Lower for grains and oilseeds.
- CBOT wheat down 11.75c to 526.25c,
- Kansas wheat down 12c to 555.75c,
- Corn down 1.75c to 406.25c,
- Soybeans down 16.5c to 1036.75c,
- Winnipeg canola down C$1 to $527.1o,
- Matif canola down €0.5 to €354.75,
- Dow Jones up 332.35 to 24262.51,
- Crude oil up US$1.36c to $69.79 per barrel,
- AUD down to 0.753c,
- CAD up to 1.284c (AUDCAD 0.967),
- EUR down to 1.195c (AUDEUR 0.629).
Wheat sold off Friday, unable to break through key technical resistance. Improved weather forecasts in the US, Australia and Russia combined with US wheat at import parity, and Russian wheat going to Mexico, to drive prices lower. Implied volatility in the July Soft Red Winter (SRW) wheat contract went out at 29.75 per cent. The results of the Saudi tender will be out over the weekend, and should provide some support to protein values in Europe. The Hard Red Winter (HRW) crop is looking to receive 20-40 millimetres of rain over the next 6-10 days. The Commitment of Traders (COT) report had SRW -46,800 from -70,600 contracts, and HRW at 28,000 from 29,900 contracts.
Corn held up well, despite the outside market pressure, thanks to dryness in Brazil and the Ukraine. The reality is that the corn market is too reliant on average US yields, which gives flat price a lot of support. Add to this the potential for production declines in other major producing countries, and it’s easy to justify price support. The market is preparing for a bullish USDA World Agricultural Supply and Demand Estimates reportt on 10 May, which will publish new crop carry-out figures for the first time. The COT report had corn at 220,900 from 152,200 contracts. Corn has had a decent rally, but it is not sitting too far off recent lows, considering the production we need to get through, which makes it a comfortable product in which to be long.
Soybeans had a hefty sell off on Friday, with limited progress made between the Chinese and US governments after two days of trade negotiations. The market still has no confidence in US bean purchases while the tax situation is unclear, as no one wishes to be hit with a tax similar to that received by US sorghum importers. Soymeal was down $4 per tonne, while soy oil was 4 points lower.
Winnipeg canola finished mixed, with the nearby contracts edging lower in the nearby contracts, while new-crop prices rallied. The inverse between old and new-crop is not yet broken, but it is trending that way. Matif futures were fractions lowers, but did not extend the same losses as Winnipeg, as that spread finds further buying support on the back of European/Ukrainian weather concerns.
In Australia, the outlook is improving slightly with some good starting rainfall received in Victoria and South Australia last week, and more forecast, particularly in Victoria. Cash markets should stagnate here, as the trade will front-run the perception of a large grower selling program. There is still plenty more moisture needed for the Victorian and New South Wales crops to offset the lack of rain received in the past four months, but the market could pause for breath here.
Source: Lachstock Consulting