Mixed for grains and higher for oilseeds.
- CBOT wheat up 2.5c to 505.5c,
- Kansas wheat down 1c to 480c,
- Spring wheat down 1.25c to 574.75c,
- CBOT corn up 0.5c to 367.5c,
- Matif corn up €0.75 to €175.50,
- Soybeans up 5.25c to 888.75c,
- Winnipeg canola unchanged at C$478.20,
- Matif canola up €1 to €377,
- Dow Jones up 208.77 to 25289.27,
- Crude oil up to $56.54
- AUD up to $0.727,
- CAD up to 0.758,
- EUR up to 1.132.
Wheat markets attempted a rally, with tenders from Saudi Arabia and Iraq creating optimism for export sales. This didn’t last long, as the market’s calculators suggested the business would be awarded to German and Baltic wheat. Hard Red Winter (HRW) wheat remains overpriced, and cash-market premiums need to decline before they get a sniff. Informa had HRW winter acres at 33.1 million, down 807,000 acres from its estimate last month. This reduction could be bullish, but was overlooked due to export pace concerns. Implied volatility in March Soft Red Winter wheat finished at 20.66 per cent, Matif wheat was down €0.25 per tonne to €200.75/t, Black Sea wheat dropped $0.25/t to $234/t, and the ruble was up 1.85pc to $0.0151. The ruble’s movement could see an increase in Russian fob premiums, but this depends on how many paper longs are in the market versus grower length.
Corn suffered further weakness after following beans higher earlier in the session on lower-than-expected US yield results. Ethanol production for the week came in at 1.067m barrels per day, very close to last week’s figures. This was surprising, given the weakness in crude, and perceived decline in margins. Informa pegged new-crop US corn acres at 92.8m, up 3.7m from last year.
Beans finished fractions higher, finding support early from positive dialogue on China-US trade. This could not be sustained, and saw the January market trade 9 cents off the daily highs. The market is running out of speculators here, so rallies are hard to sustain. Soybean meal was down $0.30/t, and soy oil was up 0.12 points. Informa brought US new-crop acres up 450,000 from its estimate last month, but this is still 5.7m acres below last year.
Aussie cash markets were slightly weaker on the east coast yesterday, with grower selling weighing on values. Western Australian prices were close to unchanged, which is making for east coast prices well under WA import parity. It seems like the harvest flow has made the market forget what supply-and-demand looks like. Eastern states will need to import more tonnes from WA. Just because there are boats on the water and local grower liquidity, it doesn’t mean the drought story is over. We don’t see current prices and spreads as being sustainable in the longer term. Weather-wise, 10-15 millimetres of rain is forecast next week for New South Wales and eastern Victoria.
Source: Lachstock Consulting