Daily Market Wire July 11, 2022

Friday markets firmed. U.S. wheat prices gained 6%

  • Chicago wheat contract in December up 54.75 US cents per bushel to 906.5 cents per bushel;
  • Kansas wheat contract in December up 56c/bu to 953.5c/bu;
  • Minneapolis wheat contract in December up 57.25 c/bu to 1,003.5 c/bu;
  • December wheat MATIF contract up €16.25/t to €345/t;
  • Black Sea wheat contract in September up $5.25/t at $364/t;
  • September corn contract up 27.25 c/bu to 623.5 c/bu;
  • November contract for soybeans up 31 c/bu to 1,396.5 c/bu;
  • Nov 2022 Winnipeg Canola contract up C$6/t at $855.10/t;
  • November 2022 MATIF rapeseed contract up €3.50/t to €695.50/t;
  • ASX July 2022 wheat contract up A$2/t at $405/t;
  • ASX January 2023 wheat contract up $5/t at $420/t;
  • Dollar AUD weaker at US$0.685.

International

Chicago wheat Dec. 22 settled Friday at 906.5 US c/bushel. A week earlier on July 1 the price had been similar but in the next 4 trading days traded at a low of 805.25c/bu amid a tussle epic between fundamentals and flow.

Open interest in Chicago wheat is a good reflection of the brutality of the cleanup given that the average 2021 IO was a hair under 400,000 contracts and there are currently just over 280,000 contracts open.

The weather in the United States has been dry and hot, which is absolutely the worst case scenario for the corn crop as it enters the pollination window. Global balances simply cannot match US corn yields below 174 bushels/acre. This means that anything less than a perfect end to the season would force the markets to factor a considerably higher risk premium into the price.

Putin has made it pretty clear that the war has just begun and the prospect of an export corridor is all but behind us. Everything bullish today has been around for a few weeks. French conditions have had another week of decline, now rated 63% good to excellent, down 26% from May. EU weather is warm which is not ideal for EU maize which is also in the pollination window

USDA crop reports will be released on July 12 and will have a significant impact on the markets.

Australia

Local stocks found reason to firm up over the weekend. Wheat prices increased by A$5-10/t, new and old crop. Barley strengthened by a fraction and canola offers for the new season firmed by $10-15/t.

The GIWA released its first 2022 winter crop production forecast last week and pegged this year’s wheat crop at 10.15 million tonnes (Mt) from 12.89 Mt last year. Canola production is forecast at 2.84 Mt (3.13 Mt last year) and barley production at 5.25 Mt (6.37 Mt last year). The report noted that “unprecedented hot conditions in June pushed crops into growth stages well ahead of what they would normally be at this time of year. Harvests generally look better than the last year in many southern regions due to advanced development Crops are in very good condition in the southern regions, although the northern regions are in desperate need of a drink and next week’s rainfall will be crucial for maintain current grain yield potential Climate models have suggested for some time that the winter and spring of 2022 in Western Australia will be drier than average and this is still the case”

The 8-day forecast looks relatively dry for Qld, while most NSW farming areas are expected to harvest 5-10mm. Most of Vic, SA and WA should all receive varying totals between 5 and 15mm with some areas up to 25mm.

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