Markets

Daily Market Wire 25 June 2018

Lachstock Consulting, June 25, 2018

Friday’s offshore futures markets traded lower for grains and mixed for oilseeds.

  • CBOT wheat down -2.5c to 504.25c,
  • Kansas wheat down -4.5c to 505.5c,
  • Corn was unchanged at 366.5c,
  • Soybean up 14.5c to 900c,
  • Winnipeg canola up 2.39$C to 527.4$C, and
  • Matif canola down -0.5€ to 352.75€.
  • The Dow Jones up 119.18 to 24580.89,
  • Crude Oil up 3.73c to $US69.28 per barrel,
  • AUD up to 0.744c,
  • CAD down to 1.326c, (AUDCAD 0.986) and the
  • EUR up to 1.165c (AUDEUR 0.638)

Wheat

Wheat finished with mild losses to close out the week, with Kansas declining further on CBOT, to mark a US10c/bu weekly decline in that spread. Friday’s trading ranges were relatively low as the market sought to get options expiration out of the way and move onto weather watching.

Implied volatility in Sep Soft Red Winter (SRW) wheat futures went out at 27.8 per cent (pc).

In demand news the Philippines purchased 200,000t of wheat of Australian and Black Sea origin, which is supportive of Australia pricing in the export states.

The Ukraine Ag Ministry forecasts that the country’s wheat production will be between 23-26 million tonnes (Mt) (USDA 26.5).

Canada is developing a small production story, with talk of yield damage in parts of Saskatchewan.

Predictions about China’s wheat crop continue to worsen with some estimates now suggesting up to 30pc yield decline.

Corn

Corn finished the week on a softer note, in a low range session with the market waiting for a bullish catalyst.

Futures prices took a pasting last week, however finished well off their lows because sellers became exhausted when prices had reached seasonal lows, and remembered the politics and weather markets still need to get through.

Hot weather is creeping into the corn belt in the US, but rain is accompanying it, so potential concerns eased somewhat.

Soybeans

Soybeans posted a strong finish to what was an incredibly volatile week, thanks to a good show of strength from soymeal. This was mainly due to spread unwinding and options expiration, but supportive nonetheless.

A trade resolution between the US and China has still not been reached, but optimism is building the longer we go on with no news or tweets. It’s beginning to have that “too big to fail” feel to it, which is encouraging some speculative participation.

Meal was up US$7.20/t and soy oil was fractions higher.

Funds were sellers of beans on the week, reducing their position 25,600 contracts to be net short -12,800 contracts.

The US Environment Protection Agency (EPA) announced plans to increase the biofuel blending mandate by 3pc in 2019 to 19.88 billion gallons, which will be supportive of future demand.

Canola

Canola finished mixed across the two futures contracts, with Winnipeg following strength in beans and potential for increased export demand. The July contract saw the most strength as limited grower selling reduced liquidity at contract expiry.

Minor production concerns in parts of Canada are encouraging further buying.

Australia

Aussie markets were quiet on Friday with a slightly better forecast for QLD and NSW discouraging an aggressive bid.

There is 15-25mm forecast over the next 8 days with good coverage across northern NSW and southern QLD. Whilst this is beneficial, there is a general feeling that the damage has already been done to these regions due to the incredibly low rainfall received this year. It will boost moisture profiles for summer crops, but that is all for now.

The rest of the country remains dry, which could encourage some price increases in the export states, given that we are at global export parity and east coast import parity.

Source: Lachstock Consulting

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