Markets

Daily market wire 11 April 2018

Lachstock Consulting, April 11, 2018

Overnight futures markets

 

  • CBOT wheat up 2.5c to 508.5c,
  • Kansas wheat down -1.25c to 540.5c,
  • Corn down -1.25c to 397.75c,
  • Soybean up 2.75c to 1060.25c,
  • Winnipeg Canola down -4$C to 532.7$C,
  • Matif canola down -1€ to 349€.
  • The Dow Jones up 428.90 to 24408,
  • Crude Oil up 2.16c to $US65.58 per barrel,
  • AUD up to 0.776c,
  • CAD down to 1.259c, (AUDCAD 0.977)
  • EUR up to 1.235c (AUDEUR 0.628).

 

Wheat

Wheat futures markets were mixed overnight.  CBOT found some support from short covering, while Hard Red Winter (HRW) wheat futures suffered mild pressure.

USDA, in its overnight release of the monthly US crop report, cut HRW feeding in old crop and decreased exports as a result of the variable storage rate, which has increased premiums and reduced cash market liquidity. This increased stocks slightly and contributed to the bearish tone.

Weather wise the models are not agreeing on a large forecast for HRW areas from the 20-24th of April. Aside from that the nearby forecast appears dry in the South East and cold and wet in the central northern areas.

Russian wheat prices denominated in US dollars have held up very well, given that the Ruble has fallen 9pc in two days. Russian current crop pricing remained firm, sustaining a US$211-215/t free on board range, though the pressure is being felt more in new crop where liquidity and execution problems are not major issues.

Soybeans

Soybeans had a surprise as the USDA world agricultural supply and demand estimates report (WASDE), released overnight, lowered Argentine production 7 million tonnes (Mt) to 40Mt, 2.7Mt below market expectations. This was slightly offset by increases in the Brazilian crop, which it raised 2Mt to 115Mt, which was at market expectations and the same figure as Brazil’s statistical agency, CONAB.

Tariff talks have been quiet, since the Chinese President made a trade-friendly speech referring to opening up trade barriers with the US. The problem hasn’t gone away, but it appears to be less tense for the time being.

Canola

Canola fell off its perch.  Old crop retreated against new as the Canadian inverse began to descend. It’s always difficult to maintain an inverse that is being held up by a lack of grower selling.

Today’s break and yesterday’s price action, suggest that further weakness is on the horizon.

The Canadian dollar was up 0.7pc, which was the catalyst for the softer tone today.

Corn

Corn finished fractions lower in a quiet, US4c/bu-trading-range, session. The WASDE report estimated Argy corn production at 33Mt vs. expectations of 33.7Mt. The estimate of Brazilian corn production also came in 700,000t below market expectations at 92Mt, although CONAB were much lower at 88.6Mt.

April corn stocks were increased as expected since their last update. The next driver for corn will be attributed to planting progress, or bean market movements.

Australia

The Aussie forecast is not proving to be as good as expected with 10-15mm forecast with limited cropping area coverage, in the next 4 days. Cash markets were strong yesterday, with very limited grower selling forcing prices higher to encourage longs to sell. The stronger currency decreased appetites later in the day and could make for a wide bid/offer spread in today’s trade.

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