Overview of futures markets:
Lower across the board for grains and oilseeds
- CBOT Wheat was down -4.25c to 430.25c,
- Kansas wheat down -3c to 440.5c,
- corn down -2.25c to 365.25c,
- soybeans down -10.25c to 1027c,
- Winnipeg canola down -1.9$C to 513.3$C
- Matif canola down 0€ to 412.75€.
- The Dow Jones up 186.549 to 20071.46 ,
- Crude Oil up 0.310c to 53.85c,
- AUD down to 0.7668c,
- CAD up to 1.3022c, (AUDCAD 0.998)
- EUR up to 1.078c (AUDEUR 0.7106).
Beans came under pressure with lack of Chinese buying surprising the marketers who had anticipated an increased appetite on their return from holiday. Adding further pressure were growing crop estimates for the South American crop. The Commitment of Traders (COT) report Friday reduced the bean long 20.3 k contracts to 153.3k.
Canola lower, following weaker palm and bean oil. Statscan’s December stocks were released at 12.2 mmt, which was in line with the markets expectations.
Corn was under pressure from limited export demand, increased farmer selling and reduced ethanol margins. Corn looks technically weak with a lot of sell side pressure above current market. There is some speculation that logistical issues in the PNW could limit export ability, if corn demand does pick up. The COT had the corn position change from long last week to a short this week, down 23.3 k contracts to -9.1k.
Wheat futures were lower under pressure from beans and corn. Volatility in the March contract was 1% lower at 20%. US export demand looks reasonable at present on the weaker USD. The market was still digesting the Algerian tender and potential increase in HRW demand, brought on by lack of French supplies. Statscan estimate for Dec stocks in wheat was 25mmt vs market estimate of 24.2, note that the increase came predominately from Durum. The COT had the SRW short increase 8.3k contracts to -106.8k, while the Kansas long reduced by 10.3 k contracts to +8.2k.
Market will watch forecast dryness for parts of the SW plains this week, where drought conditions are beginning to appear.
Saudi Arabia is back in the market for feed barley, tendering for 1.5 mmt with the results expected on the 6th of Feb. Australia should be in a good position to price this, so long as there is enough stem capacity.
Considering the existing Chinese business and ongoing demand, this should help support Aussie prices in the near term.
Source: Lachstock Consulting