Markets

Daily market wire 23 May 2017

Lachstock Consulting, May 23, 2017

Overnight markets:

Mixed for grains, higher for oilseeds.

 

  • CBOT Wheat down -0.5c to 448c,
  • Kansas wheat down -2c to 453c,
  • Corn up 2.75c to 382.5c,
  • Soybean up 4c to 958.25c,
  • Winnipeg Canola up 0.9$C to 520$C,
  • Matif canola up 0.75€ to 361.25€.
  • The Dow Jones up 89.990 to 20894.83,
  • Crude Oil down -0.010c to 51.12c,
  • AUD down to 0.74736c,
  • CAD up to 1.35022c, (AUDCAD 1.00898)
  • EUR down to 1.123c (AUDEUR 0.665).

Wheat

Wheat basically unchanged, despite gaining support from a weaker USD, negative US weather, and growing concerns for global production potential. Warmer conditions in Europe in the next two weeks are expected to affect the crop potential there. While talk of too cold and wet in parts of Russia and too dry in the Ukraine is affecting Black Sea potential. On top of this China is too hot, creating concerns for crop development there. The market is focused on problems at the moment and ignoring the surplus old crop stocks we have on hand. While the balance sheet is adequate we have a large short position and enough production murmurs at the moment, to see things supported at current levels.

Corn

Corn rallied today on the back of increased wet and cold conditions and a weaker USD. The structure is also adding support, given the huge short position. Shorts are getting nervous over issues a square book would not be concerned with. Eastern Corn Belt appears wetter in the next 3-5 days. The market was unresponsive to positive planting progress at 85pc complete vs. 71pc last week, the concern is still mounting for potential replanting requirements from weather events earlier this month.

Soybeans

Beans stronger again as reports of 3-4Mt of farmer sales in Brazil last week on the currency break. Basis has stabilized and firmed since last week’s events and should see ongoing support as grower liquidity slows on the back of less attractive flat price. US planting progress was reported at 53pc complete vs 52pc average.

Barley

The results of the Saudi Arabian Government tender for 1.5 Mt of optional origin feed barley (July August arrival) were reported at prices ranging from US$ 170/t-$181/t depending on the shipment period. This is below Australian replacement and is expected to come from the Ukraine and Russia, some of the early July shipments might need to fall back on Aussie barley depending on black sea harvest pace, though this would be a losing trade for the Saudi short. The global barley balance sheet is looking fairly tight, with ongoing weather concerns in parts of Europe, so those who committed to these sales are at the mercy of Black Sea grower selling. For Australia, we are still seeing good support from Chinese feed and malt buying. In fact we are getting very low on supplies with markets beginning to show signs of inverting, so old crop should be supported in the near term. .

Australia

The Aussie forecast is showing nothing for WA and SA, but continues to favour Vic where another 15mm is forecast in the next 8 days. With limited old crop supplies and a dry new crop outlook, prices in SA are strengthening, as traders look to fill shipping capacity. The majority of the SA stem is booked on LTA’s for the next 5 years and is long overdue for a drought, so we should expect to see premiums increase there in the absence of moisture support.

Source: Lachstock Consulting

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