Markets

Daily Market Wire 29 May 2020

Lachstock Consulting, May 29, 2020

Wheat posted gains, canola losses.

  • Chicago wheat July contract up US10c/bu to 514.5;
  • Kansas wheat July contract up 12.25c to 464c;
  • Minneapolis wheat July contract up 6c to 519.255c;
  • MATIF wheat September contract down €0.75 to €187.25/t;
  • Corn July contract up 7c/bu to 327.5¢;
  • Soybeans July contract down 1.5¢/bu to 847¢;
  • Winnipeg canola July contract down $C2.80 to $460.70/t;
  • MATIF rapeseed August contract down €5.25/t to €369.25/t;
  • Brent crude July contract up US$0.55 per barrel to $35.29;
  • Dow Jones index down 148 points to 25401;
  • AUD firmer at $0.6647;
  • CAD weaker at $1.3771;
  • EUR firmer at $1.1094.

Markets

In the wheat pits Chicago settled up 10 usc/bu closing at 514.5usc/bu, Kansas was 12.25 usc/bu higher to settle at 464usc/bu, while Minni rallied 6 usc/bu to go out at 519.25usc/bu. Corn gained 7 usc/bu to go out at 327.5usc/bu while Beans were down -1.5 usc/bu to settle at 847usc/bu WCE Canola softened -2.8 CAD/mt closing at 460.7CAD/mt with Matif Canola finishing lower by -5.25 Eur/mt. In outside markets the Dow Jones gained 553.16 points, Crude was up 0.9 bbl the Aussie was 0.0015 points higher to settle at 0.66363, the CAD rallied 0.0011 while the EUR gained 0.0069.

Double digit gains in wheat and a 2.5 standard dev move in corn – all smiles and high fives in offshore grain pits as the US reacted to the EU cutting soft wheat production to 121.5 from 125.8mmt – this will be largely offset by demand cuts which always take longer to bleed in. the first sign of this was their cut to exports from 28mmt to 26.5mmt but feeding will certainly have to take a hit with relative value where it is. BAGE, the Argy exchange had their wheat planting pegged at 13% planted vs 7% this time last year.

Ethanol production for the week ending the 22nd of May rose for the 5th week in a row – up 195 mgal/wk. The low point this year was back in late April when the US only produced 537k bpd – last week they pushed out 724k bpd. While this gain certainly helps the corn balance sheet it seems unlikely that the USDA will be able to maintain their full marketing year corn for ethanol estimate of 4.950 bbu. For context, this same week last year the US produced 1057k bpd. The positive ethanol margin is certainly being driven (pardon the pun) but the growth in gasoline demand. A slightly more modest increase this week with total gasoline demand increasing from 6.79 m bpd to 7.253 m bpd. Encouraging signs with continued growth in overall demand but, when put into context, still represents around 23% lower than this time last year.

Canola markets spent the session digesting the fall out of the Meng decision. It would seem that any chance for China and Canada to kiss and make up is now off the table – the focus clearly for Mengs defense is to challenge and try and keep Meng from being extradited to the US, where it would be considerably more difficult to get the win. This comes as a mixed blessing for Australian canola producers with global balances extremely tight – however, the demand side of this ledger is still being determined, especially bio-diesel demand in the EU. Early estimates are still indicating the EU will have to import a record 7mmt.

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Australia

Locally we draw to closer to another end of the week and also end of month as we roll into the middle period of the year! Similar themes through Aussie markets again yesterday. We saw bids and offers a fraction softer on old crop values while new crop markets remained relatively unchanged over the day. Both the southern zones and northern markets were off slightly $2-3 on wheat and barley. The ASX January contracts settled yesterday, wheat $300.50/mt and barley $233/mt. 20/21 season canola markets remain tight on the bid and offers through VIC and NSW with track values continue to hold at low $600/mt. Planting continues to draw to a close through SA and VIC with the odd later area still going in due mainly to delays due to wetter conditions. With a top up of rain last week through parts of northern NSW and QLD the planters have fired up again, getting back in the paddock to continue their 2020 campaign. We head into the weekend with forecast showers through the southern parts of Australia and falls expected to reach upwards of 5-10m.

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