Oil Trumps Wheat
Grain markets did an abrupt about face this week. After weeks of steadily rising, ag commodities led by wheat erased a month’s worth of gains. The catalyst appeared to be easing tensions in the Mid East – or at least the rhetoric dialed down a notch – and rains in the US Plains stabilising the […]
May Day for Wheat
Grain markets are firmly in the grip of the weather gods right now. The US HRW crop continues to draw attention, holding at 30% good-to-excellent despite last week’s frost event. Some of the forecast rainfall did materialise across the parched regions of western Kansas, though the Texas and Oklahoma panhandles largely missed out. There are […]
Global forecasts for wheat tightening
As has become typical in this “new normal,” markets swung through another week of diametrically opposite headlines. Some of that volatility can be traced back to the ever-changing rhetoric out of the White House — the “Strait is open, no it’s closed” narrative feels almost theatrical. For now, though, wheat is taking its cues from […]
Wheat market is being pulled in opposite directions
The constant flip-flopping in the Middle East is starting to lose its punch as a market driver. The latest move from the US to effectively blockade the Strait of Hormuz—halting most movement in and out of Iran—did little beyond weakening the USD and dragging equity markets lower. Commodity markets, by and large, followed suit. Except […]
Dire Straits
Commodity markets are being pulled in multiple directions all at once. A tenuous cease fire announced this week brought a broad sell off, with crude oil plunging 14% at one point with wheat following suit. Confusion remains around what exactly a cease fire entails as conflict continues and the Strait of Hormuz remains effectively closed […]
Beware the Headlines
Whether or not the “new way” markets operate is here to stay or not, this week was a clear example of headline driven trade impacting the market. Early in the week, Donald Trump posted on social media that “good, productive talks aimed at a complete resolution of the armed conflict” had taken place with Tehran. […]
Markets are now pricing in higher energy costs?
I’ve spoken before about the role of speculators and managed money in agricultural markets. Realistically, something like 96% of participants in CBOT—or any other trading venue for that matter—couldn’t tell a wheat plant from a power plant. One of the key factors that had been capping prices and limiting rallies was the large net short […]
Energy sector surge and weather market continues
The surge in the energy sector has also spilled over into alternative fuels, primarily corn ethanol and biodiesel. If the conflict drags on, pressure will likely mount to increase mandated blending rates to stretch petroleum supplies further. That would potentially strengthen the demand outlook for crops used in biofuels, particularly for canola, soybeans and corn. […]
Short covering heralds a shift
I’ll admit to being a bit surprised to see the wheat market continue to rally over the past week. The return to work after the Chinese Lunar New Year and little in the way of fundamental issues to drive the market, I presumed it would be a quiet week. However, money doesn’t sleep and the […]
Will these ripples build into a wave?
With a truncated trading week due to the US Presidents Day public holiday, combined with much of Asia closed for Lunar New Year celebrations, you would normally expect market activity to be subdued. Instead, volatility crept back in as an early weather narrative and rising geopolitical tension gave traders something to engage with. Heading into […]
Technical twist drives wheat
Another mostly quiet week in the wheat pits. The Feb USDA and WASDE report barely rated a mention, other than raising US ending stocks and holding carryout at previous levels. Globally wheat production increased a fraction as did overall carryout. By and large, a really benign report for wheat. The market did, however, sit up […]
Macro take the wheel
This weeks commentary is more about macro-economics and geopolitics that anything directly wheat oriented. Having climbed to over 0.70USc, the AUD has tipped over in the past couple of trading sessions, to be around 0.695USc and a slight improvement for our cash prices. The change seems to be centred around Trumps new Fed Chair nominee, […]