Markets

Daily Market Wire 3 February 2020

Lachstock Consulting, February 3, 2020

Corn ticked higher. Wheat and oilseed continued lower. Dow fell 2pc

  • Chicago wheat March contract down 6.75 cents per bushel to 553.75c;
  • Kansas wheat March contract down 5.5c to 465.5c;
  • Minneapolis wheat March contract down 2.75c to 533.75c;
  • MATIF wheat March contract down €1.25 per tonne to €191/t;
  • Corn March contract up 1.75c to 381.25c;
  • Soybeans March contract down 3.75c to 872.5c;
  • Winnipeg canola March contract down C$5.90/t to $450.50/t;
  • MATIF rapeseed May contract down €5/t to €392.50/t;
  • Brent crude March contract down US$0.13c per barrel to $58.16;
  • Dow Jones index down 603.41 points to 28,256.03;
  • AUD down at $0.6694;
  • CAD down at $1.3241;
  • EUR up at $1.1090.

Market news

Thursday’s temporary floor did not turn into a Friday bounce as grains broke back off again to end the month – Chicago closed down -6 3/4¢ to 533 3/4¢, KC -5.5¢ to 465.5¢, Minny -2 3/4¢ to 533 3/4¢, and Matif was off a euro twenty five to 191€.  Corn picked up a penny and three quarters to 381 1/4¢ and beans were down 3 3/4¢ (Winnipeg canola -$5.9 to $450.5, Matif -5€ to 392.5€).

Corn strength has been heavily front end driven, with the uptick Friday seeing N/Z invert by a quarter cent into the close.  Crude oil has dropped another half a buck to $51.6 WTI/$56.6 Brent and the DOW broke off 603 points.  The AUD’s nominally stronger, starting the week at 66.8¢, the CAD $1.323, the EUR $1.109 and with Brexit formally done the GBP has given up a quarter of a cent to $1.318.

“Risk off” has been the name of the game as coronavirus infection figures continue to expand and the word “pandemic” starts to be thrown around more readily.  More travel restrictions are going into effect in an effort to control the spread of the disease, even as the first death outside of China was reported in the Philippines.  Estimates about the overall impact are all over the place, but one headline into the weekend suggested an impact to the global economy to the tune of $160 billion.

Poultry markets in China area already feeling the impact with some 300 million birds at risk of starvation amidst the quarantine restrictions. Feed is expected to run out in some areas at the start of this week and to top it off H5N1 is back in a neighbouring province.

Still no export sales flashes to be seen to China, although it does all lend support to ideas that they’ll be back in style for meat imports in coming months – but all assuming that logistics are open again to bring in goods.

Chinese New Year holidays are supposed to be over, but many local areas, estimated to be  between half and two thirds of the country have further extended the break and business is expected to be slow to pick up this week.

Disaster is also reported in the form of locust swarms in East Africa the other week, now followed by infestations in Pakistan and raising worries about the need for more food imports around the Indian ocean.

The Commitments of Traders report released on Friday confirmed a big increase in the bean short (up 37,000contract to 910,000 contracts short) and longer corn (net short down 38,000 contracts to 29,500 contracts), all in line with market moves but bigger swings than surveyed expectations.  As always these are lagged by half a week, so the break in wheat since the 28th is not reflected. Minor changes reported there.

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Australia

Aussie markets were slightly softer into Friday as the rains moved into SA – flooding in spots but a very nice break from the summer fires.  Totals ran into the 50+ mm range across much of eastern SA and the Mallee, plus the Wimmera and Victoria’s Western Districts.

Forecast maps remain very optimistic for northern NSW and the Downs, with the last runs pushing over 100 mm on the western edge of the Downs.

Dry plantings of sorghum were going in in places across the area over the weekend.  Coverage has also expanded south, with central NSW now looking for 20-30+mm.

Longer run GFS models pushing >5″ in spots. Let’s see if they are confirmed.

Winter crop ideas are starting to get more optimistic with the moisture coming. We’re still a long way from planting but it is setting a far better base than we’ve seen in the last two years.

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