Markets

Daily Market Wire 28 May 2020

Lachstock Consulting, May 28, 2020

Mixed, small moves occurred in grains and oilseeds markets. Australian dollar weakened.

  • 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 €1.25 to €186.50/t;
  • Corn July contract up 1.5c/bu to 320.5¢;
  • Soybeans July contract up 1.5¢/bu to 848.5¢;
  • Winnipeg canola July contract down $C1.30 to $463.50/t;
  • MATIF rapeseed August contract down €0.50/t to €374.50/t;
  • Brent crude July contract down US$1.43 per barrel to $34.74;
  • Dow Jones index up 553 points to 25548;
  • AUD weaker at $0.6622;
  • CAD firmer at $1.3759;
  • EUR firmer at $1.1011.

Markets

In the wheat pits Chicago settled down -2.25 usc/bu closing at 504.5usc/bu, Kansas was 4.5 usc/bu higher to settle at 451.75usc/bu, while Minni softened -4.5 usc/bu to go out at 513.25usc/bu. Corn gained 1.5 usc/bu to go out at 320.5usc/bu while Beans were up 1.5 usc/bu to settle at 848.5usc/bu WCE Canola softened -1.3 CAD/mt closing at 463.5CAD/mt with Matif Canola finishing lower by -0.5 Eur/mt. In outside markets the Dow Jones gained 529.95 points, Crude was down -1.54 bbl the Aussie was -0.0031 points lower to settle at 0.66218, the CAD softened -0.0024 while the EUR gained 0.0027.

The big news in agricultural markets overnight was oddly about a phone company. The Canada’s Supreme Court ruled extradition proceedings against Meng Wanzhou, the chief financial officer for phone company Huawei should proceed. This has been ongoing for 18 months and has been cited as the major reason China has essentially banned Canadian canola. It’s hard to see China being comfortable with this ruling and, given there is a genuine chance that Meng may end up eventually being extradited to the US, this forms yet another issue of contention between the two superpowers. While this decision was being handed down the Trump administration said it could no longer certify Hong Kong’s political autonomy from China. This is a big deal as it has far reaching potential ramifications, not least of which is a raft of sanctions and trade restrictions. Given the dominance of Hong Kong in financial markets it will be interesting to see what the foreign (western) financial institutions do with their current presence in Hong Kong.

It was a relatively quiet night in futures markets. It’s virtually impossible to do a morning market wire without mentioning something about China and today is no different. China added further support to their recent theme of wanting to reduce coal exports – interesting timing given they are about to commence the so-called two sessions meeting which outlines China’s financial goals for the coming years. As per the initial report sent by the Premier of China, they have decided not to release a growth target for 2020, instead preferring to focus on 20/21, hoping to average out the impacts of the COVID lock down. Interestingly, in the same document China has committed to adhere to the Phase 1 trade deal with the US. Given the growing tension it seems at odds to commit to purchase a raft of US goods. Given recent price action in the US the question now is, do current prices hold enough risk premium to cover a large Chinese spend?

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Australia

Australian markets were a touch softer on new and old crop yesterday. The stronger currency saw buyers pull bids back $2-3/t. Offers remained relatively unchanged. East coast trading saw tight port zone spreads on new season APW. Port Kembla track finished bid $308-309/t while Melbourne/ Geelong was bid $6-7/t under that. Wheat-barley spreads have narrowed in the past week or so, since the Chinese barley tariff announcement. Darling Downs barley is now trading around $40 under wheat. Wheat has softened on the Downs while barley has found some underlying support. In southern Australia the wheat/barley delivered Geelong/Melbourne spread remained around $55-60/t. Showers continued to hang around through southern parts of WA and into SA and western Vic keeping top soils hydrated.

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