Overview of futures markets:
Stronger for grains and oilseeds.
- CBOT Wheat was up 8.25c to 430.75c,
- Kansas wheat up 3.75c to 439.5c,
- corn up 4.75c to 368.5c,
- soybeans up 6.75c to 1042.75c,
- Winnipeg canola up 3.5$C to 520.3$C,
- Matif canola up 1.5€ to 416.5€.
- Dow Jones up 37.87 to 20090.29,
- Crude Oil down -1.37c to 51.64c,
- AUD down to 0.76275c,
- CAD up to 1.31811c, (AUDCAD 1.00537)
- EUR down to 1.068c (AUDEUR 0.7141)
Soybeans were higher on increased Chinese buying interest and talk of funds looking to increase long positions. Mexico is in discussions with Brazil and Argentina over future import demand requirements as the political relationship between the US sours. The market is expecting carryout to be slightly lower for beans in Thursday’s USDA report.
Canola was stronger on a weaker Canadian dollar, defying weaker soy oil prices.
Corn higher, back towards key technical resistance levels. The March contract closed above the 200 day moving average for the first time since June, which could see increased technical buying. Mild farmer selling was present but was overpowered by fund buying, who are increasing their position on the back of strong US domestic demand. Surprisingly the market is not paying much attention to improving production potential in the South American corn crop.
Wheat was higher with nearby contracts showing the most strength with the March contract nearing recent highs. Calendar spreads are showing strength, despite forecast pressure from index fund rolls. The cash markets are trading over delivery in nearby SRW so spreads should remain strong into delivery, considering the large spec short position. Fundamentals are positive for US wheat at present, with a lot of tender business out and US looking to be competitive on a relative basis. USDA report this Thursday is not expected to bring any major surprises to global balance sheets.
The Saudi feed barley tender results yesterday suggest ongoing support for Australian feed prices. In addition to this, Dalian corn futures in China have rallied approx. US $10 since the 10th of Jan which should see further import demand for Australian feed barley.
On the weather front, Western Australia is forecast to receive 50-100 ml of rainfall in key cropping areas which will help the new crop moisture profile.
The RBA yesterday left interest rates on hold and the dollar remains above .76, some speculation is building that they will enact policy longer term, to decrease currency value to encourage exports.
Source: Lachstock Consulting
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