Friday’s futures markets
Mixed for grains, higher for oilseeds to end the week.
- CBOT wheat was unchanged at 464.25c,
- Kansas wheat down -1.5c to 484.75c,
- Corn down -0.25c to 374.5c,
- Soybean up 4.25c to 1047.5c,
- Winnipeg Canola up 1.09$C to 516.3$C,
- Matif canola up 2.75€ to 356.25€.
- The Dow Jones up 347.51 to 25309.99,
- Crude Oil up 0.799c to $US63.57 per barrel,
- AUD down to 0.784c,
- CAD down to 1.2626c, (AUDCAD 0.98938)
- EUR up to 1.2294c (AUDEUR 0.6381).
Wheat received early support as forecast rainfall for severely moisture stressed parts of the Hard Red Winter (HRW) wheat belt shifted further east.
Weekly exports came in slightly below market expectations at 328,000t.
On Monday we will see a condition update for US wheat areas, which should make for an interesting day-night session.
Implied volatility in May Soft Red Winter (SRW) wheat futures went out at 23pc. Commitment of Trade (COT) data had SRW at -83,500 contracts short vs. -75,900 contracts short a week ago, while HRW +10,000 long vs. +12,900 contracts long the week earlier.
The USDA Ag Outlook Forum forecast US wheat production at 50.05 million tonnes, which would lead to a year-on-year carry out reduction by 2.1Mt to 25.34Mt.
European values were stronger with Matif futures rallying €1.00/t to €164.5/t after cold temperatures in Russia and Europe slowed logistics and increased free on board (FOB) premiums.
Soybeans were stronger but finished US3c/bu off their highs, with Argentina’s dry weather forecast continuing to provide price support.
The USDA forum did not make any downside amendments to the Argentinian crop, which will be an inevitable factor in its next report, although this will be offset slightly by increases in the Brazil’s production.
Forecast ending stocks for US soybeans came in at 12.53Mt, with record exports at 62.6Mt.
Soymeal futures were down $1.40 per tonne, while soy oil was up 31 points.
Export sales came out in negative territory as cancellations outweighed new sales. This could be attributed to the Chinese NYE period, although it is not very positive, given that strong export demand is required to maintain a bullish price outcome.
The weekly Commitment of Trader Report (COT) had funds long 65,800 contracts vs. 11,100 contracts long last week.
The USDA forum had US corn production down 2 Mt, with lower-than-expected exports and record ethanol production.
Weekly corn exports were strong at 1.5Mt vs. market expectations of 1.25.
This demonstrates the attractive price and demand prospects of US corn.
A sale of 115,000t of old crop was announced to Egypt, with US basis premiums continuing to increase.
Corn COT came in +43,400 long vs. +11,000 contracts long last week.
Canola followed the strength in beans and veg oil markets.
Today’s rally represented further technical strength and surprising resilience given the Canadian dollar was up 0.57pc.
Cash markets were quiet in barley on Friday with limited direction given from China market, which has been slow to get back into things after NY celebrations.
Dalian corn futures were approximately US$2/t higher.
Wheat action was limited, with a stronger dollar not getting anyone overly excited.
The US wheat crop conditions announcement today will likely set the tone of this week’s trade.