Friday’s futures markets
Lower for grains, higher for oilseeds.
- CBOT wheat was down -13.5c to 492c,
- Kansas wheat down -9c to 522c,
- corn down -1.5c to 377.25c,
- Soybean up 3c to 1071c,
- Winnipeg Canola up 1.899$C to 527.1$C, and
- Matif canola down €2.25/t to €355.25/t.
- The Dow Jones down -121.47 to 24487.51,
- Crude Oil up 0.46c to $US61.45 per barrel,
- AUD up to 0.775c,
- CAD down to 1.287, (AUDCAD 0.998) and the
- EUR down to 1.231c (AUDEUR 0.630).
Wheat ran out of steam to end the week, with buyers exhausted after taking it on an impressive run Wednesday and Thursday.
A slight improvement in the mid-day weather forecast to parts of Kansas, Nebraska and Colorado was enough to encourage profit taking, which led to a reasonable sell off.
The Commitment of Traders (COT) weekly report revealed a Soft Red Winter (SRW) wheat futures short of -73,000 contracts from -83,500 contracts short the previous week, and Hard Red Winter (HRW) +8,300 long vs. 10,000 contracts long the previous week. These data will not show the full volume of fund buying that we witnessed on Wednesday and Thursday, because the report is a Tuesday snapshot.
Implied volatility in May SRW went out at 28.62 per cent (pc).
Matif wheat futures were down €4.50/t as grower selling and a looser SnD saw EU wheat as the favored short leg of global trade.
Russian cash prices continued to firm. They are somewhat unresponsive to the rest of the market, given the logistical challenges and limited grower engagement.
Corn reached new yearly highs before retreating on the weakness in wheat and an improvement in Illinois and Iowa weather.
Brazil’s second crop planting progress is 12pc behind last year’s. Crop reporting agency Informa called Argy corn 33.5 million tonnes (Mt) and Brazil 89Mt vs. USDA forecasts of 39Mt and 95Mt.
Corn COT was +93,300 vs. +43,400 contracts in another demonstration of the huge old crop farmer long and the transfer of ownership we are seeing between producers and funds.
New highs were made in beans; before they settled 11 cents off the highs, as a result of some deferred rainfall in the Argy forecast combined with lower than expected crush data.
The COT weekly had beans +116,600 from +65,800 contracts and meal +119,500 vs. +99,000 contracts. Soymeal was down US$4.30/t, while oil was down 10 points.
Informa had Brazil soybean production at 114Mt and Argentina 44Mt vs. USDA at 112Mt and 54Mt.
The US China trade remains a potential threat with plenty of possibilities and theories China’s response to the US steel and aluminium import tariffs.
Canola pushed higher, outperforming beans with a weaker Canadian dollar (-0.4pc) and new crop production concerns in Canada combining to continue the technical support we are seeing. We have witnessed a lot of short covering in canola over the last two weeks and the consensus is that most shorts have now covered and switched to a long.
Like other grains and oilseeds, this long structure could be dangerous if we note a serious improvement in weather.
Aussie wheat markets started to pay attention to the futures move after Thursday nights, by pricing in more of the move to the local market.
The contraction in our relative value to Russian prices into South East Asia, also helped to encourage a bid.
The rally in CBOT has created some fantastic carry or flat price opportunities for new crop, enabling growers to secure high decile hedges to start their new crop-pricing program.
Barley had a bit more behind it, with renewed Chinese enquiry, suggestive of pricing over US$260/t CFR.
We expect a slow start to the week, given the movement in wheat, but when the weather is in charge, anything can happen.