Grains and oilseeds futures markets were lower
- CBOT Wheat was down -7.5c to 436c,
- Kansas wheat down -6c to 430.75c,
- corn down -0.5c to 349.5c, S
- soybean down -5.75c to 977.25c,
- Winnipeg Canola was closed and
- Matif canola was down -3€ to 366.25€.
- The Dow Jones down -12.599 to 22761.07,
- Crude Oil up 0.270c to 49.56 US$,
- AUD down to 0.775c,
- CAD up to 1.254c, (AUDCAD 0.972)
- EUR up to 1.174c (AUDEUR 0.660).
Wheat finished softer on a combination of Aussie weather and some balance sheet reminders. Old crop winter wheats are still facing pressure from last weeks Sep stocks report increase, revealed in the USDA’s small grains report. Spring wheat was close to unchanged. Implied volatility in December Soft Red Winter wheat contract went out at 16.5 per cent (pc). The introduction of the Variable Storage Rate (VSR) in Kansas’s wheat futures this year is discouraging execution, with majority of the market favouring the cash and carry option. This is leading to strengthening basis that should make for interesting price action when Brazil comes to the market for their expected Hard Red Winter wheat demand. Matif wheat futures were slightly lower, falling 0.7pc, whilst Russian values continue to hold stable. Nearby shipping capacity is well sold in Russia, which is supporting nearby spot pricing, preventing any declines in flat price in spite of the large crop. Egypt (GASC) was in after the close for November shipment and it will be interesting to see whether price premiums increase, given the lack of nearby capacity.
Soybeans were under pressure from the beginning of the session, settling close to Friday’s low. Soymeal did not offer any support, settling down US$3.50/t, while oil was 31 points higher. Concerns for lower bean acres in South America brought on by a combination of wet weather in Argentina and hot dry conditions in Brazil are being reflected in cash markets. Some private analysts are calling farmer sold levels on new crop 14pc vs. 26pc for the same time last year. If we combine new crop production concerns with expected demand increases from China, then it’s not difficult to see price support for beans moving forward.
Corn finished with mild losses in a quiet session that only featured a US3.75 cent/bushel trading range. Fresh inputs were limited, with the USDA off the tools for Columbus Day. The crop progress report in corn is expected to show it 25-30pc done vs. the average of 38pc. The USDA is out on Thursday with its WASDE report and while the market is not expecting any surprises from a yield point of view, they are anxious with regards to harvested acres.
The Aussie weather forecast has improved for Victoria with 15-25mm now expected in the major cropping regions. Queensland is expecting 25-50 mm with reasonable coverage in summer cropping regions. Cash market had a softer tone yesterday with limited conviction from buyers in light of the weather forecast. If the Victorian rainfall is achieved then it has potential to bolster yield potential given the recent reductions in stored soil moisture.
Source: Lachstock Consulting