Markets

Daily Market Wire 14 December 2018

Lachstock Consulting, December 14, 2018

Higher for grains and lower for oilseeds.

  • CBOT wheat was up 9.5c to 536c
  • Kansas wheat was up 8.75c to 520c
  • Spring wheat was up 5.25c to 588.25c
  • CBOT corn was down 1c to 384.25c
  • Matif corn was up 0.75 to  €177,
  • Soybeans were down 13c to 907c,
  • Winnipeg canola was down C$2.20 to $482.90,
  • Matif canola was unchanged at €369.50,
  • Dow Jones was up 56.14 to 24583.42,
  • Crude oil was up 3.6pc to $52.98 per barrel
  • AUD 0.722
  • CAD  0.749
  • EUR 1.136.

Wheat

Wheat futures found support from increases in global flat price and better than expected US export sales. Export sales were 754,100 tonnes versus market ideas of 650,000t. Premiums are rallying in Argentina, Russia, Australia and the carry curve is flattening in the US. The story is building, shorts are getting nervous prompting an early exit as speculation on China purchases adds fuel to the fire. Trade flows are realigning as Russian wheat takes out Africa homes, now that it can’t work into Asia due to phyto issues. But things remain tight. Add US acreage reductions and the Jan 12th USDA report getting closer and there is plenty of reasons to be friendly wheat. Hail damage in Argy is now making the rounds, but the jury is out. No one is talking about India yet, but there is potential for demand increases there which would be the final nail in the short wheat coffin. Implied vol in March SRW finished at 22.5 per cent, Matif wheat was up 1.25€ to 207.5€, Black Sea wheat was up $4.25/t to $251.75/t and the Ruble was up 0.35pc to 0.015

Corn

Corn finished fractions lower trading a 3-cent range, lacking a demand story. Corn sales came in at 903,000t which was below market expectations at 1.25 million tonnes (Mt). Pressure from Black Sea prices and decent conditions in Brazil should keep a lid on corn for now which could play into next year, where the market will get new direction from revised yield updates, acreage etc.

Soybeans

Soybeans sold off as the USDA announced China sales of 1.13Mt which was lagging weekly projections of 5Mt. This can still occur, just not as fast as the market had hoped. Soybean meal was down $US-3.7 per tonne and soy oil was down -0.2 points. Weekly sales came in at 792,000t which were below expectations.

Australia

Aussie markets were stronger yesterday with inverses in WA and the East Coast continuing to rally things. The Philippines were in for another two cargoes, but the results have not yet been released. Barley prices are uncovering strong bids for feed and malt, with rumours that circulating that China are back in the market. Weather wise there is still good moisture (25-50 mm) forecast for NNSW and Qld and we have seen good falls (50-100mm) in parts of Northern Vic. Harvest is done there so it just tops up the profile for new crop. Areas in the south west that are still harvesting are experiencing delays and potential quality downgrades, but this will not likely have a material impact on the market. Unless of course it reduces the supply of ASX deliverable wheat in Portland. The ASX still has a large amount of open interest in the January contract and is currently inverted by $10 over the March, we need to see this open interest reduce in order to prevent further increases in the inverse. Expect to see sharp premiums for upcountry rail sites in Victoria.

Source: Lachstock Consulting

 

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