Daily market wire 1 December 2017

Lachstock Consulting, December 1, 2017

Overnight futures markets:

Mixed for grains, lower for oilseeds.
  • CBOT wheat down -1.75c to 433c,
  • Kansas wheat unchanged at 431.5c,
  • Corn up 2.25c to 355.75c,
  • Soybean down -6.5c to 997.75c,
  • Winnipeg canola down -0.79$C to 509.6$C,
  • Matif canola down -1.25€ to 367.75€.
  • The Dow Jones up 343.04 to 24283.72,
  • Crude Oil up 0.02c to 57.32c,
  • AUD down to 0.756c,
  • CAD up to 1.290c, (AUDCAD 0.9759)
  • EUR up to 1.189c (AUDEUR 0.635).


Winter wheats were mixed to end the month, with poor export sales and December contract deliveries, applying nearby pressure. Grain was only stopped by millers and warehouseman happy to take profit on the large carries. Globally, some reasonable new demand has surfaced with Saudi tendering for 470,000t over the weekend for Feb-April shipment. Baltic and European premiums have rallied slightly in anticipation they will win this business. Hard Red Winter (HRW) wheat is unlikely to get a look in given the freight disadvantage, plus the wet gluten requirements that would call for higher quality/higher premium HRW. China has reportedly purchased a reasonable amount of Canadian wheat this week. Implied volatility in Dec SRW went out at 19.6 per cent.


Corn overcame poor export sales and improved South American weather, finishing stronger, thanks to the EPA’s announcement for a continued mandate of 15 billion gallons in 2018-19, the same as 2017-18. On its own this is not overly bullish, but the new import duties for Argy and Indo biodiesel will see increases in US grain demand to process this. The USDA announced a flash sale of 110,000t of US sorghum into China, which could put Australian barley under pressure if prices drive barley out of the ration.


Month end trading saw soybeans under pressure on an improved South American forecast. The probabilities are low given the two week forecast, but its currently calling for up to an inch of rain in Argy and Southern Brazil in the next two weeks. Soymeal was down 40 cents per tonne, while oil was 13 points lower. The weakness was surprising given that the USDA announced private export sales of 525,000t to China and 132,000t to unknown.


Canola slightly lower, although it held up reasonably well given the weakness in other oilseeds. A weaker Canadian dollar helped drive this, in combination with improving export potential from China.


The Australian market is on tenterhooks ahead of the upcoming rain event on the East Coast. NSW and Vic are expecting 50-100mm in the next 4 days, while Eastern SA is looking at 25-50mm. The farmer has been nonexistent in the cash market as they rush to get crops in ahead of the event. Track markets have seen considerable strength in fixed grades as consumers and track shorts look to cover nearby requirements. If a feed wheat scenario presents, we can’t see huge downside in spreads, given that we are not too far away from export demand. If anything it will tighten the balance sheet, as we should encourage new elastic demand.

Source: Lachstock Consulting




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