Higher for grains and oilseeds.
Wheat finished with mild gains, overcoming early selling pressure supported by bean/corn strength. Price actions suggested exiting of long wheat/short corn/bean positions. Implied volatility in Dec Soft Red Winter finished at 24.37pc. Matif wheat was unchanged and Black Sea futures were up US$1.25/t. Weekly export sales were above expectations at 468,000t, with Asian purchases of white wheat and Hard Red Spring providing early confirmation of the demand shift that will be required in the absence of a large Aussie export program. The EU commissions export data had YTD wheat exports down 41pc on this time last year, this highlights another issue from the last WASDE Report which had EU wheat exports roughly unchanged. Market consensus suggests EU exports at least 3 million tonnes (Mt) lower, add Aussie at minus 4-6Mt and Russia minus 5Mt and there is a lot of exports that need to be switched into US wheat when the USDA eventually faces reality.
Corn had similar price action to beans as currency led improvements in export potential combined with solid export sales to encourage some de-risking by funds. Weekly export sales were solid coming in at 1.38Mt vs market ideas of 850,000t. Corn has done enough price work to encourage large demand increases, so if US farmers can hold firm on not promote too much order flow at these levels, then it is hard to see too much price pressure.
Soybeans rallied as the USD softened, opening import margins and prompting shorts to exit. Technically this appears as a short-term correction, with plenty more fuel needed to sustain a rally. To maintain this strength, trade tensions need a resolution and the market needs to look forward to reduced new crop planting intentions. China announced tariff reductions for non-US trading partners which prompted the currency swing and further opened non-US import margins. Weekly export sales were 917,600t vs market expectations of 650,000t. Soymeal was up $5.20/t and soy oil was up 36 points.
Canola was higher in both contracts gaining momentum from a stronger vegoil complex. If USD weakness sustains then pressure should flow into these two futures contracts presuming no major change in fundamentals.
Aussie markets were on fire yesterday with ASX wheat trading at $450 which is an all-time high. The forecast continues to offer no moisture which is punishing east coast crops, but also raising some concerns in WA. The crop there has good potential but still needs follow up moisture over the next month to achieve mid-range estimates. If we don’t see this then further price strength is likely.