Markets

Daily market wire 23 April 2018

Lachstock Consulting, April 23, 2018

Friday’s futures markets

Lower for grains, mixed for oilseeds.

  • CBOT wheat down 13.5c to 463.25c,
  • Kansas wheat down 12.5c to 482.75c,
  • Corn down 5.5c to 385.5c,
  • Soybeans down 8.5c to 1028.75c,
  • Winnipeg canola up C$0.399 to $534.8,
  • Matif canola down €3.75 to €340,
  • Dow Jones down 201.95 to 24462.94,
  • Crude oil up 89c to $US68.38 per barrel,
  • AUD down to 0.767c,
  • CAD up to 1.276c (AUDCAD 0.977),
  • EUR down to 1.228c (AUDEUR 0.623).

Wheat

The Hard Red Winter (HRW) wheat weather forecast improved, with 25-35 millimetres of rain expected through the most moisture-stressed areas this weekend, and a better mid-term outlook. This encouraged increased fund selling, with July wheat trading through the 200-day average, and now looking to push through the 100-day average at 5 cents below current levels. Talk of sorghum replacing wheat demand in US domestic feed rations is adding to the softer tone. Matif futures were down €1, while Russian values were unchanged. Commitment of Traders report (COT) figures had Soft Red Winter wheat at  -63,300 from -58,200 contracts, and HRW at 24,700 from 23,400 contracts. The updated forecast on Sunday looks to have shifted east of major HRW areas, so we could see some support on today’s open.

Corn

Corn suffered heavy selling pressure. A positive weather outlook in the US northern plains and western corn belt have eased concerns about delayed planting. If this eventuates, we could see a swing of fund length out of corn and into beans. This, in combination with weakness in wheat, was enough to encourage fund-position squaring, which resulted in corn’s biggest daily loss since mid-March. On top of this, the sorghum situation is looking bearish for corn, as talk exists of some unexecuted China sales being set to flow back into the US domestic market. Corn COT report figures came in 161,900  from 207,000 contracts. There is said to be 1.2 million tonnes (Mt) of US sorghum on the water, and at least five vessels have changed direction as a result of the tariffs. This will likely put pressure on Southeast Asian feed markets.

Soybeans

Currency weakness in Argentina and Brazil saw US flat prices come under pressure in beans and corn. Argentina’s agriculture ministry revised its 2017/18 soybean production estimate down to 37.6Mt, well below the USDA’s 40Mt. Trade wars were a recurrent theme that saw more risk-off behaviour, as China continues to source beans from other origins. Canada is reported to have sold 20 cargoes. The weekly COT report had beans 156,500 from 142,300 contracts.

Canola

Canola capped off a strong week, continuing to defy weakness in outside markets, thanks to limited grower selling and a weaker dollar. Winnipeg continued to gain on Matif, getting to levels which have traditionally encouraged demand shifts in the spread. Statistics Canada’s seeding intentions estimate is due out on Friday, and should provide some weakness as the weight of Canada’s new-crop potential dawns on the market. The Canadian dollar finished with sharp losses, and was down 0.76 per cent.

Australia

In Australia, markets remain well supported, but reluctant on either side, given the high flat price in wheat and limited rainfall potential in the next two weeks. The forecast up until the end of April is not suggestive of anything positive for parched winter-crop areas, which should encourage ongoing flat price support this week. The Australian dollar was down 0.8pc, which will provide further support and offset the Chicago Board of Trade’s weakness.

Source: Lachstock Consulting

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