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Daily Market Wire 17 October 2018

by Lachstock Consulting, 17 October 2018

Lower for grains and mixed for oilseeds.

  • CBOT wheat down 1.5c to 523.5c,
  • Kansas wheat down 3.75c to 528c
  • Spring wheat down 4.25c to 596.25c
  • CBOT corn down 3c to 375.25c.
  • Matif corn up €1.75 to €174.50
  • Soybeans down 6.75c to 884.75c
  • Winnipeg canola up C$5.40 to $492.50,
  • Matif canola up €2 to €373,
  • Dow Jones up 547.87 to 25798.42
  • Crude oil up 12c to 71.73c
  • AUD up to $0.714,
  • CAD up at $0.772,
  • EUR down to $1.1577

Wheat

Wheat futures couldn’t maintain momentum, failing at the top of their recent trading range. Improved weather in the US helped alleviate spring wheat harvest concerns, which saw Minneapolis futures lead the charge lower. Implied volatility in December Soft Red Winter wheat finished at 22 per cent. Matif wheat was down €1.25 to €203.25, Black Sea wheat was unchanged at US$248.5 and the ruble was up 0.46pc to $0.0153. Matif wheat has been declining, given its high relative value to Argentinian and Black Sea wheats. While it won’t need to find much export demand, it is commanding a large domestic premium that is hard to sustain when we see any sort of negative sentiment. Conditions in Europe remain dry and are creating issues for winter-crop plantings. If we don’t see some moisture in the next 10-14 days, then we should expect to see some additional risk premiums.  Russian prices are relatively flat, although the market is starting to price demand in January. Given the current export pace, it is expected that Russian exports could be at 25 million tonnes (Mt) by the end of December, so January exports cannot afford to move too fast before they push towards the government’s unofficial 30Mt threshold.

Corn

Corn broke lower, with beneficial US harvest weather encouraging a pause for breath. The December contract did manage to hold a close above the 100-day moving average, which is technically supportive. The last time corn broke through this and maintained a close above it was in late January, and served as the catalyst for a 41-cent rally. New-crop prospects are looking okay, with decent weather in South America. Corn needs ongoing demand to maintain buying support, given the absence of a large fund short.

Soybeans

Soybeans sold off as US harvesting conditions improved, thanks to a dry weekly outlook. The bullish momentum in beans is very hard to maintain, given the negative demand outlook and messy US-China relationship. Soybean meal was down $4.70, and soy oil was down 37 points.

Canola

Canola futures were mixed, with dryness concerns in Europe prompting a bid there, while Canadian futures were lower as harvesting weather improved and growers gained more selling confidence.

Australia

Aussie cash markets finished stronger again yesterday, supported by stronger Chicago futures values, and a lack of sellers. Western Australian prices are holding up well, despite the proximity to harvest, which is understandable, given how close its market is to export parity. South Australia remains an island of high prices that will have to fall if it wishes to find any export demand. Weatherwise, the eight-day forecast is calling for 25-50 millimetres in southern Queensland and 50-100mm in northern New South Wales. Sorghum prices have been steady so far, but this could be due to a busy grower group. There will be a large plant of sorghum, given the availability of fallowed winter area, so further price pressure should be noted, although sorghum cannot fall too far before it runs into a large demand profile and extends south, given its discount to wheat prices.

Source: Lachstock Consulting

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