Higher for grains and mixed for oilseeds.
Soybeans were fractions higher, in a low range session. Some pressure was felt early on from profit taking post report. Argentina had 1-2 inches of expected rain in the Northern Central areas over the weekend, although the 7-day outlook is reasonably dry, while concerns are building for dryness in Northern Brazil. Soymeal US$1.5/t higher, while soy oil was down 28 points.
Canola unchanged with upside potential capped by weakness in veg oils. Malaysian palm oil was lower again falling 1.2pc – the market has fallen almost 5pc in just 6 sessions. Dalian palm oil also gave up ground, as the market is disappointed by the demand profile that was expected pre-lunar New Year. European canola continues to endure significant selling pressure, with the EU parliament voting to phase out veg oil usage in biodiesel production by the end of 2021 and also voting to reduce crop-based biofuel consumption in member countries to 7pc until 2030.
Corn put in a good performance, as some of the fund shorts decided enough was enough. The large stock situation is noted, however these stocks will be drawn down heading into new crop, with ideas of larger domestic feeding thought to deplete stocks more than expected, as we approach increased new crop production volatility.
Strength in corn flowed into wheat markets today, with shorts beginning to think about an exit ahead of increases in production volatility. On top of this, US Soft Red Winter (SRW) wheat came quite close to pricing South Korean feed business that went through at US$215.50/t cost and freight (CNF) for 215,000t; the SRW was only $2-3/t away. Matif futures finally stemmed the bleeding. After making 3 consecutive new contract lows Matif finished up €1.50/t. Concerns over Russia’s new crop are creeping into cash prices with new crop values rallying $5/t in 10 days. Feels like the sentiment is shifting in wheat and corn, from “sell the rallies,” to “buy the dips”.
Aussie markets still reasonably quiet, with shorts finding it hard to swallow the stronger basis pill that we are enduring on account of lower futures and higher currency. Basis aside, we are making ground on a relative basis to stable Russian values, which should see us increase our share of South East Asian demand.
Source: Lachstock Consulting