Markets

Daily Market Wire 27 July 2020

Lachstock Consulting, July 27, 2020

Wheat futures closed markedly higher on Friday.

  • Chicago wheat September contract up US10c/bu to 539.5c
  • Kansas wheat September contract up 8.25c/bu to 449.5c;
  • Minneapolis wheat September contract up 5.25c/bu to 515.25c;
  • Corn September contract down 1.75c/bu to 326.25;
  • Soybeans August contract down 1.5c/bu to 904.75;
  • Winnipeg canola November contract up C$2.40/t to $487.70;
  • MATIF wheat September contract up €2.25/t to €185.75;
  • MATIF rapeseed August contract down €2.25/t to €377.50;
  • Brent crude September contract up US$0.03 per barrel to $43.34;
  • Dow Jones index down 182 points to 26,470;
  • AUD weaker at $0.7096;
  • CAD weaker at $1.3427;
  • EUR weaker at $1.1652.

Macro factors

On the macro front, we are now 100 days away from the November US elections.  Latest poll results continue to suggest a swing away from incumbent president Trump towards Biden. This year may prove a little different from the norm, with the larger push for mail-in ballots because of COVID, and comparatively increased urgency to become the “candidate of choice” well prior to election day.  The elections are always going to be a wild card, but markets will be watching the odds closely and following the proposed policies/associated economic impacts.  Many are cautious about the economic impacts of a Biden victory, given the leftwards swing of the Democractic party.  It’s worth remembering that we’ve also had nearly four years of volatility from the other side.
Coronavirus continues, US shutdowns are furthering economic worries, and Chinese politics remain a mess with most of the world.  Comments by the Australian Government about Chinese claims in the South China Sea have raised the spectre of further economic retaliation by China.

Rain forecast for US cornbelt

US weather outlooks are not friendly to grain markets.  Most of the southern cornbelt is set to pick up 50-75 millimetres or more of rain this week, and cooler temperatures are coming.  Conditions figures out tomorrow are mostly expected to come in near unchanged or slightly higher, and with current weather maps, many are extrapolating that into next week already.  There was another set of flashed sales on Friday too, but the 256,000t of soybeans was mostly in line with recent chatter and 133,000t of soybean meal to The Philippines was no major surprise either.  On the wheat side, weekend rains in Argentina have helped further take the edge off crop worries, and the Russian harvest continues to push along, with some relative improvements noted.  Slow farmer selling has some speculating that, despite some improvements in figures, there may be a further drop, but so far most market ideas have steadied after the past few weeks of volatility.

Australia

Markets through South Australia and Victoria were a touch firmer on Friday, helped by chatter about the dryness building into extended forecasts, and weekend model runs have done nothing to improve this.  Last week’s Thursday Bureau of Meteorology climate outlooks are still for significantly wetter-than-normal conditions in the eastern wheatbelt in August and September.
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