Lower for grains and oilseeds.
- CBOT wheat down 5.5c to 437c,
- Kansas wheat down 6.5c to 435.75c,
- Corn down 2.75c to 363c,
- Soybeans down 1.5c to 936.25c,
- Winnipeg canola down 1.80$C to 509.4$C,
- Matif canola down 2€ to 365.5€.
- Dow Jones up 29.24 to 21703.75,
- Crude Oil down -1.11c to 47.4c,
- AUD up to 0.793c,
- CAD down to 1.255c (AUDCAD 0.996),
- EUR up to 1.181c (AUDEUR 0.671).
Wheat closed lower across all three classes, with spring wheat leading the charge, down 13.5 cents. Implied volatility in Dec Soft Red Winter whent went out at 22 per cent as the contract reached new yearly lows. For winter wheats, the same story is playing on repeat at the moment; heavy volumes in Russia and Europe are pressuring global cash prices and driving futures lower. The Russian crop keeps getting bigger, with some estimates now sitting between 81-84mmt. The export capacity there cannot increase by the same metric, with exports expected to cap at 30-31mmt. The Saudi Government released its tender results, purchasing 490,000mt at US$214.47-$222.38 landed. This will likely come from different origins, with US wheat in the mix for the early shipments.
The Dec contract reached new yearly lows and appears ready to test the 359 lows, which were set in September. The Profarma tour this week will provide some good insights into yield potential, which could prompt some support for corn, given their tendency to underplay yields.
An improved forecast brought rainfall to the Midwest, putting pressure on soybeans. The losses could have been worse, but recent demand and ongoing price inquiry from China prevented any major selling. Weekly export sales had beans above expectations.
Canola closed slightly lower in very quiet trade. Volumes were thin and it fell victim to weakness in the oilseed complex. The Canola market is on frost watch at the moment, with concerns for parts of Alberta and NSW. The global balance sheet does not have a lot of exportable surplus to throw around, so any production issues in Australia or Canada will be watched very closely.
Nothing of substance is in the Aussie forecast from a moisture perspective. The market is paying more attention to some frost risk that is occurring in parts of New South Wales and Victoria. No reports of major damage have occurred yet, and night temperatures are increasing. Cash markets have been fairly quiet, and our currency strength is not helping. We are running out of sellers in new-crop in the absence of any potential production increases. In fact, we suspect that further risk premiums will be priced in, given the hot and dry temperatures in Queensland and NSW, and now the new threat of frosts.
Source: Lachstock Consulting
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