Overnight futures markets
- CBOT wheat up 2.75c to 472c,
- Kansas wheat up 6.25c to 490c,
- Corn up 1.25c to 384.25c,
- Soybean up 0.25c to 1040.75c,
- Winnipeg Canola down -2.5$C to 524.1$C,
- Matif canola down -0.5€ to 347€.
- The Dow Jones down -724.42 to 23957.89,
- Crude Oil down -0.96c to $US64.21 per barrel,
- AUD down to 0.769c,
- CAD up to 1.293c, (AUDCAD 0.995)
- EUR down to 1.230c (AUDEUR 0.625).
Weather continues to dictate wheat movements with the US crop areas weekly forecast shifting east, missing Kansas and the Texas Panhandles, this helped to support Kansas and indirectly CBOT. Open interest in Hard Red Winter wheat futures fell 18,000 contracts this week, which is a good indicator of where Commitment of Traders (COT) data will come after the close tonight.
Implied volatility in March Soft Red Winter (SRW) wheat futures went out at 23.5 per cent (pc).
Russian values have fallen slightly, as new crop conditions have improved, with only 5pc of the crop rated in poor condition.
Matif futures were up fractions at €163.50/t.
Weekly sales are expected to come in at 325,000t.
Wheat has done a lot of downside work and we have plenty of production to overcome before we can justify new lows, so feels like the market drifts higher from here, given that we are only US30c/bu off the seasonal lows and funds seem to have reloaded their short positions this week.
Crop forecaster, Informa, called corn planted area 88.9 million acres, which is slightly below previous expectations. There is a risk of corn acres reducing in the event of a wet spring, which would see a trend towards higher bean acres.
In South America Informa and the Buenos Aires Grain Exchange (BAGE) both revised their production forecasts lower again.
US export sales are expected at 1.75Mt. The US is rapidly churning through the burdensome old crop stocks, so Dec 18 corn futures price sitting 20c/bu off seasonal lows doesn’t seem sustainable given the potential for a much tighter new crop global balance sheet.
Canola felt the pressure from a weaker vegetable oil complex led by macro-economic factors and the potential issues associated with a US/China trade stoush. The CAD did not move significantly, after rallying about 1pc earlier in the week.
BAGE and Informa both revised soybean production forecasts in Argentina below 40Mt (USDA 47Mt).
There was plenty of chatter about the US/China trade war and the machinations on the soybean market.
Most feel that China needs US beans too much to warrant banning imports of US beans and therefore driving up the price of beans from other origins. However, we know political decisions are not always rational.
Export sales are delayed and out tonight, expected at 1.05Mt.
Soymeal was up $3.50 per tonne, while soy oil down 48 cents.
Aussie prices were a non-event yesterday with the stronger currency not encouraging any major movements.
We should expect to see better performances today with the dollar off again.
Demand prospects are improving in wheat as our flat price appears more attractive vs. Black Sea values.
Barley has had another layer of support added, thanks to the Saudi government tendering for another 1Mt for May/June arrival. It’s unclear how many cargoes are available for sale in this period, and if there is a deficit, we may see price results on the Saudi business for the nearby shipment slots rising close to Australian replacement price. This would be quite bullish and could see China forced to bid higher cost and freight (CFR).