Daily Market Wire 30 October 2019

Lachstock Consulting, October 30, 2019

European markets were firmer.  North American mostly down.

  • Chicago wheat December contract down 0.25 cents per bushel to 511.5c;
  • Kansas wheat December contract up 2c to 419c;
  • Minneapolis wheat December contract down 2c to 525.75c;
  • MATIF wheat December contract up €0.25 to €179.5;
  • Corn December contract up 2.25c to 386.25c;
  • Soybeans November contract down 2.5c to 918.25c;
  • Soybeans January contract down 2c to 933.5c;
  • Winnipeg canola January contract down C$0.40 to $460.70
  • MATIF rapeseed February contract up €1 to €381.75;
  • Brent crude December contract up $0.02 to $61.59;
  • Dow Jones index down 19.30 points to 27071.42 points;
  • AUD strengthened to US$0.6868;
  • CAD weakened to $1.3086;
  • EUR strengthened to $1.1109;

In the wheat pits Chicago settled down -0.25 usc/bu closing at 511.5usc/bu, Kansas was 2 usc/bu higher to settle at 419usc/bu, while Minni softened -2 usc/bu to go out at 525.75usc/bu. Corn gained 2.25 usc/bu to go out at 386.25usc/bu while Beans were down -2.5 usc/bu to settle at 918.25usc/bu WCE Canola softened -1 CAD/mt closing at 451.4CAD/mt with Matif Canola finishing higher by 3 Eur/mt. In outside markets the Dow Jones fell -19.3 points, Crude was down -0.27 bbl the Aussie was 0.0027 points higher to settle at 0.68639, the CAD rallied 0.0032 while the EUR gained 0.0012

Weather markets are still on a rolling boil; at the same time there’s more unwanted moisture for the US row crop belt as it attempts to finish harvest and South America could do with a drink.

We have long talked about the power of the grower. A clear example has been the Russian wheat farmer who, for a number of reasons, has been able to hold onto their production and seemingly force values higher.

The US corn grower is playing a similar game which is causing some discomfort for the short. Wet and cold conditions over a late crop adding resolve to this view.

US presidential impeachment application may formalise

The impeachment process is rolling forward with the House Democrats introducing a resolution to formalise their impeachment inquiry.

This process either captivates you or is so boring you ignore it – either way it will shape the upcoming election cycle and will ultimately have some influence over our agricultural markets.

In a nut shell (and from the perspective of an Australian, many miles away) the “resolution” would allow current investigations to continue in an effort to establish if there are sufficient grounds for the House of Reps to impeach Donald Trump.

This is the twist in the tail. In previous impeachment processes of Presidents Clinton and Nixon the House had to vote prior to this level of inquiry which may include public hearings but falling short of being called an “official probe”.

If you would like the for and against side of this argument simply log into CNN and then FOX. They seem to have a pretty clear take on the legitimacy of both sides of the coin.

Argentina economic policy evolving

In not dissimilar uncertainty, the Argentine markets struggled to form a clear view of how life will look under newly elected President Fernandez.

Given he has only appointed a four-member team so far and the key economic roles still remain vacant the market has been left to determine which way this will play out.

Given the relationship with the IMF and the ever-present risk of increased export taxes on agricultural products how the grower reacts will hold the key for trade flows.

Historically the grower has shut the door, preferring to stay long the commodity (and by default, USD) rather than convert it to pesos.

Meanwhile traders try and book as much business prior to any tax changes.

The handover is scheduled for Dec 10 so there will be plenty of debate and subsequent FX volatility for the next month.


Locally harvest continues to power on, with the latest Viterra weekly harvest report released adding 100,00t into the bulk handling network in the last 10 days.

Temperatures continue to offer favourable harvesting conditions for South Australia, quality on barley has been a mixed bag from high screenings in the North and as we move into the lower mid north region the quality improves.

Harvest in Western Australia is slowly trickling in and yet to really ramp up with in the next 10 days.

Another mixed bag in Aussie markets yesterday with ASX Jan wheat kicked trading $336/t, $335/t then finished the day at $337/t. While wheat-barley spreads are now out to $50-55/t the question of quality now comes into play.

Would a F2/F3 event test the F1 short and close the spread or is it simply a matter of barley volume?

Trade markets remain largely offer side and grower bids on the boards were softer by $2-3/t on wheat and barley along the east coast and in SA.



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