Markets

Daily Market Wire 29 June 2022

Lachstock Consulting, June 29, 2022

Grains markets mostly firmed 1pc to 2pc. Minneapolis wheat eased a fraction. Soybeans gained 2pc. Canola and rapeseed firmed slightly. Brent crude gained 2pc. Soybean meal and soyoil gained 1 ½ pc. Dow eased 1 ½ pc.

  • Chicago wheat September contract up US18.5 cents per bushel to 936c/bu;
  • Kansas wheat September contract up 11.5c/bu to 990.25c/bu;
  • Minneapolis wheat September contract down 3.75c/bu to 1040.75c/bu;
  • MATIF wheat September contract up €6.75/t to €356.75/t;
  • Black Sea wheat September contract up $2.25/t to $378.50/t;
  • Corn September contract up 8.5c/bu to 669.75c/bu;
  • Soybeans September contract up 28.5c/bu to 1480.5c/bu;
  • Winnipeg canola November 2022 contract up C$1.20/t to $890.60/t;
  • MATIF rapeseed November 2022 contract up €4.25/t to €685.50/t;
  • ASX July 2022 wheat contract unchanged at A$420/t;
  • ASX Jan 2023 wheat contract down $1.50/t to $440/t;
  • AUD dollar weaker at US$0.690.

 

International

This market situation looks like the dog’s breakfast. It is a war, wrapped in a weather market, wrapped in a macro clean out. Russia added to the confusion by indicating its tax system will be linked to a roubles per tonne value rather than the existing US$/t. At the same time as this was being announced the CME trading pit was dealing with more rumours of old crop Russian wheat defaults, some suggesting it could be as much as 600,000t that simply has not been shipped. The cherry on top was the fact GASC was in the middle of one of their bigger tenders with the world very keen to see how the numbers would pan out, particularly given SRW is in the mix. The world market has been seemingly very comfortable with the idea that Russia will be pumping out 40Mt exports. Were this number to be challenged in any fashion the calculation would get tough. India previously was touted as the silver bullet to the world’s wheat woes and now it would seem it is part of the problem with some estimates dropping the Indian production forecast as low 88Mt.

A focus for the G7 conference was providing access to Ukrainian grain exports. This is where I struggle. The operational side of getting a vessel into a Ukrainian port, getting it loaded and sending it on its way is one thing. The money flow is another. Every other day the Ukraine is publicly calling for more weapons or cash so they can buy them. Russia would have to help in facilitating the physical shipment so it seems impossible to me that they will allow that to happen if it is not getting the cash. The fact that two foreign-owned port elevators were bombed seems a little more strategic than collateral damage.

The US weather forecast is looking promising for the Corn Belt but no rain has fallen yet. Given the poor rainfall recorded in June and the historically high temperatures this relief is desperately needed for the US crop to yield 177bu/ac.

Australia

Local markets were sideways yet again. Wheat bids were a dollar or two softer by the close, new and old crop, and buying interest remained very quiet. ASX wheat Jan contract found some interest late in the day trading slightly lower at $440/t. When you look at FOB values and the recent Saudi wheat tender, there is still a large export margin. The sale price calculates to a track equivalent expressed in Australian dollars around A$540/t. New crop barley and canola markets were relatively unchanged.

The forecast for showers starting this Friday across NSW and Qld will be closely watched. The heavier totals forecast are now pushing towards the coast but there is still enough on the forecast to likely put an end to the late winter crop plant.

 

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