A stagnant day on the board for grains, while oilseeds continued strong.
Equities got slaughtered late in the session though, with the DJI off 3% to just over 25 thousand on what has been attributed to a mix of fundamental economic concerns – aggravated by some technical risk off triggers. The AUD has continued to hold it’s recent strength (73.4¢ as of writing) as a proxy for China given recent positive sentiment about (yet another . . . ) potential resolution to the Chinese trade war.
Cash wheat markets in the US have seen some support with various rumours about potential for more demand to hit – but nothing of significance hitting by the end of the day (outside of normal Japanese tenders). Bangladeshi business reportedly to be sourced from Russia – no surprises there. Wheat tried to break away on the China news but running away on price is not going to encourage export demand which US wheat needs. Inspections at 472,600t were near expectations. The Iraq tender is still pending with LC issues holding things up. US values appear to be the cheapest, but it its unclear whether they will get the business. Implied volatility in Mar SRW finished at 20.875pc. Black Sea Wheat was up US50c/t to $246/t and the Ruble was up 0.8pc to 0.015. Syria announced a tender for 200,000t of soft wheat from the Black Sea.
The same story has been circulating in corn and beans, with a particular focus on China coming back for US supplies before the end of the year after the US Ag Secretary speculated as such to the media. This has been the ongoing hope for soybeans for a while now, and there’s little to back up these rumours at present. As President Trump’s tweets have kindly reminded the markets, tariffs are still in place. However, if realised the speculated demand talk is enough to squeeze US balance sheets on corn and ease the pressure on beans.
Canola markets are looking towards the upcoming StatsCan report (Thursday night Australian time) – not usually a significant impact to the market but always headline risk. Meanwhile, Brazil soybeans are getting more talk of a >130 million tonnes (Mt) type crop (with generally good conditions to date though plenty of weather still to come before this is realised) and a larger than normal early harvest to hit export channels into late Dec/mid Jan. The EU was out revising their 18/19 crop production – cutting wheat to 128.6Mt (-1.3Mt) and increasing corn to 60.5Mt (+1.6Mt).
Australian wheat markets have seen some increased buying support domestically in recent days on the back of competitive export markets. Harvest continues to pick up pace in WA with yields mostly holding up above expectations. Southern NSW fields are wrapping up and headers should be pushing into southern Victoria in a few days. Yield expectations there are dismal – but still likely to be the only bright spot, relatively, on the east coast crop. Concerns continue to pick up about weather impacts on later planted Qld/NNSW sorghum.
Source: Lachstock Consulting