Overnight markets:

Mixed for grains, higher for oilseeds.

• CBOT Wheat down -4c to 429.5c,
• Kansas wheat down -5.5c to 438.75c,
• Corn up 0.5c to 366.5c,
• Soybean up 9.25c to 974c,
• Winnipeg Canola up 2.10$C to 527.6$C,
• Matif canola down -1.25€ to 372.25€.
• The Dow Jones down -36.5 to 20975.78,
• Crude Oil down -0.229c to 46.2c,
• AUD down to 0.734c,
• CAD up to 1.371c, (AUDCAD 1.007)
• EUR down to 1.087c (AUDEUR 0.675).

Wheat

Wheat suffered minor losses, though it did close below the lows reached prior to the weather event, which sparked last week’s rally. This is not a very good look from a technical perspective, suggesting further downside. Crop conditions exceeded market expectations at 53pc good to excellent vs. 54pc last week. There is nothing promising on the demand side of things, with consumers happy to buy hand to mouth as they await new-crop volume. The report tomorrow is usually the most important for wheat, given that it provides the first new crop S&Ds. Barring a large surprise in the report, there is nothing that looks overly supportive for wheat at present. The damage issues with SRW and HRW have been discounted, as the market adds things up and realises the soft landing that a large carry-in will provide.

Soybeans

Soybeans traded stronger, with meal leading the charge. Spread unwinding was thought to be the catalyst for the jump in prices as traders unwound oil/meal spreads. Planting progress is not too far behind, with USDA calling progress 14pc vs. 17pc average. The demand story in China remains quiet for now. The market is dialling in a reasonable increase in new crop carry-out in tomorrow’s USDA report.

Canola

Canola went along for the ride with beans and meal. Although planting conditions have improved in the prairies, there are still significant production areas which have too much moisture.

Corn

Corn was basically unchanged, finding some buying support as shorts close positions ahead of the USDA report. The crop progress report was okay. Though not factoring in areas which will need to be replanted, the USDA showed 47pc progress vs. 52pc on average. Given that the planting issue is resolving, the focus returns to the reality of the large balance sheet. It is difficult to justify a rally in corn once this is considered.

Australia

In Australia the AUD continues to weaken, which is providing some minor cash market support in spite of futures weakness. The forecast is still generally bare for the areas which need it; the best falls are set for southern WA, though the rainfall is really needed in the north-central regions. SA has some coastal showers forecast, though the volume looks pretty low. As mentioned in previous wires, this is now becoming an issue and could see a swing out of canola area and into barley if we don’t receive anything in the next few weeks.

Source: Lachstock Consulting