Markets

Daily Market Wire 9 November 2018

Lachstock Consulting, November 9, 2018

WASDE report produces mixed results, market take a moderately weaker turn.

  • CBOT wheat down -2.5c to 507.75c
  • Kansas wheat down -5c to 497.25c
  • Corn up 1.25c to 373.5c,
  • Soybeans down -0.25c to 867.50c,
  • Winnipeg canola down C$1.20 to $474.70,
  • Matif canola down €0.50 to €376.50,
  • Dow Jones up 10.92  to 26191.22
  • Crude oil down $0.96 to 60.63c
  • AUD down to 0.72539c,
  • CAD up to 1.31508c, (AUDCAD 0.95394)
  • EUR down to 1.13619c (AUDEUR 0.6383).

WASDE

Whilst we had all heard and it was pretty well advertised that there were some revisions coming to the USDA china SND (maybe not this big) as a global trader its one of those days where you finish the day (or in our case wake up to it) feeling a little confused and lost and realise that today we know less than we did yesterday!  Lucky its Friday hey!  back up off the deck on Monday and see what the flow on effects might be or how we rationalise this China debacle yet again.

Wheat

The focus on the day was the USDA monthly WASDE report.  Highlights in the wheat numbers were; China production up 4.5mmt to 132mmt, Russia left unchanged at 70mmt, Russian exports unchanged at 35mmt, Australia cut by 1mmt to 17.5mmt, China beginning stocks up 4.4mmt and as a result of the changed in China figures we saw global stocks for wheat increase 6.5mmt.  China is always opaque to say the least, the market took this has a bit of a slap in the face and traded down for the day, however there haven’t been any changes to the major exporter SND, if anything its still getting tighter.

Corn

The corn pit was a strange one.  The headline focus was on the US corn yields, which were cut to 178.9bu/acre, below market expectations of a 180 number.  To me this should have been supportive but corn still finished in the red.  Dig a bit deeper and we have US corn ending stocks down 2mmt and production lower…nothing there.  Keep digging and we see that China beginning stocks were increased from 79mmt to 222mmt!!!  Yes that is not a typo, increased to two hundred and twenty two (thanks Richie Benaud) million metric tonnes!  Sure not, that is truely a “what the…” moment right there.  But then they also add another 31mmt on this years production and increase domestic use in china by 25mmt leaving us with ending stocks that are up 149mmt since the last month to a monstrous 207.5mmt number.    Looking forward to seeing what the corn brokers and traders have to say about this one…very strange and I wonder how reflective the market has been of this in China, price action doesn’t seem to be consistent with a >200mmt stocks figure.  Guess we will find out one day, probably when it is vice tight and markets exploding and we have to cut stocks by 75mmt to “solve” it….

Oilseeds

Poor old oilseeds, still can’t take a trick.  US yields cut 1bu/ac to 52.1 but demand was cut more to see ending stocks increase to 955mbu, up 70.  Clearly there is little faith in a trade deal getting done, with exports cut another 160mbu.  Global changes saw China imports drop 4mmt but global stocks changes were pretty much restricted to the US.  Not surprising that we didn’t see the USDA “tinker” with the China SND anymore, China only produce 15-16mmt so there isn’t much room for manipulation.  Canola markets followed suit.

Australia

The Australian market was softer yesterday as the Aussie dollar strengthened and the recent rain across much of the eastern states has allowed consumers to feel a bit of a sign of relief.  As we approach harvest, some people are also trying to reduce longs and get short, before we see some strong activity in the market.  We wouldn’t expect it to stay to soft out the back end of harvest as we still need to respect import parity from WA and make sure WA doesn’t over export to Asia.

Source: Lachstock Consulting

 

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