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Daily market wire 19 January 2018

by Grain Central, 19 January 2018

Overnight futures markets:

Mixed for grains, stronger for oilseeds.

  • CBOT wheat up 3.75c to 425.25c,
  • Kansas wheat up 2.5c to 429.5c,
  • Corn down 1.5c to 351.5c,
  • Soybeans up 4.25c to 984.25c,
  • Winnipeg canola up C$2.89 to $500,
  • Matif canola up €1 to €344.75,
  • Dow Jones down 78.03 to 26037.62,
  • Crude oil down 11c to $US63.85 per barrel,
  • AUD up to 0.799c,
  • CAD down to 1.243c (AUDCAD 0.993),
  • EUR up to 1.222c (AUDEUR 0.653).

Soybeans

Soybeans continue to find support from South American weather with dryness in northern Brazil and an unconvincing forecast for southern Argentina raising some concerns. Soymeal finished US$4.10/t higher, while oil was down 28 points.

Canola

Canola achieved a promising close, managing to settle on the key $500/t level.

Pressure in vegetable oil markets drove canola lower in the previous session, however rapeseed seems to have found a floor for now.

A vote in the EU parliament, regarding reduced vegetable oil consumption, had put pressure on the complex yesterday, but upon closer inspection there are still a lot of hurdles to overcome for legislation to be enacted. It needs to be passed by the EU council and commission which have different interests and a greater understanding of the legal and regulatory ramifications, thus reducing its likelihood of success. In any case, it could actually be friendly for rape oil vs. palm if it passes, as its use will not impacted.

Corn

Corn ran into a wall of grower selling, which stopped it following wheat higher. Ethanol production recovered to 65,000 barrels per day, which is the highest ever week on week movement. Rallies in corn will be capped until the market can chew through enough stocks to prevent a cushioning in any new crop issues.

Wheat

Wheat finished stronger in a quiet session that featured a US4c/bu range. It’s now close to testing the 20- and 50-day moving averages again. Implied volatility in March Soft Red Winter wheat futures went out at 15.7pc.

Russian cash prices $1-2/t firmer with the Ruble up 0.57pc and looking to test recent highs.

Matif futures were fractions lower, though not reaching new lows, which is a positive given the recent price action there.

Australia

Aussie markets remain fairly quiet in wheat, as grower liquidity continues in a lack-luster fashion; with post harvest holidays and a strong currency providing limited sales motivation.

There is some activity in track APW ahead of Jan execution, but that’s about as exiting as it gets for now.

Barley is a bit of a different story, with demand signals continuing to improve out of China. The CFR (cost and freight) bid is now at US$238/t, which is a US$15/t monthly movement. Export pace is tracking well, given the crop size and we expect prices to stay supported here.

 

Source: Lachstock Consulting

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