Markets

Daily market wire 20 December 2017

Lachstock Consulting, December 20, 2017

Overnight futures markets:

  • CBOT Wheat down -0.75c to 432.75c
  • Kansas wheat up 1.25c to 433c
  • Corn up 0.5c to 355.75c
  • Soybean down -5.75c to 966.75c
  • Winnipeg canola up 2.60$C to 493.8$C
  • Matif canola down -2.5€ to 356€
  • Dow Jones down -28.99 to 24763.21
  • Crude Oil up 0.30c to 57.46$ per barrel
  • AUD up to 0.766c
  • CAD up to 1.288c (AUDCAD 0.987)
  • EUR up to 1.184c (AUDEUR 0.646)

Soy

The South American forecast features more rainfall over the next 7-10 days, this put more pressure on soybeans. Soymeal continues to bear the brunt of the improved South American outlook; meal was down $3.10 per tonne, while oil was down 21 points. A private sale US sale of 145kmt was announced to unknown. Open interest in soybeans has gone up 10.3k contracts this week, which indicates persistent fund selling. The one bullish factor that the market is clinging to at the moment is the dry and cold weather across the Northern plains in the US, but there is still a lot to play out there. In other news China is negotiating a new phyto protocol for US beans, which includes ambiguous language regarding foreign material, which puts the power in the hands of the buyers at point of discharge. This could restrict trade out of the US and South America.

Canola

Canola managed a turnaround, bouncing off key technical support, despite the weakness in beans and palm oil. The above mentioned phyto review on soybeans could have positive impacts on canola trade flows, if the bean trade eases up while the agreements are being finalized.

Corn

Corn fractions higher in another quiet session that featured a 2-cent range. Fundamental news is lacking, as well as order flow on account of holiday trading. There are some whispers of increased winter-feeding demand in the US, due to the cold snap that is forecast. While South American acreage forecasts continue to decline. Open interest in corn is up 9.4k contract his week, as funds continue to pile into short positions. We need to see a change in technical momentum to encourage any short covering.

Wheat

Wheat fractions lower in another quiet session ahead of the holiday period. The Iraq offers came in, with the US the lowest offer, $5 under Australian wheat at $283 CFR. SRW wheat continues to find demand from Asian feed consumers, with South Korea purchasing it last Friday, plus ongoing interest from other feed consumers. Implied vol in March SRW went out at 18.52%. Open interest in wheat is up 4.3k contracts this week, which suggests that funds continue to add to their short positions. So US wheat has new crop acreage/drought issues, good demand prospects, yet the funds keep piling in.

Australia

Nothing new on the Aussie forecast, good rains in NNSW could extend north which may help some parched inner downs sorghum crops, but that’s optimistic. Cash markets are pretty quiet ahead of the Christmas period. Feed barley demand out of China remains strong and should see the shipping stem reasonably full of barley for the next 3 months. Wheat is finding some demand in the lower grades, while protein has taken a tumble.

Source: Lachstock Consulting

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