Markets

Daily Market Wire 9 September 2021

Lachstock Consulting, September 9, 2021

US wheat markets stepped more than 1pc lower.

  • Chicago wheat December contract down US10.25c/bu to 709.5c/bu;
  • Kansas wheat December contract down 12.75c/bu to 704.75c/bu;
  • Minneapolis wheat December down 13.75c/bu to 894.5c/bu;
  • MATIF wheat December contract down €0.25/t to €242/t;
  • Corn December contract down 0.5c/bu to 510.25c/bu;
  • Soybeans November contract up 2.5c/bu to 1279.5c/bu;
  • Winnipeg canola November contract up C$1.40 to $881.50/t;
  • MATIF rapeseed November contract up €4.75/t to €581.50/t;
  • US dollar index up 0.2 to 92.7;
  • AUD weaker at US$0.737;
  • CAD weaker at $1.269;
  • EUR weaker at $1.182;
  • ASX wheat September contract down A$2 to $338/t;
  • ASX wheat January 2022 down $2/t to $338/t.

International

In the wheat pits Chicago settled down -10.25 usc/bu closing at 709.5usc/bu, Kansas was -12.75 usc/bu lower to settle at 704.75usc/bu, while Minni softened -13.75 usc/bu to go out at 894.5usc/bu. Corn fell -0.5 usc/bu to go out at 510.25usc/bu while beans were up 2.5 usc/bu to settle at 1279.5usc/bu WCE canola rallied 1.4 CAD/mt closing at 881.5CAD/mt with Matif canola finishing higher by 4.75 Eur/mt. In outside markets the Dow Jones fell -68.93 points, crude was up 0.85 bbl.

I’m old, old enough to have talked about the relevance of US futures to the global wheat market one too many times. This is definitely an example of dislocation. World wheat demand has not blinked an eye at the US$300/t FOB price handle yet US futures have found selling. The lack of demand on the row crop side has weighed on the wheat long which can largely be attributed to China. You cannot read a wire at the moment without finding a theory about ASF demand erosion estimates. And as long as China stays on the side lines this theory sounds pretty plausible, so here we are. Ahead of Friday’s WASDE report one could contemplate that with a USDA stroke of the pen adding corn planted area, a vessel cancellation or two and things could seem pretty bleak. Alternatively, an unchanged WASDE and a fresh round of Chinese bargain buying and we wouldn’t have nearly enough risk premium.

The Russian tax has created enough uncertainty around forward wheat value that liquidity is a challenge. This has been somewhat of a windfall for Ukraine which has been able to combine good production with amazing prices. Grain exports are just under 8pc ahead of this time last year, well on the way to achieve their 23.8 million tonnes wheat export estimate.

With the EPA submission sitting in front of government it is interesting to see the potential impact of the electric car goals in the US. With around one third of corn consumption heading to ethanol production the impact to the price could be significant. This does assume however that the ethanol inclusion rates remain fixed at 10pc. The blend wall could potentially be moved if engine manufacturers become comfortable with higher inclusion and petrol stations had incentive to gear up their pumps.

Palm oil keeps firming. COVID-related problems with harvesting the palm are adding to supply woes.

GASC bought 300,000t wheat, 240,000t from Ukraine and 60,000t from Russia. Rough and dirty the prices equate to $310-317/t FOB.

Australia

Local wheat and barley markets both remained largely unchanged across the board yesterday in both track and delivered. ASX Jan east coast wheat was softer by a couple bucks to settle the day out at A$338/t.

Reports of more interest through NSW zone on new crop selling by the grower. While other zones are on the quiet side with growers wanting to see another rainfall event at the end of the month.

Hand to mouth buying continues on old crop filling holes into the ports and domestic consumers for LH Sep and October slots. Old crop wheat bids have come off $5/t this week.

Barley still holds a bid behind for Sep-Oct, with appx 375,000t of east coast barley shipments on the lineups for September. We have also seen an additional handy vessel confirmed of canola headed to Japan.

WA Southern region still looks the best chance to jag another decent rainfall event over the next 8 days, while growers in SA and Victoria now hang on till the end of month and put full faith in the longer terms forecast for an above average October.

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