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Daily market wire 16 October 2017

by Lachstock Consulting, 16 October 2017

Overnight markets:

Higher for grains, mixed for oilseeds.

  • CBOT wheat was up 9c to 439.5c,
  • Kansas wheat up 10c to 436.25c,
  • corn up 3.75c to 352.75c,
  • Soybean up 7.75c to 1010.25c,
  • Winnipeg Canola up 3.39$C to 505.9$C,
  • Matif canola down -0.5€ to 367.5€.
  • The Dow Jones up 30.71 to 22871.72,
  • Crude Oil up 0.82c to 51.42US$,
  • AUD up to 0.788c,
  • CAD down to 1.246c, (AUDCAD 0.982)
  • EUR was down to 1.181c (AUDEUR 0.667).

Wheat

Wheat caught a bid to end the week. Implied volatility in December Soft Red Winter (SRW) wheat futures went out at 17.25 per cent. Export sales were a lot lower than expectations at 175,000t with the market looking for 400,000t. These represent the lowest sales volume for this period since 2000. Russian cash prices remain stable as logistical constraints continue to command higher fob premiums despite the record crop size. The weekly wheat Commitment of Traders Report (COT) had the fund position in SRW at -90,599 vs. -86,700 contracts; HRW at -6,100 vs. +2,400 contracts; spring wheat +4,600 vs. +3,800 contracts.

Corn

Corn finished higher, defying the bearish undertones of Thursday’s USDA report. Export sales were strong at 1.59 million tonnes (Mt) vs. market ideas of 950,000t. Corn is only US10 cents/bushel off its contract lows and South American production concerns are combining with poor yield reports from the Black Sea to draw a bid. The fund COT position is getting heavy at -190,300 vs. -170,600 contracts last week.

Soybeans

Beans found some follow through buying after the strength brought on by last Thursdays USDA report. Beans have broken through the US$10/bushel mark, which was a key technical level that has not been reached since the beginning of August. The market is pricing more risk into the South American crop where hot dry forecasts for central and northern regions continue to occur. Export sales were +700,000t higher than market expectations at 1.75Mt. The weekly COT  had the bean position -9,100 vs. -15,600 contracts last week.

Canola

Canola finished the week with a strong rally, reaching contract highs not seen since early September. Crush and export demand in Canada is driving up local pricing as the market fills the backlog brought forward by a mild Aug-Sep export period. US import demand for imported Canadian oil is supporting local crush, which is currently tracking at about 92.4pc of capacity.

Australia

The Australian forecast features another 15-25mm of rainfall for QLD and NSW that sets things up for a very prosperous summer crop. As far as winter crops are concerned, last week’s rainfall is probably too late in NNSW and SQLD, but it will provide some benefit in the Southern NSW and Vic where 15-25mm was received just in time to bolster parched moisture profiles. Cash prices were softer last week as buyers disappeared, which saw us get close to export parity on the East coast, which is not sustainable longer term considering the smaller crop this year.

Source: Lachstock Consulting

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