Overnight futures markets:
Mixed for grains, higher for oilseeds.
- CBOT wheat down -2.5c to 432.75c,
- Kansas wheat down -2.5c to 431.5c,
- Corn up 0.25c to 353.75c,
- Soybean up 10.25c to 1020.5c,
- Winnipeg canola up 2.30$C to 509.7$C,
- Matif canola unchanged at 369€.
- The Dow Jones down -74.13 to 24215.91,
- Crude Oil up 0.18c to $57.65 per barrel,
- AUD up to 0.760c,
- CAD up to 1.269c, (AUDCAD 0.965) and the
- EUR was down to 1.181c (AUDEUR 0.643).
Wheat was under pressure, with some analysts calling for 35 million tonnes (Mt) of Russian exports this year.
Internal Hard Red Winter wheat basis in the US continues to strengthen, with premiums in 11.1-11.3% protein up US35 cents/bushel (c/bu). This is a good reflection of the US’s continued lack of export competitiveness. With Russia’s large program the US market runs the risk of missing too much export business, which should see carryouts grow and potentially suppress any new crop planting concerns. This will leave wheat in the hands of the fund sellers for the interim. Implied volatility in March Soft Red Winter wheat went out at 19.32 per cent (pc).
Corn finished a fraction above unchanged in a quiet session that featured a 3.5 c/bu range. Farmer selling continues to cap upside in corn as recent strength has re-engaged selling activities. The corn balance sheet is heavy enough for the moment, to prevent the same South-American-concerned rally that we are seeing in beans. Brazil’s national supply company, Companhia Nacional de Abastecimento (CONAB) might change this situation in its production report next week. The USDA announced a private daily sale of 162,00t of US sorghum to China, under the existing tariff rate quota. This may put some pressure on US corn, given the recent unconfirmed rumours of large Chinese Pacific North West (PNW) corn purchases. If sorghum is being preferenced, then corn misses the party.
Soybeans posted strong gains, breaking through technical resistance in a meal-lead rally, prompt by a dryer Argentinian forecast. December meal was up $6/t, while oil was 6 points lower. The Argentine forecast is calling for dry conditions through to mid-December. This coincided with the Australian BOM indicating that the tropical Pacific had reached La Nina levels, which would not be generally favourable for South American production. Planting pace there is 3pc below average in beans at 43pc; while in Brazil it is ahead 5pc ahead of the average at 92pc. Canadian statistical agency Statscan is expected to revise soybean production down 200,000t to 8.1Mt. Agribusiness global intelligence network Informa is calling for a 110Mt Brazilian crop, down 1Mt from its previous estimate.
Canola posted reasonable gains, as strength in beans, meal and oil encourages position-squaring ahead of tomorrow’s Statscan report. It still lacked some conviction however, not managing to close on its highs, with speculation that Canada’s crop is a lot bigger than expected.
Aussie cash markets are off slightly, but hard to define as growers in NSW and Vic assess the damage from the weekend’s rain. The weather forecast features no significant rainfall in Vic and SA, but there is still some hanging around in NSW that may cause some further issues. Malt spreads in barley remain well bid in Vic and SA, as selection concerns prompt local and global shorts to cover. The feed wheat situation in NSW is now a reality, though its impact is hard to define, as it’s likely to meet support from the northern draw before it finds an export bid. So the Darling Downs market either needs to take the whole lot, or fall to sell off to reduce demand.
Source: Lachstock Consulting