Markets

Daily market wire 5 December 2017

Lachstock Consulting, December 5, 2017

Overnight futures markets:

Lower for grains and higher for oilseeds.

  • CBOT wheat down 3.25c to 435.25c,
  • Kansas wheat down 3.5c to 434c,
  • Corn down 5.25c to 353.5c,
  • Soybeans up 4.25c to 1010.25c,
  • Winnipeg canola up $C1.29 to $507.4,
  • Matif canola up 2.25€ to 369€.
  • Dow Jones up 144.04 to 24375.63,
  • Crude oil down 90c to US$57.45 per barrel,
  • AUD down to 0.759c,
  • CAD up to 1.269c (AUDCAD 0.964)
  • EUR down to 1.185c (AUDEUR 0.640).

Wheat

Wheat attempted an early rally, following strength in corn and beans, but couldn’t hold on as fundamentals weighed in. The Saudi wheat tender revealed a purchase of 490,000t, with prices ranging from US$226-228/t for Jeddah and $231-235/t for Dammam. Argentina is thought to be the cheapest origin, but its quality profile is uncertain; Baltic premiums rallied after the tender result. Weekly exports came in below expectations. Implied volatility in the March Soft Red Winter contract went out at 19.25 per cent. Russian cash prices continue to hold firm, and their lack of movement in the past six weeks has been incredible, considering the size of their local crop. There is more market chatter regarding dryness in the US winter wheat areas, though we will not get another condition score until the new year, so this issue is being parked for now.

Corn

Farmer selling finally tipped corn off its perch, after failing to close above 360 in the March contract. Despite a heavy fund short position, potential weather issues in South America and consistent ethanol demand, corn was unable to break higher. Serving as a reminder of the large carryout stocks still in the grower’s hands.

Soybeans

Despite the stronger close, soybeans disappointed, finishing 10 cents off their highs, not being able to manage a close through the $10 technical resistance level in Jan. Argentina’s weekend forecast did not transpire, with conditions dryer than expected. This, combined with dryness concerns in southern Brazil, and strength in soymeal to help drive things higher. Selling came in later in the session, as sceptics were not convinced of the South American issues. Soymeal finished $6.10 per tonne higher, while soy oil was down 20 points.

Canola

Canola followed strength in other oilseed markets to recover some of Friday’s losses. Statscan is out this week with updated production figures. The market is expected an increase from 19.7 million tonnes (Mt) to 20.2Mt, though this change has been expected for some time and shouldn’t be a major surprise.

Australia

The fall-out from the Aussie weather event over the weekend looks like universal downgrades for unharvested wheat in southern NSW, while Victoria may have avoided disaster, given that rainfalls did not exceed 50mm in any of the major production areas. Bulk-handling companies are opening segregations for sprouted grains in NSW, where we estimate up to 850,000t could be affected. Cash prices were hard to define yesterday, with wide bid-offer spreads, as the market seeks further clarification on the weather damage.

Source: Lachstock Consulting

 

 

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