Markets

StatsCan pegged wheat planting in Canada at 24.971 million acres (Ma) vs 25.2Ma market expectation. Canola area fell slightly to 20.78Ma vs average trade guess of 20.86Ma. In the US the market action didn’t capture the crop condition and progress report which was released after the close. It revealed a sharp decline in spring wheat conditions should support HRW today. USDA rated the spring crop at 69pc good-to-excellent vs 75pc last week and 81pc two weeks ago. The forecast in the spring crop region should temper things a little with plenty of rain forecast from Montana through to North Dakota.

Game day

Tonight’s release of the US quarterly stocks and acreage report, out during Tuesday’s pit session, will drive values, at least for a moment. Corn and bean acres will be the column the market will be watching. The average trade guess is looking for close to a 2Ma drop in corn acres vs the March 31st guess and a 1.8Ma increase in bean footprint. Then we go back to trading weather and tweets.

Russian spring wheat areas are getting some attention and a reasonably dry outlook will keep the markets focus. But rain is likely to fall somewhere across the region.  What Russia is missing out on, Kazakhstan should get.

From the financial markets’ perspective, the US has revoked Hong Kong’s independent status as China implements its new national security law.

Calculating the demand implications of COVID will be an ongoing estimate that will ultimately drive balance sheets. An interesting example has been the release by Algeria’s state news agency which indicates they have eaten one third less bread after the lock down, although it has recovered from the absolute lock down lows. The idea that, when locked down, you still eat the same amount has been a common theme. As has the fact that the food services sector is the source of most of the waste so, ultimately there is less consumption. The anecdotal evidence is easy to discuss, but the reality in the figures will take time to materialise.

Australia

The new week kicked off with firmer currency and weakness through offshore markets. Despite this local Aussie markets held some ground through the old crop, where demand is needed. New crop markets were left widely bid offer or just all offer side through the upcountry domestic homes. ASX Jan 21 east coast wheat futures traded a couple of bucks lower for a very small volume to finish the day at $282/t. New season canola cash bids were a couple of bucks firmer across most port zones. East coast genetically modified (GM) canola trading a spread of $50/t under conventional. This is typically considered par for the course but the spread has grown from early-season bids of $35/t.

Source: Lachstock Consulting