Daily market wire 12 December 2017

Overnight futures markets:

Lower again, for grains and oilseeds.

CBOT wheat down -5.5c to 413.5c,
Kansas wheat down -5.25c to 412.75c,
Corn down -3.75c to 349c,
Soybean down -7.5c to 994c,
Winnipeg canola down -2.60$C to 502.5$C, and
Matif canola down -2.25€ to 362.5€.
The Dow Jones up 51.22 to 24380.38,
Crude Oil up 0.63c to 57.99$ per barrel,
AUD up to 0.752c,
CAD up to 0.777c, (AUDCAD 0.967) and the
EUR was up to 1.177c (AUDEUR 0.639).

Wheat

Wheat continued to get pounded by fund sellers. There were no major changes in fundamentals today. Russian cash prices remain bid at US$191/t, while US futures weakness could ignite some export demand there. Although the market is suffering on account of the impressive export pace out of Russia, which continues to flow, suggesting a total figure of 35 million tonnes it is expecting a very slight (81,000t) increase in US stocks from tomorrow’s World Agricultural Supply and Demand Estimates (WASDE) report. Implied volatility in March Soft Red Winter wheat futures went out at 17.66pc. Wheat needs some demand, or an issue with Russian logistics, though it doesn’t seem like we’ll encounter anything like this before the end of the year, which means we are at the mercy of the funds until then.

Corn

Corn had nowhere to go, as wheat and beans sold off. On top of this we saw a 25pc reduction in weekly export sales, which came in at 586,000t. The market is expecting a slight reduction in US ending stocks from tomorrow’s WASDE report, though it is only small at 230,000t. Ethanol demand is the major supporter of corn at present, holding it up against a sea of weakness in outside markets. Speculation is building that the Trump government is attempting to amend biofuel policy to ease the burden on oil refineries. Though it’s hard to speculate on the outcome, a change like this would be detrimental to corn pricing.

Soybeans

Soybeans were lower again today on an improved weather forecast for Argentina and southern Brazil. Meal suffered the most falling $4.1/t, while oil was down 21 points. Tomorrow we will see a a report from (Brazilian forecasting agency) CONAB and WASDE, with the market expecting lower exports. If we can discount the weather issues in South America, then there is no problem for beans, presuming lower exports and trend acreage next year. As a result the sellers are in the driver’s seat, but it’s unlikely that the South American story is over yet.

Canola

Canola lower again, suffering ongoing pressure from last week’s Statistics Canada production increase. There are still good demand prospects for canola, which should lead to futures support, though it’s not presenting in a hurry.

Australia

The Aussie market remains reasonably quiet, with weather delays preventing farmers from having confidence in quality and volumes. Export demand is not encouraging traders to step up to the blocks on wheat, which makes for a fairly quiet market. Barley is well bid in malt and feed on account of quality issues and ongoing Chinese demand. The 8-day Bureau of Meteorology forecast is calling for 15-25mm of rain for SA and Victoria which should cause further delays and quality issues.

Source: Lachstock Consulting

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