Markets

Daily market wire 23 May 2018

Lachstock Consulting, May 23, 2018

Higher for grains and oilseeds.

  • CBOT wheat up 14.25c to 521.5c,
  • Kansas wheat up 14c to 540.5c,
  • Corn up 2c to 404.75c,
  • Soybeans up 5.25c to 1030.5c,
  • Winnipeg canola up C$0.30 to $532.7,
  • Matif canola up €2 to €358.25,
  • Dow Jones down 178.88 to 24834.41,
  • Crude oil down US$0.10c to $72.13 per barrel,
  • AUD down to 0.757c,
  • CAD up to 1.281c (AUDCAD 0.971),
  • EUR down to 1.177c (AUDEUR 0.643).

Wheat

Wheat finished higher, but 7 cents off the daily highs. Implied volatility in July Soft Red Winter wheat went out at 29.5 per cent.

Above-average temperatures in Russia and Eastern Europe are leading to mild concerns for wheat production which, combined with dryness in eastern Canada and eastern Australia, encouraged bids. The many production unknowns over the next three months should keep wheat supported on any breaks lower.

Russian new crop is quoted at US$203/t fob, a discount of $8-$15/t to French and German wheat.

Corn

Corn found support from beans and wheat, reaching a new high not seen since July last year.

Corn has underlying support, but needs a new catalyst to sustain higher pricing. Dryness in parts of the United States and a limited moisture outlook for June could impact production, which should provide some price support.

Overlay that with a declining world situation in China, Russia and Brazil, and it’s easy to get excited: the problem is that everyone is on the same side.

Soybeans

Soybeans finished with slight gains, holding above the gap formed on Monday’s open.

Trucking strikes in Brazil are tightening fob availability, which has Pacific North West exports firing again, as they have perceived risk to Chinese importers.

Donald Trump commented that he was unhappy with the trade talks, which forced a sell-off in equities and beans later in the session, and saw them closed 5 cents per bushel off the highs.

Soymeal was down $1.60/t, while soy oil was 10 points higher.

Canola

Following Monday’s public holiday, canola couldn’t follow soybeans’ strength.  A stronger Canadian dollar and long old-crop structure prevented aggressive buying.

Reports of Chinese purchases of rape oil should support crush demand, though volume is not yet defined.

Australia

Aussie markets showed some strength yesterday in eastern states, despite the higher dollar, lower futures and improved moisture forecasts for Western Australia.

The domestic market was the major driver, with limited top-up supplies available until November.

Barley prices found some support in old-crop, with potential export demand for malt threatening to tighten the balance sheet further.

Longer term, the forecast on the east coast remains dry, which gets us through to the first week in June, and quashes any turnaround potential in New South Wales.

Source: Lachstock Consulting

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