Markets

Daily Market Wire 6 August 2019

Lachstock Consulting, August 6, 2019
US futures prices were firmer on Monday, European weaker.
  • Chicago wheat September contract up 3.75 cents per bushel to 494.5
  • Kansas wheat September contract up 5c to 426.75c,
  • Minneapolis wheat September contract up 2.25c to 524.5c,
  • MATIF wheat September contract down €0.5 per tonne to €172.75;
  • Corn September contract up 5.75c to 405.25;
  • Soybeans August contract unchanged at 850.25c;
  • Winnipeg canola November contract unchanged market closed holiday $444.80;
  • MATIF rapeseed November contract down €2 at €372.50;
  • Brent crude October contract down $2.08 per barrel to $59.81;
  • Dow Jones down 767.27 points to 25,717.74;
  • AUD weakened to US$0.6778c;
  • CAD weakened to $1.320;
  • EUR strengthened to $1.1229

Grains bounced back slightly to close up after a turbulent early session – Chicago wheat closed up 3 ¾¢ to 494.5¢, KC +5¢ to 426 ¾¢, and Minny up 2 ¼¢ to 524.5¢ (matif off half a euro on the earlier close to 172 ¾€).  Corn picked up 5 ¾¢ to 405 ¼¢ while beans ended unchanged at 850 ¼¢ (Winnipeg closed today for the holiday).  With the RMB allowed to drop below 7 (noting that China keeps a peg in place on their currency, so this move was driven by the central government), and US announcements that they were labelling China a currency manipulator (largely a symbolic gesture, though it does open some discussions at the IMF), economic markets took a beating – with the DOW down 767 points (which we believe should make it the 6th biggest daily drop in the DOW ever) and crude oil fell a buck on WTI to $54.7 (Brent off $2 to $59.8).

Reports that China was banning purchases of US ag products by state companies yesterday have been followed by comments that they may also apply taxes to anything that does get purchased – none of which is surprising when one considers that pushing around ag trades has been their modus operandi to date in the trade war (US beans/milo, Canadian Canola/barley, and Australian barley to some degree).  Meanwhile, GASC is back again – this time for early September.  With the ongoing firmness in Russian wheat, this looks likely to remain a Romanian/Ukrainian tender.  On that same note, with Russian cash markets acting as they have been we’re seeing a gradual building of interest in EU wheat to other destinations as price spreads remain narrow

US crop progress figures saw corn conditions down 1pc on good/excellent rating to 57pc, and beans unchanged at 53pc – though both crops remain well behind normal maturity.  Winter wheat harvest was up to 82pc complete, and they also pegged spring wheat harvest at 2pc nationally (5pc in South Dakota) – though this is somewhat above what we’ve been hearing.  Export inspections were also out, with strong bean figures (1Mt) including 0.5Mt to China, 0.6Mt odd of corn and just under 0.4Mt of wheat (no real surprises in either, though corn was slightly below some expectations).

Back in Australia, we continue to see crop stress across central and northern NSW (and southern QLD), and though there is a 5-10 mm even for parts of the Riverina this week Lachstock does expect some further drops to the worst conditioned crops – the forecast moisture is simply not enough to sustain the more marginal stands.

Source: Lachstock Consulting

 

 

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