Wheat mixed as market weighs up rain’s impact.
- Chicago wheat down US 0.75 cents per bushel to 437.25c;
- Kansas wheat up 1.5c to settle to 403c;
- Minneapolis wheat down 0.75c to 514.25c;
- Corn down 6.5c;
- Soybeans down 12c;
- Winnipeg canola down C$0.20 per tonne;
- MATIF canola down €2/t;
- Dow Jones down 66.47 points;
- Crude oil up US$0.76 per barrel;
- AUD weaker;
- CAD and EUR higher.
The effects of the extremely wet spring are being felt; the national corn crop is estimated to be 23 per cent planted versus the five-year average of 47pc. Some of the larger production states had an extremely quiet week, and Illinois took its plantings from 9pc to just 10pc versus the five-year average of 65pc. Spring wheat is a similar story, with the national crop only 22pc planted versus the five-year average of 52pc. However, the winter crop has been the beneficiary of the moisture, with crop conditions rated at 62pc good to excellent, unchanged from last week.
Commodity markets traded amid more “will-they-or-won’t-they” US-China negotiation speculation. Wheat was the follower overnight, but eventually fought its way well off the lows, probably driven by position unwinding versus any real fundamental reason.
Weather in Europe is cold, but not cold enough to cause any lasting damage, while conditions are dry in parts of Russia but not dry enough to dent the massive production estimates. Sessions like that of last night reflect what is the true driver of sentiment and capital flow. US area and yield losses are still in play, and balance sheet estimates are speculative. Prevent-plant dates are approaching, and forecasts will continue to shape the next 12 months of balances. It is worth remembering that last night’s session will be captured in the next Commitment of Traders report, when corn will presumably gets shorter than the already record position.
The Australian cash market has had to absorb a lot of information. Recent rain was well received but missed some areas in the east, 14-day forecasts provide no relief for Western Australia, last week’s drop in old-crop values puts east-coast prices well below WA import parity, and offshore markets keep domestic traders guessing. Volume was extremely thin as these inputs were assessed. Looking forward, the realisation that it’s a long time until new crop versus the apparent endless supply of old-crop make price projection difficult at best.
Source: Lachstock Consulting