Daily market wire 27 March 2017

Overview of currency and futures markets:

Mixed for grains, lower for oilseeds.

CBOT Wheat May contract was up 3.75c to 424.75c,
Kansas wheat unchanged at 428c,
corn down -0.5c to 356.25c,
soybeans down -15.25c to 975.75c,
Winnipeg canola down -5.80$C to 482.5$C,
Matif canola down -4.25€ to 401.25€.
The Dow Jones down -59.86 to 20596.72,
Crude Oil up 0.439c to 48.14c,
AUD down to 0.762c,
CAD up to 1.337c, (AUDCAD 1.018)
EUR up to 1.079c (AUDEUR 0.706).

Soybeans

Increasing South American crop estimates continue to weigh down soybeans, with the Buenos Aires Grain Exchange increasing their Argentine crop estimate to 56.5Mt. This, combined with the previous days weakness, encouraged follow through selling, the technical picture continues to weaken. The weekly Commitment of Traders (COT) report was out after the close on Friday night and saw the fund position reduce by 34,600 contracts to long only 33,100 contracts. The market is expecting an increase in planted acres, so any surprises in the USDA report this Friday could be explosive.

Corn

Corn slightly lower in a very quiet session. The balance sheet remains supported at current levels as Gulf corn remains cheap on a relative basis, while ethanol crush remains strong. The COT increased their short position from -25,400 to -77,500 contracts, which could be the perfect storm for a price rally if Fridays USDA report has a surprise on the stocks or acreage front.

Canola

Canola had another large sell off, again, on the rumors of China cancelling cargoes. The sentiment is negative due to weakness in other oilseeds, despite the fact that domestic crush in Canada is strong and should see a tightening in old crop stocks.

Wheat

Wheat slightly higher as the rainfall forecast for the southern Plains looks to have missed the key wheat growing areas. Ongoing reports that Black Sea values are slipping lower, which should pressure export values ahead of their new crop production, provided they have no issues. The COT had the short position increase -15,900 contracts to -134,900. This is a big position to be carrying into a fairly substantial USDA report, so like corn, watch this space as any bullish surprises could see the shorts all heading for the door at the same time.

Australia

Tropical cyclone Debbie off Far North Queensland looks to be pushing good rainfall into southern Queensland and NSW, where a few weeks ago we had been through 6 weeks of record temperatures and were digesting the BOM’s 3 month dry outlook forecast. It certainly doesn’t look like that at present as we have received good recent coverage and continue to receive top ups, which will enhance the moisture profile and should boost winter crop acres.

Source: Lachstock Consulting

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