Daily market wire 23 Nov 2016

Lachstock Consulting, November 23, 2016

lackstock1Grain markets were quiet in a mixed session led by soybeans.

CBOT wheat was down -3c to 407.25c, Kansas wheat up 2c to 416.5c, corn up 1.25c to 351c, soybeans up 9.75c to 1030c, Winnipeg canola down -1$C to 520.2$C, and Matif canola down -1.5€ to 398.25€. The Dow Jones up 67.18 to 19023.87 , Crude Oil down -0.33c to 47.91c, AUD up to 0.73992c, CAD up to 1.345c, (AUDCAD 0.9952) and the was EUR down to 1.062c (AUDEUR 0.6963).

Goldman Sachs came out calling for higher commodity prices, providing renewed investor confidence, which could be supportive of the AUD going forward. The Dow Jones reached new record highs.

Options expiration and first notice creating order flow issues in WZ where implied vol was up 5.5 per cent to 30pc. WZ longs suffered today with the WZ/WH spread losing 3.5 cents. Interesting to see where this carry structure gets to once nearby expiration pressure is removed. Could provide some good opportunities for Aussie longs if we blow out towards full carry again.

Some models suggesting moisture for 2017 winter wheat areas, which will be a relief to a starved profile. Still not enough to relieve concerns considering declining conditions and informa’s record low acreage estimate.

Indonesian wheat imports are expected to increase to 8 mmt from 7.4 mmt. This should have positive effects on Australian exports provided our quality profile and relative values remain intact.

Corn closed slightly higher on no major news. Technical are looking supportive and harvest is nearing completion. Domestic cash bids are firming on reduced harvest liquidity and increasing ethanol margins.

Soybeans closed higher again on Chinese buying. Charts are showing technical strength remaining above 200 day moving average. Rally has surprised the market considering burdensome stock numbers.

Rainfall in Victoria is affecting harvest progress and could impact quality if it continues.

Canola followed lower Soy oil prices down. Canada’s harvest is 95pc complete.

US Markets closed on Thursday (US time) for Thanksgiving holiday.


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