smaller harvest is a sign of price optimism for oilseed markets.

Australia

Aussie markets kicked a fraction higher yesterday although volume was low. The firmer AUD into today, just under US0.59, is putting a little pressure on grains today.  Pressure is exacerbated by weaker night-session futures, partially offsetting the board rally in Chicago overnight.

Coronavirus uncertainty giving rise to talk of a spike in unemployment has nerves on edge.  Rain maps still look good for the east coast later this week, with projections solidly into the 20-30 mm range for most of central and northern NSW.

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