Overnight futures markets
Higher for grains and oilseeds.
- CBOT wheat up 10.5c to 474c,
- Kansas wheat up 16.5c to 503.25c,
- Corn up 1.5c to 397.25c,
- Soybeans up 3c to 1049.25c,
- Winnipeg canola up C$1.39 to $531.8,
- Matif canola up €3.5 to €351.75,
- Dow Jones up 389.17 to 24033.36,
- Crude oil up 0.56c to US$63.57 per barrel,
- AUD up to 0.768c,
- CAD down to 1.280c (AUDCAD 0.983),
- EUR down to 1.226c (AUDEUR 0.626).
Wheat found a bid, led by Hard Red Winter (HRW) contracts being impacted by worse-than-expected state crop conditions. HRW areas remains dry and need to receive at least 25 millimetres of rain per week for the next two months to stabilise yield potential. Soft Red Winter (SRW) wheat conditions are also deteriorating, with six out of seven states worse off year-on-year, and down between 2-19 per cent. Implied volatility in May SRW went out at 25.6pc. Global wheat values remain well supported, with old-crop Russian wheat trading at $210/t fob, with rumours of higher trades at $212/t, and new-crop not far away at $205/t.
Corn finished fractions higher, supported by strength in wheat and expected planting delays. Planting progress had Texas showing 55pc versus an average of 42pc, while Kansas came in at 1pc, against an average of 2pc. Argentina production estimates continue to decline, while Brazil estimates remain unchanged. Argentine corn is forecast at 31-31.5 million tonnes (Mt) by private local estimates versus the USDA estimate of 36Mt, while Brazil is called at 86Mt versus the USDA’s at 94.5Mt. Cold wet weather in the corn belt is threatening to cause harvest delays that would prompt a switch of more area into beans. Global corn doesn’t have much margin for error.
Soybeans finished fractions higher in a risk-off session, with China’s import tariff changes rumoured to be announced over the weekend. Good rainfall in Argentina has finally been forecast, with 25-50mm expected. This is too late to have any positive impact on bean yields. Informa estimates in Brazil and Argentina are calling for 116Mt in Brazil and 39Mt in Argentina versus USDA estimates of 113Mt and 47mmt. Soymeal was up $2.70, while soy oil was up 30 points.
Canola found further support, despite the currency rallying almost 1pc. Old-crop supplies are tight in Canada, and traders are rallying both futures and basis in an effort to extract stock. Market in Australia is a different story, with very limited demand from the trade and growers still sitting on long positions. The Winnipeg strength has prompted a large contraction between it and the Matif spread, which may not be sustainable given the production volatility that Europe is about to face.
Aussie markets were dead quiet yesterday, with most of the trade unwilling to make a bold move without a strong lead from CBOT. In addition to this, the Chinese tariff war with the US is placing a lot of uncertainty around China’s overall import policy. The current strength in Russian wheat underpins Aussie prices reasonably well, which could, in combination with the dry forecast, lead to price support this week.