Daily market wire 24 Nov 2016

Lachstock Consulting November 24, 2016

lackstock1OVERNIGHT markets were volatile on a combination of fundamental and technical inputs.

CBOT Wheat was down -5.75c to 401.5c, Kansas wheat down -1c to 415.5c, corn down -0.25c to 350.75c, soybeans up 4.25c to 1034.25c, Winnipeg canola up 7.79$C to 528$C, and Matif canola up 7.75€ to 406€. The Dow Jones up 59.31 to 19083.18, Crude Oil down -0.09c to 47.94c, AUD down to 0.738c, CAD up to 1.348c, (AUDCAD 0.995) and the was EUR up to 1.055c (AUDEUR 0.6994).

Soybean oil and canola were pushed sharply higher after the EPA announced its 2017 volume requirements and associated percentage standards under the RFS program.

The US Thanks Giving Holiday closes markets today and half of tomorrow, this created order flow issues as people looking to exit positions beforehand.

Fund activity in oilseeds are pushing flat price, which is impacting basis.

China is an active buyer of soybeans receiving a total of 35 vessels in this past week, although this is down on the 43 in the previous week. The USDA has reported 390 TMT soy oil sold to China. They remain an active buyer in South America and the US.

Corn and sorghum shipments were both up on the previous week. Buyers include Saudi Arabia (corn and meal), with some interest in Malaysia and Latin America. US corn harvest is 97% complete.

In the wheat market, Indonesia’s feed mill association announced that they may increase feed wheat imports to 3 mmt, this could be good news for Australian wheat if we can compete with black sea and Argy values.

The Indian government has provided loans to farmers to plant their next wheat crop, to help encourage planting to reduce their deficits. This could have an impact on Australian exports as India have been a significant importer of Australian wheat this year.

Taiwan, Japan and Colombia have been buying milling wheat for January to February with Nigeria targeting US wheat. In the US, winter wheat planting is 97% complete.

US 2017 winter areas forecasted to receive moisture, which has been a major concern to shorts. This encouraged renewed selling, until the EPA announcement forced wheat to follow oilseeds.

We are seeing strong WA canola receivals with a likely increase in the canola forecast to 1.9-2 mmt. In NSW we’re lower forecast despite early harvest wheat results. In VIC there may be upside, while in SA tonnage is less clear with Pirsa values higher than market expectations and yield modelling.

Australian canola harvest is cracking on with 75% in WA, 40% SA, 15% VIC, 20% NSW. We expect this will rapidly increase in NSW and SA over the next two weeks. In VIC there are many crops yet to windrow.

Finally, USD has hit new highs making US grain less competitive, which is good news for Australian exports.



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