Markets

Daily market wire 16 Feb 2017

Lachstock Consulting, February 16, 2017

lackstock1

Overview of futures markets:

Stronger for grains and oilseeds.

  • CBOT Wheat was up 5.25c to 454.75c,
  • Kansas wheat up 4c to 469.25c,
  • corn up 4.5c to 378.75c,
  • soybeans up 16.25c to 1061.25c,
  • Winnipeg canola up 3$C to 524.1$C,
  • Matif canola up 2.75€ to 426.25€.
  • The Dow Jones up 107.45 to 20611.86,
  • Crude Oil down -0.190c to 53.01c,
  • AUD up to 0.771c,
  • CAD down to 1.307c, (AUDCAD 1.008)
  • EUR up to 1.060c (AUDEUR 0.727).

Oilseeds

Fund buying supported positive gains for soybeans and meal, as the soybean chart encourages technical bids. Crush numbers were higher than expected, with the 5 month crush volume up 3.4% YOY. In addition heavy rainfall forecast for Argentina are thought to be excessive and the threat of acreage losses from flooding has reared its head again. Oil was weaker in a reversal to yesterday’s spread trading, sell beans/buy oil.

Canola higher following strength in beans and meal, with Canadian dollar close to unchanged.

Corn

Corn stronger as fund longs increase and the technical picture builds momentum. Ethanol production continues at a solid pace. In what would appear to be bearish news at face value, China sold corn to Japan for the first time in 10 years. The market did not respond to this, as volume was small and the catalyst was due to logistical constraints in the US preventing nearby exports from the West Coast.

Wheat

Wheat was softer to commence the session on US dollar strength, but gained buying support later in the session as the dollar weakened and fund buying continued. The Indian Government is forecasting new crop wheat production to be up 3.8Mt on last year’s crop to 96.64Mt, this crop will be harvested in May and the outcome will have a significant impact on increased Australian demand, shall any production issues occur.

Australia

The AUD has rallied again closing above 0.77, which will reduce trade liquidity as local pricing becomes less attractive to buyers and sellers.

After continued record temperatures in QLD and NSW, they are finally set to get some minor reprieve with 25-50mm of rainfall forecast for some cropping areas in the next 8 days. It’s likely that this is too late for majority of the South Queensland summer crop, but it might provide some assistance to NSW and central QLD.

In WA the outcome of the damaging rain events is becoming clearer, with some of the rail and road networks now back in operation. This event is expected to result in delays for vessels stemmed for February and March. Any CFR shorts who were elevating out of WA, may have to source grain from other origins which should support east coast pricing. The FOB elevation margins seen earlier in the season have been reduced as grower selling slows and the dollar strengthens. Victoria remains as a cheap origin with decent elevation margins, relative to other states, for those with elevation capacity.

Source: Lachstock Consulting

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