Federal holidays in Canada and the US leaves market data for north America a little scarce this morning. Cereal and corn markets generally continue to trend lower while oilseeds were mixed. Paris rapeseed futures closed +€3.50 / tonne in the Feb slot, Chicago soybeans +2c/bu in the Jan slot and cash bids for canola ex farm SE Saskatchewan for a December lift were up C$1.16/t on average.
This brings us to the party pooper, the wet blanket. The Aussie peso improved 0.51% against the US dollar and most other majors. As an example of the value of the move we can look at Winnipeg canola futures, unchanged from Friday due to the holiday, but once factoring in the AUD / CAD move, we have AUD$5.40/t worth of downside potential just from the stronger AUD.
This plays out across the board, Paris rapeseed futures although moving €3.50/t higher, a spot rate conversion of +AUD$6.21/tonne. When compared to the last conversion the potential up side is reversed and we have a theoretical decline in the conversion of roughly AUD$1.38 / tonne, not ideal.
The decline rolls across wheat too, when compared to Saturday morning conversions we see HRWW out of the PNW is back roughly AUD$1.70/t, white wheat is AUD$1.84/t lower. Russian milling wheat FOB Black Sea conversion is back roughly AUD$4.99/t. Black Sea and EU conversions to Asian markets and back to an equivalent Aussie farm price are hit the hardest. Ukraine conversion is back AUD$3.57/t, French milling wheat is back AUD$4.15/t.
When comparing Aussie H2 wheat C&F Japan and US Club White wheat C&F Japan we continue to see the Australian product is cheaper by roughly US$7.00/t, this conversion doesn’t include a trade margin. Looking at milling wheat values into the Asian market, US wheat is still the cheapest with Australian wheat not far behind. Australian values could remain unchanged, higher basis, and still not price itself out of the Asian market against EU / Black Sea wheat.
New crop sorghum and barley conversions are AUD$2.00 to AUD$3.00 lower thanks to the AUD, but like wheat, remain very competitive on a C&F cash basis into Asia. The US government shut down continues, no official data flowing to the market is leaving a few punters guessing.