Daily market wire 28 November 2017

Lachstock Consulting, November 28, 2017

Overnight futures markets:

Lower for grains, mixed for oilseeds.

  • CBOT wheat was down -6.25c to 409.5c,
  • Kansas wheat down -7.25c to 407.25c,
  • corn down -3.5c to 338.75c,
  • Soybean up 3c to 1007.75c,
  • Winnipeg Canola down -3.10$C to 516.3$C,
  • Matif canola down -4.75€ to 366.75€.
  • The Dow Jones up 36.01 to 23594.01,
  • Crude Oil down -1.02c to 57.93c,
  • AUD down to 0.760c,
  • CAD up to 1.276c, (AUDCAD 0.970)
  • EUR was down to 1.189c (AUDEUR 0.638).


Wheat suffered reasonable losses, led by spring wheat, which fell US11.5 cents/bushel. It wasn’t hard to encourage more selling in US winter wheats and European wheat, given that they had forged new lows in the previous days session. Implied volatility in March Soft Red Winter wheat futures went out at 19.06 per cent. Results from the Iraq tender showed Aussie values coming in the cheapest out of the US and Canada, by US$10/t. This was $20/t below its last purchase price. WheatCommitment of Traders (COT) had HRW increase its short position by 10,000 contracts to -20,700 contracts, while the SRW short is -109,000 contracts.


Barley prices should be under pressure in the short term, with the recent Saudi tender being taken out by very aggressive Black Sea offers. Saudi bought 723,000t at prices ranging from $211-$218 cost and freight for Jan-Feb shipment. It is unlikely that this will be filled out of Australia, given the strong feed demand we have seen from China.


Corn broke lower, but unlike wheat it is still sitting above seasonal lows. A combination of mediocre export sales last week and outside market weakness was enough to encourage shorts. Corn is still 3c/bu off its lows and holding support, perhaps due to stable ethanol demand. The reality is a very large global and local production, which nothing but a new crop distaste can overcome.  Corn COT was -200,300k contracts vs. -223,000 last week.


Soybeans held onto a stronger close, amongst a sea of negativity, thanks to strength in meal. It was up $3.1 per tonne, while oil was down 43 points. Export sales are lagging the requirement to reach the USDA’s forecast, which should lead to higher carryout stocks, unless we see a large spike in demand. South American weather features no major concerns for the moment, though the market is very weary of it and no one is rushing to sell beans. The COT report had the bean position long 20,200 contracts, down 2400 from last week.


Canola continues to suffer from weakness in veg oil prices. Rape oil prices in China are not falling like palm and soy oil, so this price decline could prompt a new wave of import demand, which should be reasonably supportive.


In Australia, the 8-day forecast is looking worst for un-harvested winter crops in Vic and NSW, with 50-100 mm looking to cover most cropping areas beginning this Friday. South Australia is also copping some rain with 25-50mm forecast across the states eastern cropping regions. Any crop that is not harvested before this rainfall in Vic and NSW will experience quality damage, given the rainfall this crop has already endured. Cash markets were quiet yesterday, although the ASX was stronger, despite the sell off in CBOT, with basis strengthening as APW ownership becomes appealing in the event of severe quality downgrades

Source: Lachstock Consulting




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