Markets

Daily market wire 28 May 2018

Lachstock Consulting, May 28, 2018

Higher for grains and mixed for oilseeds, ahead of a public holiday in the US today.

 

  • CBOT wheat up 12.75c to 543c,
  • Kansas wheat up 15c to 564c,
  • corn up 1.75c to 406c,
  • soybeans up 5.75c to 1041.5c,
  • Winnipeg canola down -0.89$C to 538.1$C,
  • Matif canola up 0.25€ to 363.25€.
  • The Dow Jones down -58.66 to 24753.09,
  • Crude Oil down -3.20c to $US67.5 per barrel,
  • AUD down to 0.755c,
  • CAD down to 1.296c, (AUDCAD 0.978)
  • EUR down to 1.165c (AUDEUR 0.648).

Wheat

Wheat found further support from production concerns in the Black Sea region, Australia and the US, which saw it claw back from a technically weak session on Thursday.

Implied volatility in July Soft Red Winter (SRW) wheat futures went out at 32.37 per cent (pc).

Russia’s crop reporting agency IKAR revised their wheat production range down 3 million tonnes (Mt) to 69.6-77Mtt.

Global concerns are being felt for eastern Australia, despite the positive forecast for WA.

Canada’s moisture forecast has improved in some of the drier parts of the Prairies, but a lot more is required.

In the US hot dry weather for the winter wheat areas has potential to reduce production potential.

The commitment of traders report (COT) in SRW was -29.5k from -38.1k contracts, while HRW was +37.5k from 35k contracts.

A public holiday in the US on Monday means markets are not open until Tuesday, which should force a volatile open, particularly if hot temps further penetrate the cropping regions.

Corn

Corn managed a higher close, finding support from wheat and speculation on hot dry temps in the US and crop declines in the Black Sea. If hot temperatures were to extend from Texas into the corn belt then we should expect a sharp price response, given the limited moisture that is forecast.

China sold 1.24Mt of state reserve corn in their auction, this reflected 31pc of total reserve grain offered. Speculation is still rife that China will import 5Mt of US corn and potentially DDGs. This is pure speculation at present with government discussions ongoing as US officials travelling to China this week.

The weekly COT came in +215.7k from +213.8k contracts last week.

Soybeans

Soybeans extended recent gains, with new US sale announcements providing some comfort that the trade war is over. Soymeal was up $3 per tonne and soy oil was down 37 points following weakness in crude oil.

A new-crop sale of 312,000t US beans was reported to China, as well as a 165,000t optional origin sale.

The popular bullish theory on beans at present is that China will commence a stockpiling program, which will provide additional demand, on top of their regular imports.

In Brazil the truckers are striking which is preventing meal and soy oil production, and wreaking havoc on vessel execution.

The COT came in +76.7k from +89.5k contracts last week.

Canola

Canola followed weakness in veg-oils and ended up fractions lower, though it did hold up well comparatively. From a technical point of view, the charts are holding near recent highs, but a break from Thursday’s close would suggest further downside.

Australia

Aussie markets were mixed on Friday, with bears holding onto the WA and Vic rainfall and bulls focussing on terrible NSW conditions and a nervous consumer group.

Barley found some life in old crop, thanks to rumours of new export business. The balance sheet in barley is the tightest it’s ever been from a local and global perspective, so cannot afford to let much more grain go via exports.

Source: Lachstock Consulting

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