Daily market wire 28 September 2017

Lachstock Consulting September 28, 2017

Overnight markets:

Stronger for grains and oilseeds.
  • CBOT Wheat was up 7.75c to 461.5c,
  • Kansas wheat up 6.75c to 459c,
  • corn up 1.75c to 354c,
  • Soybean up 2.25c to 976.25c,
  • Winnipeg Canola up 0.59$C to 499.2$C,
  • Matif canola down -1.75€ to 371.5€.
  • The Dow Jones up 56.38 to 22340.71,
  • Crude Oil up US14.9c to US$52.03,
  • AUD down to 0.784c,
  • CAD up to 1.247c, (AUDCAD 0.978)
  • EUR was down to 1.174c (AUDEUR 0.668).


Wheat was the leader today in spite of a stronger US dollar, defying technical pressure to settle US12.5 cents/bushel above its lows. Implied volatility in Dec Soft Red Winter wheat futures went out at 19.75 per cent. Global cash price strength is discouraging potential sellers, with the market revising their Russian export ideas and realising the importance of other major exporters that have significant year on year reductions in available supplies. The CBOT short is large enough now to spark caution in the event of a bullish catalyst. Today that catalyst was a lack of sellers.


Corn was a follower of wheat today, with similar price action. There is nothing new on corn, global stocks are huge, demand is not overly impressive and the structure is not large enough to warrant a short covering rally.


Canola finished with slight gains, rallying almost Can$5/t off its lows in a high volume trading session. The Unied States Environmental Protection Agency (EPA) potential revisions to ethanol production have impacted veg oil markets, which is reducing crush margins and seed demand at a national and global level. A firm decision by the EPA is not out until November.


Soybeans finished slightly higher, rallying US8 cents/bushel off their lows in a technically strong finish. Soymeal prices were stable, while soy oil was US21 cents/pound lower. A fresh daily sale of 132,000t to China was announced, which helped the market to remember the demand profile, after a quiet couple of days on the sales front. Yield results for harvest are still coming in mixed, making it difficult to confirm the final results given the amount remaining to harvest. In Argentina the Buenos Aires Grain Exchange called their new crop 54 million tonnes (Mt) vs. 57Mt last year, due to lower acres.


In Australia the moisture forecast for QLD has increased and should clip parts of northern NSW as well for 10-15mm. In the case of winter crops, it’s probably too little to late. It will top up the moisture profile and encourage sorghum planting which could see some pressure on the downs market as traders factor sorghum into second quarter 2018 feed rations. New crop basis may soften on this forecast, though our view is that consumers will treat weaker basis as a buying opportunity given the tight national supplies.

Source: Lachstock Consulting


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