Markets

Daily market wire 8 January 2020

Lachstock Consulting, January 8, 2020

A reminder that Friday (US time) is the winter wheat seedings report and final 2019 row crop figures.

Quiet trade continues with macro risks across the board and quiet fundamentals

Chinese trade ideas remain optimistic but nothing concrete to date

Some slight moisture chances for Australia – hopefully an improvement to help with fires, but forecasts not optimistic at current.

Market news

Quiet trade continued through Tuesday in the US with conservative positioning, given upcoming reports and wildcard politics. In the close, Chicago was off a quarter cent to 550.25¢, KC -2 1/4¢ to 475¢, Minny -1 1/4¢ to 546 3/4¢, and Matif up a quarter of a euro to 188.5€ on the earlier close.  Corn dropped a quarter cent to 384.5¢ and beans -3/4¢ to 944¢ while canola firmed with Winnipeg $2.5 to $479.7 and Matif up a euro to 416.5€.  Crude has eased back about half a buck with some with some more tempered opinions coming out of the Middle East (WTI $62.7, Brent $68.3) and the DOW dropped 120 points.  The AUD is around 68.7¢, the CAD $1.300, and the EUR $1.115.

The Chinese trade deal remains an open question. Comments from China were suggesting that they will not increase their TRQ quotas, but we haven’t seen that this rules out reallocation of unused quotas from state firms to the market.  Keeping quotas in state firms has been a de facto way of preventing their usage in the past.  We’re now a week away from the intended signing date, so expect the headlines and clarifications to continue as final details are worked out and information trickles into the market.

In contrast to the apparently intentional vague nature of earlier statements, a key US senator stated overnight that he expected the deal to be immediately available to the market after signing.

Markets will be keenly watching to see if there are any concrete actions taken.

Yesterday was Orthodox Christmas, but it will be a rapid jump back into the markets for those who had the holiday off because GASC is tendering for wheat again (for late Feb).

Meanwhile, surveyed ideas for this Friday’s corn and bean final figures are about a yield lower on corn, 0.3 bu/acre lower on beans, and overall winter wheat down about 500,000 acres form last year in HRW but there are more mixed opinions on SRW given weather and market.

Australia

Back locally, markets have pushed higher with bids working to pull out some supply from the farmer and a few players clearly still short and covering.

Transhipment interest has remained key in WA, with feed barley in the $295-300/t type FIS range working the Downs about a $405-410, right about where the nominal market is.

Demand for overall feed grains has not dropped off at all and has little reason to, currently, so it’s a matter of where it needs to price to work.

Weather models are still showing some improvement with the last runs putting up to 25mm across the WA wheat belt into next week and some chances of a 50-60+ mm band hitting the east coast into central NSW, eastern SA, and western Vic.

We’re a long way off from these events realising, but fingers crossed something comes of it.

 

Source: Lachstock

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