Markets

Daily market wire 2 May

Lachstock Consulting, May 2, 2018

Overnight markets

Higher for grains, mixed for oilseeds.

  • CBOT wheat up 18.75c to 529.25c,
  • Kansas wheat up 15.5c to 553c,
  • Corn up 5c to 405.75c,
  • Soybeans up 4.75c to 1053.25c,
  • Winnipeg canola down C$2.19 to $530.10,
  • Matif canola unchanged on publish holiday
  • Dow Jones down 64.10 to 24099.05,
  • Crude oil down US$1.09 to $67.47 per barrel,
  • AUD down to 0.748c,
  • CAD up to $1.28c (AUDCAD 0.962)
  • EUR down to $1.199 (AUDEUR 0.624).

Wheat

Winter wheats came out of the blocks, with short covering noted in Soft Red Winter wheat, while Hard Red Winter (HRW) went along for the ride, with reports from the Kansas wheat tour adding some zest.

The market found support today from issues in Australia, Argentina, Russia and the US, which are all solvable subject to weather over the next four weeks. The HRW conditions are improving, with more moisture on the nearby forecast, as well as private in-field reports suggesting better-than-expected yields.

A large spike in volatility was noted as increased money flows attempt to get ahead of these concurrent threats. Implied volatility went out at 30.125 per cent.

European markets were closed for the May Day holiday, though markets appear unchanged to higher.

July Chicago Board of Trade (CBOT) futures are now fractions below the high reached at the beginning of this year. If we close through here, the next markets should eventually make a push for the 600 highs reached in July last year, although it is still early days and buyers might run out of steam, given the move we have already witnessed this week.

Corn

Corn finished higher, following strength in wheat and soymeal.

Funds extended long positions due to delayed harvest progress, and production threats in Brazil. Brazilian temperatures continue to remain hot and dry for the next 10 days, which is forcing downside revisions to current crop projections.

Soybeans

Soybeans finished with mild losses, torn between strength in meal, weakness in oil, and a stronger US dollar.

Soymeal was up $10.6 per tonne, while soy oil was down 29 points. The USD index continues to rally, finishing up another 0.7pc on better US economic performance.

In a show of flexibility on trade negotiations, the Trump Government granted a one-month extension to US allies on steel import tariffs.

Canola

Canola finished lower as vegetable oil weakness overpowered strength from outside markets.

The market remains mixed after Statscan’s report on Friday, which called for lower-than-expected new crop area. The inverse between old and new crops continues to ease, with July futures falling the hardest overnight.

Australia

In Australia, cash prices in wheat and barley were much firmer yesterday, and we expect this to continue today with the weakening currency and higher CBOT.

The forecast is showing some mild improvement in the eight-day forecast for parts of South Australia, where 10-15mm is expected to fall across most production regions. However, the rest of the country’s cropping regions remain fairly dry.

New South Wales is probably the largest area of concern, and northern feed markets are rallying accordingly.

We still have one month to achieve decent rainfall before panic sets in, but the current forecasts are not calling for anything significant in the next two weeks, so the last half of the month will become very important.

Source: Lachstock Consulting

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