Markets

Daily market wire 6 April 2018

Lachstock Consulting, April 6, 2018

Overnight futures markets

Higher for grains and oilseeds

  • CBOT wheat up 9c to 464.75c,
  • Kansas wheat up 12.5c to 498.5c,
  • corn up 8.5c to 389.5c,
  • soybeans up 16c to 1031.25c,
  • Winnipeg Canola up 0.40$C to 534.2$C,
  • Matif canola up 1.75€ to 352.5€.
  • The Dow Jones up 240.92 to 24505.22,
  • Crude Oil up 0.27c to $US63.64 per barrel,
  • AUD down to 0.768c,
  • CAD down to 1.275c, (AUDCAD 0.979)
  • EUR down to 1.223c (AUDEUR 0.627).

Wheat

Wheat found support from an incredibly cold snap forecast across the US production regions, notably the winter wheat belt.

Old crop weekly wheat exports came in lower than market expectations at 109,000t vs. market ideas of 350,000t. Implied volatility in May SRW went out at 26.5pc.

There is some better rainfall forecast for late next week, but it still appears to miss most of the parched HRW production regions.

The USDA’s forecast for higher spring wheat acres is becoming an unlikely proposition, due to unfavourable weather conditions which should delay planting and favour bean acres. Current weather conditions are suggestive of further state conditions downgrades.

Russian wheat values were unchanged, with old crop bid US$210/t free on board.

Soybeans

Soybeans recovered a good portion of yesterday’s losses, as the market speculated on the likelihood of the import taxes being applied.

On top of this we saw production declines in Argentina with the Buenos Aires Grain Exchange lowering their estimate 1.5 million tonnes (Mt) to 38Mt.

Weekly US export sales were a surprise coming in at 1.13Mt vs. market ideas of 750,000t.

On the trade war front, the US government has to formalise their import tariffs before China will respond.

The balance sheet is unlikely to suffer too heavily from a demand perspective in the event of a Chinese tariff increase; it’s just going to reshuffle trade flows.

Soymeal was up $1.80/t and soy oil was up 9 points.

Corn

Corn clawed back yesterday’s losses and moved higher.  With US weather indicative of a late corn plant, that should force an acreage switch into beans.

Weekly export sales were disappointing at 898,000t vs. market expectations of 1.15Mt.

The balance sheet story in corn continues to build, with tightening old crop supplies and lower acreage expectations placing immense pressure on average yields.

Canola

Canola finished stronger again and is now quite close to testing the highs reached in November last year.

The May contract is Can$4/t away and looking technically strong.

The market in Canada has rallied as limited grower selling coincided with a heavy export commitment period from the trade.

The Canadian market is distorted on the back of this, reaching unseasonably high levels vs Matif futures, so it will be interesting to see whether any demand swings occur on the back of it.

Australia

Aussie markets showed some spark yesterday with wheat well bid on old crop, thanks to stable export demand and ongoing new crop moisture concerns.

The 8-day forecast remains dry in the areas that need moisture.

Canola is gaining some price support, which should hopefully continue given our cheap relative value and increasing potential for export demand.

Barley and sorghum remained well bid; fewer grower offers encouraged flat price increases.

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