Daily market wire 15 May 2018

Lachstock Consulting, May 15, 2018

Mixed for grain and oilseeds.

  • CBOT wheat down 7.5c to 491.25c,
  • Kansas wheat down 8.25c to 509.75c,
  • Corn unchanged at 396.5c,
  • Soybeans up 14.5c to 1017.75c,
  • Winnipeg canola down C$0.09 to $532.2,
  • Matif canola up €1 to €358.25,
  • Dow Jones up 68.24 to 24899.41,
  • Crude oil up US$0.40 to $71.11 per barrel,
  • AUD down to 0.752c,
  • CAD up to 1.280c (AUDCAD 0.963),
  • EUR down to 1.193c (AUDEUR 0.630).


Wheat continued to suffer selling pressure brought about by fewer global weather threats, and a very slow demand profile. Implied volatility in July Soft Red Winter wheat went out at 24.75 per cent. Weather outlooks in the US and Russia are both improving, and beneficial for wheat production. The only real global weather problem in wheat is in Australia, given that Argentina has dried out, enabling greater planting potential. Wheat conditions improved week on week, with the good to excellent rating up 2pc to 36pc.


The Saudi Arabian Government’s buying agency has purchased 1.5 million tonnes of feed barley for July-August delivery at an average price of $228.6 per tonne c and f. This price represents a significant discount to old-crop markets, particularly in Australia, where stocks are at record lows. The reason for the lower prices is because this delivery period coincides with the European and Black Sea harvest, where grower liquidity is expected to be high, given current cash prices. There is some risk to this price aggression, given the tightening global balance sheet and large demand potential from China for Ukrainian barley. We could see similar price action to last year in the Ukraine, where prices rally out of harvest and represent the seasonal lows for global pricing.


Corn finished fractions lower in a mild session that featured a tight trading range. Some slight pressure was noted earlier on, with the unwinding of corn/bean positions thought to be the driver. After the close, planting progress came in at 62pc, revealing a 23pc weekly increase, which puts the crop fractions below the five-year average. Heavy rainfall throughout the corn belt is going to hold up planting, and should see limited progress over the next week. Yield penalties become an issue if the crop goes in too late, so the market could look upon this favourably.


Soybeans found support from optimism regarding China-US trade resolutions. This came via a tweet from Donald Trump on Sunday night, which was supportive of struggling Chinese firm ZTE. This also coincided with rumours that a trade resolution had been reach between both governments, though nothing official was reported. If trade returns to normal, there is good reason to be bullish beans, so speculators are slowly scaling in to gain exposure to this event. Soymeal was up $9 per tonne, while soy oil was down 5 points.


Canola finished fractions lower, and well off the highs after following bean values up earlier on. Canola has done too much work relative to beans over the past two weeks, so new buying was scarce, with the improved price action in beans encouraging unwinding of canola positions in favour of beans.


Cash prices were higher in Australia yesterday for barley and wheat, led by a strong northern feed market that is continuing to open the drawing arc as it rallies. The eight-day forecast for Australia has gotten dryer, with nothing major forecast in any winter-crop production regions. Longer term, the models are pointing towards no significant moisture for the rest of May, which will increase cash-price support and place a heavy reliance on June rainfall.

Source: Lachstock Consulting



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