Markets

Daily market wire 5 October 2017

Lachstock Consulting, October 5, 2017

Overnight markets:

Lower for grains, mixed for oilseeds.

  • CBOT Wheat was down -6c to 442c,
  • Kansas wheat down -5.75c to 436c,
  • corn down -1.25c to 348.25c,
  • Soybean up 2.75c to 968.75c,
  • Winnipeg Canola up 0.30$C to 499.7$C,
  • Matif canola up 1€ to 368€.
  • The Dow Jones up 19.97 to 22661.64,
  • Crude Oil down -53c to US$49.89,
  • AUD up to 0.786c,
  • CAD down to 1.247c, (AUDCAD 0.980)
  • EUR up to 1.176c (AUDEUR 0.668).

Wheat

Winter wheats suffered a decent sell off, while spring wheat posted mild 2 cents/bushel losses. Implied volatility in Dec Soft Red Winter wheat futures went out at 16.5 per cent (pc).
In a fairly quiet day from an inputs point of view, the big news was that India are considering revising their wheat import duty from 10pc to 20-25pc. Given that they have been consuming Ukrainian wheat, a slow down in their import requirements would free up exportable surplus in the Black Sea region and place pressure on global cash prices.
Ukrainian fob markets did not respond to this in any way, remaining stable to slightly higher. Both Russian and Ukrainian prices remain well supported due to logistical constraints making it harder for shorts to capitalise on the record volumes.
Iraq’s tender for milling wheat will be between Canada and Australia and should provide good price discovery. Despite good yield outcomes for Canada there are some questions regarding availability of protein wheat and, like Russia and the Ukraine, Canada is thought to be quite heavily sold forward, causing large nearby premiums in spite of decent crop size.

Soybeans

Soybeans finished with slight gains in a low range session. They were under pressure earlier on, before bean oil strength helped encourage bids. Meal was down 40 cents per tonne, while oil rallied 48 points. Concerns for South American new crop production have maintained with hot and dry conditions in Brazil and flooding in Argentina still on the menu.

Corn

Corn was under pressure early pushing towards new monthly lows, before strength from beans helped prop it back up. The trading range was only 3 cents/bushel and is a good reflection of the lack of conviction present in the corn market. Global stocks are high and should warrant a default bearish bias, though most of this news is factored in, so with potential demand increases, plus new crop planting and yield uncertainty, it makes it a hard sell so close to the seasonal lows.

Australia

In Australia, the 8-day forecast is looking positive for SA, Victoria and NSW with 5-15 mm forecast in key growing areas. In NSW and QLD it is too late for winter crops, where damage from heat and frost is irreversible, but Victoria and South Australia will stabilise on the back of this if it eventuates. Cash markets remain well supported in wheat and barley since last weeks sell-off.

 

Source: Lachstock Consulting

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