Daily market wire 5 February 2018

Guest Author, February 5, 2018

Friday’s futures markets

Lower for grains and oilseeds.

  • CBOT wheat down 4.25c to 446.75c,
  • Kansas wheat down 3.75c to 463.25c,
  • Corn down 0.25c to 361.5c,
  • Soybeans down 6.25c to 990.25c,
  • Winnipeg canola down 80c to C$499.20,
  • Matif canola down €0.5 to €345.75,
  • Dow Jones down 665.75 to 25520.96,
  • Crude oil down 73.9c to $US65.06 per barrel,
  • AUD down to 0.791c,
  • CAD up to 1.24c (AUDCAD 0.982),
  • EUR down to 1.243c (AUDEUR 0.635).


With limited fresh inputs and a stronger USD, wheat sank lower to finish the week. US weather features an accumulation of snow cover, but not in the southern plains, where conditions are at their worst. The weekly Commitment of Traders (COT) data revealed a huge turnaround in wheat, with the short in Soft Red Winter (SRW) wheat moving from -166,000 to -117,700k contracts, and from -23,200 to -6000 contracts in Hard Red Winter. Implied volatility in March SRW went out at 20.86 per cent. The Saudi tender is expected to favour European wheat, while Egypt’s GASC bought 180,000 tonnes of Russian wheat at US$219.45/t cost and freight. Statistics Canada estimates will be released tonight, with the average guess for Dec 31 wheat stocks coming in at 23.9 million tonnes (Mt).


Corn closed fractions lower, reacting to pressure from outside markets. However, it managed to reach a fresh weekly high not seen since mid September last year. Informa reduced its forecast for Argentina to 37Mt versus the USDA figure of 42Mt. COT revealed a huge amount of buying in corn, moving to -146,500 versus -248,100 contracts last week.


Lagging exports, improved Brazilian production, and weakness in vegetable oils led beans below their 50-day and 200-day moving averages. Soymeal was down $2.6 per tonne, while oil was down 39 points. The COT report revealed a very large reduction in the short position, which moved from -117,000 to -54,900 contracts.


Canola values suffered in line with other oilseeds, with Canadian crush and export data not helping the cause. Weekly exports came in at 153,400t, which brings yearly export pace back to very close to last season’s. Crush figures came in at 184,400t, up 1.5pc on the previous week. Statscan data is due out this week, and will report ending stocks as of Dec 31. The trade estimate for canola is 14.3Mt, so any number below this would imply a smaller production figure, which could provide support, given the variations in last year’s estimates.


Finally some currency relief for the Aussie market, with the AUD falling 1.5pc against the USD, which will get us closer to pricing export business across wheat, barley and canola. Expect a slow start to things today, but if the dollar can hold its current levels, then we should see an increase in cash-market activity over the next week. The northern market remains strong as sorghum production continues to decline, and with limited winter-crop moisture availability, we expect to see further risk premiums added in the near-term.


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