Daily market wire 15 November 2017

Overnight futures markets:

Mixed for grains, lower for oilseeds with macros the driver.

CBOT wheat up 3.75c to 428c,
Kansas wheat up 0.5c to 428c,
Corn down 4.75c to 337.5c,
Soybeans down 6.5c to 967.75c,
Winnipeg canola down C$2.5 to $512.6,
Matif canola down 1.75€ to 377.5€,
Dow Jones down 41.95 to 23397.74,
Crude oil down US$1.15 to $55.61,
AUD up to 0.763c,
CAD up to 1.273c (AUDCAD 0.971),
EUR up to 1.179c (AUDEUR 0.647).

Wheat

The delayed Commitment of Traders (COT) report helped wheat to catch a bid. Soft Red Winter increased the short by 14,000 to -125,000 contracts, while Hard Red Winter increased the short by 1400 to -26,000 contracts, and spring wheat longs increased by 1000 to 4300 contracts. The fund position has likely increased in wheat since this data was compiled, with open interest increasing by 11,000. Russian cash prices held up surprisingly well, considering the ruble was down 1.3 per cent, following weakness in crude oil, which was down almost 2pc.

Soybeans

Soybean contracts closed lower on a weaker Brazilian real, which fell 0.6pc, as well as weakness in crude oil. Meal was down $1 per tonne, and soy oil was 20 points lower. NOPA’s crush report is out tomorrow, and the market is expecting an average of 4.4 million tonnes, which would market a significant increase on the September figures, but still be below last year’s numbers. The US bean harvest is nearing completion and the focus will shift to South American production; in Brazil, rainfall in the north is proving beneficial and putting pressure on prices.

Corn

Corn could not follow the strength in wheat and a weaker US dollar. It sustained pressure from weakness in beans and crude oil; at least the trading range was higher today at 5 cents. Implied volatility went out at 11.6pc. The corn COT maintains a large short position, with the fund position increasing the short by 3,000 contracts to -205,000. Since this data was recorded, it is expected that this would have increased further, given the 23,000 increase in open interest.

Australia

Aussie cash markets remain quiet, with rain causing harvest delays on the east coast. The eight-day forecast has increased the area in Victoria and NSW where 25-50 millimetres of rain is expected to fall. This doesn’t spell immediate quality damage but it will delay things and if more in-crop rain is received, we will run into quality problems. Frost damage in Victoria is slowing harvest pace and restricting grower selling, with some areas receiving yield losses as high as 50pc. Despite being fairly close to export parity, markets remain quiet, with overseas consumers bidding hand to mouth and no local traders willing to step up on the bid side until we have a better understanding of our crop’s volume and quality profile.

Source: Lachstock Consulting

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