Markets

Daily market wire 21 December 2017

Lachstock Consulting, December 21, 2017

Overnight futures markets:

Stronger for grains, mixed for oilseeds

  • CBOT Wheat up 3.5c to 436.25c,
  • Kansas wheat up 2.5c to 435.5c,
  • Corn up 1.75c to 357.5c,
  • Soybean down -2.25c to 964.5c,
  • Winnipeg canola up 1$C to 494.8$C,
  • Matif canola down -4.5€ to 351.5€.
  • The Dow Jones down -14.47 to 24740.28,
  • Crude Oil up 0.53c to 58.09c,
  • AUD up to 0.766c,
  • CAD down to 1.282c, (AUDCAD 0.983)
  • EUR up to 1.187c (AUDEUR 0.645).

Wheat

Wheat finished higher with support coming from a weaker USD, large spec position and freezing temperature forecast in the US southern plains. Export sales tomorrow are expected to see 5-700,000t US wheat, which will be a marked improvement on previous weeks’. Implied volatility in March Soft Red Winter wheat went out at 18.44 per cent(pc). Black Sea prices were a touch softer and could threaten US flat price if they buy back some of the feed demand that the US has seen recently. Wheat is still in need of a catalyst to break through the 20-day moving average and encourage fund coverage; order flow could assist this heading towards the New Year.

Corn

Corn finished higher in a very quiet session that featured a US2.5c/bu range. Goldman Sachs were out calling for flat corn trade in the New Year, assuming normal weather conditions. Weekly ethanol production was lower again, marking the second decline in two weeks. On its own this is negative, but we need to consider that this week’s production was also the third highest on record, which will lead to greater disappearance than previous years. Ethanol prices have done work to the downside and should ignite China import demand, despite their hefty import tariffs.

Soybeans

Soybeans continued their downward slide, with concerns over the China phyto issues adding weight to the US crop, given the potential for demand shifting into Brazil, if they can achieve less than 1pc foreign material. Soymeal was down $1.70/t, while oil was down 25 points. The weather outlook in Argentina remains promising, though the market is still quantifying whether or not it is enough to reverse the previous 30 days of dryness.

Canola

Canola defied oilseeds weakness to finish fractions higher, although off the daily highs. The market is trading light volume with limited conviction, as the demand side seems comfortable to wait until the New Year to make its move.

Australia

Aussie markets have taken on a slightly firmer tone in wheat with more people willing to step up and own it, due to the mild stability in Chicago, the increased proximity to export parity and a shortage of grower selling, Feed grains remain well bid with sorghum and barley’s strong export potential into China. The forecast for NNSW and SQLD is showing 25-50mm in the next 8 days. This has to be good for the sorghum crop, but may not encourage any price declines, given the export and domestic demand potential.

Source: Lachstock Consulting

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