Daily market wire 31 January 2018

Lachstock Consulting, January 31, 2018

Higher for grains and oilseeds.

  • CBOT Wheat up 8c to 457.25c,
  • Kansas wheat up 16.75c to 469.75c,
  • corn up 2.75c to 361.5c,
  • Soybean up 8.5c to 1011.25c,
  • Winnipeg Canola up 1.699$C to 504.9$C, and
  • Matif canola up 2€ to 347.75€.
  • The Dow Jones down -340.27 to 26099.2,
  • Crude Oil down -1.18c to $US64.38 per barrel,
  • AUD down to 0.808c,
  • CAD down to 1.232c, (AUDCAD 0.996) and the
  • EUR up to 1.239c (AUDEUR 0.651).


Beans found support from a drier Argy forecast, as the weather market there continues to dominate headlines. Soymeal was up US$3.10/t, while soy oil was 21 points higher. A major South American crop forecaster trimmed Argentina’s production figures back 1 million tonnes, after ongoing dryness in the southern areas prompted yield declines.


Extremely low crop conditions in Kansas (14pc good to excellent vs. 44pc last year) and Oklahoma (4pc good to excellent) were the catalysts behind wheat’s rally today. Implied volatility in Mar Soft Red Winter wheat futures went out at 22pc. With these conditions, the question of abandonment is raised with thoughts of wheat acres declining further than existing expectations and factoring in a much smaller crop than initially expected. This encouraged shorts to hit the exit button. Russian values were firm at $196/t free on board (fob) for Feb shipment, while Matif futures finished up €2.25/t.


Corn higher following strength in beans and wheat, plus the prospect of much greater demand potential with uncommon export destinations beginning to show up. Egypt was the talking point yesterday, but Spain raised eyebrows today, with US corn $5-6/t cost and freight (CandF) cheaper than Ukrainian corn. Ukrainian corn has found good support from an increase in Chinese import activity, which is part of the reason behind the spread change.


Canola also found a bid, thanks to support from outside markets and in spite of a slightly stronger CAD. Futures broke at one point but found support on the 30-day moving average to then rally up to the 40-day MA, before finishing slightly off the highs. The technical picture in canola is building and should prompt some short covering, if things continue along current trajectory.


In Australia the Bureau of Meteorology was out calling for weak La Nina conditions, which are unchanged since their last update. It’s “Groundhog Day” in the physical space in Australia, despite the recent strength in futures. The AUD remains firm thanks to USD weakness, making it very difficult for traders to secure export business, with reluctant grower liquidity and uninspiring export bids. Yesterday was the final day of January track execution, which didn’t seem to spark any major fireworks, as most of the shorts in wheat and barley were either rolled or covered earlier in the month.


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