Daily market wire 9 Jan 2017

Lachstock Consulting, January 9, 2017


Slight declines in grains, heavy declines in oilseeds.

CBOT Wheat was down -3c to 423.25c, Kansas wheat down -1c to 433.5c, corn down -3.25c to 358c, soybeans down -17.75c to 994.75c, Winnipeg canola up $C to $C, and Matif canola down -2.75€ to 415.25€. The Dow Jones up 64.509 to 19963.8 , Crude Oil down -0.210c to 53.78c, AUD up to 0.73037c, CAD up to 1.325c, (AUDCAD 0.96773) and the was EUR down to 1.0527c (AUDEUR 0.6935).
Export sales were lower than expected and the USD was stronger, which put pressure on everything. Soybeans came under the most pressure selling off heavily due to poor sales, which then triggered technical selling as market dropped below $10.00 and broke recent moving averages. Soy planting estimates have been cut 1.5% due to dryness in South East Buenos Aires. Chinese buying interest is limited and could stay remain this way for some weeks, with their New Year’s fast approaching.
Corn could not defy technical resistance and weak export sales did not offer any bullish sentiment.
US HRW sale of 100 kmt to unknown has created some speculation that this is destined for China, which could paint a bullish demand story. Wheat was strong most of the session for the same usual reasons, fund short covering, index fund rebalancing, winterkill potential for new crop winter wheat and lower wheat acres in the Jan 12 report. It couldn’t manage a higher close as it succumbed to pressure from a higher dollar and weakness in corn and beans.
Canola followed soy complex weakness, breaching key support levels at $500, which could be a technically bearish signal if we have another close below this level. Although this would be in contrast to fundamentals as export sales are expected to increase into China given positive crush margins over the last two months, which should see ongoing demand.
In Australia, there is no major fresh news. Harvest is close to completion and the focus now shifts to our execution capabilities and demand profile. With consumers buying hand to mouth, traders do not have an urgent requirement to buy grain.
We will need to see Saudi in for Q2 barley and perhaps some increased Indian interest in wheat, to encourage an active buying program.


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