Overnight futures markets:
Lower for grains and oilseeds.
- CBOT wheat down -3.75c to 421.5c,
- Kansas wheat down -2.75c to 420.75c,
- Corn down -1.25c to 351.5c,
- Soybean down -10.5c to 1004.25c,
- Winnipeg canola down -2.10$C to 505.9$C,
- Matif canola down -1€ to 365.5€.
- The Dow Jones up 70.56 to 24211.48,
- Crude Oil up 0.63c to 56.59c,
- AUD down to 0.751c,
- CAD up to 1.285c, (AUDCAD 0.965)
- EUR down to 1.177c (AUDEUR 0.637).
The bleeding continued for wheat, with winter wheats forging new contract lows. The spring wheat balance sheet appears to be solved, with Minneapolis futures reaching lows not seen since the initial rally in the middle of June. Implied volatility in March Soft Red Winter wheat went out at 17.65pc. Export sales at 321,000t were below the markets expectations, serving as a reminder of the incredible export pace and market share that currently exists out of Russia. Cash markets in Russia were lower and not well bid. Export capacity limitations in Russia, has been one of the major factors supporting cash pricing, so its government’s announcement of a US$34million grain transportation subsidy in 2018 is reasonably bearish longer term.
Corn was off slightly in another low-range session. It is holding up very well, given the pressure in outside markets. Things were limited on the news front; export sales came in at 876,000t for the week, which was in line with expectations. Whether it’s the spec position, lack of grower selling, or ethanol demand that is holding corn up. It’s starting to look pricey on a relative value basis to wheat.
Soybeans suffered selling pressure, as Argentine weather outlook improved, which served as a reminder that the crop has plenty of time to develop. The weather story is not dead, but the concern is pushed back. Soymeal bore the brunt of the forecast improvement, falling US$4.80/t, while oil was 7 points lower. US weekly export sales were reasonable at 2.02Mt with China taking 1.2Mt.
Canola fell in a similar fashion to beans, marking a Can$17/t fall off the highs reached in November. Cash markets were softer in Canada, waking to up to yesterday’s Statistics Canada surprise.
The Aussie forecast is reasonably dry for the next eight days. Cash markets are softening slightly in wheat, though liquidity is still light. Barley prices are well supported on the back of the tight global and local balance sheet, combined with ongoing Chinese demand and potential for them to lift CFR feed bids, given limited alternative supplies.
Source: Lachstock Consulting