Daily market wire 3 November 2017

Lachstock Consulting, November 3, 2017

Overnight markets:

Higher for grains and mixed for oilseeds.
  • CBOT wheat up 8c to 426c,
  • Kansas wheat up 10c to 425.75c,
  • Corn up 2.25c to 350.5c,
  • Soybeans up 8c to 999.25c,
  • Winnipeg canola down 0.20$C to 520.9$C,
  • Matif canola up 0.25€ to 379.25€,
  • Dow Jones up 81.25 to 23526.26,
  • Crude oil unchanged at US$54.20,
  • AUD up to 0.771c,
  • CAD down to 1.280c (AUDCAD 0.988),
  • EUR up to 1.166c (AUDEUR 0.661).


Wheat posted a strong close, bouncing off yesterday’s levels convincingly. Implied volatility in the Dec Soft Red Winter wheat contract went out at 20 per cent. Weekly exports came in at 347,000 tonnes, in line with market expectations, and South Korea took the lion’s share this week. Hard Red Winter (HRW) premiums continued to push higher, with carries too appealing to prompt physical grain movements. Speculation is building with regards to Iraq’s export demand for HRW this year; their crop is smaller than in previous years, and it’s likely they will need to increase their import program to replenish state reserves. The funds continue to try and bully wheat lower, with open interest up 12,700 contracts in CBOT and 6,400 contracts in Kansas. Most of the fundamentally bearish news feels to be factored in, so a large bout of new fund selling is required to push things lower from here.


Corn finished with slight gains, supported by strength in beans and wheat. Price action was better than usual, with a higher trading range of 4.5 cents. Export sales came in below market expectations at 811,000t, although a
daily sale of 1.36 million tonnes to Mexico was a positive surprise. Open interest is up 15,900 contracts, as funds increase their short positions.


Soybeans posted reasonable gains in a strong technical session, supported by solid export sales. The Jan contract looks like it will push high to test resistance at 1013. Soymeal was up US$3.6/t, while oil was 6 points lower. Open interest increased 11,800 contracts as funds added to long positions. Weekly sales came in at 1.966Mt, ahead of market expectations. Next week’s USDA World Agricultural Supply and Demand Report will provide some clarity on final US yield figures, where recent speculation has suggested them to be lower than expected.


Canola was fractions lower in a quiet session; it appears to be trading within a $3 range, and pausing for breath given the market’s recent strength. The Canadian dollar was slightly higher which didn’t help. Harvest pace is increasing in Australia, and the Winnipeg rally is providing good flat-price opportunities for Aussie sellers.


The 15-25 millimetres of rain forecast for NSW is still present, and could prompt harvest delays and quality downgrades, but based on the performance of wheat crops in Queensland in the face of severe moisture, we expect to see things hold up reasonably well. Cash markets have nothing new; it is groundhog day until harvest gets under way.

Source: Lachstock Consulting


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