Markets

Daily market wire 11 May 2017

Lachstock Consulting, May 11, 2017

Overnight markets:

Higher for grains, lower for oilseeds after digesting the USDA’s first new crop SnD reports.

  • CBOT Wheat up 2.25c to 431.75c,
  • Kansas wheat up 0.5c to 439.25c,
  • Corn up 7.25c to 373.75c,
  • Soybean down -3.75c to 970.25c,
  • Winnipeg Canola down -7.70$C to 519.9$C,
  • Matif canola unchanged at 372.25€.
  • The Dow Jones down -32.66 to 20943.11,
  • Crude Oil up 1.46c to 47.34c,
  • AUD up to 0.735c,
  • CAD down to 1.366c, (AUDCAD 1.004)
  • EUR down to 1.086c (AUDEUR 0.676).

Wheat

Wheat closed slightly higher, with the USDA report offered no major surprises. US Winter wheat production was 1.3 million tons (Mt) lower than market expectations. The new season global wheat carryout was pegged at 258.3 Mt, which is big and on par with this year’ huge surplus. The detail though reveals that China carryout is forecast to increase 17Mt, so remove China from the equation and global stocks are lower. In fact, across the 8 major exporting countries new season production was down 15Mt. Production forecasts were questionable for China and India whose crops increased 10 and 2.15Mt respectively, current demand enquiry is not reflective of this. Away from the report, some concerns remain for yield and quality damage, which still need to be determined in Hard Red Winter (HRW) wheat areas after recent weather events. Globally things are looking safe from a production point of view, France has received timely rainfall, which is easing concerns there. There is talk of cold temps in Russia, but not breaking headlines at present. The USDA did call Russian new crop 67 Mt, which implies no issues there.

Soybeans

Soybeans slightly lower with the front-end contract suffering the biggest losses. Ending stocks in report for both new and old crops were slightly below the markets expectations. Soybeans were stronger leading into the report and responded well, however they could not hold their gains, due to weakness in the oilseed complex.

Canola

Canola took a big hit, after being a pillar of strength recently. The USDA’s new crop oil SnD forecasted larger than expected production and a larger carryout, which saw it fall half a cent. Canola followed oil down, with a stronger Canadian dollar also weighing in on things.

Corn

Corn was the strongest market today, rallying out of the report, due to lower than expected old crop supplies in the US, plus lower projected carryout’s in the new season global SnD’s. The average old crop market estimate for 16/17 ending stocks was 2,331 million bushels (about 59Mt), but the report came in at 2,295 million bushels (about 58Mt).  Globally carryout’s were set at 195.27Mt vs. market expectations of 209.7 Mt, the main catalyst for the change is Chinese data, which is not overly transparent, so market treating this with caution.  Stepping away form the report, weather conditions are improving with much needed warm temperatures in the Midwest. Ethanol production was higher week on week, which sees ongoing demand for US corn. Interesting to see where futures go from here, with large South American crops, reasonably good export demand and ongoing feed and ethanol demand in the US.

Australia

Australian forecast has improved slightly for South Australia, though the falls in WA are missing the parched areas in Kwinana and Geraldton. There is a lot of rainfall in Central QLD and NNSW, but it looks to be too far inland to provide major benefit to the winter crops. No major cash market improvements, though rail strike issues are expected to be resolving which should see the export task improve going forwards.

Source: Lachstock Consulting

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