Markets

Daily Market Wire 25 October 2018

Lachstock Consulting, October 25, 2018

Lower for grains and oilseeds.

  • CBOT wheat down -9.5c to 499.5c,
  • Kansas wheat down -10.5c to 497c
  • Spring wheat down -6.5c to 578.5c
  • CBOT corn down -2c to 368.25c
  • Soybeans down -7.25c to 850.25c,
  • Winnipeg canola down C$5.20 to C$482.80
  • Matif canola up €0.50 to €372.25,
  • Dow Jones down -474.93 to 24716.5,
  • Crude oil  to $66.35
  • AUD down 0.3% to 0.70632
  • CAD up 0.33pc to $0.76664,
  • EUR down -0.65% to 1.13959.

Wheat

Wheat sold off thanks to a higher USD, technical weakness and a shortage of any fundamentally bullish information. Implied volatility in Dec SRW finished at 20.25pc. Matif Wheat was down -0.5€ to 200.5€, Black Sea wheat down -0.5$ to 241.5$ and the Ruble was down -0.08% to 0.0152. SRW and HRW made new monthly lows today, testing key technical support. A further breakdown from here, could see a test of contract lows.  A recent Algerian wheat tender was awarded to French wheat, with HRW remaining overpriced. This is another nail in the low US wheat demand coffin. For US futures to rally, it’s likely that we need to see a sharp increase in export sales. The more demand that is missed, the lower the likelihood of this occurring. Looking to next year dryness concerns persist in parts of France, but Russian and other parts of Europe have received reasonable moisture. Russian officials are said to have stated that they are not concerned with the pace of wheat exports, which helped to remove any bullish flavour.

Corn

Corn had an unseasonably quiet session today, that featured a 2-cent range and low traded volume. Weekly ethanol production was up 1.2pc at 1024 million barrels per day.  The technical picture looks vulnerable here and the market needs to see an increase demand before sentiment changes. Export sales are expected at 600,000t tomorrow, which is below the 903,000t required to meet the USDA’s forecast.

Soybeans

Beans sold off for the usual reasons, limited demand, higher stocks:use and no certainty for future demand changes. Speculation on trade progress is building with Chinese and US leaders scheduling a meeting at the G20 summit in November, though no trade-specific agenda has been mentioned. Soybean meal was down US$4.60/t and soy oil was down 0.37 points.

Canola

Canola futures finished mixed across the two contracts, with Winnipeg futures getting walloped. Part of this was due to a strength in the Canadian dollar, but vegoil market weakness was the dominant factor today. Improved weather is also increasing harvest progress, which is increasing offer side order flow.

Australia

Aussie markets were mixed yesterday with ASX prices jumping in thin volume as frost concerns in South West Vic create consumer concerns. Barley markets were defensive in thin volume with some old and new crop grower increasing the offer side, prompting bids to back off. Weather wise the 8-day forecast is looking for 15-25mm in central QLD, whilst the rest of the country remains dry.

Source: Lachstock Consulting

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