Futures prices were mostly firmer on Thursday.
- Chicago wheat December contract up 8.75 cents per bushel to 500
- Kansas wheat December contract down 0.25c to 435c,
- Minneapolis wheat December contract up 0.5c to 532c,
- MATIF wheat December contract up €0.25 per tonne to €175;
- Corn December contract up 4.25c to 418.25;
- Soybeans November contract up 16.25c to 883c;
- Winnipeg canola November contract up C$2.80 to $452.20;
- MATIF rapeseed November contract up €2 at €375.75;
- Brent crude October contract up $1.15 per barrel to $57.38;
- Dow Jones up 371.12 points to 26,378.19;
- AUD strengthened to US$0.6797
- CAD strengthened to $1.3235
- EUR weakened to $1.1190
In the wheat pits Chicago settled up 8.75 usc/bu closing at 500usc/bu, Kansas was -0.25 usc/bu lower to settle at 435usc/bu, while Minni rallied 0.5 usc/bu to go out at 532usc/bu. Corn gained 4.25 usc/bu to go out at 418.25usc/bu while Beans were up 16.25 usc/bu to settle at 883usc/bu WCE Canola rallied 2.8 CAD/mt closing at 452.2CAD/mt with Matif Canola finishing higher by 2 Eur/mt. In outside markets the Dow Jones gained 371.18 points, Crude was up 2.89 bbl the Aussie was 0.00436 higher to settle at 0.67996, the CAD softened -0.0074 while the EUR fell -0.002
The wheat market is a tale of two stories. There is a focus on flat price, then there is the focus on spreads, both to other wheat contracts and to corn. The flat price is a combination of speculation around Monday’s USDA report and the likelihood of further global cuts. Spreads are far more complicated. From an Australian perspective it could be seen as too complicated and too far away to matter – however, as was the case last night the movement in the spreads telegraph a potential shift in the market. News of Saudi, a buyer of both HRW and Aussie wheat, changing their import specs has far reaching ramifications. Yes it moved the spreads and yes it matters to Australia. While the hard wheat areas in Australia are the hardest hit with drought it may not be felt this year but longer term it would represent another market that the Russians have elbowed their way into.
In the row crop markets it was oddly Chinese demand for US products, veg oil in this case, that pushed values higher. The second order impacts of a lower crush in China, be it through the China/US barney or meal demand erosion via the African Swine flu has throttled veg oil availability and increased the need for imports. The USDA report does not have to answer the ongoing corn questions – regardless of the firming bias in the market suggesting it will. Conditions are, on the most part okay in the US so the USDA has to feed the bulls… who are starving.
As the week draws to an end here locally, we have seen more rain continue to fall through parts of SA and Central Vic. Market wise late yesterday wheat gained some momentum in the West on the back of lack of rainfall in last event while we continue to see East Coast markets firm a little on the back of reduced rain on the forecast and lower AUD supporting exports and lifting the transshipment cap from WA.
Source: Lachstock Consulting
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