Markets

Daily Market Wire 9 May 2019

Lachstock Consulting, May 9, 2019
Futures markets mostly a shade lower; the US dollar strengthened against most currencies.
  • Chicago wheat July contract down US0.5 cents per bushel to 439c;
  • Kansas wheat July contract down 0.5c to 403.5c;
  • Minneapolis wheat July contract down 1.25c to 520.5c;
  • MATIF milling wheat May contract down 0.5 to 184.75/t
  • Corn July contract down 2.25c to 364.25c;
  • Soybeans July contract down 3.5c to 827.25c;
  • Winnipeg canola July contract down C$0.80/t to C$437.50/t;
  • MATIF rapeseed August contract up €0.25/t to €364/t;
  • Dow Jones up 2.24 points to 25,967.33,
  • Crude oil June contract up 0.72 to US$62.12 per barrel;
  • AUD 0.6974,
  • CAD 1.3484,
  • EUR 1.1190.

Stocks and trade

Overnight futures trading was relatively quiet market ahead of the USDA World Agricultural Supply and Demand Estimates May report due out Friday. Much anticipation surrounds this report, with most of the predicted changes focused on domestic US. With extensive wet weather hindering corn and spring-wheat planting, the trade is looking for the USDA to revise down its production estimates. Given the increased likelihood of both abandonment and yield loss in the Soft Red Winter (SRW) wheat crop, many expect this balance sheet to tighten as well. On the flip side is the massive Hard Red Winter wheat crop, which is benefiting from the moisture that has SRW. Export revision in beans is also on the cards as the USDA deals with the fallout from the extended trade negotiations and anticipated demand erosion from the African Swine Flu. From a global perspective, the average guess leading into the report has a slight increase in old-crop ending stocks for wheat, corn and soybeans.
On weather, recent trends continue, with dry in parts of Russia, but some moisture on the way, and wet to extremely wet conditions in the US. There is a small window opening for corn planting but the six to 10-day outlook suggests a return to cold and wet conditions. Current planting pace is very similar to 2013, when the window opened and farmers put in 48 per cent of the crop in one week.

Australia

The old-crop market was very quiet, with more rain falling in the Western District of Victoria, with some on the way for parts of South Australia and Victoria today and tomorrow. It’s still early days, but the outlook for Western Australia fails to produce any meaningful moisture for the next 14 days. On Queensland’s Darling Downs, the outlook for rain is encouraging for the one to six days. Domestic old-crop markets have been severely dealt with over the past two weeks. The debate over current supply, driven seemingly by east-coast production carryover versus imported WA grain, will define values into the back half of the year. Consumers have been lucky enough to have the market coming their way, even with the east coast of Australia needing interstate grain to make the balance sheet work. What happens if this grain is consumed and demand remains? Based on today’s calculations, the import margin from WA doesn’t work, so either the east coast has to rally, or WA has to fall.  While this debate continues, hand-to-mouth buying is clearly evident, with spot loads required throughout the major feed destinations.

Source: Lachstock Consulting

 

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