Markets

Daily Market Wire 8 February 2021

Lachstock Consulting, February 8, 2021

Markets took off risk ahead of Tuesday’s USDA reports.

  • Chicago wheat March contract up US3.75 cents per bushel to 641.25c;
  • Kansas wheat March contract up 6.5c/bu to 625.25c;
  • Minneapolis wheat March contract up 4.25c/bu to 626;
  • MATIF wheat March contract down €0.25 to €224.50/t;
  • Corn March contract down 1.5c/bu to 548.5c;
  • Soybeans March contract down 5.75c/bu to 1366.75c;
  • Winnipeg canola March contract down C$3.20/t to $692.30;
  • MATIF rapeseed May contract up €0.50/t to €439.75;
  • Brent crude April up US$0.50 per barrel to $59.34;
  • Dow Jones index up 92 to 31,148;
  • US dollar index down 0.5 to 91.0;
  • AUD firmer at $0.766;
  • CAD firmer at $1.276;
  • EUR firmer at $1.204

International

Macro excitement about the new US stimulus package remains, with the attempts to push it through via budget reconciliation looking set to see it pass in the next 2 weeks – adding US$1.9 trillion ($1.9 times 1012) in new liquidity.

Coronavirus concerns remain in play for global macro markets though, with reports over the weekend that the AstraZeneca vaccine is not effective against the South African coronavirus variant.

We’re one trading session away from the February WASDE report. Given the corn balance sheet impact of recent US corn sales to China, there’s more than normal interest in how the USDA will balance the figures. Uncertainty going into Tuesday’s report will likely see markets take some more risk off in the next 24 hours.

StatsCanada stocks report as at 31 December 2020 pegged total wheat stock at 24.8 million tonnes (Mt) and canola at 12.1Mt.  Wheat was a little tighter than some had thought but neither figure was a real shock to the market. March and July stocks reports often have some significant adjustment/residual factors.

US sales flashes had 102,000t of corn to unknown for the old crop

South American weather maps are starting to show a little bit of moisture on the extended run models for central Argentina into later next week, but dryness remains a concern.

Brazilian harvest is still slowly plugging along, though rain delaying harvest is still bringing major delays to exports. Focus is shifting to the delayed safrinha crop planting. In spite of the better moisture prospect being of general benefit, a long planting delay would raise concern about yield potential.

Russian export tax formulas for the new season got the “official” approval late last week, but there’s been more discussion about whether the government’s assumptions for the formulas will work. There’s potential for more volatility if it were to become significantly unhedgeable.

Chinese New Year this year is Friday 12 February. The week of holidays from the 11-17 February will bring most of the country to a shutdown. Some are expecting to see more sales business in the next few days in a rush to get it across the line before the holidays.

The USDA outlook forum in mid-February will be electronic this year. Lachstock notes the afternoon sessions on 18 February, which in Australia would be mid-morning on the 19 February, will include a focus on the USDA’s view of Chinese market impacts. It’s free to register and attend for those who wish to tune in.

Australia

Late Friday selling saw ASX east coast wheat futures nearby settle down $5/t.

Welcome weekend rain delivered 10-30+ mm of rain across parts of the western Darling Downs, giving a much-needed drink to some of the later sorghum crops.

Today’s markets will be likely opening with some downwards pressure from the firmer dollar, at US0.766.

 

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