Overnight futures markets
- CBOT wheat market closed,
- Kansas wheat market closed,
- Corn market closed,
- Soybeans market closed,
- Winnipeg canola market closed,
- Matif canola up €1.75 to €352,
- Matif wheat up €1.25 to €162.75,
- Dow Jones up 19.01 to 25219.38,
- Crude oil up 82c to $US62.5 per barrel,
- AUD up to 0.791c,
- CAD up to 1.256c (AUDCAD 0.993),
- EUR up to 1.240c (AUDEUR 0.637).
Matif wheat closed €1.25 per tonne higher at €162.75, taking the lead from a sharp increase in Russian fob pricing. Russian prices have benefited from weather and logistical issues at port. These factors, combined with a sharply higher ruble and strong nearby demand, have seen the market thin on the offer side as grower replacement and execution capabilities become more challenging.
The Saudi feed barley tender revealed sharp price increases since the previous tender and strong support for barley prices until new-season crops are harvested. The Saudi Government’s purchasing arm bought 960,000t at US$238.50/t to $251.84/t, which is expected to be filled predominantly by Europe. These prices are around $28/t higher than the previous tender, which confirms the tight global and local barley balance sheets we are witnessing. Australian values are approximately A$10 too high to work into the highest value sales on the tender, unless lower grade blending is possible in some of the non China-friendly ports like Port Lincoln or Port Giles.
It does serve as another solid demand foundation for Aussie barley, as a $10 fall would quickly find support from Saudi shorts. Australia being dependent on Saudi demand this year is very unlikely, given the aggressive nature of China’s purchases so far this year. Their return from the Chinese New Year holiday could mark a strong improvement in barley prices, if the premiums they have previously paid over Saudi for Aussie barley is anything to go by.
Canola and soybeans
Canola in Europe finished stronger, closing above key technical resistance for the first time in three months. The catalyst was Argentinian weather, which continues to raise concerns for crop potential. Temperatures were warmer than normal over the weekend, which offset scattered showers. The weather forecast looks mostly dry, which should see soybean futures open well bid when traders return from their public holiday in the United States. Malaysian palm oil futures were fractions higher, but not enough to impact the canola market.
Cash markets in Australia were very quiet yesterday, with the combination of a closed futures market and traditionally quiet Monday trade combining to crush liquidity. A slightly weaker dollar may add some support today, but it’s likely traders wait for futures to give them a lead.