Overview of futures markets:
- CBOT Wheat was up 0.75c to 434.5c
- Kansas wheat up 3c to 443.5c
- corn down -0.75c to 367.5c
- soybeans up 0.5c to 1037.25c
- Winnipeg canola up 3.10$C to 515.2$C
- Matif canola up 0.75€ to 412.75€
- The Dow Jones down -6.029 to 19884.91
- Crude Oil down -0.17c to 53.71c
- AUD up to 0.765c, CAD down to 1.302c, (AUDCAD 0.997)
- EUR down to 1.075c (AUDEUR 0.7119).
Soybeans had a fairly quiet session. The market was weak early on, with some technical selling, but speculation of Chinese demand post NYE provided support. Weekly export sales were slightly above market expectations.
Canola traded higher following strength in palm and bean oil. Statscan is out tomorrow publishing Canadian stock on hand for grains and oilseeds as at 31 Dec.
Corn had pressure from profit taking. Export sales were strong, with demand to remain strong until Argy supplies come off. Sales were at 1.144 mmt which is above the market expectations of 0.8-1.1mmt. Ethanol production hit a new weekly record.
Wheat was stronger with a combination of new money flow talk, in addition to some positive fundamentals.
Implied volatility in the March contract was up 1%. One cargo of HRW was rumoured to be priced into the Algerian tender with the others supplied out of France, a total of 585k was booked.
The market talking about rumours that China have been buying HRW and are looking to buy more.
Wheat needs to see demand to maintain current pricing, so given that US is competitive at the moment, could suggest limited downside in futures.
US Wheat sales were slightly above market expectations at 451kmt, which is 36% higher than last year.
Saudi Arabia is back in the market for feed barley, tendering for 1.5 mmt with the results expected on the 6th of Feb. Australia should be in a good position to price this, so long as there is enough stem capacity.
Considering the existing Chinese business and ongoing demand, this should help support Aussie prices in the near term.
Source: Lachstock Consulting