Overnight futures markets
Higher for grains and oilseeds.
- CBOT wheat was up 9.25c to 509.25c,
- Kansas wheat up 11.75c to 545.5c,
- Corn up 2c to 387.25c,
- Soybean up 6.5c to 1077.5c,
- Winnipeg Canola up 3.39$C to 530.5$C,
- Matif canola down -1.25€ to 354€.
- The Dow Jones up 239.39 to 24777.46,
- Crude Oil up 1.13c to $US62.38 per barrel,
- AUD up to 0.776c,
- CAD up to 1.298c, (AUDCAD 1.00)
- EUR up to 1.23c (AUDEUR 0.629).
Wheat finished higher, returning a good chunk of Friday’s losses, as short covering continues, with no improvement in the weather forecast.
Implied volatility in May Soft Red Winter (SRW) wheat futures went out at 28.44 per cent (pc). Today we will see conditions updates from various US wheat production states, which will likely show deterioration and encourage further buying support.
Matif wheat was up €1.00/t to €165.75/t.
Russian prices remain strong between US$205-209/t free on board (fob). New crop prices are also moving higher at $199/t fob for August shipment.
Corn found support from the Argy dryness, with the market paying more attention to the new crop balance sheet, as increasing old crop demand reduces the supply buffer for a new crop production issue.
The weight of volume in the grower’s hands at the beginning of this year was impressive, when we consider the relatively small market move, relative to the turnaround in fund positioning.
There is still have potential for an acreage battle in the US, with the corn:bean ratio pushing out to levels that could encourage larger bean acres.
Corn seems well supported until know what the new crop global balance sheet looks like.
The beat goes on for soybeans, continuing to garner support from dryness in Argentina, with conditions deteriorating enough to encourage new buying.
At this stage it seems too late for any future moisture to have any meaningful impact on yield potential.
Soymeal was up US$0.30/t, while soy oil was down 9 points.
Post-New Year Chinese demand for US beans is dampening speculation on the China/US trade spout.
Canola continued its impressive streak higher, making new highs not seen since November last year, thanks to a 0.8 per cent (pc) decline in the Canadian dollar and ongoing concerns for new crop.
The May contract is now just Can$8/t off the seasonal highs reached in early November and looking to push towards and beyond this, if Canadian new crop conditions continue to encourage speculative buying.
Cash markets in Australia were quiet in typical Monday fashion.
Sorghum prices remain strong in the north despite reasonable rainfall, as crop harvest delays limit grower engagement and reduce liquidity for trade and export shorts.
We expect to see some strength in feed barley prices this week, with renewed CFR (cost and freight) buying interest from China, as well as an impressive rally in Dalian corn futures.
The May contract broke previous resistance US$290.80/t, to finish at $293.50/t.
Wheat’s demand prospects look good, on the back of increasing Russian prices, although we may not feel the effects of this until enough business is done to enable the trade to get short.
Aussie dollar weakness is not being completely passed on, although it looks technically weak and poised to break lower.