Markets

Daily Market Wire 15 October 2018

Lachstock Consulting, October 15, 2018

Higher for grains and mixed for oilseeds.

  • CBOT wheat up 9.25c to 517.25c
  • Kansas wheat up 10.5c to 524.25c
  • Spring wheat up 6.5c to 596c.
  • CBOT corn up 4.5c to 373.75c
  • Matif corn up €1.50 to €174.25
  • Soybeans up 9.25c to 867.5c,
  • Winnipeg canola down C$1.80 to $494.70,
  • Matif canola down €0.50 to €371.50,
  • Dow Jones up 287.16 to 25339.99
  • Crude oil up 0.53c to 71.34c
  • AUD unchanged at $0.711,
  • CAD unchanged at $0.767,
  • EUR down to $1.155

Wheat

Wheat found buying support as the market grew tired of stagnant price action and started to trade production concerns again. Implied volatility in Dec SRW finished at 20.75pc. Matif wheat was up €1.25/t to €204.75/t, Black Sea wheat was down $0.25/t to $248.5/t and the Ruble was up 0.19pc. Export sales were 339,000t and well below market expectations of 450,000t. Frost and dryness in Argentina are raising concerns for the crop there with both the Buenos Aires Grain Exchange and the Rosario Grain Exchange highlighting these events as negative production flags. Add the fact that a large portion of the Canadian crop is still under snow and you can easily justify a wheat rally. New crop planting delays in the US are being worsened by excessive snow cover. The wheat Commitment of Traders Report (COT) had SRW -43.4k contracts, HRW +16k contracts and Spring Wheat -3.2k contracts.

Corn

Corn found further buying support after a solid technical close last week, prompted by a non-drastic yield increase from the USDA. Fund short covering appeared to offer support on any price dips. Ongoing weather concerns in Iowa and Minnesota and creating harvest delays and prompting realistic concerns for quality and yield. Corn sales came in below expectations at 1.01 million tonnes (Mt), where the market was looking for 1.25Mt. The COT came in -80.7k contracts from -95.3k contracts.

Soybeans

Soybeans uncovered a new round of buying after the USDA avoided a 54b/ac yield in last week’s report. This buying seems optimistic at best, given that the USDA also failed to address demand reductions created by the trade dispute with China. Otherwise there was nothing new for beans, more of the same speculation on politics. Export sales were tiny at 439,000t vs market ideas of 1.05Mt. Soybean meal was up US10c/t and soy oil was down -0.37points. The COT had funds -101.7k contracts from -100.3k contracts.

Australia

The Aussie cash market finished the week with a firmer tone, after a midweek retreat thanks to solid east coast rainfall. Sorghum crop potential is creating optimistic crop ideas there and a decent grower/trade selling campaign has driven it to levels that appear valuable under wheat. Last week’s rainfall appears fantastic for crop development, and the 8-day forecast is showing even more potential for NNSW and SQLD. Central WA and parts of the Wimmera and Mallee could get 15+mm which will provide further stabilisation to the crops there. WA harvest pressure appears to be the next potential price driver, but given how close they are to export parity, this selling could be met by a solid consumer bid.

Source: Lachstock Consulting

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