US wheats gained 2 percent. Brent crude dropped 6 percent.
- Chicago December 2024 wheat up US11.75c/bu to 570.5c/bu;
- Kansas Dec 2024 wheat up 12.75c/bu to 574.25c/bu;
- Minneapolis Dec 2024 wheat up 11.25c/bu to 606.5c/bu;
- MATIF wheat Dec 2024 up €2.75/t to €219.75/t;
- Corn Dec 2024 up 3c/bu to 413.75c/bu;
- Soybeans Nov 2024 down 8.75c/bu to 965.25c/bu;
- Winnipeg canola Nov 2024 up C$5.30/t to $631.80/t;
- MATIF rapeseed Nov 2024 up €6.75/t to €509.25/t;
- ASX Jan 2025 wheat down A$2/t to $324/t;
- ASX Jan 2025 barley down A$4.50/t to $275.50/t;
- AUD dollar down 22 points to US$0.6561.
The day ahead
Weather – HRW is bracing for impact. North western OK and south western KS are set for over 6 inches in the next 7 days with surrounding areas from Texas to Wisconsin set to get 2-5 inches. Given the winter crop was rated the second worse ever, a drink is desperately needed. Russia/Black Sea is still short of completing their winter crop plant with the southern, most productive area, still rated as very dry. Brazil weather helping planting.
Markets – Bounce back – wheat led the charge, fueled by the 2nd poorest winter crop rating on record. There is some expectation that, post this rain event, conditions improve dramatically. Vegoil managed to hold its own despite crude remaining on the recent lows. AUD can’t find a bid, partially lower due to a consensus amongst the investment banks that a Trump victory is bullish the US Dollar.
Australian day ahead – Higher offshore wheat markets, lower AUD and unchanged Russian. Values should find some support. As we have mentioned however, the exporter is largely on the side lines across the east coast, waiting for some certainty around quality and quantity. Canola should continue to find buyers, particularly in WA given the export program that needs to be filled.
Offshore
Don’t call it a comeback. Wheat firmed over the entire session to settle near the highs with the second worst winter crop driving values. The average guess on the crop condition rating before the release was 43pc according to Bloomberg, clearly the 38pc rating caught the market a little off guard. Broken record but there is little correlation between pre dormancy and final yield. The record poorest rating for this time of year was 2022 – a year where the US crop came very close to hitting trend yield.
Ninety percent of the normal wheat debate is around supply. This year it feels like wires are filled with thoughts around demand. Türkiye’s import ban was the catalyst for balance sheets to re-examine the demand side. The cleanest way to test these numbers is to provide incentive via price – potentially exactly what happened yesterday when North Africa came knocking on France’s door. Morocco, Jordan and Algeria all popped up, along with news that Egypt is finally starting to take its massive Russian purchase.
Given the export pace of both Russia and Ukraine, the argument that there isn’t demand is worth challenging. USDA has Russia in for 48Mt of exports – October was basically 6mmt with estimates of July-Oct at 20.8Mt, smashing last year’s record. Year on year exports are 7.5Mt lower, so the current record pace will have to find resistance at some point.
The top three consumers of Russian wheat are Egypt, Türkiye and Bangladesh. These nations are also a member of BRICS. Interesting to note that the Russian Ruble is back to levels not seen since mid 2023 and the only other period it was lower was when tanks started rolling over borders.
Canada is set to dethrone Australia as the world’s third largest wheat exporter behind Russia and the EU.
Australia
In Western Australia canola bids took a breather yesterday losing around $10 for conventional to be bid A$840 and GM bid $750. Cereal bids were also down around $5 yesterday being bid $365 and barley $315.
It was a similar story for the east of Australia where canola bids were down around $5-10 to be bid $786 with GM bids around $730. Wheat and barley bids worked lower.
Barley delivered Darling Downs bids have improved over the last week +$7 to be bid $307 with some trading around $310 for Jan+, wheat is bid around $325.
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