Markets

Daily market wire 24 January 2018

Guest Author, January 24, 2018

Overnight futures markets:

Lower for grains, higher for oilseeds.

  • CBOT wheat was down -4.25c to 421.5c,
  • Kansas wheat down -5.25c to 423.25c,
  • corn down -0.75c to 351.25c,
  • Soybean up 2c to 997.75c,
  • Winnipeg Canola up 1.89$C to 502.9$C, and
  • Matif canola down -0.5€ to 344.25€.
  • The Dow Jones down -3.88 to 26210.71,
  • Crude Oil up 0.869c to $US64.44 per barrel,
  • AUD down to 0.798c,
  • CAD up to 1.244c, (AUDCAD 0.994) and the
  • EUR up to 1.228c (AUDEUR 0.650).

Wheat

Wheat is lacking a demand story, which is keeping the fund shorts comfortable, despite ongoing dryness in the US southern plains and firmer cash prices in Russia.

The market needs to get through burdensome old crop stocks faster, before more attention is paid to potential new crop weather concerns.

Implied volatility in March Soft Red Winter wheat futures went out at 15.51 per cent (pc).

Corn

Corn suffered mild losses, but settled well off its low, thanks to support from South American conditions. It touched the 50-day moving average, but retreated to close above the 20-day.

Ukraine and Argentinian corn fob (free on board) markets continue to rally due to new crop production concerns.

The number of Brazilian offers for nearby delivery period is declining, and is non-existent for delivery beyond 4 weeks.

Crop forecasting agency Informa is calling for 89.179 million acres of corn, which is 1.4pc below last year’s figures.

Soybeans

Dryness in central and southern Argentina continues, helping to support soybean prices, finishing higher for their sixth consecutive session.

Soymeal was US$1/t higher, while soy oil was 36 points higher.

Informa forecast US soybean acres 91.197 million, which is 1.2pc higher than last year’s acres.

Government data showed Brazilian export to China at 1.043 million tonnes (Mt) for the month of Jan, which is already higher than the previous record set in 2012. Last night’s close broke through key resistance in the form of the 50-day moving average, which indicates further upside potential.

Canola

Canola returned all of yesterday’s losses to finish at the highs reached on Monday. Strength in veg-oils and the threats to South American bean production helped to spur things on.

Australia

The Aussie market has seen an increase in activity on barley, thanks to an increasing Chinese CFR (cost and freight) bid, now over US$242/t, marking a US$17 turnaround in under a month. Unfortunately for the Aussie farmer, the currency is holding local prices back.

Wheat is still lacking traditional demand, though the market was poised to see us get some Philippines feed wheat business this week.

Sorghum prices continue to rally, as production ideas shrink, due to dry conditions on the inner downs and limited acreage in CQ. The strength in sorghum should support wheat, given that the spread has contracted approximately A$20/t since the end of last year.

It is very early days, but the poor sorghum weather will soon flow into winter crop potential, given the need for moisture to get a start to wheat and barley crops in the region.

Source: Lachstock Consulting

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