Daily market wire 15 February 2018

Lachstock Consulting, February 15, 2018

Overnight futures markets

Mixed for grains and oilseeds.
  • CBOT wheat down 5c to 455.75c,
  • Kansas wheat down 4.75c to 469.75c,
  • Corn up 0.5c to 367.25c,
  • Soybeans up 5.5c to 1027.75c,
  • Winnipeg canola down C$0.5 to $508.5,
  • Matif canola down €1.25 to €350.75,
  • Dow Jones up 174.84 to 24815.29,
  • Crude oil up US$1.39 to $60.58 per barrel,
  • AUD up to 0.7909c,
  • CAD down to 1.252c (AUDCAD 0.990),
  • EUR up to 1.243c (AUDEUR 0.636).


Wheat finished lower, with an improved US weather outlook combining with a well-balanced fund position to exhaust new buying for the moment. Implied volatility in Mar Soft Red Winter (SRW) wheat went out at 26.18 per cent. Most of the SRW areas and corn belt look to be receiving heavy rainfall in early March, while there is potential for 5-15 millimetres of rain across the southern plains, with slightly better potential for eastern parts of Oklahoma, Texas and Kansas. Matif futures finished €1.15 lower, while Russian values remained stable at US$198-$200 per tonne. There is some very early talk of damaging cold temperatures in Russia, though the forecast has some work to do before it covers the important production areas.


Corn finished fractions higher, but off its highs as it remained torn between strength in beans and improved conditions in the US. Weekly ethanol production came in at 1.016 million barrels, down 4pc on last week’s figures. Weekly stocks fell 2.6pc for this period, though demand still remains historically high. The USDA reported a private sale of 123,000t to an unknown buyer, and Thursday’s export sales are expected by the trade to be 1.25 million tonnes. Corn has the potential for decreased US acreage which comes with rallying beans, as well as strong US export potential; on the other hand, it has a very limited structural position in the Chicago Board of Trade, as well as an improved weather forecast in the US corn belt.


Soybeans posted a small rally, with Argentina’s dry-weather forecast once again providing the rallying call. If the forecast eventuates as expected, then this could be Argentina’s driest February in 38 years. Brazil is still showing potential to receive a deluge of rainfall starting on Saturday, with 60-100mm forecast across most production regions. Soymeal led the charge, finishing $4.70/t higher, while oil was also stronger, up 23 points. The market is expecting US export sales to come in at 600,000t in tomorrow’s figures.


Canola rallied in check with beans earlier in the session before stronger local currency drove values down. A C$3.20/t range was featured in the May contract, after rallying to $509.7/t and looking to break technical resistance before a 0.5pc increase in the CAD forced prices lower.


Aussie markets showed some promise yesterday in wheat, with protein premiums lifting, possibly due to Indian or Middle Eastern demand.  With China on holidays, the barley market is in a holding pattern for now,  but rallying Russian and French premiums serve as a reminder that Saudi Arabia has not bought for a while, and prices in the next tender should be significantly higher than the last. While this will not directly support Aussie pricing, it does increase the lowest common denominator and narrow the spread, which could give China more comfort in increasing their c and f bid.


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