Markets

Daily Market Wire 26 July 2019

Lachstock Consulting, July 26, 2019
The wheat market firmed a fraction in opposition to the rest of the pit, with hot temperatures across Europe continuing to dominate news.
  • Chicago wheat September contract up 2.5 cents per bushel to 500.25
  • Kansas wheat September contract down 1.75c to 437.75c,
  • Minneapolis wheat September contract up 0.75c to 523c,
  • MATIF wheat September contract up €0.25 per tonne to €175.50;
  • Corn September contract down 5.5c to 418.5;
  • Soybeans August contract down 8.5c to 882.5c;
  • Winnipeg canola November contract down C$1.30/t to $448.90;
  • MATIF rapeseed August contract up €3.25 to €380;
  • Brent crude September contract up $0.21 per barrel to $63.39;
  • Dow Jones down 128.99 points to 27,140.98;
  • AUD weakened to US$0.6950c;
  • CAD weakened to $1.316;
  • EUR steady at $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 2.5¢ to 500.25¢, KC -1.75¢ to 437.75¢, Minny +0.75¢ to 523¢, and Matif was up 0.55€ to 175.5€ on the earlier close. Corn dropped another 5.5¢ in the spot, with Dec down 3.25 while beans were down 8.5 to 882.5¢ (Winnipeg lost $1.30 to $448.90, and Matif popped 3.25€ in the Aug spot contract to finish at 380€, with the rest of the curve unchanged).  Crude oil finished unchanged with WTI at $55.9.  The DOW traded down 160pts and the AUD slid further to 69.5¢.  The CAD steady to $1.316, and the EUR also steady at $1.114 with rates being left unchanged.  There was some speculation from the text that a rate cut, which would be the first since 2016, was discussed.  This also initially sent equities markets higher, before European Central Bank (ECB) President Mario Draghi clarified in a press conference that there was no discussion of a rate cut, allowing the Euro to correct and equity markets to fall.  The potential for stimulus by the ECB had been thought to further encourage the US Fed to do the same, hence the initial bullish enthusiasm.

 

The wheat market firmed a fraction in opposition to the rest of the pit, with hot temperatures across Europe continuing to dominate news.  Temperatures hit record highs in Europe, which has now reached the point where water restrictions are coming into place in Spain and the Netherlands in particular.  The International Grains Council also forecast cuts for global wheat production by 6 million tonnes (Mt) to 763Mt.  Russian production was reduced to 75.7Mt from 79.5Mt, Europe lost 2.5Mt and Canada 1.6Mt.  The eagerly anticipated “details” surrounding the US MFP were released in part today.  The USDA announced a US$15-$150/ac payment, with the first tranche of a total of $16 billion in payments to begin in August.  There wasn’t enough in the release to give the market any real direction.
US grain export sales were better than in recent weeks, Wheat 659,700t vs expectations of a 200-400,000t number.  Sales were led by 143,000t to Japan.  Corn came in at 507,800t and beans 559,300t.  All in all, a day that had the potential to provide a lot, ended up being a lot more of the same with uncertainty continuing to surround the market. In oilseeds, the sting was taken out by the lack of exciting news in the MFP press release.  Whilst canola continues lower as weather continues to improve in Canada and the market lacks any real fresh news.  In Europe, rapeseed markets again bounced in the front end due to the ongoing weather problems.  Oil traders are keeping an eye on the poor start to the Indian monsoon.

Australia

In Australia, markets responded to talk about WA pricing 280kmt of Philippine business, popping $5, albeit on light volumes.  The Australian market has suffered another recent bout of depression with old crop inverses collapsing in the absence of any new export business.  However, with problems afoot in the Black Sea and prices getting to Asian export levels, market sentiment may be ready for a turn around.  Light rain only remains forecast for southern regions of the Australia cropping belt.

Source: Lachstock Consulting

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