Overnight futures markets
Lower for grains and oilseeds.
- CBOT wheat down 10.25c to 462.25c,
- Kansas wheat down 17.75c to 478c,
- Corn down 3.5c to 391c,
- Soybeans down 12.25c to 1042c,
- Winnipeg canola down C$2.90 to C$520.8,
- Matif canola down €4 to €342.5,
- Dow Jones up 212.90 to 24573.04,
- Crude oil down $1.06 to US$66.33 per barrel,
- AUD up to 0.778c,
- CAD down to 1.256c (AUDCAD 0.977),
- EUR up to 1.238c (AUDEUR 0.628).
Wheat
Wheat came under heavy selling pressure after improved forecasts for later this week reduced the markets’ prospects for further yield declines. Rainfall of 30-60 millimetres is scheduled to fall this weekend, which was enough to spark some long liquidation in the fund space. This rally has been on the back of production concerns, with wheat pricing itself out of export demand a long time ago. If we had some demand, this weather may not encourage the liquidation we are witnessing. In overnight trading, the market appeared to be ignoring the sub-zero temperatures which a decent portion of the winter wheat belt is enduring. In addition, we have ongoing blizzard conditions in the northern plains which are preventing paddock access and spring-wheat planting. The weekly crop progress report came out after the market closed, and had spring wheat at 3 per cent planted versus 12pc last year and a 15pc average. Winter-wheat conditions came in mixed, increasing 2pc in the poor-to-very poor category, while increasing 1pc in the good-to-excellent category. Fair conditions gave up 3pc to accommodate these changes. Implied volatility in May Soft Red Winter wheat went out at 27.625pc. Russian prices held up well in old-crop, trading at $215 per tonne, while new-crop is slipping, increasing the size of the inverse.
Corn
Corn felt the pressure from wheat and beans, but the market is still holding cautiously bullish views here. Weather in the Northern Plains continues to prevent paddock access to enable seeding. The crop progress report which came out overnight had planting at 3pc versus 6pc this time last year, and a 5pc average. Weekly export inspections were lower than last week, at 1.505 million tonnes (Mt), but at levels supportive of the USDA’s balance sheet. The near-term challenge for corn will be bid-side volume; given that funds are already quite long, we may see some downside in sympathy with other markets before we uncover new buying.
Soybeans
Soybeans finished with reasonable losses, despite stronger crush figures, as the potential for a larger US area begins to dawn on the market as a result of the delayed planting pace of US corn and spring wheat. NOPA monthly crush figures came in above market expectations at 4.67Mt, 11.8pc higher than the February figures, and 12.3pc higher than March. Soymeal was down $5/t, while soy oil was down 30 points.
Canola
Canola followed beans lower, with added pressure from the weaker vegoil complex. It’s an interesting situation in Canola, with new-crop planting delays discouraging old-crop farmer selling, despite limited nearby fundamental support.
Australia
The Aussie forecast remains dry for the next eight days, with only 1-5 millimetres of rain forecast with reasonable coverage. This will not be enough to increase moisture profiles and encourage new-crop production. The market felt relatively unchanged yesterday, despite the weaker futures open and stronger currency. Old-crop wheat has enough of a balance sheet to fall in a heap if we get a decent rain event, but barley seems too tight now, particularly considering the global concerns building in Europe, Canada and the Black Sea thanks to plantings being delayed by unfavourable weather. This is putting pressure on the $10-per-tonne inverse that we witnessed in the last Saudi tender.
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