Markets

Daily market wire 12 Jan 2017

Lachstock Consulting, January 12, 2017

lackstock1

Down for grain and oilseeds ahead of the USDA report.

CBOT Wheat was down -8c to 418.75c, Kansas wheat down -6.5c to 431.75c, corn down -1c to 357.25c, soybeans down -2.25c to 1011.5c, Winnipeg canola down -1.89$C to 498.1$C, and Matif canola down -0.25€ to 414.25€. The Dow Jones up 98.75 to 19954.28 , Crude Oil up 1.62c to 52.44c, AUD up to 0.7443c, CAD down to 1.317c, (AUDCAD 0.9807) and the was EUR up to 1.058c (AUDEUR 0.7031).

Corn was under pressure as China increased the tax on DDG imports which is expected to slow imports. Despite rising stocks and margins being squeezed, ethanol production from corn was at record weekly levels again. Corn was under heavy pressure early before rallying late to manage only slight declines, this could be attributed to index buying as their participation in corn was expected to be larger than wheat.

Wheat experienced a heavy sell off breaching key technical support levels, as negative corn news spilled over. In addition, rainfall forecast for winter wheat areas next week has improved, which should provide more snow cover and reduce threats of winterkill.

Index fund buying appeared to slow down in wheat which could not sustain price levels. Market is expecting the lowest wheat acres since 1965, which may see downside post report given the market’s already extreme view.

Soybeans rallied off recent lows to close slightly lower. Rainfall forecast for Argentina, which was thought to increase flooding and reduce harvested acres, has reduced. With DDG imports being reduced there is potential for soymeal demand to increase which provided some underlying support.

Canola lower again, despite strength in palm and soy oil.

Locally its not a great day for grain sellers with the AUD rallying over 70 points, due to USD weakness based on fresh concerns regarding Donald Trump’s economic capabilities as US president.

Barley prices are seeing good support from the DCT market which supports ideas of an ongoing Chinese program. If Saudi tenders this month, then we should see enough demand to steady prices in the near term.

Source: Lachstock Consulting

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