Overview of futures markets:
Mild gains for grains, strong gains for oilseeds ahead of tomorrow’s USDA report.
- CBOT Wheat was up 1.75c to 432.5c,
- Kansas wheat up 2.5c to 442c,
- corn up 2.25c to 370.75c,
- soybeans up 16c to 1058.75c,
- Winnipeg canola up 3.7$C to 524$C,
- Matif canola up 2.75€ to 419.25€.
- The Dow Jones down -35.95 to 20054.34,
- Crude Oil up 0.239c to 52.41c,
- AUD up to 0.7638c,
- CAD down to 1.31395c, (AUDCAD 1.00361)
- EUR up to 1.0693c (AUDEUR 0.7143).
Soybeans and canola
Soybeans were supported by increases in Chinese demand with rumours of PNW soybeans being sold. Market saw increases in farmer selling, but bid side was strong enough to avoid that pressure.
Canola followed oilseed complex higher, testing nearby resistance and encouraging old and new crop selling.
Corn rallied again, slowly grinding through technical resistance. The current picture should look appealing to technical buyers, the question is whether it comes to fruition. Corn is back at its highs but grower selling at these levels is exhausted. Domestic demand remains strong with livestock and ethanol demand continuing close to record levels. Chinese corn consumption has increased, since the cancellation of DDG imports, this is evident in the Dalian futures strength.
Wheat rallied in sympathy with corn and beans, with little fundamental inputs of its own. The March contract is the driving force at present, with order flow issues resulting from shorts looking to roll their positions. Market is not expecting any surprises in USDA’s wheat figures tomorrow.
Indian wheat planting has increased by 7% this year on the back of increased domestic prices last year, they have imported 5.1mmt of Australian and Ukrainian wheat. If they have a production issue in new crop, then that could quickly see a huge increase in Australian imports.
Forecast rainfall for WA remains with key growing regions expected to receive 50-100 mm in the next four days.
With Canola prices in Kwinana nearing $550 FIS, we could see an acreage shift considering confidence in the moisture profile and strong price signals.
High temperatures are forecast for the majority of the east coast in the next week, which will add further pressure to the moisture stressed sorghum crop and see limited farmer selling amidst drought concerns.
Rumours of Chinese export business for Australian sorghum is also supporting local prices as the shrinking crop gets bid up. The northern market is very strong at present, with price gains extending the drawing arc and increasing demand for southern feed grains.
Source: Lachstock Consulting