Markets

Daily Market Wire 30 September 2022

Lachstock Consulting, September 30, 2022

Wheat prices eased ahead of USDA stocks reports tonight. Dry conditions hampered US winter wheat sowing. Australian nearby wheat trade volumes built on rain threat.

  • Chicago wheat December contract down US7 cents per bushel to 896.25c/bu;
  • Kansas wheat December contract down 9.25c/bu to 966.75c/bu;
  • Minneapolis wheat December contract down 6.5c/bu to 966c/bu;
  • MATIF wheat December contract down €1.50/t to €352.25/t;
  • Black Sea wheat December contract down $1/t to $326.25/t;
  • Corn December contract down 1c/bu to 669.5/bu;
  • Soybeans November contract up 2c/bu to 1410.75c/bu;
  • Winnipeg canola Nov 2022 contract up C$13.50/t to $852/t;
  • MATIF rapeseed November 2022 contract up €4.50/t to €611.75/t;
  • ASX Jan 2023 wheat contract up A$3.50/t to $441/t;
  • ASX Jan 2023 barley contract unchanged at A$325/t;
  • AUD dollar weaker at US$0.650.

International

In an outcome which would appear unsurprising, the recent vote run by Russia in occupied territory came back with resounding support for Russia. President Putin will sign agreements on Friday and meet with pro-Russian leaders of Donetsk, Luhansk and the majority of Kherson and Zaporizhzhia. In fairness, Donetsk and Luhansk have been largely Russian since 2014, however, that hasn’t stopped the West condemning the move. In response to the annexation, President Zelensky was very clear that any negotiations with President Putin are now off the table.
Adding fuel to the fire is the finger pointing since NATO announced the damage to both Nord Stream 1 and 2 pipelines was deliberate. The chances of the export path remaining open in this environment is close to zero. 

USDA tonight will release its stocks and wheat production figures which, historically have been cause for market volatility. Corn in particular has been focused on the lacklustre demand – highlighted last night with a dismal 512,000t of weekly sales vs a little over 900,000t needed to achieve USDA forecast figures. However, balance sheets can certainly tighten more if the USDA adopts a more aggressive supply side. The corn balance sheet can go from feast to famine quickly. 

While there is close to zero correlation between pre-dormancy conditions and final yield, the HRW wheat areas are thirsty. Winter wheat is just over 30pc planted so all the risk is in front of the crop but, according to the USDA drought monitor, 99pc of Kansas is in some kind of drought. This compares to 49pc this time last year and 97pc last week. The next foot to drop will be river heights and the probability of barge traffic being affected.  

Global recession a distinct possibility according to 7 out of 10 of the Community of Chief Economists of the World Economic Forum.
Germany’s coalition government on Thursday agreed not to go through with a controversial levy or surcharge on natural gas consumption, which it was estimated would have cost the country’s chemical industry alone about €4bn/year. Instead, the government agreed a €200bn package “to brake” the soaring natural gas prices, to be financed through an “economy and stabilisation fund.” 

Australia

Local markets yesterday continued to firm. As the day went on, and as market prices advanced, most were left largely offer side as bidders got their fill. 

Current crop liquidity continued, with Clear Grain Exchange transacting a bit over 9,000t. 

Harvest started slowly in Central Queensland and is set to really ramp up leading into the weekend. Canola harvest has already kicked off in Geraldton zone. 
Forecast rainfall of between 20mm and 35mm over the next 8 days is blanketing most of Australia’s growing regions. Despite early harvest now underway, most is still a long way off.

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