Mixed for grains and lower for oilseeds.
Wheat finished with mild gains today, led by spring wheat as unfavourable weather reduces North American high protein supplies. Ongoing snowfall and freezing temperatures in Canada’s central cropping regions are affecting unharvested spring wheat with approx. 42pc remaining unharvested. Implied volatility in Dec Soft Red Winter wheat futures finished at 21.87pc, Matif wheat was up €0.5/t to €203.50/t, Black Sea wheat was up $0.5/t to $249/t and the Ruble was up 0.54pc. Wheat export sales came in at 423,200t which was in line with market expectations. Bangladesh purchased 120,000t of US spring wheat in a recent tender. Cold wet weather delaying corn and bean harvest is also delaying wheat plantings.
Corn finished lower as the market reduced bullish enthusiasm ahead of the WASDE report, with the threat of larger yields a 50:50 change. Export sales were 1.351 million tonnes (Mt) and above market expectations, but without a large fund short to exploit it was not enough to prompt a bid. Crop progress had the corn harvest at 34pc vs. 26pc last week, with conditions down 1pc at 68pc good to excellent.
Soybeans sold off with export sales coming in below expectations at 569,700t. Harvest delays are ongoing with wet weather remaining for the Plains and south west corn belt. After the close crop progress revealed the bean harvest at 32pc from 23pc last week, with conditions unchanged at 68pc good to excellent. Brazilian prices continue to increase which is making US beans even more appealing to China. They are approximately $15/t cheaper on a landed basis to China despite the 25pc tariff, but political risk is hard to put a value on. Soybean meal was down $0.69/t and soy oil was down -0.37 points.
Australian markets sold off on the east coast yesterday, with the market reacting beyond expectations to the weather events. Interestingly these should do very little for winter crop production but we still saw wheat prices fall approx. A$8/t. WA prices did not follow the east lower as recent export business to the Philippines suggests price support at current levels. This led the east coast market to trade under WA import parity, which seems unsustainable this year given the east coast deficit and strong dependence on interstate imports. Sorghum prices were pummelled by the weather forecast but seem to have fallen enough to engage some demand.
The forecast remains solid for the east coast with 15-25mm expected across most cropping regions. This forecast is in contrast to the BOM’s announcement of a 70pc chance of El Niño in the later parts of the year. This serves as a solid reminder for shorts not to get too cute with prices on a sell off. WA harvest is not far away and the weight of volume could add some selling pressure, although we would expect to see a lot of South East Asian consumptive demand step in on any decent break lower.