Daily market wire 29 Nov 2016

Lachstock Consulting November 29, 2016


Strength in soybeans continues while grains show technical weakness.

CBOT Wheat down -3c to 416.5c, Kansas wheat up 1c to 430.5c, Corn down 0c to 358.25c, soybeans up 10c to 1056c, Winnipeg canola down -3.30$C to 524.9$C, and Matif canola up 1€ to 402.75€.
The Dow Jones down -54.239 to 19097.9 , Crude Oil up 0.839c to 46.9c, AUD up to 0.74837c, CAD down to 1.340c, (AUDCAD 1.003) and the was EUR up to 1.061c (AUDEUR 0.705).
With options expiration out of the way, Dec wheat is facing the prospect of physical deliveries, which put pressure on the WZ/H spread, which traded out to 26.5 cents.
The cash markets are not competitive which makes deliveries a likely prospect, suggesting that prices need to fall further to engage any demand.
The Variable Storage Rate (VSR) calculation period ended last week with an average of 55.59%, which means carry will remain the same at 11.00 cents per month for SRW futures.
HRW spreads also under pressure as delivery prospects are realised. Downside for HRW despite having larger stocks, should be limited compared with SRW, as HRW is finding demand.
Conditions for 2017 US SRW wheat establishment and germination have significantly improved, whilst HRW areas remain mostly dry. Welcome rainfall in Europe has eased concerns for their new season crop.
Soybean strength continues, supported by strong values out of China where Dalian bean, oil and meal all closed up. Crush margins in China are supportive of price strength, whilst physical demand is also contributing with cargoes of US soybeans reportedly done into China Friday. High Crude oil and lower USD another enabling factor here. South American forecasts looking positive for Argentina’s soybean planting.
Corn quiet, with Dec/March roll coming under pressure. Export inspection numbers were high but stocks are too heavy. A promising SAM weather forecast is not helping, with their crop potential improving. Winnipeg Canola futures closed lower on CAD strength and fund re positioning.



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