Markets

Daily Market Wire 27 January 2021

Lachstock Consulting, January 27, 2021

North American markets rose another 2 per cent

Wheat saw flow-over support translate into a 2 ½ per cent rally on CBOT, which almost always gets most of the gain from row crop strengths before the other boards. The size of the wheat rallies on the KC and Minneapolis boards was around 2pc. In livestock markets, feeders took it in the teeth with the rally on corn, down some 2pc to give up most of the rally on Friday, although fats and hogs have held stronger after the tight pork stocks report.

  • Chicago wheat March contract up US16.75 cents per bushel to 665.25c;
  • Kansas wheat March contract up 13.75c/bu to 641c;
  • Minneapolis wheat March contract up 12c/bu to 638c;
  • MATIF wheat March contract up €3.25/t to €229.75/t;
  • Corn March contract up 20.75c/bu to 532.25c;
  • Soybeans March contract up 26.75c/bu to 1370.25c;
  • Winnipeg canola March contract up C$17.50/t to $693.20;
  • MATIF rapeseed February contract up €1.50/t to €438.50;
  • Brent crude March up US$0.03 per barrel to $55.91;
  • Dow Jones index down 22 points to  30,938 points;
  • AUD firmer at $0.775;
  • CAD firmer at $1.269;
  • EUR firmer at $1.216

International

Corn’s blown back up to pre sell-off levels building on yesterday’s bounce, with excitement across the market after 1.36 million tonnes of old crop corn sold to China was flash reported. Two more boats were reported but destination is yet unknown.  There had been rumours of more Chinese buying last week and the sales flashes on Thursday to unknown, but the size of the flash was a major surprise.  Bulls are now talking up the demand story again and hoping that strong purchase interest in domestic reserve sales there is an indicator of more yet to come.

CBOT day limit margins will increase tonight on row crops following recent market moves.

The “new” US stimulus bill keeps getting kicked down the road, with comments from politicians suggesting that they are aiming for early/mid-March at the best.

In the meantime, vaccine distributions are continuing around the world, but there are more concerns about supply availability. Germany suggested it may restrict exports of vaccines if  local rollout targets are not met.

Regular export inspections from the other day had corn at 1.4 million tonnes, beans 2Mt, and wheat at 524,000t and three boats of milo/sorghum to China.

Talk about a “new” lower corn carryout in the US is doing the rounds after the recent China sales, with some of the demand optimists pushing talk that we might approach the billion bushel mark. It’s certainly not there yet, but easy to pencil if you were generous with export and feed figures.  Next year’s lower expected corn acres would add further fuel to the fire.

Saudi Arabia’s SAGO barley tender results out late Monday had sales in the ~$277/t Gulf / $278-9 Red range.  Excluding the one clear Russian boat it’s priced very well to execute ex-Aussie, if someone has the slots open to do so.

Russia’s wheat tax has formally been increased for March onwards after the law was signed by the government on Monday, taking the tax from €25/t to €50/t.  No surprise to the market, with the discussion now about whether there’s another tax change to come and how much/when farmers will sell. Cash markets there are reportedly very quiet but stable, with little sales interest amidst the political changes and values hard to define given the low trade activity

Brazilian soybean harvest continues to peck along slowly, with some fairly disappointing yield talking coming in, even as market crop estimates have been trending upwards.  It’s still early days for harvest, but the coming weeks will see a lot of attention to field results coming off.

Winter wheat conditions in the southern plains of the US are off to a mediocre start for the year, with Kansas figures the other day at 43% good-to-excellent rating.  Too early to make any large yield calls, but it’s supporting the continued concerns.

Algeria’s new OAIC tender offers are due tonight, Wednesday.

Argentine weather maps remain fairly dry into next week, with good moisture this week boosting optimism but models still holding a dry bias into Valentine’s Day.

Australia

Domestic markets were very quiet yesterday with the holiday. Welcome back all.

Plenty of speculation going around in barley market given Viterra/Glencore’s sales to Saudi

Weather maps still set to bring some more moisture in at the end of the week across SA – hopefully helping to tamp down some of the fires.

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