Lower for grains and mixed for oilseeds.
Wheat continues to grind lower. The potential for further China/US trade tensions added weight as well as US deliveries and a larger Canadian number. Statscan are calling the wheat crop 31.7 million tonnes (Mt) which was around 1Mt over trade guesstimates. Positive news has the market considering lower HRW acres due to unfavourable weather. Implied vol in Mar SRW finished at 20.75pc. Matif wheat was down €0.5/t to €202/t, Black Sea Wheat was unchanged at $246 and the Ruble was up 0.05pc to 0.014. Egypt’s GASC purchased 6 cargoes of Black Sea wheat, despite noted LC issues on at least 16 cargoes still awaiting execution. Wheat markets need consistent demand and political certainty before any strength can be maintained.
Corn reacted in a similar fashion to beans in response to the trade threat. It appears that Black Sea corn has found a second wind as far as selling is concerned, with their prices reducing US corn’s export potential.
Soybeans markets were under pressure due to macro uncertainty relating to the arrest of a Chinese national (the CFO of Huawei) in Canada, on behalf of the US Government, over breaches of Iran sanctions. This has no direct trade impacts, but it raises tensions between the two countries. Soybean Meal was down US$-1.6 per tonne and Soy oil was down -0.1 points.
Canola finished fixed across the two contracts, with Winnipeg gaining strength from lower than expected production which prompted some short covering. Statscan pegged the crop at 20.34mmt which was not in wild contrast to the market, but still slightly lower.
Aussie markets remain interesting with WA values pricing over east coast import parity and still featuring good export demand prospects. The Philippines made more “feed wheat” purchases earlier in the week at values supportive of current ASW replacement. They are in again today, which highlights our cheap global relative values. The balance sheet keeps telling us to slow elastic exports, but the market isn’t doing it, which could spark some fireworks as the year rolls on and supplies dwindle.
Source: Lachstock Consulting