Overnight futures markets
Mixed for grains, lower for oilseeds.
- CBOT wheat down -6.25c to 481c,
- Kansas wheat down -9.25c to 507.5c,
- Corn up 1.5c to 397.25c,
- soybeans up 13c to 1060.75c,
- Winnipeg canola up 1.5$C to 524.9$C,
- Matif canola up 0.75€ to 348€.
- The Dow Jones up 293.59 to 24483.05,
- Crude Oil up 0.34c to $US67.16 per barrel,
- AUD down to 0.775c,
- CAD up to 1.258c, (AUDCAD 0.976)
- EUR down to 1.232c (AUDEUR 0.628).
Wheat futures prices suffered from a positive medium term Hard Red Winter (HRW) wheat areas forecast, which was all that was needed to expose buyer exhaustion.
Spring wheat futures price was down US6c/bu and implied volatility in May Soft Red Winter (SRW) wheat futures went out at 25.375pc. That’s all today’s session was about, tired buyers, which enabled the bears to drive HRW wheat through the gap formed on Monday, SRW is yet to break its gap. We could see further follow through selling with no new fundamentals before we get state conditions next Monday.
Freezing temperatures are forecast over the weekend, which statistically could encourage conditions declines on Monday. Weather in the Northern Plains remains cold and wet, which is restricting spring wheat sowing and could see acreage declines if conditions stay cold and wet.
Despite the weak price action in wheat today, it still has a lot to overcome from a weather point of view, and given its proximity to corn, prices for which have been supported, in wheat it feels like a buy-the-dips scenario.
Soybeans found support from declining Argy production estimates and solid export sales. The Rosario Grain Exchange revised their production estimates down 3Mt to 37Mt (USDA at 40Mt). Soymeal was up US$3.20/t, while soy oil was up 10 points. Weekly export sales in soybeans came in at 1.51Mt vs. market estimates of 1.15Mt.
Canola found support from the strength in beans, finishing with mild gains in a quiet low-range session.
Corn export sales, at 839,000t this week were below market expectation of 1.15Mt. This shortfall prevented a potential rally in corn in sync with beans.
Cold, wet medium-term conditions forecast for the corn belt, are going to restrict sowing pace and should see acres shift into later crops.
The US government is considering revisions to biofuel policy which would see the ethanol blend in gasoline increase from 10pc to 15pc. This would be friendly corn, as it would encourage increased local demand though it would be difficult though to determine whether this policy was part of a government attempt to offset any farm losses associated with Chinese tariff restrictions.
The Rosario Grain Exchange left their corn production estimate unchanged at 32Mt (USDA 33Mt).
Aussie markets remain very well bid on the east coast in old crop, with nothing on the forecast to ease new crop production concerns.
Consumptive buying has been noted in old crop, with limited pasture supplies increasing feedlot cattle numbers and on farm grain feeding.
Barley continues to defy gravity, thanks to the historically tight balance sheet. Given that barley is now cheaper than old crop wheat, it is buying local feed demand which the export market cannot afford to lose. “Barley is the next bit coin”, said a local trader.
Wheat remains well bid despite the futures sell off; basis will remain very strong until we get some confidence in new crop.
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