Daily market wire 10 August 2017

Lachstock Consulting, August 10, 2017

Overnight markets:

Slight increases for grains and oilseeds.

  • CBOT wheat up 2.75c to 486.75c,
  • Kansas wheat up 3.25c to 491c,
  • Corn up 2.5c to 386.25c,
  • Soybeans down 1c to 966c,
  • Winnipeg canola up 5.39$C to 516.5$C,
  • Matif canola up 1€ to 372.5€,
  • Dow Jones down 36.63 to 22048.7,
  • Crude Oil up 0.43c to 49.6c,
  • AUD down to 0.788c,
  • CAD up to 1.270c (AUDCAD 1.001),
  • EUR up to 1.175c (AUDEUR 0.670). 


Wheat etched out a slightly higher close on nothing in particular. Implied volatility in Sep Soft Red Winter went out at 22.75 per cent. The USDA report due out tomorrow is not expected to surprise much; if anything, it may add some fire to the spring wheat debacle, but nothing is expected to shock the market into a rally, especially with Matif continuing to forge new lows due to the abundance of wheat in Europe and the Black Sea. Global wheat could really use some demand at the moment to prevent further downside.


Corn closed slightly higher on anticipation of the USDA report, with a dryer forecast also throwing in some support. The average trade estimate for yield sits at 166 bushels per acre, which is well below the USDA’s July estimate of 170.7bu/acre. Even if it wanted to, it’s unlikely the USDA would drop that much in one report, as they still have the scope to make further revisions in September. This report could be a fizzer, which leaves corn adrift again until we get a solid fundamental driver.


Soybeans were quiet ahead of tomorrow’s USDA report in another low volatility session. In its last update, the USDA forecast yields of 48 bu/acre, the average market expectation for the report is 47.5 bu/acre. Given that weather conditions have not been terrible of late, it is hard to see the USDA making a huge reduction to their existing yield estimate. We would need to see a very large shift in yield to encourage a significant rally, which the market doesn’t appear to be considering based on current price action.


Canola came out of the blocks, posting another strong close. A weaker Canadian dollar and the renewed focus on adverse prairie conditions were the main drivers.


No major changes have been seen in the Aussie weather forecast; things are still looking good for Western Australia and relatively dry everywhere else. The parched northern and central WA wheat belt received 25-50mm yesterday with reasonable coverage. While the start has been terrible for those crops, this rain will prevent things from deteriorating further. Cash prices for wheat have come off the boil since the recent rainfall, though we are probably cheap enough into some destinations now, with Australia recently winning Iraq and Bangladesh business.

Source: Lachstock Consulting


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