Markets

Daily Market Wire 25 January 2021

Lachstock Consulting, January 25, 2021

Beans and corn fell almost 5pc on Friday. The US dollar index strengthened to 90.2.

Meat markets were of course very happy with the sell off, with hogs, fats, and feeders all pushing new highs for the year. Fats and feeders both get expanded limits for Monday after the large moves.

  • Chicago wheat March contract down US26.25 cents per bushel to 634.5c;
  • Kansas wheat March contract down 22.5c/bu to 613.25c;
  • Minneapolis wheat March contract down 22.75c/bu to 612.5c;
  • MATIF wheat March contract down €8.50/t to €223.25/t;
  • Corn March contract down 23.75c/bu to 500.5c;
  • Soybeans March contract down 58.5c/bu to 1311.75c;
  • Winnipeg canola March contract down C$7.40/t to $649.60;
  • MATIF rapeseed February contract down €1.50/t to €432.25;
  • Brent crude March down US$0.69 per barrel to $55.41;
  • Dow Jones index down 179 points to  30,997 points;
  • AUD weaker at $0.772;
  • CAD weaker at $1.272;
  • EUR weaker at $1.217

International

When most of the spec market is already long it often doesn’t take much to spook a panic selling wave. Friday’s trading was hard proof of that with sell pressure throughout the day as large volumes exited length. No, there has not been anything massively fundamental that changed, but the fundamentals of future supply and demand were certainly one sided.  After Friday’s moves the question bothering the market is where we’ll go from here. Have we triggered enough technical levels to see new selling pressure into Monday?  Not many are interested in catching a falling knife, but at the same time there has been more talk of physical demand on the edges and speculation that basis will need to firm significantly in the US interior after the crash.

Markets are still waiting to see what will come of the new stimulus package floated by the new US President, and when it’ll happen.

Even as vaccines are rolling out around the world, concerns continue to grow around the new variants. Lockdowns in Europe are looking more likely to drag into spring, with the German government suggesting that theirs will be in play until at least March.

Few are expecting any significant changes to policy when the Open Market Committee of the US Federal Reserve (FOMC) board meets this week. The US dollar index is holding just over 90. FOMC will provide its updated economic outlook as we look towards new stimulus and possible re-openings with the vaccinations underway.

Flash export sales on Friday had two boats of old crop beans and two boats of milo/sorghum (one old, one new) to China

Regular export sales reports were delayed a day by the holiday on Monday there; showing good corn (1.4Mt) and beans (1.8Mt) figures.  Wheat was a little disappointing at 330,000t, but we also saw 294,000t of new milo business.  This week’s sales, despite the delay, are expected to be fairly large given the big flashes.  There was also a large bite of new crop bean sales (830,000t, 319,000t to China and 452,000t unknown) reported

South American crop optimism continues to grow after the recent rains in Argentina, and there’s more on the maps for this week as we move through corn pollination and bean flowering.

Two week maps are skewing very dry again, but crops are expected to be in much better condition by then after the recent storms

EIA ethanol production was up 4,000 bpd to 945,000, although stocks were also down slightly to 23.6 million barrels.

Friday’s Commitment of Traders figures from the CFTC only reflect positions as of Jan 19th. This coming Friday’s report will be the one including last Friday’s crash.

Saudi Arabia’s SAGO barley tender should see results out to start this week. As always it’s optional origin, but the question will be who did the business and at what level, given short timing to shipment, Australian logistical tightness, and the overall tight barley markets in the EU/BSEA.

Black Sea weather maps are still abnormally warm for this coming week. There are no concerns for the crop right now, but of course there are worries about reduced snow cover if there’s a new cold snap in the coming weeks

GASC was not back to the wheat markets last week, but after Friday’s sell off both in the US, and EU markets, many are thinking they will be soon.

Australia

Local markets looking at what may well be a choppy day of trading today with pressure from the board collapse and most going on holiday tomorrow.

Origination programs remain in gear as execution ticks forward. Road freight remains fairly tight and some premiums being paid for direct-to-port movements where exporters are short covering.

Recently planted late sorghum crops are off to a great start across the Downs, even as bid depth picks up from the trade

Next Tuesday 2 February will be the first RBA meeting of the year.We’ll see if they announce any more quantitative easing

BOM maps have really filled in for southern SA/VIC this week. Wide spreads 30+ mm accumulation forecast across most of Victoria.

Lachstock offices will be closed next Tuesday for Australia Day, but US markets will be open for full trading.  Happy Australia Day from all of us here.
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