Friday’s futures markets
- CBOT wheat up 4.5c to 476.5c,
- Kansas wheat up 8.25c to 498.25c,
- Corn up 1.5c to 385.75c,
- Soybean down -1.5c to 1039.25c,
- Winnipeg Canola up 1.60$C to 525.7$C,
- Matif canola down -0.75€ to 346.25€.
- The Dow Jones down -424.68 to 23533.2,
- Crude Oil up 1.44c to $US65.74 per barrel,
- AUD up to 0.769c,
- CAD down to 1.288c, (AUDCAD 0.991)
- EUR up to 1.235c (AUDEUR 0.623).
Wheat futures on Friday in the US sold off early, but went back to trading fundamentals once beans and corn recovered.
Old crop wheat sales came in at 265,200t vs. market ideas of 200,000t.
Despite patchy showers in the US, the Hard Red Winter (HRW) wheat belt is still missing out. The forecast is calling for below average rainfall for the next two weeks. This saw a sharp increase in Kansas pricing.
Implied volatility in May Soft Red Winter (SRW) wheat futures went out at 25.25 per cent (pc).
The weekly Commitment of Traders (COT) for SRW was -60,400 contracts short, compared with -48,300 contracts short the previous week; for HRW it was +24,200 long compared with +25,400 previous week.
Corn sold off hard early in the session, reaching a low US6.5c/bu below the open.
In a very un-corn like session, the market traded a 10c/bu range.
Export sales came in at 1.485 million tonnes (Mt) vs. market ideas of 1.75Mt.
The COT had the long at +219,500 vs. 266,700 contracts last week.
The weather forecast appears favourable for corn areas, although a wet spring could see an increase in bean acres.
It’s hard to see too much sell side pressure in corn, given the tightening old crop situation and limited error potential for global production.
Beans finished fractions lower after trading a 25c/bu (approximately 2 ½ per cent) range.
China’s ability to disrupt the market by retaliating to US import taxes weighed heavily on price action.
The market sold off very hard early in the session, but China did not announce a bean import ban, so the market rallied, led by meal. Meal finished up $9.10 per tonne, while oil was down 46 points.
Export sales in beans came in at 759,100t vs. 550,000t.
If China prevents US bean imports, it will see a huge spike in South American premiums, however European and Asian demand will prevent too deep a US hole forming.
The market is of the opinion that China cannot afford to lose US beans, given the tightness in the global balance sheet without them.
Canola was not immune to the chaos created by China’s import policy threats, although it did hold up better than soybeans, particularly considering the weakness in oil.
A China tax on US beans would likely be supportive for Canadian import demand, so the market is beginning to increase premiums on the back of this.
Aussie cash markets were well supported on Friday in both wheat and barley.
Barley has run out of sellers, which coincided with a weaker dollar, strong Chinese demand and the Saudi government’s 1Mt tender for May/June arrival.
Wheat is seeing good support from ongoing container demand, as well as strong flat price support from increased Russian values.
Sorghum prices continue to defy gravity, with talk of 4-5 bulk cargoes getting done into China.
The weather forecast looks dry for the remainder of this week, Victoria got some reasonable showers in south- central areas, but further rainfall is needed in the major cropping areas.