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Daily market wire 16 April 2018

by Lachstock Consulting, 16 April 2018

Friday’s futures markets

Lower for grains and oilseeds.

  • CBOT wheat down-8.5c to 472.5c,
  • Kansas wheat down -11.75c to 495.75c,
  • Corn down -2.75c to 394.5c,
  • soybeans down -6.5c to 1054.25c,
  • Winnipeg canola down -1.60$C to 523.3$C, and
  • Matif canola down -1.5€ to 346.5€.
  • The Dow Jones down -122.91 to 24360.14,
  • Crude Oil up 0.32c to $US67.39 per barrel,
  • AUD up to 0.776c,
  • CAD up to 1.260c, (AUDCAD 0.977) and the
  • EUR up to 1.232c (AUDEUR 0.629).-6.25c to 481c,

Wheat

An improved Hard Red Winter (HRW) wheat weather outlook, for later this week and in the deferred forecasts, saw winter wheats lead the charge lower.

Implied volatility in May Soft Red Winter (SRW) finished at 25.75pc.

If the forecast eventuates and production concerns for HRW ease, there is very little to hold it up, given its high relative value, heavy old crop stocks and low demand profile.

Russian values finished the week around US$213/t free on board, at their seasonal highs. This was an impressive show of resilience given the weakness in the Ruble that occurred last week.

Wheat COT had SRW -58,200 contracts from -74,600 contracts and HRW +23,400 contracts from +16,100 contracts.

Looking at the updated forecast today, it does not appear as favourable as originally expected, so a combination of this and the release of state conditions later in the session could spark an increase in wheat prices.

Soybeans

Soybeans made a push for new monthly highs, which they achieved before retreating to settle with mild losses.

Farmer selling was noted in Brazil and as they came to the market, this offset the aggressive commercial bids. Brazilian premiums have settled off the highs reached in response to the China-US trade dispute.

Soymeal was down US60c/t and soy oil was down 15 points.

With political tensions building between Russia, the US and China, we could see macros take the lead in price action this week.

The Commitment of Traders Report (COT) had beans long 142,300 contracts from 144,000 contracts previous week.

Canola

Canola finished lower to end the week, after strong increases in the Canadian dollar put pressure on flat price. On top of this, weakness in veg-oil markets put pressure on crush margins, which prevented follow through buying in Winnipeg. Weakness in price action last week is making the canola chart look vulnerable, so with trade issues in soybeans not making headlines and conditions improving for new crop planting, we could see an increase in grower selling create a vacuum lower as speculators and traders back their bids off.

Corn

Corn got caught up in the weakness in wheat and also found some weakness of its own, with cheap South American offers threatening to take some export share from the US.

The weather story in corn continues to discourage a timely plant, with blizzard conditions over the weekend followed by two decent weather systems in the longer-term forecast set to arrive before month end. The COT in corn came in at +207,000 contracts from +178,500.

Australia

Aussie markets continued to trade higher last week, despite a softer tone from futures and a stronger AUD. The catalyst remains the dry start for next year’s winter crop, with profiles in Vic, NSW and SA all in need of a substantial top up.

Prices in wheat stabilised as basis appreciated on the futures weakness, while barley continued to strengthen, as shorts covered into an illiquid market. F1 prices in Vic got to A$280/t on Friday and it’s hard to know where they will stop, given the very tight balance sheet and increased domestic consumption.

 

Source: Lachstock Consulting

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