Markets

Daily market wire 20 April 2018

Lachstock Consulting, April 20, 2018

Overnight futures markets

Mixed for grains and oilseeds.

  • CBOT wheat  up 1.5c to 476.75c,
  • Kansas wheat up 6.5c to 495.25cc,
  • Corn down 0.75c to 391c,
  • Soybeans down 4.5c to 1037.25c,
  • Winnipeg canola up C$8 to $534.4,
  • Matif canola up €1.25 to €343.75€.,
  • Dow Jones down 83.18 to 24664.89,
  • Crude oil down 329c to $US68.14 per barrel,
  • AUD down to 0.772c,
  • CAD up to 1.265c, (AUDCAD 0.978),
  • EUR down to 1.234c (AUDEUR 0.625).

Wheat

Wheat markets finished mixed across the three contracts, with Hard Red Winter (HRW) wheat the stand out, while Soft Red Winter (SRW) and Spring Wheat were flat to slightly lower.

Implied volatility in May SRW went out at 27.5pc.

Weekly export sales in wheat came in negative due to cancellations, meaning that old crop shipment results were -66,900t and new crop sales were 240,000t vs. market ideas of 225,000t and 100,000t.

In HRW the weather forecast has eased back again, which encouraged fund buying, as the market is now preparing for the wheat quality council (WQC) tour of Kansas that will occur at the start of May. Feedback from those touring Kansas in an effort to get ahead of the WQC tour is that things are looking worse than expected.

Russian prices remained unchanged whilst Matif was down €1/t.

Corn

Corn finished with slight losses, weekly were above market expectations at 1.09 million tonnes (Mt), but like beans the market wasn’t confident in driving prices higher, despite declining new crop acreage potential.

One side of the market is taking the view that corn acres can get in very quickly and whilst weather is not ideal currently, farmers only need a short window to make significant progress.

The whole market is friendly corn from a long perspective and that is part of the problem, current structure is too long to encourage new buying unless we see a huge fundamental driver.

Soybeans

Weekly sales in beans came in at 1.04 million tonnes, which was at market expectations, but the market’s response was negative price action, as trade issues and increased acreage potential added to the negative sentiment. Fund selling was noted in seed and meal today. China has reportedly bought 1 million tonnes of new crop Canadian soybeans.

Attention is beginning to focus on the potential for higher bean acreage as planting delays in corn and spring wheat, leave beans as a favourable alternative.

Soymeal was down US$3.30/t, while soy oil was unchanged.

Canola

Canola rallied strongly in the front end as the May contract inverted over July.

Strong nearby demand prospects, combined with questionable new crop potential, added to the positive flavour. Crude oil reached highs not seen in three years, which was also supportive of the veg-oil complex.

Australia

Aussie markets remained well supported yesterday, with a higher CBOT market supporting wheat.

Markets in the north for wheat and barley were higher, while in the south wheat was stronger, with barley flat due to no liquidity. Weather-wise there is 10-15mm rain forecast for parts of northern NSW and southern Queensland in the next 8 days, while the rest of the country looks dry. No major changes at this stage, the market is trading a drought in April, but the rainfall outlook remains grim.

Source: Lachstock Consulting

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