Markets

Daily market wire 21 May 2018

Lachstock Consulting, May 21, 2018

Friday’s futures markets

Higher for grains, mixed for oilseeds.

  • CBOT wheat up 20.75c to 518.25c,
  • Kansas wheat up 19.75c to 538.75c,
  • Corn up 7.25c to 402.5c,
  • Soybeans up 3.5c to 998.5c,
  • Winnipeg canola down C$0.20 to $532.4,
  • Matif canola up €1 to €355,
  • Dow Jones up 1.11 to 24715.09,
  • Crude oil down US$0.14 to $71.35 per barrel,
  • AUD down to 0.750c,
  • CAD up to 1.287c (AUDCAD 0.966),
  • EUR down to 1.176c (AUDEUR 0.637).

Wheat

Wheat was the leader across all contracts on Friday, staging the largest daily gains since July last year.

Implied volatility in July Soft Red Winter (SRW) wheat went out at 28.37 per cent. Ongoing dryness in Australia and Canada, and uncertainty in the Black Sea, were the major drivers, with a lot of production volatility still to overcome, and declining stocks in the major eight exporters.

The hot rumour for US wheat was that limited supplies of Argentine wheat had Brazil was seeking Hard Red Winter (HRW) wheat.

In its tender, Iraq purchased 50,ooo tonnes each from Australia and the US. Pakistan is calling a tender for 500,000t wheat through its government program.

Matif wheat was up €2.5 to €176.75, following support from higher Russian values.

The Commitment of Traders (COT) report had SRW at -38,100 from -25,800 contracts, while HRW was 35,000 from 37,300 contracts.

Corn

Corn staged a strong rally, following wheat and a tighter US balance sheet after China cancelled its US anti-dumping investigation and tariffs for US sorghum imports.

Corn couldn’t break through highs reached after the USDA’s May World Agricultural Supply and Demand Estimates report, as US conditions remain very positive and the market is all on the same side. With that said, concerns are building for production in China, with seeded area expected to be lower due to dry conditions in its north-east. Brazil also has production issues, with some forecasts sitting 8 million tonnes below the current USDA forecast. For now, these issues are not enough to encourage new buying, but the potential is there.

The COT came in 213,800 from 238,000 contracts.

Soybeans

Soybeans finished with modest gains, closing 9 cents off their highs as bearish news of export cancellations did not allow beans to run with corn and wheat.

Export sales saw the cancellation of 949,000t, made up of 829,000t of old-crop and 120,000t of new-crop, which was likely destined for China.

The Chinese Government’s actions on sorghum were thought to be the start of a large round of trade concessions, but that did not eventuate for beans.

Soymeal was up $1.20/t, while soy oil was 3 points higher.

The COT report had beans at 89,500 from 110,600 contracts.

Canola

Canola finished fractions higher, following outside market strength, though stifled somewhat by an improved weather forecast for some of the drier parts of the prairies.

Australia

Aussie markets were off a touch on Friday, with barley enduring new-crop sellers on speculation of lower Chinese demand, and US sorghum back in play. Wheat maintained strength on low liquidity, though the bid was reluctant thanks to an improved longer-term forecast, which has now disappeared.

The planting outlook for Western Australia is looking better, with 15-25 millimetres expected on Thursday, but the rest of the country remains dry.

 

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