Markets

Daily Market Wire 27 September 2018

Lachstock Consulting, September 27, 2018

Lower for grains, higher for oilseeds.

  • CBOT wheat down 3.25c to 517.5c,
  • Kansas wheat down 1c to 521c,
  • Corn down 0.75c to 363c,
  • Soybeans up 4.25c to 850c,
  • Winnipeg canola up C$3.80 to $494.70,
  • Matif canola up €4 to €371.25,
  • Dow Jones down 106.93 to 26,385.28,
  • Crude oil down US$0.26 to $72.02 per barrel,
  • AUD down to 0.726c,
  • CAD down to 0.768c (AUDCAD 0.938),
  • EUR down to 1.174c (AUDEUR 0.612).

Wheat

Wheat finished lower, with traded volumes declining, while the market awaits a new catalyst to prompt further activity. Implied volatility in December Soft Red Winter wheat finished at 21.75 per cent. Matif wheat dropped €0.25 to €201.25, and Black Sea wheat futures were fractions lower at $249 per tonne FOB, with traded volumes reducing. Export sales will surprise if they are more than 375,000t tomorrow, with 475,000t needed to meet the current USDA export projection. The market is getting tired of waiting for US demand, and prices keep running away as soon as they get within reach. This is frustrating traders and reducing traded volumes. The Iraq tender revealed success to one US and one Australian cargo, while Turkey purchased about 250,000t of Russian wheat at around $224/t FOB for nearby shipment.

Corn

Corn paused for breath after a five-day streak of higher closes. The market is dubious of the USDA’s last yield projections, and has priced this in accordingly. Weekly ethanol production was down only 1.4 per cent at 1.036 barrels per day as margins continue to decline. There is a large short waiting in the wings that could be blown up by an increase in export demand, which is possible, given cheap global relative values.  Export sales are expected at 1.1 million tonnes (Mt), and only 883,000t is needed to meet USDA projections.

Soybeans

Beans finished with mild gains in a low-volume session. On paper, the bean market looks like a screaming sell, with record production and the absence of China, but prices are comfortable now, and sitting above seasonal lows with obscure demand continuing to keep things ticking over. A flash sale of 650,000t of US beans was announced to Mexico, while rumours are swirling that Brazil is going to import 1Mt of US beans. Soymeal was up $1.70/t and soy oil was up 14 points.

Canola

Canola finished higher across both contracts with weather delays creating concerns for quality and production in Canada. Currency helped with the CAD down 0.43pc and the Euro down 0.21pc.

Australia

Aussie markets were stronger yesterday, with some frost concerns in Victoria combining with more talk of crops being cut for hay prompting some consumer buying. The weather forecast has improved over the next eight days, with WA now pencilling in 10-15 millimetres, with good coverage across southern and central regions. Northern New South Wales and southern Queensland are also looking better, with 10-20mm looking likely. Cash markets have done a power of work in a short space of time to get where we are now, so a mild moisture forecast could be all it takes to ease the panic and take some of the urgency away from shorts.

 

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