Grains markets weakened, oilseeds were steady to firmer.
- Chicago wheat March contract down US10.75 cents per bushel to 637.5c;
- Kansas wheat March contract down 6.75c/bu to 618.75c;
- Minneapolis wheat March contract down 3.25c/bu to 621.75c;
- MATIF wheat March contract unchanged at €224.75/t;
- Corn March contract down 2c/bu to 550c;
- Soybeans March contract up 1.25c/bu to 1372.5c;
- Winnipeg canola March contract up C$0.40/t to $695.50;
- MATIF rapeseed May contract up €2.75/t to €439.25;
- Brent crude April up US$0.38 per barrel to $58.84;
- Dow Jones index up 332 to 31,056;
- US dollar index up 43 points to 91.53;
- AUD weaker at $0.760;
- CAD weaker at $1.282;
- EUR weaker at $1.196
Macro markets still waiting for the new US stimulus package, but in the ongoing debates there we note that the President has expressed support for a higher federal minimum wage – almost certain to ignite new controversy.
Russia’s new season export tax has been formally announced – the same 70% over a FOB threshold calculation that has been discussed in recent days. Wheat threshold was set at US$200/t and barley at $185/t. As expected it’s based on a government benchmark not individual contract prices.
The timing of this is slightly different from that previously rumoured/expected, but the overall impact looks to be unchanged.
Russian grain stocks figured published overnight, s of 1 January 2021, put total grain stock at 37.7 million tonnes (Mt) of which wheat was 22.6Mt up 1.8Mt on previous year.
The US weekly export sales reported 7.4Mt corn, 0.8Mt beans and 0.6Mt wheat, which included White wheat and Hard Red Spring wheat sold to China. The large corn sales figure was no surprise given the export sales flashes, though the beans were slightly better than expected with two new boats of Chinese sales noted, plus the expected shifts from unknown. There was also a nice chunk, 0.6Mt new crop bean sales, which included some flashes over the week.
It was another day without new export flashes reported. The demand bulls are writing it off as exports for own-account type business, that is, not yet sold to China, but originated with the intention of shipping it there. The bears on the other hand contend that the program is finally slowing down.
Canadian statistical agency StatsCan is due to report year-end grain stocks estimates this Friday. While not the most accurate surveys historically, they’re getting more interest this year with the ongoing canola squeeze. Surveyed estimates were around 12.3Mt on canola. We will be keeping an eye out for any old crop revisions there too.
Canola exports from Canada were 239,100t reported this week. Up from 96,000t last week. We are forecasting average weekly pace of 230,000t in Jan/Feb, before it drops off further in Mar/Apr. So it’s a neutral number this week.
Brazilian weather concerns remain. It looks like another couple inches forecast for main soybean areas into next week, certainly not helping harvest.
With the ongoing weather and harvest delays, we also note that the USDA local office in Brazil was out pegging Brazilian corn production at 105Mt, compared with 109Mt in the last WASDE, on the back of delayed planting and associated yield drags.
In contrast, weather in Argentina is forecast dry across the two-week outlook. Crops there have benefited from the January moisture, but the forecasts are raising longer-term concerns.
The USDA outlook forum in mid-February will be electronic this year. Lachstock notes the afternoon sessions on 18 February, which in Australia would be mid-morning on the 19 February, will include a focus on the USDA’s view of Chinese market impacts. It’s free to register and attend for those who wish to tune in.
In Australia the bid/offer spreads widened and though logistics remained the dominant factor, shorts no longer were chasing the offers as hard as they had.
Rain which fell in eastern Australia yesterday and overnight rains is forecast to continue moving east through the weekend. BOM outlooks are for widespread 25-30+ across most of the NSW cropping area.
The BOM seasonal outlook is holding slightly wetter than average into early planting for the east coast, yesterday’s report had much of NSW and Qld in the 60pc+ chance of above normal rainfall range. Their accuracy is historically reasonable for this point in the year too. There’s not much variance in the maps for SA and WA though.
Source: Lachstock Consulting