Markets

Daily Market Wire 4 February 2019

Lachstock Consulting, February 4, 2019

Grain and oilseeds futures markets closed higher on Friday. Wheat saw more action in the US cash markets.

  • CBOT wheat up 8 cents per bushel,
  • Kansas wheat up 10,
  • Minneapolis wheat up 6,
  • MATIF wheat almost unchanged. 
  • Corn up 2c
  • Soybeans up 2c
  • MATIF rapeseed unchanged,
  • Winnipeg canola up C$1,
  • Dow Jones was up 64 points,
  • West Texas crude oil up $1.50 and Brent up $2, US rig counts were reported down amid talk in Saudi Arabia talks of further production curbs and political turmoil in Venezuela where weekend demonstrations called for the resignation of its president, Nicolás Maduro Moros.
  • AUD down slightly 0.7233.
  • EUR  $1.145
  • CAD  $1.309

Wheat

Despite EU competition, talk of additional US export business ran around the markets on Friday (US time), with rumours of HRW hitting the Ethiopian tender and other various destinations (most of which is not been confirmed). We haven’t seen anything to follow up on previous talk of Chinese spring wheat purchases, but that was also back in the rumour mix. Inspections this week should bring some confirmation about whether the previously reported boat loading to China was real or just an extension of these rumours. At the same time, EU markets continue to work more demand, and loading pace on existing sales has picked up with boats reported loading last week into Saudi and Africa. US winter kill talks have gradually picked up pace, with worries about the SRW crops. On the HRW side, though conditions were reportedly ripe for winter kill, the temperatures never held low enough for long enough to bring large losses.

Soybeans and corn

Chinese purchases of US beans that were previously promised have apparently begun (with talk of 1-3 million tonnes (Mt) booked already), but the ongoing trade talks remain a concern.  Promised purchases of 5Mt are a drop in the ocean of beans still sitting in the US. Chinese markets should be quiet this week, given the public holiday there. The Buenos Aires Grain Exchange in Argentina is now noting positive conditions in bean crops there, raising some ideas that yield improvements could offset part of the flooded areas – though they haven’t moved their production forecast from 53Mt yet. This was the first trading day of the US crop insurance calculation window (corn, bean, and spring prices are set through the month of Feb).  Based on the first day of the window with Dec corn 402c/bu and beans 957c/bu, US farmers will be looking at a price ratio of ~2.38 (down sharply vs last years 2.56 and one of the drivers behind ideas of higher corn acreage).

WASDE

Markets will finally see a USDA WASDE report this week, with Friday bringing the Feb WASDE and the delayed winter wheat seedings plus final corn/bean production (2018) reports. We do note that while other reports continue to trickle out (delayed due to the government shutdown), the recent export sales and CFTC reports are from December data and are not representative of the current situation.

Australia

Australian markets were slow to end up last week, and feed consumers have been forced to pay up to find sellers.  Premiums are still holding for interior markets (given the freight from port), with nearer port prices at a discount and working off WA imports.  There is some nice rain hitting the Atherton tablelands and set to grow some grass up north – but no break to the weather pattern into the Downs and NNSW.

Source: Lachstock Consulting

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