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Daily market wire 18 May 2018

by Lachstock Consulting, 18 May 2018

Mixed for grains and oilseeds.

  • CBOT wheat up 3.25c to 497.5c,
  • Kansas wheat up 5c to 519c,
  • Corn down 4c to 395.25c,
  • Soybeans down 4.75c to 995c,
  • Winnipeg canola up C$3.39 to $532.6,
  • Matif canola up €2 to €354,
  • Dow Jones down 54.95 to 24713.98,
  • Crude 0il up $US0.06 to $71.55 per barrel,
  • AUD down to 0.751c,
  • CAD up to 1.280c (AUDCAD 0.9612),
  • EUR down to 1.179c (AUDEUR 0.636).

Wheat

Wheat followed yesterday’s momentum, running out of sellers due to technical support, and an unresolved global balance sheet. After being 9 cents higher at one stage, the final close was disappointing. Russian conditions appear safe for the moment, but Australia and Canada are the areas of concern due to ongoing dryness. Implied volatility in the July Soft Red Winter wheat contract went out at 26.13 per cent. Weekly export sales were 100,000t below market ideas at 194,800t. Cash prices in Russia are not moving much, with old-crop trading at $210 per tonne, while new-crop is around $199/t. From a technical point of view, the wheat market is respecting its ranges while trending upwards. Any production issues in Russia would be met with strong price action.

Corn

Following strength in wheat, corn opened stronger, but values were pushed down by technical selling and repositioning that saw it reach its lowest monthly close. Export sales were well above market expectations at 1.115 million tonnes (Mt). US weather looks non-threatening for now, despite the potential for area losses if conditions stay wet. Rainfall that was forecast for Brazil has not eventuated as expected, but more is on the way. Talk of frost damage in parts of Brazil could affect the corn crop. The Buenos Aires Grain Exchange (BAGE) maintained its corn-crop estimate at 32Mt.

Soybeans

Soybeans were higher early in the session before trade-war problems, or lack of resolutions, led prices lower. With a Chinese delegation in town, hopes were high for a result, but Trump came out later in the day stating that he didn’t expect to see a resolution. Export sales were disappointing at 505,000t versus  market ideas of 700,000t. The BAGE cut its Argentinean bean forecast by 2Mt to 36Mt due to a dry production season. Soymeal was down $1.50/t, while soy oil was up 35 points with noted fund buying.

Canola

Canola opened lower, but recovered thanks to strength in bean oil, potential for further import demand, and some moisture concerns in the Canadian prairies. The China-US trade issue has provided underlying support to canola because if it is not resolved, a shortage of soybean availability would support canola demand.

Australia

The Aussie forecast remains dry for eastern states, but Western Australia could see 15-25 millimetres if coastal showers penetrate inland. The longer term, and less reliable, forecast is calling for good rainfall on the east coast from the beginning of June. Cash prices remain strong in old and new crop, as domestic consumption drives prices higher, with no short-term reprieve in site.

Source: Lachstock Consulting

 

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