Lower for grains and oilseeds.
- CBOT wheat down 7.25c to 449c,
- Kansas wheat down 9c to 465.5c,
- Corn down 3.75c to 362c,
- Soybeans down 5.25c to 993.5c,
- Winnipeg canola down $C2 to $503.5,
- Matif canola up €0.25 to €350.
- Dow Jones up 77.29 to 23937.75,
- Crude oil down 2.11c to $US59.04 per barrel,
- AUD up to 0.779c,
- CAD up to 1.261c (AUDCAD 0.982),
- EUR down to 1.22c (AUDEUR 0.636).
Moisture in the US winter wheat forecast, combined with a large movement in the fund position, saw wheat under pressure at the end of the week. Implied volatility in March Soft Red Winter (SRW) wheat went out at 22 per cent. In the Commitment of Traders (COT) report, Hard Red Winter wheat has gone from -6,000 to 12,500 contracts, while SRW has gone from -117,700 to 106,700 contracts. Egypt’s GASC purchased six cargoes of Russian and Romanian wheat at prices reflective of Russian cash replacement. With a reduced fund short and the prospect of US rains, it will be interesting to see how this wheat story plays out. Global cash values are not declining, but perhaps the funds will be tempted to take another bearish swipe at wheat, which could end in tears.
Soybeans sold off as the weekend’s weather forecast for Argentina improved. The open today will be interesting to see as the market reacts to weather. Looking forward, there is some potential for 10-15 millimetres of rain later this week. The COT report had the bean position -46,600 versus -54,900 contracts a week earlier. Soymeal was up $2.10 per tonne, while soy oil was down 25 points.
Corn suffered from weakness in beans, a large reduction in the fund position, and Chinese export cancellations. The COT report revealed how much weight there is in the corn market, having covered 175,000 contracts in 12 cents. The fund position now sits short -71,700 contracts. The China-US trade issue continues, with four cargoes being cancelled and switched to Ukraine, citing GMO issues. New-crop fundamentals in corn have a lot of uncertainty, with a 5-million-tonne variance on Brazil’s second crop, plus a lot of weather to get through in the US and Argentina.
Canola followed weakness in outside markets, giving up some of the earlier gains, but still managing a stronger weekly close. In the absence of a significant demand story, canola will follow beans and be victim to the South American weather market.
Aussie markets showed good strength last week, thanks to a depreciating currency, strong northern feed markets and a strong export barley market. We expect a slow start to the week in cash markets, with lower futures and limited grower engagement. Wheat saw some export business last week, with The Philippines’ feed market continuing to show good support for ASW and below, thanks to our tax and freight advantage. The barley market remains strong in China, with c and f bids now around $249/t. On top of this, the market is expecting Saudi Arabia to tender again soon, which should uncover strong price increases in European markets.
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