Daily market wire 19 February 2018

Lachstock Consulting, February 19, 2018

Friday’s futures markets

Mixed for grains and oilseeds, ahead of Monday’s Presidents Day, public holiday in the US.
  • CBOT wheat down -4c to 457.75c,
  • Kansas wheat up 0.5c to 478.5c,
  • corn down -0.25c to 367.5c,
  • Soybean down -2.5c to 1032.5c,
  • Winnipeg Canola up 2.39$C to 508.2$C, and
  • Matif canola up 0.75€ to 350.25€.
  • The Dow Jones up 19.01 to 25219.38,
  • Crude Oil up 0.26c to $US61.61 per barrel,
  • AUD up to 0.791c,
  • CAD down to 1.255c, (AUDCAD 0.991) and the
  • EUR up to 1.240c (AUDEUR 0.637).p


Wheat finished mixed across the three classes, as the Soft Red Winter (SRW) and spring wheats lost, while Hard Red Winter (HRW) wheat just managed a higher close. Implied volatility in March SRW went out at 23.125 per cent. The weather forecast has improved in the US corn and SRW areas, but there is still nothing solid expected for the moisture-parched HRW areas. Weekly commitment of traders report (COT) data had HRW at +12,900 contracts long vs. +12,500 contracts long last week and SRW -75,900 short vs. 106,700 contracts previous week. Russian values continue to firm, with the 12.5pc protein market now around US$204/t free on board, with limited offers available as weather and logistics concerns prevent aggressive selling.


Corn fractions lower, in a very quiet session featuring a US2c/bu range. Corn is holding steady at the top end of the range, as the market is still perceiving upside risk given that US supplies are dominating global trade, as well as the threat of a smaller crop in Brazil and the potential for lower US acres given the strength in beans. COT data saw corn +11,000 vs. -71,700 contracts last week. The monthly COT turnaround is impressive, given that on the 23rd of Jan the fund position was -248,000 contracts, and we have only moved 18c/bu in covering it off.


Beans finished with minor losses, as profit taking was noted ahead of the three-day weekend. The forecast for Argentina remains reasonably dry and if no improvement is noted soon, then we should expect to see further yield losses in beans. Soymeal was up $0.5/t, while soy oil was down 17 points. The COT report has the bean position +11,100 vs. – 26,600 contracts last week.


Canola found support from a weakening local currency, which fell .62%, helping futures to recover most of the previous days’ losses. Short covering was also noted, with fund squaring up positions heading into the long weekend (Canada also has public holiday Monday).


Australian markets were quiet on Friday with a firming dollar limited liquidity in both wheat and barley. The barley market is awaiting the result of the Saudi Government’s tender for 960,000t of feed, which is expected to mark a significant price increase since the last tender, given the very tight global situation. Aussie wheat markets should start to see some better demand potential, given the increase in Russian values, which have been the anchor to global prices and export demand this year.



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