Markets

Daily Market Wire 28 January 2025

Lachstock Consulting January 28, 2025

The day ahead

Temperatures in Argentina, forecast over the next week approaching 40°C, are about 6°C above normal for this time of year. Source NOAA via Lachstock

Weather – Dry and warm weather is still a concern for Argentina. Scattered showers are forecast for the next 7 days through northern parts accompanied by warmer-than-average temperatures.

The US Great Plains and Midwest recently received freezing temps which likely will lead to at least some winterkill.

Markets – Markets were off across the board on Monday with Argentinian grain export tax cuts likely to result in an increase in the export of soybean products, corn and wheat from the country in the short-term, weighing on global futures.

Australian day ahead – Expect canola bids to be lower to begin the week on the back of a lower Matif and veg oil complex. Wheat is unlikely to fare any better with futures down across the board. Little change to the Aussie dollar currently 62.9c.

Offshore

Chinese New Year this year falls on January 29. Celebrations last up to 16 days for what is the most important holiday in China, with generally very little trade over this period. 

Ukraine Agriculture Ministry reported grain exports totalled 24.7 million tonnes (Mt) this season ytd from July 1, 2024. Wheat export ytd is 10.6Mt, up 21pc y-o-y, barley 2Mt, up 60pc and corn 11.7Mt, down 2pc. January exports so far were 2.5Mt, 30pc less than the same time last year. 

US live and feeder cattle futures reached all times highs as cash prices and tight supplies pushed futures higher. Consumer demand has been strong with low unemployment and strong equity markets resulting in more people “splurging” on beef.  

The effect of Argentinian lower grain export taxes has been felt in Chicago with soybean futures posting losses on both Friday and Monday. Wheat followed suit. Tax cuts are likely to trigger increased shipments from Argentina. It is the largest export in the world of soybean oil and meal and number three corn exporter. 

Reports are suggesting as much as 15pc of the winter wheat crop through parts of the US Plains and Midwest has been killed by freezing temperatures. Temperatures reached minus 21 degrees Celsius last week. Inadequate snow cover would raise winterkill potential. The true extent of the damage can only be determined in spring, post dormancy. 

Australia

Western Australian canola bids ended the week bid around $850. Wheat was down around A$3-5 on Friday with bids around $363, with barley still well supported around $336.

Canola finished the week in the eastern states bid around $788 off around $12, wheat was down slightly around $344 with barley bids between $296-$325.  

Australian Q4 CPI tomorrow with analysts expecting mean inflation at 0.5 percent q/q—the lowest since Q2 2021—bringing annual inflation to 3.2pc y/y, below the RBA’s 3.4pc forecast. If realized, this could reinforce the RBA’s confidence that inflation is easing and support a rate cut in February. 

There has been little change to the delivered Darling Downs markets to begin the year with barley steady around $315 and wheat $332. Sorghum bids are +$5 over the last couple of weeks having risen from $317 to around $322.  

Pulses remain well bid with tight supply after poor growing seasons for fabas and lupins through SA and Vic. Faba beans are around $645 deld Geelong for Mar-May delivery. Lupins are $570-80 ex farm in SNSW, the only place in the east of the country with any supply remaining.

SFW1 wheat price delivered Darling Downs, January 2021 to January 2025. $A per tonne. Click expand

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