Markets

Daily market wire 28 February 2018

Lachstock Consulting, February 28, 2018

Overnight markets

Higher for grains and oilseeds.

CBOT wheat was up 3.75c to 463.25c,
Kansas wheat up 11.25c to 489c,
corn up 2c to 370.5c,
Soybean up 3.5c to 1049.5c,
Winnipeg Canola up 0.10$C to 522$C, and
Matif canola up 0.75€ to 359.5€.
The Dow Jones down -157.38 to 25551.89,
Crude Oil down -0.93c to $US62.97 per barrel,
AUD down to 0.779c,
CAD up to 1.274c, (AUDCAD 0.993) and the
EUR down to 1.223c (AUDEUR 0.637).

Wheat

State conditions reports and an ongoing dry forecast in the US saw wheat finish with strong gains led by Hard Red Winter (HRW) wheat. May HRW futures powered beyond their 400-day moving average to push through more resistance at 500c/bu.

May Soft Red Winter (SRW) wheat futures will be raising concerns to existing fund shorts, given that its 5c/bu away from breaking the 200-day moving average, a close through here would encourage position coverage. Implied volatility went out at 24.56 per cent (pc).

Conditions in Kansas were down 2pc at 12pc good to excellent, whilst conditions declines were also noted in central US production states.

The winter kill threats in Europe and increasing cold temps in Russia have supported prices there, with Russian milling wheat trading at $206.50/t free on board to forge a new seasonal high.

Corn

Corn finished with reasonable gains (for corn), as fund buying was noted in enough volume to overpower farmer selling on the day. May futures finished just shy of the 200-day moving average, where more buying will be uncovered.

Corn is still finding support from dryness in Argentina, the likelihood of increased US old crop disappearance; a US acreage battle with beans and now the potential for declining conditions in some key US production states.

It’s only US26c/bu off its lows, so as old crop consumption continues, corn could surprise to the upside.

Soybeans

Soybeans were stronger again, thanks to ongoing dryness in Argentina reducing crop potential on a daily basis. On top of this there is now some talk of dryness in Southern Brazil.

Oilseeds markets did hold beans back somewhat, finishing down 46 points. The opposite occurred in soymeal, which finished up $8.90 per tonne.

Canola

Canola finished fractions higher, as weakness in veg oil markets offset the strength in meal markets, to encourage some profit taking. Dryness in Canada is raising some minor concerns for new crop production, it is still early days, but the uncertainty is helping to price some risk premium back into canola.

Australia

Australian markets were reasonably quiet yesterday with a higher dollar and end of month, preventing any strong trade appetite.

Sorghum prices continue to show strength, despite reasonable rainfall in Southern QLD, as Chinese export enquiry combines with limited grower selling to force trade shorts to cover.

Wheat markets remain well supported as Australia’s export prospects continually improve, with the appreciation in Russian values.

Barley was quiet yesterday with mixed signals in the market. One side reported Chinese demand continuing at pre-NY levels of $255/t CFR (cost and freight), while others were not seeing it. We expect to see more action as the week progresses and China come back to the market.

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