Daily market wire 20 November 2017

Lachstock Consulting, November 20, 2017

Friday night futures markets:

Stronger for grains and oilseeds.

  • CBOT wheat was up 5.75c to 427.25c,
  • Kansas wheat up 5c to 422c,
  • corn up 6.5c to 343c,
  • Soybean up 18.25c to 1001.5c,
  • Winnipeg Canola up 2.00$C to 519.4$C,
  • Matif canola down -0.25€ to 378.75€.
  • The Dow Jones down -100.11 to 23358.24,
  • Crude Oil up 1.46c to 56.6c,
  • AUD down to 0.756c,
  • CAD up to 1.277c, (AUDCAD 0.966)
  • EUR up to 1.179c (AUDEUR 0.641).


Wheat finished with solid gains, though it did not rally on its own set of fundamentals. Support came from strength in corn and beans, plus a weaker USD which was enough to prompt some short covering. Implied vol in Dec SRW went out at 17.25%. Russian cash prices remained steady; the ruble was 1% higher, which added support. In US cash markets, HRW basis offers are 10 cents higher as the VSR discourages physical execution. Domestic mills in the US are now switching up to 30% spring wheat into their bread wheat grind, because of the increased basis premiums in HRW, brought on by the VSR. The weekly COT report revealed a reduction in the short, with SRW at -132k contracts from -144.9k; HRW -16.1k from -26.6k contracts; spring wheat +6.2k from +3.7k contracts.


Soybeans finished with strong gains, as South American production concerns increase risk premiums. Meal was up $7.70 per tonne, while oil basically unchanged. Dryness in Argentina and the expectations of La Nina is expected to stress production there, with concerns mounting that this spreads into Southern Brazil. The Brazilian crop is 73% planted which is on track with last year and 3% above average, while Argentina’s planting is 23.8%, slightly below last year. Bean COT came in at -11.4k from +7.9 k contracts. Expectations are that export prices will be a lot stronger this week out of the PNW.


Canola finished with moderate gains, following strength in oilseeds and speculation of increase Chinese demand. The Jan contract is now sitting very close to technical resistance, so a break higher this week could see it get to $530.


Corn broke out of its low range cycle to end the week, finishing with strong gains on speculation of a large round of export demand. There were rumors building that China bought .5-1 mmt out of the PNW given its cheap relative value. This was enough for some shorts to hit the exit button. The weekly COT revealed an increase in the short at -264.4k from -237k contracts.


The Aussie forecast looks to mostly have cleared up, after battering Victoria and parts of SA and NSW last week with falls generally ranging from 25-50mm.
Parts of Western SA are expecting 15-25mm, but this should just slow up harvest rather than do any damage. Cash prices have been quiet, as growers become reluctant sellers while quality and yield uncertainty persist.
Though the Aussie dollar is doing good things for local producers, after posting some decent falls last week.


Source: Lachstock Consulting



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