Lower for grains and oilseeds.
- CBOT wheat down 7.75c to 498.75c,
- Kansas wheat down 9c to 518c,
- Corn down 5.5c to 396.5c,
- Soybeans down 18c to 1003.25c,
- Winnipeg canola down C$0.90 to $532.3,
- Matif canola down €2 to €357.25
- Dow Jones up 91.63 to 24831.17,
- Crude oil down US$0.849 to $70.51 per barrel,
- AUD up to 0.754c,
- CAD down to 1.279c (AUDCAD 0.964),
- EUR up to 1.194c (AUDEUR 0.631).
Wheat suffered further selling post Thursday’s report, thanks to improved moisture in the US and enough rainfall in Russia to satisfy requirements in the near term. Implied volatility in July Soft Red Winter (SRW) went out at 24.625 per cent. Australia’s production prospects are now the only concern. Argentina is drying out, which is reducing its area concerns as farmers get better access to paddocks. Demand remains an issue for US wheat, with Russian discounts continuing to take market share. This has serious potential to increase US carryout figures, which would be very negative for futures. The Commitment of Traders (COT) report had SRW at -25,800 from -46,800 contracts, and HRW at 37,300 from 28,000 contracts.
Corn sold off, suffering pressure from wheat and beans, as well as feeling the pinch from negative or unimpressive price action post Thursday’s report. Despite a very constructive balance sheet, the corn market is suffering from order-flow issues. Everyone is on the same side, and for the moment, there are no major concerns for US yields. Yields have a lot of pressure on them and need to be above average to prevent a drawdown in stocks year on year. In addition, the USDA seems to have underestimated its ethanol demand, which is expected to increase, given the strength in energy markets. The COT report had the market’s position as long at 238,000 from 220,900 contracts.
Beans finished lower, breaching some key technical support levels, as the break from highs on Thursday revealed weakness in price action, which encouraged further selling. Brazil’s crop estimates appear to be improving, which is coinciding with the obvious low demand profile of US export beans to China. The COT report had the bean position at 110,600 from 149,300 contracts. Soymeal was down US$7.50 per tonne, while soy oil was up 18 points.
Canola finished weaker, in sympathy with beans. Statscan reported 31 March that stocks at 9.1 million tonnes were slightly below the market’s expectations. This is significant because it reinforces Statscan’s 2017/18 production figures, which the market has been dubious about.
In Australia, prices were flat to slightly softer on Friday due to the stronger currency. Markets remain well supported, irrespective of global futures markets. The Australian market is a pillar of strength until the weather forecast changes new-crop yield prospects. At this stage, there is nothing of significance on the forecast for the next eight days, which takes us beyond the May 20 deadline of yield penalty avoidance.
Source: Lachstock Consulting