Overnight futures markets

Higher for grains and oilseeds.

• CBOT Wheat up 11.25c to 538c,
• Kansas wheat up 12.5c to 567.75c,
• Corn up 3c to 408c,
• Soybean up 10.25c to 1053.25c,
• Winnipeg Canola down 0.8$C to 528.1$C, and
• Matif Canola up 1€ to 355.25€,
• The Dow Jones up 5.17 to 23930.15,
• Crude Oil up 0.099c to $US68.53 per barrel,
• AUD down to 0.753c,
• CAD up to 1.285c, (AUDCAD 0.967) and the
• EUR down to 1.198c (AUDEUR 0.628).

Wheat

Wheat came out of the blocks, finished stronger and made new highs not seen since August last year.

This is despite good rainfall received for HRW areas, which suggests that it is not driving the current price strength. The current driver remains dryness in Australia and Russia.

Implied volatility in July Soft Red Winter (SRW) wheat futures finished at 30.75pc.

Exports sales came in at 234,000t in old crop and 210,000t in new crop.

The Wheat Quality Council Tour called the Kansas wheat yield 37bushels/acre (b/ac) vs. an average of 40.98b/ac.

Russian values in new crop are a stark contrast to the current CBOT market with 12.5% protein trading at US$203/t free on board for August.  This is pretty much at parity to US futures in new crop, though we know which market has more physical demand potential.

The Saudi Government is tendering for 540,000t of hard wheat tomorrow for July/August shipment.

Corn

Corn was weak early in the session before rallying on dryness in Brazil and Ukraine.

The market is gearing up for a bullish May 10 WASDE report for corn and it is not hard to achieve. The more production declines we get globally, the more pressure that US yield faces.

US corn represents good relative value and a cheap way to gain upside exposure in the event that the whole grains complex breaks out.

Export sales exceeded expectations, coming in at 1.02Mt vs. market ideas of 850,000t.

Soybeans

Soybeans were lower for most of the session, before buying in the last hour of trade pushed things higher. The catalyst for the late rally was on speculation that China and the US had reached an agreement on trade, the market moved 17 cents in under an hour.

The Chinese and US governments are expected to make a joint statement Friday morning US time, so this should make for a volatile trading session.

Export sales in beans came in at 416,000t for old crop which was at expectations, new crop sales were a surprise at 489,000t. Soymeal was down US$2.10/t, while soyoil was up 21 points.

Canola

Canola finished lower in old crop in Winnipeg, with new crop unchanged.

Matif rallied slightly with follow through buying from the weaker Euro and moderate dryness concerns building for parts of the Black Sea and Europe.

Australia

Australia is unlikely to be competitive for the Saudi wheat tender; German wheat is likely to be the cheapest origin.

Australia received some rain in parts of Victoria and Southern NSW with 8-15mm providing welcome reprieve. The 8-day forecast is calling for some mild showers in parts of Vic and NSW, while the longer-term forecast has gone from being completely dry to having 25-50mm in parts of NSW and QLD.

Cash prices should settle today despite the higher move in futures.