Daily market wire 14 December 2017

Overnight futures markets:

Higher for grains, mixed for oilseeds.

CBOT wheat up 6c to 416.75c,
Kansas wheat up 5c to 416.25c,
Corn up 1.25c to 349c,
Soybean up 3.25c to 990.5c,
Winnipeg canola down -1.40$C to 498.7$C,
Matif canola down -2€ to 358.75€.
The Dow Jones up 87.51 to 24592.31,
Crude Oil down -0.46c to $56.67 per barrel,
AUD up to 0.763c,
CAD down to 1.282c, (AUDCAD 0.979)
EUR up to 1.182c (AUDEUR 0.645).

Wheat

Wheat showed strength in a convincing session that suggests we have run out of sellers for the moment and could indicate fund desire to cover shorts before the festive season. Implied vol in Dec SRW went out at 17.32%. The Brazilian government approved Russian wheat as an import option for their local millers, which would see a decline in HRW exports, presuming cheaper Russian wheat, though the freight fob price differences will still see HRW get most of this business. It does provide somewhat of a floor in HRW pricing though, given that it cannot get too expensive before Russian wheat takes the business. Iraq is in for another 50kmt of Australia or Canadian origin hard wheat, with Australia in a good position to take this out. The French Agmin reduced their export forecast for wheat shipped out of the EU by 400kmt. The Philippines purchased 3 cargoes of feed wheat out of Australia at $229 CFR, which equates to levels well below ASW pricing in Victoria and puts a downside floor in local SFW pricing.

Corn

Corn fractions higher, with a very low 2.5-cent range. It struggled to keep pace with wheat today, which finally got some market attention. Weekly ethanol production was slightly lower than last week’s record, yet still solid at 1.089 billion pounds.

Soybeans

Soybeans finished with slight gains in a quiet session, featuring a 5-cent range. The stronger finish was surprising, given that both the Argy and Brazilian forecasts are wetter. Soymeal finished up 90 cents per tonne, while soy oil was 24 points lower.

Canola

Canola finished lower again, breaking through the $500 level in the Jan contract. The Canadian dollar was stronger in response to USD weakness, which was a large contributor to the softer tone.

Australia

The Aussie forecast remains ideal for harvesting conditions in Victoria, while parts of Western SA are looking at 15-25mm which could add further delays to what’s been an incredibly slow harvest. Grower selling has had some influence on pricing in Victoria, now that harvest pace is increasing and the quality profile is becoming more apparent. Export business has confirmed underlying support for off grade wheat, while early protein results in Vic are putting pressure on spreads there. Local consumers need to be careful not to lose too much wheat to the export market, given the huge barley demand profile and tighter year on year supplies.

Source: Lachstock Consulting

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