Markets

Daily Market Wire 7 January 2022

Lachstock Consulting, January 7, 2022

US wheat prices eased another 2 per cent overnight, while oilseed values firmed again, rapeseed by 2pc.

  • Chicago wheat March contract down US9.25 cents per bushel to 760.75c/bu;
  • Kansas wheat March contract down 17c/bu to 787c/bu;
  • Minneapolis wheat March down 22.25c/bu to 948.25c/bu;
  • MATIF wheat March contract down €3.25/t to €276;
  • Corn March contract down 7.25c/bu to 602.25c/bu;
  • Soybeans March contract up 5c/bu to 1394.75c/bu
  • Winnipeg canola March 2022 contract up C$1.60/t to $1023/t;
  • MATIF rapeseed February 2022 contract up €18.25/t to €806.50/t;
  • ASX Jan 2022 wheat contract down A$2/t to $345/t.
  • ASX Jan 2023 wheat contract unchanged at $365/t.
  • AUD dollar weaker at US$0.722c.

International

In other markets Black Sea wheat dropped US$4.5/t to close at $314.75. The May contract posted a high on the 23-Nov-21 of $366/t and in the meantime the tax has been steadily increasing. Soybean meal dropped $2.40/st and soybean oil dropped 0.54usc/lb.

It seems the only time the US can sell wheat into the export market is when it rallies. The market was lower and they only sold 48,600t versus the 321,000t needed to hit the USDA estimate. Some snow on the way for the US Plains looks like it will miss Kansas.

The meeting notes from the Federal Reserve December meeting was the wet blanket on the market and a clear indication that the time horizon on a rate increase maybe earlier than expected.

While there is some rain on the Argentine forecast, it won’t be enough to deal with the 43 degrees that will hit. Meanwhile in the north of Brazil there is widespread flooding.

Brazil-based consultancy AgRural slashed its Brazilian soybean crop estimate by 11.3 million tonnes (Mt) to 133.4Mt due to heat and drought in southern Brazil. It now forecasts Brazil’s soybean yield will be the lowest since 2015-16. AgRural says Paraná has been hit hardest, with drought spreading from western areas of the state in December. The firm also cut its production forecasts for the Rio Grande do Sul, Santa Catarina and to a lesser extent Mato Grosso do Sul. AgRural says “In the rest of the country, the crop is developing well and high yields are expected in Mato Grosso, where the first areas are already being harvested.”

The world is at the beginning of a commodities supercycle that could go on for a decade, Jeff Currie, global head of commodities research at Goldman Sachs, says in a Bloomberg TV interview, Is “extremely bullish” on commodities; it’s “best place to be right now”, notes record dislocations in energy, agriculture, metals, and a lot of money in the system, oil market has potential to get extremely tight over next 6 months.

Australia

Markets remained subdued yet again locally, wheat values were relatively unchanged with ASX eastern wheat settling at $343/t for January contract. Barley markets were thin on the bid and the offer. Canola found a bid early for small volume with values around $840/t Port Kembla.

In the BOM latest Climate outlook overview some of the key takeaways were • February to April rainfall is likely to be above median for parts of northern and eastern Australia • The La Niña in the Pacific Ocean, the near-positive state of the Southern Annular Mode (SAM) and the Madden–Julian Oscillation (MJO) over the eastern Pacific are likely influencing the rainfall outlook.

Heavy falls have been recorded through NSW with Dubbo recording 59mm, Temora 23mm and Griffith 55mm With harvest pretty much completed through NSW growers will now be switching their attention to the summer weed program. With ongoing rising cost of glyphosate and tight supplies does this put more pressure with good summer rain activity on the market and also impact growers further rising cost of production?

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