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Daily market wire 5 January 2018

by Lachstock Consulting, 05 January 2018

Overnight futures markets:

Lower for grains, mixed for oilseeds.

  • CBOT wheat  down -1.75c to 446.5c,
  • Kansas wheat down -1c to 453c,
  • Corn down -2c to 359.25c,
  • Soybean down -1c to 967.75c,
  • Winnipeg canola up 4.30$C to 490.3$C,
  • Matif canola up 2.25€ to 357.75€.
  • The Dow Jones up 153.50 to 25076.19,
  • Crude Oil up 0.259c to 61.89c,
  • AUD up to 0.785c,
  • CAD down to 1.249c, (AUDCAD 0.982)
  • EUR up to 1.206c (AUDEUR 0.651).

Wheat

Winter wheats both finished with slight losses, while spring wheat futures rallied US 8c/bu. The catalyst for the Minneapolis strength was speculation on an increase in China’s import program, given that the New Year brings new wheat import volume quotas. Hard Red Winter and Soft Red Winter (SRW) wheat futures sold off early in the session before uncovering buying support near yesterday’s lows, enabling both contract to hold at resistance levels.

Implied volatility in Mar SRW went out at 19.76pc. Looking forward we have export sales out tonight, with the trade expecting a figure between 250-350,000t, as well as a fresh C0mmitment of Traders (COT) report after the close. We then move to rebalancing in Kansas City wheat futures next week, with the USDA report to finish things off.

Concerns are building for snow forecasts to dry areas in the parts of the plains, which could cause further conditions downgrades and winterkill potential.

In Europe Matif wheat futures were €0.50/t higher, while Russian prices increased US$2/t. Algeria issued a snap tender for optional origin wheat for March shipment. Its early stages but there are some whispers of concern regarding Russia’s new crop, due to lack of snow cover in the southern areas.

Corn

Corn finished with losses, in a 3.25 c/bu range session. Beginning-of-the-year grower selling is preventing corn following wheat, or finding support from South American weather. The latest ethanol report revealed a 5pc slight decrease in production over the holiday period, while stocks increased to 22.6 million barrels. Export sales are expected between 600-900,000t tonight as well as the update COT after the close. Corn is a follower for now, but it’s sitting close to seasonal lows.

Soybeans

Beans were fractions lower, after selling off early on a short-term wetter forecast for Argentina. Although the markets attention was more focused on the 10-12 day forecast which is calling for hot dry conditions. Export sales in beans are expected at 750,000t. Soymeal was down US$1.10/t while soyoil was 8 points lower.

Canola

Canola in Europe and Canada both posted another convincing close, thanks to limited grower selling and improved import prospects. The Winnipeg close was impressive given that the Canadian dollar was 0.4pc higher. Canola has a lot of work to do to recover recent losses, but it is starting the year well.

Australia

Aussie markets remain hamstrung by the strong dollar. Barley demand remains strong with limited grower selling supporting nearby pricing, as traders need stock to demonstrate entitlement for upcoming vessels. Wheat is in no-man’s land and we don’t expect to see a flurry of activity until the USDA report is out of the way.

Source: Lachstock Consulting

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