Daily market wire 11 July 2017

Lachstock Consulting July 11, 2017

Friday’s markets:

Stronger for grains and oilseeds.

  • CBOT wheat  up 15c to 550c,
  • Kansas wheat up 14.25c to 557.25c,
  • Corn up 9.5c to 402c,
  • Soybean up 23.75c to 1024.75c,
  • Winnipeg Canola up 13.1$C to 530.4$C, and
  • Matif canola up 8.25€ to 377.5€.
  • The Dow Jones down -5.819 to 21408.52,
  • Crude Oil up 0.21c to 44.44c,
  • AUD up to 0.760c,
  • CAD up to 1.288c, (AUDCAD 0.979) and the was
  • EUR up to 1.139c (AUDEUR 0.667).


Dejavue in wheat, futures were higher, with spring wheat leading the charge. The forecast brought some rainfall for spring wheat areas, but the focus was on hot, dry temps elsewhere. The Minneapolis contract is notorious for scalping new entrants and there look to be a fair few, with open interest in the contract setting an all time record at Fridays close. Its hard to see how long this rally can extend, the Spring wheat snd is going to be incredibly tight, but it can be solved by demand rationing, which we will already be seeing with relative values where they are. Conditions were down 2% good to excellent. In Global news rain in Northern Europe is probably too late for yield additions and raises potential quality issues for high protein Baltic wheat, which the global market could do without given whats going on in the states.


Corn stronger again, finishing at new yearly highs as a dry forecast in the pollination window pegs back yield ideas. The COT short position was higher than market expectations, which has helped fuel bid side pressure. The close above 400 c/bu is significant from a price action perspective, considering the large amounts of unsold grower tonnes that would have pressured things at these levels. Technical resistance was broken, suggesting potential to jump higher, if we can close at or above these levels again. Corn conditions down 3% good to excellent after the close. This comes after surprising the market last week by moving up. The market was expecting a reduction, but maybe not 3%, so with the longer-term forecast looking unfavourable for pollination, this should keep things ticking higher.


Soybeans powering along, as the longer term forecast suggests hot, dry temps with reasonable coverage. The weather rally is premature for soybeans given that August is the more crucial seed filling period, however the large structural short, combined with strength in outside markets is helping fuel things. Beans probably got too cheap on a relative basis and are now making up for lost time. Crop progress out after the close revealed a 2% reduction in good to excellent bean conditions, which the market was expecting, but will keep things supported nonetheless.


Canola keeps climbing to new highs, as Prairie weather stays hot and dry. Todays close reflects significant technical strength, with the Nov contract closing well over previous resistance levels to reach highs not seen since July 2013. The chart suggests that the Nov contract will test $600 and possibly $650 resistance levels. Though we need to remember that Canada is not the only place in the world growing Canola, so with European harvest getting underway we may see some pressure there drag things down.


Aussie weather features nothing major in the forecast for the next 4 days, but the 8 day suggests coastal showers in central WA which may push inland to help the Kwinana zone. Otherwise it’s all looking pretty bare, NSW needs rain soon before we see further basis appreciation. Victoria still looking ok but needs another big fall in the next three weeks. Cash markets in wheat still relatively quiet, though basis is starting to pick up some ground with the new crop concerns increasing.

Source: Lachstock Consulting


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