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Daily Market Wire 7 January 2019

by Lachstock Consulting, 07 January 2019

Futures closed mostly higher on Friday.

 

Wheat has continued to trickle up through Friday and into the Sunday session, up ~2¢ on KC and Chicago since Friday Aussie time, +1€ on Matif, and +5¢ on Minny. Corn has picked up 3¢ while beans +9¢. Matif rapeseed was +1€ and Winnipeg canola -$4. The AUD has gradually continued to strengthen since the mid-week sell off (which has gained the “flash crash” moniker in the news, pushing back to 71.1¢ at current with the Euro 1.140 and the CAD 1.338. Crude’s up slightly to ~$48.3 for west Texas and $57.4 for brent.

WASDE and trade policy

The USDA officially confirmed that Jan 11th reports will be delayed as the US government continues to feud over the budget. Politics there are heating up, with most critical government functions still working but increasing numbers of unpaid workers. At the same time, US/China trade talks are expected to be positive, with more meetings starting today in Beijing. We’ve heard that many times before, but in any case headlines reported off the meetings will be well watched across the markets.

Wheat

While we won’t get the winter wheat seedings report on Friday because of the government shutdown, private estimates have continued gradually trending down since the start of planting – Informa was out late last week calling for a 3% cut to total winter wheat. This is at the same time as there is more gradual talk about export interest for HRW finally hitting more export business. Will these assumptions prove correct?  That’s the big speculative factor for the next few weeks as the trade starts to guess about when the shutdown will end (and bring with it an “information flood” from the USDA).
Rumours late last week about Argentine cargos getting rejected in Algeria have not been confirmed, but prices are close enough between French and HRW to allow more interest and speculation about switches there. Russian Christmas is today, and markets there should be picking back up again later in the week/into next week which should add more clarity to currently illiquid trade there.
 Corn and soybeans
On the row crop side, ethanol stocks drew down slightly at the end of last week and margins are perking up (albeit still strongly negative with the corn strength and depressed ethanol markets). South American weather continues to push headlines as crops mature there – a little more rain on the radar for Brazilian beans but not enough to dampen concerns. US beans continue to look for large Chinese demand – but that’s weighed on by the significant political risk there as trade talks hit.

Australia

Unlike the Sydney Cricket Ground, there’s been little relief locally for struggling later sorghum crops in the downs – and forecasts still dry into the coming week.

Source: Lachstock Consulting

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