Daily market wire 13 Dec 2016

Lachstock Consulting December 13, 2016

lackstock1Positive close for grains, mixed for oilseeds.

CBOT Wheat was up 1c to 417.25c, Kansas wheat up 1c to 426.25c, Corn up 1c to 367.25c, soybeans down -6.5c to 1031c, Winnipeg canola down -0.699$C to 518.1$C, and Matif canola up 1€ to 413€. The Dow Jones up 39.58 to 19796.43 , Crude Oil up 0.90c to 52.41c, AUD up to 0.749c, CAD down to 1.312c, (AUDCAD 0.983) and the was EUR up to 1.063c (AUDEUR 0.7045).
Wheat was under pressure early, before a weaker USD and a cold US temperature forecast helped find support for new crop.
The Saudi government buying arm SAGO purchased 725 kmt hard wheat (12.5% protein) for Feb-April delivery, at prices ranging from $205-211.74. The sellers have the option of supplying wheat from the EU, US, South America and Australia. Current hard wheat replacement out of Australia suggests we are over export parity and will not be competitive in this business. But US HRW should price into some of the later shipment periods, which helped add support to futures.
New demand continues to support global wheat values with Algeria launching a new tender to purchase milling wheat, which is expected to come from Argentina. Reports out that black sea 11.5 protein wheat is trading into India for Jan shipment at $213-216 C&F, this highlights the shortage of shipping capacity in Australia which is having trouble selling anything before mid-February.
There is no doubt that global wheat stocks are burdensome, but the story is well noted. With a large spec short and talk of index fund re-balancing, the market seems more attentive to potentially bullish stories.
Argentina’s weather forecast is expected to be dry this week, but longer term forecast suggested wet weather. The market is watching this closely, as Argentina’s weather will determine the production potential for corn and soybean summer crops which could result in a bullish story if they experience further drought like conditions.
Soybeans closed lower, after reports out of China that some crushing plants were being shut down due to air pollution. This could result in reduced demand and lead to port congestion.
Corn faced pressure to follow soybeans down, but a lower USD, higher crude oil price and index fund re-balancing helped it to achieve a positive close.
Winnipeg Canola slightly lower with soybeans and palm oil, plus a stronger Canadian dollar. Reports overnight that China’s rapeseed imports are declining this year and expected to continue.
The USDA has reported 100 kmt of US sorghum to China, this buying activity is supportive of Australian feed barley given that feed users in China switch between US sorghum and Australian feed barley at the right spread. It also backs up claims that China have ongoing enquiry for imported feed grains despite their internal harvest coming off. This suggests that their feed demand could be ongoing all year, which will be positive for exports and help to keep Australian barley prices supported.

Source: Lachstock Consulting 


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