Markets

Daily market wire 16 March 2018

Lachstock Consulting, March 16, 2018

Overnight futures markets

Lower for grains, higher for oilseeds.

  • CBOT wheat down -10.25c to 496c,
  • Kansas wheat down -11.25c to 530.5c,
  • Corn down -2.25c to 394.5c,
  • Soybean up 8.25c to 1051.25c,
  • Winnipeg Canola up 3.69$C to 527.8$C, and
  • Matif canola up 2€ to 348.75€.
  • The Dow Jones up 138.49 to 24896.61,
  • Crude Oil up 0.25c to $US61.21 per barrel,
  • AUD down to 0.780c,
  • CAD up to 1.305c, (AUDCAD 1.018)
  • EUR down to 1.230c (AUDEUR 0.633).

Wheat

Market structure, limited demand and a stronger USD saw wheat fall off its perch today.

The weather forecast has not improved, in fact it is probably slightly worse, however the market’s first task would be to shift old crop wheat stock before deciding whether the future weather concerns playing on next year’s balance sheet constraints would warrant further price support.

Weekly sales in wheat came in below expectations at 162,800t vs. market ideas of 350,000t.

The May Soft Red Winter wheat contract broke through key technical support, closing through both the 20-day  and 200-day moving averages. The 100-day sits 22 cents below current levels, so a drastic sell off from here is not beyond the realms of possibility.

Implied volatility went out at 25pc.

Matif futures were stronger, as well as Russian prices after Egypt’s GASC purchased 240,000t of Russian and Romanian wheat at US$217 FOB. This highlights the ongoing strength in cash pricing here, brought forward by logistics constraints and limited grower selling.

 

Corn

Corn couldn’t defy wheat pressure, despite very strong weekly export figures and aggressive price action in beans.

Corn sales for the week came in at a whopping 2.5Mt vs. market ideas of 1.5Mt. This is the highest weekly sales report since 1994 and is 3 times higher than the same time last year.

The Rosario Grain Exchange brought its Argentine production figures down 3Mt to 32Mt (USDA 36Mt). With fund length as large as it is, it’s very difficult to entice new buying, in the presence of any outside market pressure.

If wheat continues to pressure corn, it will become a very attractive buy, given its proximity to seasonal lows and positive demand outlook.

Canola

Canola followed and exceeded strength in beans thanks to strength in veg oils and technical weakness in the Canadian dollar.

Soybeans

Beans recovered some of yesterday’s losses.  Divergence in the weather-forecasting models combined with massive crush figures and a lower Argentine production forecast to keep the long-beans dream alive.

National Oilseeds Processors’ Association crush figures for February came in at a record 4.183 million tonnes (Mt), 7 per cent (pc) higher than this time last year. Weekly sales came in at 1.27Mt, a figure which was above market ideas of 1Mt.

Argentina’s Rosario Grain Exchange revised its Argentine bean production figure down to 40Mt (USDA had forecast 47Mt).

Soymeal price was basically unchanged, while soy oil was up 35 points.

Australia

Aussie cash prices have been mixed, with the AUD preventing flat price opportunities.

USD values in wheat and barley are rallying thanks to ongoing support from China on barley and renewed interest from South East Asia on wheat.

The overnight break in currency could promote decent liquidity today.

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