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Daily market wire 17 October 2017

by Lachstock Consulting, 17 October 2017

Overnight markets:

Lower for grains and oilseeds.

  • CBOT wheat was down -3c to 436.5c,
  • Kansas wheat down -2.5c to 433.75c,
  • corn down -2.25c to 350.5c,
  • Soybean down -8.75c to 1001.5c,
  • Winnipeg Canola down -0.5$C to 505.4$C,
  • Matif canola down -1.5€ to 366€.
  • The Dow Jones up 74.18 to 22945.9,
  • Crude Oil up 0.399c to 51.85c,
  • AUD down to 0.784c,
  • CAD up to 1.252c, (AUDCAD 0.982)
  • EUR was down to 1.178c (AUDEUR 0.665).

Wheat

Spring wheat was the leader today dropping US5 cents/bushel in stagnant trade. Implied volatility in December Soft Red Winter (SRW) wheat futures went out at 17.5 per cent. SRW showed early strength and was looking to push technical resistance, but ultimately failed, falling to settle near daily lows. There is nothing new to trade in wheat at the moment, the market is aware of the major fundamental news, now it’s a question of which opinion is right. Russian cash prices are maintaining themselves, which is almost confirmation of the perceived ongoing logistics burden. Australia’s crop is definitely smaller than the USDA’s estimate at 21.5 million tonnes (Mt). But these points have been widely publicised and won’t come as a surprise, which means that the next bullish catalyst for futures will be new crop planting intentions, or a significant demand surprise.

Corn

Corn was off slightly with sell side pressure from bean/corn spread unwinds. Structure is a supporting factor at the moment, with the spec position nearing historically high levels. An improved forecast for Brazil has eased some concerns there, but it still needs to eventuate.

Soybeans

Soybeans lower and looking to test support at US$10/bushel, with profit-taking and an improved Brazilian forecast applying sell side pressure. December meal was US$2.7/t lower and bean oil was down 6 points. A fresh private export sale was announced by the USDA of 227,000t to “unknown” destination/s.  Crush figures were expected at 138 but only came in at 136.4, which added pressure. Bean harvest progress is lagging the long-term average of 60%, coming in at 49%.

Canola

Canola suffered slight losses, feeling the pressure from beans and the macro implications of the potentially failed NAFTA negotiations. The economic impacts of failed NAFTA negotiations would put pressure on the Canadian dollar and increase local crush demand, but the longer-term impacts appear to be more daunting, and that’s what the market was paying attention to today.

Australia

The Aussie forecast continues to improve on the east coast where 25-50mm is expected to fall in QLD and north central NSW cropping regions. It’s too late for winter crops, but providing an excellent start for summer crops. Cash markets were quiet yesterday in typical “Monday trade”. We are expecting to see some demand engagement for Aussie wheat and barley on the back of the recent sell off and the narrowing of the spread between Aussie and Black Sea values.

Source: Lachstock Consulting

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