Markets

Daily Market Wire 29 October 2018

Guest Author, October 29, 2018

Higher for grains and oilseeds.

  • CBOT wheat up 18c to 505.25c,
  • Kansas wheat up 13.75c to 500.25c
  • Spring wheat up 8.25c to 577.75c.
  • CBOT corn up 6.75c to 367.75c
  • Matif corn up €0.25 to €169.25,
  • Soybeans up 3.25c to 845c,
  • Winnipeg canola up C$0.40 to $483.10,
  • Matif canola up €1.5 to €374,
  • Dow Jones down -296.24 to 24688.31
  • Crude oil up 0.39 per cent to US$67.59 per barrel
  • AUD up 0.06pc to $0.708,
  • CAD down 0.24pc to $0.763,
  • EUR up 0.24pc to $1.140.

Wheat

The GASC (Egypt) wheat tender was the dominant factor in Friday’s session, halting two days of losses attributed to fund selling, with the market trading speculation on the winning origin. Implied volatility in Dec SRW finished at 22pc. Matif Wheat was up €3.25/t to €202.5/t, Black Sea Wheat was up $1.5/t to $239/t and the Ruble was down -0.07% to 0.0152. After the close the results were reported with 350,000t Russian, 60,000t Ukraine and 60,000t US SRW. It was interesting to note that Argy didn’t price this which is probably beneficial for global flat price. Prior to the tender US SRW had done a lot of work in both futures and basis to become the cheapest wheat available, so the market responded accordingly with cash markets stimulating the futures markets. Despite the small volume, the US result was supportive as it suggests that prices have finally converged to a level that encourages greater US demand. Although SRW has probably outpriced itself again now given the rally in local basis and futures. This could see the rally short lived, as the US needs to find a lot of HRW demand if export sales are to reach a level that the USDA is forecasting. A Russian exporters meeting turned out to be a non-event, with the Ag Min revealing that there was 33-34Mt available for export (USDA exports 35Mt), but this didn’t rule out government intervention below these levels. Wheat COT had SRW -54.3k from -43.8k contracts, HRW +11.3k from +16.2k contracts.

Corn

Corn recovered from Thursday’s losses following strength in wheat and potential for lower than expected US yields. The demand outlook from ethanol and exports remains bleak, but today was all about relativity to wheat. The Corn COT came in at -29.6k contracts from -28.6 k last week.

Soybeans

Beans finished fractions higher in a mild session that featured an 8.25 cent range. A 260,000t sale of US beans was reported to “unknown”. Harvest progress is improving in the US, with a good weather window over the weekend expected to see some good volumes reaped. The problem lies in where the beans can be stored. With limited export potential some elevators are closing their doors, meaning farmers need to store on farm in bags or piles, in some cases. Soybean meal was up US$3/t and soy oil was down -23 points. The commitment of Traders report (COT) had the bean short -102.6k contracts from -94.4k last week.

Canola

Canola finished with conservative gains in both contracts, following price action in beans and vegoils. Canola is a follower for the moment, China are focused on buying Canadian Canola meal which has taken the sting out of export demand to some extent.

Australia

Aussie cash markets were softer in the east to finish the week, but WA appeared to have stabilised. ABARES finally came to the party revising their wheat production to 16.6Mt. Weather wise the forecast has CQ receiving 15-25mm over the next eight days. This week should uncover the results of the frost that went through Victoria’s Western Districts last week. If this were to result in further than expected hay cutting, then we should expect some sort of price reaction, especially considering that east coast prices drifted below WA import parity last week.

Source: Lachstock Consulting

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