Markets

Daily Market Wire 8 May 2019

Lachstock Consulting, May 8, 2019
Australian cash markets soften while North American futures close higher on domestic factors.
  • Chicago wheat up US 2.25 cents per bushel to 439.5c;
  • Kansas wheat up 1c to 404c;
  • Minneapolis wheat up 7.5c to 521.75c;
  • Corn up 2.25c to 366.4c;
  • Soybeans up 0.4c to 830.6c;
  • Winnipeg canola up C$5.90 per tonne to $438.30/t;
  • MATIF canola up €0.75/t to €363.75/t;
  • Dow Jones fell 473.39 points,
  • Crude oil US$0.81 per barrel lower;
  • AUD and CAD higher,
  • EUR weaker.

Stocks and trade

A modest bounce overnight amid further speculation as to how the Chinese negotiations will progress ahead of Round 10 of talks, coupled with a minor tightening in Canadian wheat stocks. StatsCan released its 31 March 31 stock ideas, which saw wheat at 15.7 million tonnes (Mt) versus 16.4Mt last year, largely in line with market expectations. This was largely overshadowed by the ongoing trade talks and the promise that, should there not be an agreement, the Trump administration will be increasing tariffs on Friday. The positive is that China’s Vice-President will be involved in the Washington talks tomorrow and Friday.

Corn concerns

Corn planting and potential yield is becoming more than concerning. There is a small window without rain, but this will quickly be closed by another 75-125 millimetres. Production prospects are being impacted by area yet to be planted, and seed in the ground which is experiencing temperatures below that needed to germinate. The risk exists that this seed will burst due to excessive moisture. The last estimate on the yield side was 176.4 bushels (bu) per acre versus the five-year average of 169.74 bushels. To put that into context, if the USDA dropped this yield by 2bu, and assuming all else was equal, ending stocks would fall below 2 billion bu, not a reason to add $1/bu, but a tightening bias into a delayed crop warrants some risk premium.

Australia

Markets have continued to feel the effects of widespread trade selling. Confusion would be one way to describe the price action but, regardless of the reasons, values have fallen AUD$10-20/t throughout most of the east coast. While this puts Victoria some $30/t away from importing Western Australian grain, the consumer is being shown ample inventory, and is in no hurry to cover back-end requirements. Until end-users decide they want to increase cover, offers will dictate price direction which, for the short-term at least, is lower.

Source: Lachstock Consulting

 

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