Overnight futures markets
Lower for grains and stronger for oilseeds.
- CBOT wheat was down -8.5c to 449.25c
- Kansas wheat down -6.75c to 471.75c,
- Corn down -2c to 365.5c,
- Soybeans up 5c to 1037.5c,
- Winnipeg canola up 3.10$C to 511.3$C
- Matif canola up 2€ to 354€.
- Dow Jones down -282 to 24937.38,
- Crude oil up 21.9c to $US61.9 per barrel,
- AUD down to .7870,
- CAD up to 1.264c (AUDCAD 0.996),
- EUR down to 1.233c (AUDEUR 0.6386).
Wheat futures finished lower, despite rising global cash prices, as a stronger US dollar combined with moderate improvements in the US forecast to encourage an influx of selling.
Implied volatility in May Soft Red Winter wheat futures went out at 23.89 per cent. The longer-term forecasts in the US continue to suggest reasonable moisture across the Southern Plains, but the nearby forecast is still below average.
Hard Red Winter (HRW) wheat regions finally saw some moisture for the forecast in Oklahoma and the Eastern HRW area, but we need to see a lot more to alleviate moisture stress.
Today’s sell off was expected, with the market now close to net long wheat, hiccoughs are bound to be met with a vacuum of selling.
Matif futures were unchanged, while Russian values were quoted around US$203/t free on board, as cold temperatures limit grain availability and logistics.
The weather story in Argentina continues to support beans, led by meal. The forecast rain over the weekend did not eventuate. It delivered only scattered showers, failing to offset temperatures between 33-38 degrees Centigrade. The nearby outlook is dry over the next 5 days, with heavy rainfall in Brazil, that will likely damage crop production there. Weekly export inspections were down almost 400,000t week on week at 960,000t, though this could be due to the Chinese NY holiday.
Soymeal was up US$3.20 per tonne, but the close looks technically weak, given that it finished $8.60 off the daily highs. Soy oil also quite supportive, up 31 points. Until we can get some certainty around South American production, beans will continue to chop and change with the weather forecast.
Corn slightly lower, finishing well of its daily highs, following price action in beans and weakness in wheat. Export inspections were reasonable at 938kmt, only 10% lower than the previous week. Corn remains something that needs to catch up, once the old crop stocks burden is reduced further. There is a lot of uncertainty around the size of the corn crop in both Brazil and Argentina, as well as strong price signals in beans that could see it favored over corn for the US plant.
Canola managed a higher close, thanks to strength in veg oil markets, which saw the May contract reach highs not seen since mid-December last year. The contract pushed up the 100-day moving average, but settled slightly lower on the 200-day moving average. The CAD was off .64pc, which provided additional support.
Aussie cash markets were abuzz yesterday with activity in both wheat and barley!
Barley markets were A$3-5/t stronger after the Saudi result, with the market very keen to see how China responds on their return from NY holidays next week.
A softer Aussie should help things today.
The wheat market seems to have come to terms with our lack of correlation to Chicago and is more responsive to our biggest competitors pricing in Russia. We are getting very close to levels which should re-engage traditional demand from Indonesia on a relative basis, provided they still need some Aussie cover.
Good local buying support was noted for protein wheats yesterday.