Overnight markets:
Higher for grains and oilseeds.
- CBOT Wheat up 4.75c to 434.5c,
- Kansas wheat up 7c to 436.25c,
- Corn up 12.25c to 357.75c,
- Soybean up 12c to 945.25c,
- Winnipeg Canola up 1.30$C to 505.1$C,
- Matif canola up 2.5€ to 369.5€.
- The Dow Jones up 55.669 to 21948.1,
- Crude Oil up $1.12 to US$47.08,
- AUD up to 0.794c,
- CAD down to 1.247c, (AUDCAD 0.991)
- EUR up to 1.190c (AUDEUR 0.667).
Wheat
Wheat stronger in HRW and SRW, although spring wheat was hit hard as physical deliveries against the Sep contract reflected weaker cash markets, brought on by better than expected yield reports. Winter wheats were supported by the Statistics Canada (Statscan) number, better than expected weekly export sales and strength in corn and beans. Weekly export sales at 536,000t were above expectations. Implied volatility in Dec SRW went out at 20.41 per cent (pc). Global prices have stabilized for now, supported by a stronger ruble. The Statscan wheat number came in at 25.5Mt vs. market expectations of 26.2Mt. The Canada figure combines with lower production in Australia to highlight something important. Of all the major 8 exporters in the world, the only places where stocks:use are growing year on year are in Russia and Kazakhstan. So once the market is done discounting this, we may see strength in cash prices given the relatively low quality profile and the heavy reliance on their execution capabilities. Not to mention the effect that current cash prices will be having on new crop planting intentions.
Canola
Canola finished stronger, but CAN$4/t off of its highs. A weaker Canadian dollar helped things early, before a lower than expected new crop Statscan number (18.2Mt) drove things to the highs. However, a stronger dollar combined with increased old crop production to add pressure. Statscan increased the 16/17 canola production up 1.2Mt to 19.6Mt. Interesting that this was a bearish driver, considering the tightness we have witnessed in Canada’s old crop and the large inverse noted leading into new crop. Looking ahead, the new crop figures tighten the global balance sheet and suggest ongoing support for canola.
Corn
Corn had a surprising rally, which started on concerns for limited heat units affecting final yield figures in some regions. The momentum continued with better than expected export sales at 188,000t old crop and 804,000t new crop. China purchased 141,000t of old crop corn and 268,000t of old crop sorghum, which is a pretty positive sign for feed grains. It appears that price has done enough work for now, to encourage demand.
Soybeans
Soybeans stronger supported by strength in oil and better than expected export sales. The weekly figures came in at 123,000t old crop and 1.56Mt for new crop, which were approximately 600,000t above the combined estimate. Oil finally bounced with lower Stastscan canola figure supporting the drive.
Australia
The Aussie forecast features no major rainfall for the next 8 days. We are getting toward the business end of the season as far as rainfall is concerned and cash markets are responding accordingly. New crop ASX wheat rallied $6/t yesterday, as traders factor more risk premium into new crop. Barley remains supported by a fresh recent round of Chinese purchases for Oct-Dec delivery.
Source: Lachstock Consulting
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