Markets

Daily Market Wire 26 March 2020

Lachstock Consulting, March 26, 2020

Rises of 2-3pc were common across agricultural commodities and indices.

  • Chicago wheat May contract up US18.5¢/bu to 580¢;
  • Kansas wheat May contract up 10.25c to 501¢;
  • Minneapolis wheat May contract up 4c to 539¢;
  • MATIF wheat May contract up €3/t to €197.75/t;
  • Corn May contract up 1.25c/bu to 348.5¢;
  • Soybeans May contract down 5.25¢/bu to 881.5¢;
  • Winnipeg canola May contract down $C1.90 to $465.60/t;
  • MATIF rapeseed May contract up €7 to €350/t;
  • Brent crude May contract up US$0.24 per barrel to $27.39;
  • Dow Jones index up 496 points to 21201;
  • AUD weaker at $0.5880:
  • CAD weaker at $1.4258;
  • EUR firmer at $1.0910

Market news

Another step up on Chicago, closing +18.5¢ to 580¢, KC +10 1/4¢ to 501¢ and Matif +3€ to 197.75€ after Algeria bought 240,000t at prices sharply higher than previous tender, boosted in part by the logistical mess in France.  Corn picked up a cent and a quarter to 348.5¢ and Winnipeg dropped a buck ninety to $465.6 (Matif +7€ to 350€).  Macro markets continued slightly higher with the DOW ending up 495 points.

What a period it has been – first we saw global markets shrug off the virus problems in China, only to fall off a cliff as it spread around the world.  Now part of the world is moving past the hump, but it’s anyone’s guess as to how the remainder will fare in coming days/weeks and whether or not there will be a “second round” coming.

Ag markets at least have finally started to see some real ag-specific activity, with supply availability and demand spikes stepping in and helping disconnect some from the macro wave.  The question now is how that will play out into coming months with new crops arriving and row crop plantings hitting.  There are more than a few out there who are turning sharply bullish as the market rallies, hoping that the problems from corona will continue to manifest themselves in a firming ag demand side.  On the flip side, we do have new supplies coming online soon, assuming there are no blanket export bans.

Back on a short-term basis though, the world’s attempt to stimulate the economy away from the coronavirus crash is continuing, although the US Fiscal Stimulus Bill still has not passed.  Ongoing disputes between the Republicans and Democrats over various line items have continued to delay any passing vote although they apparently expect to reach an agreement tonight, today in Australia.

Global logistics are still sorting out the problems and delays, including force majeure situations, with port closures in India yesterday throwing the latest major wrench in the works.

Russia was also talking about locking down the country, with some exceptions as has been the case globally, in an attempt to stop the virus.  In the meantime, some “optimism” continues to be thrown around by certain parties. Parts of Brazil. where lockdowns have been threatening soybean logistics, are starting to open back up again.

The situation is far from over though, and markets continue to play it by ear as any easing in restrictions can just as easily switch back on again if cases surge.

There was another export sales flash from the US, two boats of corn, with some speculation that it was further Chinese buying. Cash corn premiums were up slightly, earlier in the US though not much reportedly traded.

New crop acreage ideas continue to be refigured, with some starting to cut 3-4 million acres from corn towards beans and minor crops as a consequence of the collapse in ethanol demand. Others remain more of the opinion that at these levels beans will still be less attractive than corn.  Ethanol production figures were published for last week, down about 3pc from prior, and confirming the rapid demand destruction that we’ve seen reflected in cash bids and basis levels.

With planting rapidly approaching in the central corn belt, a factor threaten corn acres is ongoing worry about fertilizer availability.  The view is becoming decidedly more widespread as the coronavirus situation expands.  Weather outlooks are mostly positive for planting at least.

Note: Lachstock offices have internal meetings today and tomorrow.  Calls and emails will be attended, but there may be some delays.

 

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