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Daily Market Wire 3 January 2019

by Lachstock Consulting, 03 January 2019

WHEAT’s come out the door to welcome us back to 2019, futures closing higher at all exchanges. Crude oil was up 90¢ to $46.5/barrel (Brent $54.9) after briefly spiking over $47.5 in early trading. The AUD broke hard through the overnight as US markets digested slower Chinese economic figures. The dollar danced over/under 70¢ all night before slamming down to 68.0¢ at time of writing. The US dollar index held in the mid-96 range.

  • CBOT wheat up 5c/bu
  • Kansas wheat up 5c/bu
  • Spring wheat up 5c/bu
  • Matif wheat up €1/t
  • CBOT corn up 0.75c/bu
  • Matif corn up €1 to €177.75
  • Soybeans up 12c/bu
  • Winnipeg canola up C$9/t
  • Matif rapeseed unchanged
  • Dow Jones up 19 points
  • Crude oil up 90c to  $46.5bp,
  • AUD  down to $0.68
  • CAD down to $1.133
  • EUR down to $1.364

Wheat

The USDA remains in shutdown mode with no apparent change to the funding impasse – the latest house proposal makes no move closer to President Trump’s demands. Until/unless this changes, the upcoming Jan WASDE and US Winter Wheat Seedings reports are likely to be delayed (or in the case of the WASDE, potentially cancelled). As wheat markets have been shifting focus to the new season crop (of which the US winter wheat planting report is the first large “data” release), there is a lot of question as to how traders will treat the markets in coming days. Speaking of winter wheat – winter kill scares are starting to make the rounds again, highlighting parts of western Kansas/Colorado and Montana. As in all winter kill cases, we won’t really know until spring and crops exit dormancy, but any further cold snaps will only add fuel to the fire.

Russian domestic supplies tighten

Black Sea markets will be in semi-holiday mode for the next week yet still, with Orthodox Christmas not until next Monday. Prior to New Year Russia had upped their estimate for wheat exports, and are reportedly going to further subsidise internal freight shipments to help move wheat out of Siberia and the eastern Urals. At the same time, even with these subsidies, domestic supplies there are tightening up – the same record pace and availability we saw through the first half of 2018/19 are not repeatable into the spring..

Soybeans

Bean markets continue to see rumours about more Chinese buying – the latest version focusing on Feb/March shipment (which is also when we should see the first Brazilian beans coming off, though shipment ex-SAM is slower than if taking via the PNW). With the USDA shut-down in place there are no export sales reports coming out, there will be no clear confirmation in this area until the US government restarts. Meanwhile, Brazilian crop estimates were cut some in late December after middling rains there – but most still looking for a new record crop. Weather is still too wet in parts of Argentina too.

Australia

Local markets are gradually coming back from the Christmas holidays – and the break in the AUD should prove supportive with WA wheat still competitive into Asia. Later sorghum crops have come under some pressure up north, with rains disappointing over the past two weeks. and hot weather hitting.

Source: Lachstock Consulting

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