Markets

Daily market wire 6 February 2018

Lachstock Consulting, February 6, 2018

Overnight futures markets

Lower for grains and mixed for oilseeds.

  • CBOT wheat down 6.5c to 440.25c,
  • Kansas wheat down 1.5c to 461.75c,
  • Corn down 2.75c to 358.75c,
  • Soybeans down 9c to 981.25c,
  • Winnipeg canola up C$1.30 to $500.50,
  • Matif canola down €0.25 to €345.5,
  • Dow Jones down 583.34 to 24937.62,
  • Crude oil down US$1.43c to $64.02 per barrel,
  • AUD down to 0.790c,
  • CAD up to 1.251c (AUDCAD 0.988),
  • EUR down to 1.240c (AUDEUR 0.637).

Wheat

Weather in US winter wheat areas is improving slightly with good snowfall expected, while the southern plains is forecast to receive warmer weather, followed by showers. Statscan reported 31 Dec wheat stocks excluding durum at 18.73 million tonnes (Mt), which was below market expectations. Implied volatility in Mar Soft Red Winter wheat went out at 20.86 per cent. Export inspections came in at 428.5, which was 26pc below last week’s figure. Russian wheat prices remain strong at $197 fob for March shipment. The Saudi tender came in at $240 c&f for April-June shipment, with replacement values pointing to France as the likely origin. Iraq is in for 50,000t of Australian, Canadian or US wheat.

Corn

Corn inspections came in at 1.073Mt, up 6.2pc on the week prior. A flash sale of 130,000t to South Korea has been reported. In the background, corn is being influenced by a trade war, which was prompted by the Trump government imposing an import tariff on Chinese solar panels and washing machines. The Chinese government has responded by launching an investigation into imports of US sorghum and anti-dumping, and this has spooked buyers and sellers. This would be bearish corn, given the potential for sorghum to compete into the domestic ration.

Soybeans

The pressure continued for beans, with the market needing something more from the Argentine forecast to prompt another buying spree. Hot and dry conditions persist in Argentina for the rest of this week, before patchy showers bring a forecast 20-60 millimetres of rain. The current weather forecast does not look overly promising, and may prompt some buying at a later stage. Bean inspections were steady at 1.3Mt. Soymeal was down $2.80/t, while oil was basically unchanged.

Canola

Canola managed a strong technical finish, despite weakness in other markets. Statscan’s 31 Dec canola stocks number came in 154,000t below market expectations at 14.146Mt, which prevents further upside in old-crop production ideas. The CAD/USD has fallen almost 2pc in the past two sessions, which will inhibit US imports, but will make Canadian seed a more attractive export prospect. The May contract finished above the key support level at $500.

Australia

Aussie markets were quiet in wheat yesterday, as the currency fall was offset by weakness in the futures markets. Barley is a different story, where the full currency movement was passed on as the trade positions for an ever-greater influx of Chinese demand should the US sorghum trade dispute not be resolved. This should also flow into local sorghum, which will prompt an even tighter northern feedgrain market.

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