Markets

Daily market wire 20 October 2017

Lachstock Consulting, October 20, 2017

Overnight markets:

Higher for grains and oilseeds.

  • CBOT wheat was up 2.75c to 432.75c,
  • Kansas wheat up 1.25c to 429.25c,
  • corn up 0.5c to 349c,
  • Soybean up 2c to 997c,
  • Winnipeg Canola up 3$C to 508.6$C,
  • Matif canola up 0.75€ to 366.5€.
  • The Dow Jones up 5.44 to 23163.04,
  • Crude Oil down -0.64c to 51.4US$,
  • AUD up to 0.787c,
  • CAD up to 1.248c, (AUDCAD 0.983)
  • EUR was up to 1.184c (AUDEUR 0.664).

Wheat

Better than expected weekly export sales underpinned wheat today. Spring wheat lead the charge up US5.75 cents/bushel. The all-wheat export figure was 615,400t vs. market ideas of 350,000t. Spring wheat saw the lions share with 251,400t, SRW has 63,300t, HRW 245,200t and White wheat 54,200t. Implied volatility in Dec SRW went out at 16.5pc. Egypt’s GASC bought 235,000t of wheat at similar prices to their last tender, which are very close to Russian replacement. More demand is expected in the coming weeks with speculation on more Saudi, Moroccan and Algerian tenders in the pipeline. US basis continues to strengthen in winter wheats which is not encouraging any export business. No one is that willing to offer it, considering the premiums that the VSR is providing.

Corn

Corn finished just above unchanged in another quiet session, featuring a US3c/bu range. Export sales provided some mild support at 1.25Mt vs. market ideas of 950,000t. The major buyers were Mexico at 510,000t and Japan at 234,000t. Corn is in a long boring grind, with ample stocks and slow demand. The market needs a new crop weather story to trade or volatility keeps declining. In global news China sold 782,089t of the 1.116Mt offered at an auction of state reserves on Thursday, which seems high considering quality issues and their recent barley and sorghum import activity.

Soybeans

Soybeans managed slight gains in another low volume session, whilst the market awaits the outcome of Brazil’s forecast. Weekly export inspections were slightly lower than market expectations at 1.28Mt vs. 1.5Mt ideas. A private sale of 348,000t was announced to China during the session, which provided some support. Meal was a fraction higher and oil was 39 points higher, on policy uncertainty. Ranges in beans are contracting and won’t break out until we see what happens in Brazil.

Canola

Canola finished higher, despite a stronger dollar, following strength in soyoil. The chart is looking slightly positive. If it can manage another rally through technical resistance, then prices are looking to have a run at old highs of Can$510/t and then Can$520/t.

Australia

Nothing new for Aussie, the forecast remains in NSW and QLD, perhaps a little bit lighter for parts of QLD. Ideas for the Vic and WA crops are increasing as we get closer to harvest, with the market backing off prices awaiting harvest pressure. Whether this occurs in style is to be determined, on one hand, the trade has probably not been able to build a large enough short to buy into all harvest. On the other hand, the grower is relatively cashed up, the crop is 14Mt smaller and we are sitting very close to some South East Asian FOB bids.

Source: Lachstock Consulting

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