Markets

Daily market wire 25 October 2017

Lachstock Consulting, October 25, 2017

Overnight markets:

Higher for grains, lower for oilseeds.

  • CBOT wheat was up 1.25c to 438c,
  • Kansas wheat up 0.5c to 434c,
  • corn up 1.5c to 352.75c,
  • Soybean down -5.25c to 985.75c,
  • Winnipeg Canola down -1.59$C to 509.3$C,
  • Matif canola down -2€ to 365.25€.
  • The Dow Jones up 167.79 to 23441.76,
  • Crude Oil up 0.63c to 52.53$US,
  • AUD down to 0.777c,
  • CAD up to 1.267c, (AUDCAD 0.985)
  • EUR was up to 1.175c (AUDEUR 0.661).

Wheat

Wheat was fractions higher in a quiet session, featuring a 5.75-cent range, while we wait for some new price drivers. Implied vol in Dec SRW went out at 17.5%. Russian values are unchanged, with 12.5% protein wheat at $193 fob and 11.5% at $187 fob for nearby shipments, with $1 monthly carries beyond that. The resilience of Russian prices has been incredible considering the crop size, with a strong Ruble helping prevent significant grower selling. The spread between Aussie and Russian wheat into South East Asia has contracted significantly and should help Aussie increase their share of export demand. Planting and emergence for winter wheat is behind schedule, with Kansas’s plantings at 67% vs. 86% average and emergence at 41% vs. recent average of 63%. Oklahoma is worse at 13% vs. a 72% average. No one is actively pricing this risk yet, with spread volumes low today, only 9 lots traded in the July KWN/WN spread.

Corn

Corn posted slight gains in a quiet session, featuring a 3.6-cent range. It’s a bit of a broken record at the moment, global stocks are high, and demand is not exploding so the next real catalyst for this market will be new crop production concerns, which may coincide with the funds getting too short. Feels like a sell the rallies market for now given the large % of US harvest that still needs to hit the market.

Soybeans

Soybeans were softer as harvest progress reports revealed a greater completed percentage than expected. Meal was down $1.7 per tonne and oil was 29 points lower. Chinese imports have been impressive for the month of September at 8.113 mmt, which is 12% higher than last year’s figures. Brazil took out the lion’s share of this demand, with the US only doing 937kmt.

Canola

Canola finished lower today, which either marks the end of an impressive rally, or a momentary pause for breath. A stronger CAD was not helpful. Oil share could not maintain recent momentum with profit taking noted when the US flagged intentions to impose an import tariff on Indo and Argy biofuels. China imported 295kmt of Canola in September which is double that of the previous year. We need to see this sustained if Canola prices are to maintain strength this year.

Australia

The 8-day forecast for Australia is pretty bare, with 10-15 mm expected in Southern Vic. Cash prices remain defensive as traders and consumers await harvest pressure. The extent of this is questionable given the attractive carries offered by US futures, low supply vs. fixed cost execution capacity and the contraction we have already done on a relative basis to Russian wheat.

Source: Lachstock Consulting

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