Daily market wire 16 November 2017

Overnight futures markets:

Lower for wheat, mostly higher for oilseeds.

CBOT wheat was down -8c to 420c,
Kansas wheat down -10.25c to 417.75c,
corn up 0.75c to 338.25c,
Soybean up 8.5c to 987.25c,
Winnipeg Canola up 6.70$C to 526.5$C
Matif canola unchanged at 377.5€.
The Dow Jones down -108.25 to 23301.22,
Crude Oil down -0.43c to 55.27c,
AUD down to 0.758c,
CAD up to 1.276c, (AUDCAD 0.968)
EUR down to 1.179c (AUDEUR 0.643).

Wheat

Russian wheat bid values have nominally dropped, but offers for 12.5% protein continue to hold up at US$194 FOB.

Egypt’s buying agency GASC announced it would reintroduce strict ergot requirements, which is raising concerns for future demand and what this does to Russian exports. This could be a legitimate threat or a tactic employed to drag down prices in a heavily supplied market.

The Ruble has fallen just over 3 per cent since the beginning of November. This weakness is not supportive of sustained Russian cash pricing and is beginning to play a part in US futures weakness.

US cash markets have been quiet with basis bids dropping slightly on limited volume. This has lowered flat price and could see HRW competitive into Algeria, which may provide some support.

Implied volatility in December Soft Red Winter wheat futures prices went out at 19pc, as open interest continued to grow.

Soybeans

Beans managed a rally despite 65-100mm of rainfall forecast for Brazil in the next two weeks. Soymeal was up US$1.7/t while soy oil was 49 points higher, popping up on lower than expected US stock reserves in the National Oilseed Processors’ Association (NOPA) numbers. NOPA’s crush figures came out at around expectations and were 20pc higher than September figures.

Reports from a major Chinese importer suggested 17/18 bean imports would reach 100Mt, which is well over the current forecasts from USDA and China’s Ag ministry.

Canola

Canola found a bid and rocketed back towards recent highs. Strength in bean oil, brought on by lower US oil stocks, should encourage greater local crush demand in the US and increase competition between local and export buyers.

Corn

Corn finished fractions higher in a flat session that featured a measly 2c/bu range. It did manage to form new seasonal lows, before the big 2-cent rally. For now corn stays flat to lower until a significant new crop concern is raised, or ethanol demand increases significantly.

Australia

The four-day Aussie forecast is looking precarious for Victoria and NSW where 25-50mm is forecast to fall on un-harvested winter crop. If this rain is on the higher end of forecasts it’s hard to imagine no quality damage, but time will tell. What it will do is crush grower liquidity and lead to flatter than usual cash prices until the market determines the extent of any damage.

Southern Queensland is looking also looking at 25-50mm which will provide support for summer crops in the region.

New crop sorghum prices have stabilised, for now, but improved weather may provide opportunities to increase the plant further. The northern markets have come under some pressure, after rallying to a point that saw South Australian barley shipments working into Brisbane.

Source: Lachstock Consulting

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