Daily market wire 11 September 2017

Lachstock Consulting, September 11, 2017

Overnight markets:

Mixed for grains, lower for oilseeds.

  • CBOT wheat up 0.5c to 437.75c,
  • Kansas wheat down 0.25c to 441.5c,
  • Corn up 1.5c to 356.75c,
  • Soybeans down 6.75c to 962c,
  • Winnipeg canola down 2.39$C to 496.3$C,
  • Matif canola down 1.5€ to 363.5€
  • Dow Jones up 13.01 to 21797.79,
  • Crude oil down $1.53 to $47.56,
  • AUD up to 0.805c,
  • CAD down to 1.214c (AUDCAD 0.977),
  • EUR down to 1.201c (AUDEUR 0.67).


Wheat finished either side of unchanged in a session lacking any major drivers. Implied volatility in Dec Soft Red Winter (SRW) went out at 19.25 per cent. Black Sea prices continued to firm last week, aided by the ruble, which continues to show great strength; it looks to be setting up to test highs formed in late April. It is difficult to encourage selling in a market where the cheapest origin wheat keeps rallying in spite of a record crop. The weekly Commitment of Traders (COT) report had SRW at -104,600 vs. -99,800 contracts, Hard Red Winter at 10,600 vs. 13,300 contracts and spring wheat at 4,800 vs. 6,200 contracts.


Corn managed a slightly higher close in a quiet session. Export sales were better than expected, although the market is still in need of a fundamental catalyst to prevent low-volume and low-range markets. USDA on Tuesday might offer something in the form of a yield change; aside from that, corn is not very exciting, given its heavy global balance sheet. Corn COT came in at -140,200 vs. -108,800 contracts.


Soybeans tried to push higher, with hurricane threats showing potential to threaten unharvested beans. However, values could not break through technical resistance, which then saw a reversal with longs taking profits. Meal and oil did not help, both finishing in the red. Weekly export sales were a lot better than expected, almost double, as China’s appetite continues to grow. In August, China imported a record amount of soybeans at 8.45 million metric tonnes. The weekly COT report had the bean short at -49,900 vs. -65,800 contracts.


Canola continues to suffer from the ongoing strength of the Canadian dollar. Nearby export demand is low, despite forecasts for strong Chinese demand as the year progresses. Timing could be a big issue for canola prices, with harvest volumes increasing and no-one in the market for nearby-loading vessels. If China does not enter the market soon, there could be some pain in canola until demand reignites and the market remembers the relatively tight global balance sheet we are facing.


The 8-day Aussie forecast features no significant rainfall in any cropping regions, with the exception of Victoria, which is already adequately supplied. Temperature lows in NSW over the weekend indicate potential for further frost damage, which raises serious concerns, given the damage already caused, and existing moisture deficits. Cash markets are stronger and should remain so, with time running out for production upside in some areas.


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