Markets

Daily Market Wire 27 May 2020

Lachstock Consulting, May 27, 2020

Wheat mixed, oilseeds firmer. US dollar weaker.

  • Chicago wheat July contract down US2c/bu to 506.75;
  • Kansas wheat July contract up 2.25c to 447.25c;
  • Minneapolis wheat July contract up 4.75c to 517.75c;
  • MATIF wheat September contract down €1.50 to €187.75/t;
  • Corn July contract up 1c/bu to 319¢;
  • Soybeans July contract up 13.75¢/bu to 847¢;
  • Winnipeg canola July contract up $C4.60 to $464.80/t;
  • MATIF rapeseed August contract up €1.25/t to €375/t;
  • Brent crude July contract up US$0.64 per barrel to $36.17;
  • Dow Jones index up 530 points to 24995;
  • AUD firmer at $0.6642;
  • CAD firmer at $1.3791;
  • EUR firmer at $1.0956.

Markets

In the wheat pits Chicago settled down -2 usc/bu closing at 506.75usc/bu, Kansas was 2.75 usc/bu higher to settle at 447.25usc/bu, while Minni rallied 4.75 usc/bu to go out at 517.75usc/bu. Corn gained 1 usc/bu to go out at 319usc/bu while beans were up 13.75 usc/bu to settle at 847usc/bu WCE canola rallied 4.6 CAD/mt closing at 464.8CAD/mt with Matif rapeseed finishing higher by 1.25 €/mt.

Markets were mixed post the Memorial Day long weekend after showing some early signs of life. Due to the holiday the crop progress and condition reports were delayed a day. They show the US farmer has now put 88pc of the corn crop in the ground, 65pc of the beans. Texas wheat yesterday was reported 27pc harvested. Cumulative rainfall over five days in Kansas was above 150mm in some areas, which should still be adding value. Hard to say if the 30-40mm in Texas will cause any damage.

The driest parts of Russia have seen over 50mm in the same period which may be too little too late. This pattern also stretched into the spring wheat zones which will only add to crop prospects.

Today marks the significant ruling in Canada which will determine if Huawei CFO, Meng Wanzhou will continue to be extradited and face criminal charges. The potential fallout is unclear – many suggesting that any chance of China/Canada kiss and make up will live and die by this ruling. In what can only be described as an odd move Meng posed with family and friends on the steps of the British Columbia Supreme Court building in Vancouver giving the thumbs up, clearly pretty confident of the pending result. As pointed out by a respected market commentator in Canada, a win for Meng doesn’t guarantee a win for Canada in its ongoing trade battle with the Chinese.

China industrial sector recovery

The Chinese National Bureau of Statistics reported the Chinese industrial sector is close to full recovery post the COVID-19 shutdowns. The report looks at the year-on-year growth of the total value added of industrial enterprises, in totality and by sector. Key barometers such as production of sedan cars is only down 2pc from April last year, mobile phone production is still lagging, down 15.2pc year-on-year while, most importantly to Australia, steel product output was quoted as 3.6pc higher than a year ago. When combined with cement output showing a 3.8pc increase it’s a decent indication that the infrastructure spend is real and further support to both Australian iron ore and the AUD.

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Australia

Australian new crop markets yesterday were a fraction softer on the bid side while old crop remained largely offer side as it has been for some time now. Trade activity saw ASX Jan 21 wheat trade lower at $303/t and finished up settling at $301/t. January 21 barley was unchanged at $232/mt. Old crop liquidity saw smalls trade on Clear Grain Exchange on wheat and barley through Victoria at track values around $345/t for wheat, and around $240/t track for barley. Expect to see Aussie grain prices a fraction softer this morning on the back of strengthened AUD. More widespread rain continues to hit parts of WA in the past 24 hours with southern parts receiving a further 5-10mm. With reports of damaging, high winds over the weekend through parts of WA it won’t be known until later next week how much replanting or the extent of plant damage.

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