Markets

Daily Market Wire 25 July 2019

Lachstock Consulting, July 25, 2019

Wheat futures lifted overnight at all exchanged.  Coarse grains and oilseeds prices were mixed..

  • Chicago wheat September contract up 10.5 cents per bushel to 497.75
  • Kansas wheat September contract up 8c to 439.5c,
  • Minneapolis wheat September contract up 1.75c to 522.25c,
  • MATIF wheat September contract up €0.75 per tonne to €175.25;
  • Corn September contract down 1.5c to 424;
  • Soybeans August contract up 5.25c to 891c;
  • Winnipeg canola November contract up C$2.70/t to $450.20;
  • MATIF rapeseed August contract unchanged €376.75;
  • Brent crude September contract down $0.65 per barrel to $63.18;
  • Dow Jones down 79.22 points to 27,269.97;
  • AUD weakened to US$0.6977c;
  • CAD weakened to $1.3142;
  • EUR weakened to $1.114

Market news

Wheat markets rallied overnight, with continued speculation about the Black Sea region crops and ideas of Brazilian demand – Chicago wheat rallied 10.5¢ to 497.75¢, KC +8¢ to 439.5¢, Minny +1.75¢ to 522 ¼¢, and Matif was up 0.75€ to 175 ¼€ on the earlier close.  Corn dropped another cent and a half to 424¢ while beans were up 5 ¼¢ to 891¢ (Winnipeg picked up $2.7 to $450.2, and Matif unch at 376.75€).  Crude oil broke back, despite drops in crude production and inventories, both attributed to poor weather the other week and expected to rebound, with WTI off 89¢ to $55.9, and Brent off 65¢ to $63.2/barrel, while the DOW was off 79 points.  The AUD has continued to trade down since yesterday, off to 69.7¢ as of writing, the CAD steady to $1.314, and the EUR slightly weaker to $1.114.  The GBP has strengthened almost half a cent from yesterday, although Brexit concerns remain.

Rumours about Chinese “goodwill” purchases of US beans have apparently actually come through (we admit to being surprised), with news reports overnight that the government will allow 2-3 million tonnes of private purchases of US beans by five companies, with indications that this could be higher if upcoming trade talks go well.  Although these overtures have been taken as slightly bullish by the market we note that these tons, by themselves, are still well within the sales levels “needed” to fill the USDA’s export estimates.  Interestingly, there were also some 100,000t of old crop export sales that were flashed as cancelled, to unknown destinations but likely intended for China.

Talk of production cuts in Brazil coincided with reports that there had been HRW sold to Brazil the other day.  The question there remains Argentine supply and selling price on old crop, but the bulls are taking the story as indicative of higher ultimate demand back to the HRW balance sheet.  They’re hoping to see some confirmation of such sales in export sales reports tomorrow, noting that this will depend on sale timing.  Meanwhile, crop tour results have remained positive on the spring wheat tour in North Dakota today, with field reports noted as variable but yields still calculating above last year’s levels. They missed the yield dramatically in last year’s tour.    Hot weather over in Europe is also continuing to fuel concerns, and localised fires, over the summer crops there, and we note that there’s been yet another ASF incident reported in Bulgaria.    Also, on the oilseeds side there, the EU has proposed anti-subsidy duties of 8-18 per cent on Indonesian biodiesel imports.

Australia

Meanwhile, new crop WA wheat has been getting competitive in export markets – with sales to the Philippines grabbing attention globally.  We do also have some chances for another set of showers to move into WA later next week, which will be well received by the crops there.  Ongoing models showing 5-10 mm across southern NSW have also fleshed out a little, giving some chance for precipitation further north – fingers crossed that this eventuates.

Source: Lachstock Consulting

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