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Daily market wire 14 February 2018

by Lachstock Consulting, 14 February 2018
Lower for grains, mixed for oilseeds.
  • CBOT wheat down 3.25c to 460.75c,
  • Kansas wheat down 3c to 474.5c,
  • Corn down 0.25c to 366.75c,
  • Soybeans down 9.75c to 1022.25c,
  • Winnipeg canola unchanged at C$509,
  • Matif canola down €0.5 to €352,
  • Dow Jones up 41.5 to 24,642.1,
  • Crude oil down 12c to $US59.17 per barrel,
  • AUD up to 0.786c,
  • CAD down to 0.793c (AUDCAD 0.990),
  • EUR down to 1.23c (AUDEUR 0.635).

Wheat

Wheat took a breather after the flurry of activity in yesterday’s session. US weather in parts of the delta and eastern corn belt has reasonable moisture for the rest of February, which should provide good support for Soft Red Winter wheat. Hard Red Winter (HRW) wheat is where the story lies. Rain is possible over 33 per cent of the eastern HRW belt, but the rest remains dry, which should lead to an ongoing decline in conditions. Implied volatility in Mar SRW went out at 26.74pc. Russian wheat values are now at $198-$200/tonne for 12.5pc protein, with Ukrainian 11.5pc-protein wheat at $193-$197/t.

Corn

Corn closed fractions lower in a quiet 2.5-cent range. Corn should gain support from the strength in beans as the ratio increases, encouraging bean plantings over corn in the US. The jury is very much out on Brazilian corn production, with another well-regarded crop forecaster revising production figures down 2 million tonnes (Mt) to 86Mt, 9Mt below the USDA’s recent estimate. With stronger beans, declining Brazilian production and attractive relative values, US corn could move higher, especially if funds reverse into a long position.

Soybeans

Weather-led support for soybeans continued overnight, with no changes to the forecast for Argentina, and the continued threat of heavy rainfall in Brazil beginning on Sunday. Ongoing dryness in Argentina is putting pressure on local crushers, who might have to switch some export sales into the US. Soymeal was $7.40 per tonne higher, while soy oil was down 28 points.

Canola

Canola couldn’t follow the strength in beans today, with lower veg oil markets weighing on things. It did manage to hold onto Monday’s impressive gains, which represents good technical strength. At this point, the canola market cannot followed all of the beans movement, without its own demand story, so with Europe quiet and China on holidays, a higher bid was hard to find.

Australia

Aussie markets were quiet yesterday, with slight gains in currency as good an excuse as any to keep trade dull. With China on holidays, barley markets were too wide to trade, with the bid side of the market unwilling to lift pricing without direction from importers. Despite the potential for increased exports, wheat was relatively quiet, despite the futures move. Northern markets continue to move higher, with import parity calculations getting close for the southern states. Dry, hot conditions in southern Queensland are offsetting recent rainfall, while winter-crop concerns continue in NSW, where rainfall has been very limited. This is reducing grower liquidity and helping to widen the drawing arc into the northern feed market.
Source: Lachstock Consulting

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