Lower for grains and mixed for oilseeds.
Wheat finished lower, with HRW leading the charge in an unconvincing session. New HRW registrations led HRW futures lower. Letter of Credit issues in Egypt are causing execution delays on up to 16 cargoes. The government should stump up the cash, but it slows trade flows and prompts some future demand questions. Implied volatility in Mar SRW finished at 20.25pc. Matif wheat was down €0.5/t to €202.5/t, Black Sea Wheat was unchanged at $246/t fob and the Ruble was down -0.01% to 0.015. Wheat needs increased demand or a larger fund position if it is going to sustain a rally in the short term.
Corn markets finished with slight losses, with nothing delivered from China in terms of demand. Conditions in South America are improving for new crop and prices in the Ukraine are under pressure. Grower selling was noted on the rally, serving as a stark reminder of the stocks that need to be consumed to prompt sustained gains.
Beans finished with mild gains in a low-ranging session. Trade news has China agreeing to purchase 5-6 million tonnes (Mt) of US beans in a government-to-government sale, which avoids the 25pc tariff. This courtesy was not extended to wheat, corn and ethanol which we will not see a resolution on until Jan 1. Soybean meal was down US40c/t and soy oil was down -0.059 points.
Cash markets were mixed yesterday with WA increasing, while east coast prices remained flat. The rally in WA seems to be for nearby shipments and maybe not indicative of a sustained demand swing. In any case east coast prices fell under WA import parity, which is unsustainable given the supply deficits there. Weather wise there is nothing major in the forecast, WA wheat harvest is ramping up with the surprise coming in the form of limited protein. Longer term this should prompt a contraction in the spreads, as we are already competitive on low grades there.
Source: Lachstock Consulting