It’s probably more about the weaker US dollar than fundamental grain news this morning. The US jobs data was a little bearish the US dollar. Slower than expected jobs growth in the US, less participation and fewer hours for those working were the key to it all. One headline read “soft or hard landing, here we come”. There were a few other indicators that were mixed but generally the US economy is showing very tangible signs of a downturn now.
The key to all of this for us is what the RBA will do with Aussie rates next week. An increase could see the AUD climb sharply. A Reuters poll is suggesting that the majority (90%) of those currency experts polled are expecting the RBA to increase local rates by 25pts (Merry Christmas), so the move might already be factored in.
Last night the big moves were in Chicago soybeans which in turn lent significant support and spillover buying to both Paris rapeseed and ICE canola. The late rally in beans pushed day to day increases up to 23.5c/bu. Paris rapeseed closed E9.25 higher on the nearby contract, and ICE canola pushed C$9.70 higher and C$9.42 higher in the Dec cash market ex farm SE Saskatchewan. The move in Winnipeg futures was worth close to AUD$15.00 at yesterday’s exchange rate, but the higher AUD peeled over AUD$5.00 out of the conversion this morning. Paris also converted to a much lower rally given the strength in the AUD, but still significant if reflected here on Monday.
The move in Chicago soybeans is mostly speculative. Rain in Brazil over the weekend may help soybeans there that have been looking for a drink. The sowing pace, which is lagging a little, may also pickup after a fall of rain improves topsoil moisture.
Wheat values were firmer at Chicago, the weaker USD appearing to finally put the seasonal slide in wheat futures on hold. Nearby SRWW futures at Chicago closed the week at 572.5c/bu, 3c/bu under last Fridays close. The AUD is now 2c higher than it was this time last week.