Markets

Daily Market Wire 7 June 2024

Lachstock Consulting, June 7, 2024

Winnipeg canola firmed 3 percent, corn firmed 2pc. Wheat markets eased a little.

  • Chicago December 2024 wheat down 7c/bu to US688c/bu;
  • Kansas Dec 2024 wheat up 1.5c/bu to 712c/bu;
  • Minneapolis Dec 2024 wheat down 5c/bu to 732.75c/bu;
  • MATIF wheat Dec 2024 down €2/t to €258/t;
  • Corn Dec 2024 up 10.5c/bu to 469.5c/bu;
  • Soybeans Nov 2024 up 16.5c/bu to 1167c/bu;
  • Winnipeg canola Nov 2024 up C18.70/t to C$660.70/t;
  • MATIF rapeseed Nov 2024 up €6.50/t to €482.75/t;
  • ASX Jan 2025 wheat down A$3.50/t to $382.50/t;
  • ASX Jan 2025 barley down $15.10 to $323.90/t;
  • AUD dollar up 20 points to US$0.6667.

International

Where to start. Something for everyone into the end of the week – wheat down, corn up, import bans, poor weather, good weather, USA beating Pakistan in the cricket T20 world cup – yep, things don’t make sense. 

Let’s start with wheat – from a production perspective the themes continue – Hot and dry Russian conditions continue to push the street estimates below 80Mt. The EU continues to struggle with excessive rainfall, especially France. This explains the amount of investment Matif vs Chicago, a popular trade in fund land. Meanwhile the US and Canada are in very good shape. So the main fundamental driver of futures is adding weight. 

In a strange move, Turkey has shut imports until Oct – rough and dirty, this represents 2Mt of demand, somewhat offsetting some of the cuts in Russia. 

Corn had an amazing rally – conditions are great, forecast is, for the most part good and ending stocks are pegged the sunny side of 2bbu. Export sales were an impressive 1.18Mt vs a 900kmt guess. Many of the long-range forecasters have flagged the potential for an excessively hot summer, particularly toward the end of summer and last night I note some shorter-range folks talking a ridge mid to late month. 

The US awaits tonight’s their jobs data – which is increasingly the barometer for their rates outlook. The average street guess is 3.9pc, unchanged from the prior update. Change in Nonfarm payrolls is anticipated to be 180k vs 175k prior. 

The significance to the AUD outlook can’t be understated. Post what I thought to be bad week for Aussie data the AUD is seeking direction, and the rate differential is one of the purest drivers of value. I have to admit, this is where I get more confused, not less. The growth in housing loan approvals was impressive, suggesting the housing market is extremely resilient – however, there was also a drawdown in household savings which, when put in context, shows Australian homes are struggling in relation to our western counterparts. I’m sure I will be told where I am wrong, but the immigration impact on the housing market and the fact many home owners are refinancing is the driver of the loan value increase, households then draw savings to fund – if this is in the ball park, a rate increase would be an interesting input – despite what Michele Bullock said. 

A person in Mexico died due to a previously undetected strain of bird flu.

Australia

Local values lost further ground yesterday as the weight of offshore moves weighed on markets .

ASX traded down to $382.50 Jan25. 

Domestic markets were a little more resilient though, giving up $2-3 for the day. With traders now on the defensive as the sellers that are in the market trying to catch the falling knife.

WA old crop wheat values have held ground this week, quite impressive given the break in offshore futures. 

The 23/24 WA wheat export program will be over 90pc complete by the end of June, leaving little work to do and provides support to basis levels. 

New crop bids are lower, APW1 MG wheat now $415/t FIS, CAN $795/t FIS and feed barley $340/t FIS.

 

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