Markets

Daily market wire 3 April 2018

Lachstock Consulting, April 3, 2018

Overnight futures markets

Lower for grains and oilseeds.

  • CBOT wheat down -5c to 463.5c,
  • Kansas wheat up 0.5c to 486.75c,
  • Corn down -0.5c to 395.75c,
  • Soybean down -9.25c to 1046.25c,
  • Winnipeg Canola up 2$C to 530.4$C.
  • The Dow Jones down -458.92 to 23644.19,
  • Crude Oil down -2.09c to $US62.85 per barrel,
  • AUD down to 0.765c,
  • CAD up to 1.291c, (AUDCAD 0.988)
  • EUR down to 1.230c (AUDEUR 0.622). 

Wheat

Wheat finished last Thursday in positive territory.  The USDA 2018 prospective plantings report did not reveal any shocking surprises. Winter wheat acres came in 200,000 acres above market expectations, while March 1 stocks were 217,000t lower than the markets expectations. Wheat sales were 353,000t in old crop vs. market ideas of 300,000t.

In demand news Egypt purchased 475,000t of wheat, 355,000t from Russia and 120,000t from Romania.

The futures market on Monday finished mixed, in lighter volume trade with global cash markets quiet.

Soft Red Winter (SRW) wheat futures were lower, with pressure coming from improvement in the weather forecast for central US cropping regions.

Hard Red Winter (HRW) finished fractions higher, after showing strength earlier in the session thanks to alarming figures in the first national condition ratings. All wheat conditions rated 32 per cent good to excellent vs. market ideas of 35pc. The figures at this time last year were 59pc. Wheat in the state of Kansas wheat was rated 10pc good-to-excellent vs. 13pc last week. HRW couldn’t hold its gains, with an improvement in the weather forecast combining with weakness in SRW to discourage more buying.

Corn

The USDA brought corn acres down, 1.4 million acres below the markets expectations and 2.2 million below last year’s figures.

Weekly sales in corn were 1.353 million tonnes (Mt), which was at market expectations. Corn managed to hang on, on Monday, despite weakness in beans and wheat.

On top of this, China has announced a 15pc import tariff for US ethanol. This will have a significant impact on the market as it will rally non-US premiums and see an increase in local Chinese pricing, as more local stocks will be consumed to reach the government’s ethanol mandate.

Corn has ongoing support due to strong old crop demand, revised acres and a weather situation that will prompt late planting. This leaves very little margin for error.

Soybeans

On Thursday, the USDA report brought a bullish surprise for beans in the form of lower acreage intentions for the US crop. Acres were 2 million acres lower than the market expected at 89 million and 1.1 million acres below last year’s acreage. Beans and corn lost ground to cotton, spring wheat and sorghum.

Weekly export sales were 353,000t in old crop, vs. market ideas of 750,000t.

In Monday’s session, beans slipped lower.

Canola

On Thursday canola followed price action from beans, with a stronger veg-oil markets providing assistance. Canada’s canola market remains at an inverse between old crop and new crop, which is interesting, when considering that the Aussie market has priced in a lot of carry.

Another stronger close was managed on Monday, with veg-oil strength assisting the move higher.

Australia

Aussie markets should see ongoing support this week, with the dollar weaker and showing potential to break nearby support.

The weather forecast features no rainfall in key cropping areas over the next 8 days, which will limit grower selling and could prompt some consumers to increase coverage.

The Chinese government’s increased US ethanol tariffs should see support for their internal corn, which will rally local markets, further opening the import margin for Aussie feed barley.

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