Overnight futures markets:
- CBOT wheat down 2.5c to 422.75c,
- Kansas wheat down 2c to 427.5c,
- Corn up 1c to 352.5c,
- Soybeans up 4.25c to 988.5c,
- Winnipeg canola up C$2.80 to $502.8,
- Matif canola up €0.75 to €345.5,
- Dow Jones up 53.90 to 26071.72,
- Crude oil down 38c to $US63.57 per barrel,
- AUD up to 0.799c,
- CAD down to 1.247c (AUDCAD 0.997),
- EUR up to 1.226c (AUDEUR 0.651).
Wheat finished with slight losses in a session lacking any major new input. Export sales were the cause of pressure, coming in at 153,000 tonnes vs. market ideas of 350,000t and a USDA forecast of 342,000t. This served as a blunt reminder of Russia’s export dominance this year, although the issue here is that Russian prices continue to firm, meaning demand should shift as the spreads narrow. Matif futures were down €0.50, but not testing recent lows. Weather issues for new-crop US wheat continue, with ongoing dryness in the southern plains. Implied volatility in March Soft Red Winter wheat went out at 15.365 per cent. The total Commitment of Traders (COT) in wheat came in at -163,600 vs. -146,900 contracts last week, with Hard Red Winter wheat at -18,500 vs. -21,700 the week earlier.
Corn finished stronger but off its highs, which had broken the 50-day moving average. Export sales proved to be a great support, coming in at 1.89Mt vs. market ideas of 650,000t. This unexpected demand could see some flighty price action moving forwards, with uncertainty around the South American crop and the COT at -258,100 vs. -253,100 contracts last week.
Beans found support from dryness in Argentina and northern Brazil, plus better-than-expected export sales, finishing higher for the fifth day in a row. Meal finished up $3.2/t, while oil was 5 points higher. The Buenos Aires Grain Exchange rated the Argentine crop at 37.3pc good to excellent vs. 52.6pc at the same time last year. Soybean weekly sales were 1.24Mt vs. market ideas of 800,000t. The COT report had beans at -136,600 vs. -122,600 contracts last week.
Canola closed stronger, with a convincing finish leaving the $500/t resistance level behind. The Canadian Oilseed Processors Association crush figures were down 1.6pc on the same time last year, although there have been some external impediments, including weather and logistical issues, which have affected this. An increase in crush utilisation as the year progresses could be expected, given the market improvements. Weekly exports out of Canada were up 86,200t at 259,500t.
Aussie cash markets featured another quiet week, with limited grower and trader engagement. The dollar strength is not helping, but we are improving on a flat price versus Russian wheat, so it’s only a matter of time before some export demand engages and the market begins to move again. Barley remains very strong with China increasing their c&f bids last week. Saudi’s tender results from last week featured some very aggressive offers, which will be feeling some pain now, as European markets rallied approximately US$5/t for the rest of the week in the wake of the tender. The January track market squeeze looks to have been covered, as no-one is willing to invert the market, as we saw earlier this month.
Source: Lachstock Consulting