Markets

Daily Market Wire 6 November 2020

Lachstock Consulting, November 6, 2020

Commodity futures firmed. US dollar weakened.

The world remains largely captivated by the ongoing uncertainty in the US election, but in the meantime, grain markets have continued to firm up again across the board.

The US dollar has fallen sharply lower amidst the ongoing election confusion, with weakness starting to work in as confidence in a Biden victory increases – the US dollar index DXY is off to 92.5, the AUD is at 72.8¢, the CAD $1.305, and the EUR $1.183.

  • Chicago wheat December contract up US3.25cents per bushel to 609.25c;
  • Kansas wheat December contract up 3.25c/bu to 563c;
  • Minneapolis wheat December contract up 4c/bu to 561c;
  • MATIF wheat December contract up €2.25/t to €209;
  • Corn December contract up 4c/bu to 409.25c;
  • Soybeans January contract up 17.5c/bu to 1103.75c;
  • Winnipeg canola January up C$4.60/t to $550.40;
  • MATIF rapeseed February contract up €6/t to €402.25;
  • Brent crude January contract down US$0.30 per barrel to $40.93;
  • Dow Jones index up 542 points to 28,390;
  • AUD firmer at $0.728;
  • CAD firmer at $1.304;
  • EUR firmer at $1.183.

International

  • As we’ve seen all too much in recent days, the US election remains uncertain although general confidence is growing that challenger Joe Biden will scrape out a victory.  There remains the likelihood of a majority of Democrats in the House, less dominant than previous but still a majority. Combine this with a Republican-dominated Senate and Democrat President would suggest we see more political infighting and stalemates. That outcome may be spooking some but at the same time tempering people’s worries about what could have been a sharp reversal in policies had there been a large “blue wave”.
  • Egypt’s GASC was in the market last night again. As expected most of the offers were Russian origin. Egypt bought five vessels, three December and two January, all Russian origin. Prices in the low $260s per tonne were in line with recent GASC costings and the current cash market.
  • Saudi Arabia’s SAGO is back looking for wheat. It called a tender for 10 vessels with arrival dates in February and March 2021. They’d be expected to book about 600,000t.
  • The USDA flashed more Chinese demand business once again – this time 106,000t of milo/sorghum.  They also had a chunk of bean oil (33,000t) to India in the report
  • Rumours have additional sales of US beans to China recently for the Jan/Feb window. While there’s been no confirmation yet, if it’s accurate it’s further confirmation of the worries about Brazilian new crop beans which should start hitting the market in a very tight timeframe relative to that business
  • Regular export sales reports were also released; just under 600,000t of wheat, 2.6 million tonnes (Mt) of corn, and 1.5Mt of beans.  Corn figures were large but bean and wheat were mostly as expected, with some noting the slowdown in Chinese business as most of the Chinese sales were switches from unknown and therefore were not “new”. Milo had 365,000t total, with 242,000t of new Chinese business the main driving factor
  • The USDA’s next WASDE report is due on next Tuesday, 10 November US time. Ideas are for slightly lower corn and bean yields.  Markets are taking note of comments by the USDA attache in China pegging corn imports there at 22Mt. There’s been ongoing discussion about the divergence between official WASDE figures at 7 Mt and the realized sales in the market which are well above that.
  • Drought conditions remain in place across the US HRW belt, with the updated Drought Monitor released overnight still calling Kansas at 45pc moderate or worse drought.  Weather maps continue to pencil in solid rains for the eastern side of the state, but very little in the west where most of the winter wheat is cropped
  • Rains have been falling in parts of Brazil but general dryness remains a concern. Talk is focusing in once again on La Niña and the historic risks there

Australia

  • Another red day on the harvest cash boards with wheat down another $5-10/t along the east coast, barley was relatively unchanged across the board.
  • Canola was up for the day on the back of global oil values, local domestic bids up $7-8/t along the east coast and also firmer in WA
  • We continue to see good harvest conditions in northern NSW with grain hitting the bins causing some harvest selling pressure
  • 8-day BOM forecast is calling for more showers through Vic and southern parts of NSW

 

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