Markets

Daily Market Wire 26 October 2018

Guest Author, October 26, 2018

Lower for grains and mixed for oilseeds.

  • CBOT wheat down 12.25c to 487.25c,
  • Kansas wheat down 10.5c to 486.5c,
  • Spring wheat down 9c to 569.5c,
  • CBOT corn down 7.25c to 361c,
  • Matif corn down €1 to €169,
  • Soybeans down 8.5c to 841.75c,
  • Winnipeg canola down C$0.10 to $482.70,
  • Matif canola up €0.25 to €372.5,
  • Dow Jones up 464.61 to 25048.03
  • Crude oil up 0.7 per cent to US$67.29 per barrel
  • AUD up 0.31pc to $0.708,
  • CAD down 0.15pc to $0.764,
  • EUR down 0.24pc to $1.1364.

Wheat

Wheat was hit the hardest, breaking key technical support and gathering steam from the higher USD and weakness in corn and beans. Weekly sales came in at 442,000 tonnes, which was above market expectations of 350,000t, but below the 550,000t needed to meet the USDA’s forecast. With improved Ukrainian corn and aggressive Argentinian wheat offers, it’s hard to pencil in excessive US demand, which could spark a non-event for projected tightness in March-April next year. Implied volatility in December Soft Red Winter wheat finished at 21.5pc, Matif wheat fell €1.25/t to €199.25, Black Sea wheat was down 50c to $241.5 and the ruble was up 0.23pc to $0.01526. Spain and France received some rain, which helped to ease concerns for winter-crop plantings. From a technical point of view, CBOT wheat could fall a further 20c to test the lows forged in December last year, but it may run into some buying support on the way down, given its relative value to corn and beans.

Corn

Export sales drove corn lower, with weekly figures coming in at 349,500t versus trade ideas of 600,000t. To meet the USDA’s forecast, they need to average 950,000t per week, which now seems unlikely, given that demand is being displaced by cheaper supplies from Argentina and the Ukraine. An auction of Chinese state reserve stocks saw a 98.16pc clearance rate for the 3.92 million tonnes offered.

Soybeans

Beans finished with decent losses after poor export sales, combined with a flare-up in China-US trade discussions, and a stronger US dollar. The USD index climbed 0.35pc, making a push to highs not seen since the middle of August. US officials stated that they would not resume trade discussions with China until they come up with a solution on other economic issues like forced technology transfers. Export sales came in at 212,700t versus expectations of 500,000t. Soybean meal was down $1.80/t, and soyoil was down 0.37 points.

Canola

Canola tried to follow beans and vegoils lower, but ran out of sellers after testing new lows which led to some mild short covering.

Australia

Aussie markets were mixed yesterday, with some weakness noted in Western Australia, while east coast prices paused for breath after a few down days, and the realisation that its market is too far away from WA import parity now. Sorghum values continued to add a negative flavour, showing potential to compete with winter cereals into parts of southern New South Wales and northern Victoria. The market is pricing in heavy discounts for sorghum already, and winter-crop potential is still going backwards, with frosts in parts of southwest Victoria likely to have done significant damage to flowering wheat crops.  The forecast puts the only rain likely to fall in coming days as 10-15 millimetres in Central Queensland.

Source: Lachstock Consulting

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