Overview of currency and futures markets:
The US dollar dropped sharply as markets reacted to the US Federal Reserve Bank lifting interest rates a quarter per cent. Overnight futures markets were stronger for grains and weaker for oilseeds.
- CBOT Wheat May contract was up 5.5c to 436c,
- Kansas wheat up 4.75c to 447.25c,
- corn up 1.25c to 363.5c,
- soybeans down -1.25c to 998c,
- Winnipeg canola down -3.40$C to 510.8$C,
- Matif canola up 2.75€ to 409€.
- The Dow Jones up 112.73 to 20950.1,
- Crude Oil up 1.37c to 49.09c,
- AUD up to 0.7703c,
- CAD down to 1.3299c, (AUDCAD 1.024)
- EUR up to 1.073c (AUDEUR 0.717).
Wheat was buoyed by frost damage chatter and reduced rain forecasts in the southern plains. Export demand remains strong with Egypt again tendering for wheat supply and Algeria expected tomorrow. US wheat could be poised to take out some of this demand, which should support flat price in the near term.
Canola showed strength early but sold off to close lower. A strong CAD was the main contributor, following the US Federal Reserve (Fed) announcement.
Corn followed wheat higher in a low range session. The market is still absorbing Chinese import rumors and the associated impacts if confirmed in volume. Ethanol production figures continue to show strength, suggesting stronger annual demand than current forecasts, which could see a stock surprise later on.
The Australian dollar rallied on the back of USD weakness after the Fed announcement. This should lead to lower prices and liquidity in the Aussie market today, unless traders need to pay up to fulfill execution requirements. The forecast for NSW and Qld still looks promising and northern wheat and barley look to have eased slightly. Sorghum container demand from Chinese alcohol producers is keeping it supported in spite of high relative values, if this demand is sustained then domestic markets will have to increase prices to keep some stock in country.
Source: Lachstock Consulting
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