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Daily market wire 12 September 2017

by Lachstock Consulting, 12 September 2017

Overnight markets:

Lower for grains and oilseeds.

  • CBOT wheat down 3c to 434.75c,
  • Kansas wheat down 6.75c to 434.75c,
  • Corn up 0.75c to 357.5c,
  • Soybeans down 2c to 960c,
  • Winnipeg canola down 3.69$C to 492.6$C,
  • Matif canola down 2.5€ to 361€,
  • Dow Jones up 259.57 to 22057.37,
  • Crude Oil up 56c to US$48.04,
  • AUD down to 0.8026c,
  • CAD down to 1.212c (AUDCAD 0.972),
  • EUR down to 1.195c (AUDEUR 0.671).

Wheat

Wheat finished lower in quiet trade ahead of tomorrow’s USDA report. US production will not be updated tomorrow, and the market’s attention is how much the USDA will increase its estimate for Russian production.This feels a bit like old news, given that cash prices remain buoyant, with limited grower selling thanks to the strong ruble, and export-capacity limitations that may be faced. In data released today, ABARES is calling the Australian wheat crop in the ground at 21.6 million tonnes (Mt), down from its initial estimate of 23.98Mt in March; even this may be on the high side, as it doesn’t appear to factor in recent frost events in NSW. Canadian yields are coming in better than expected, prompting some upside yield revisions. Implied volatility in the Dec Soft Red Winter wheat contract went out at 19.5 per cent.

Corn

Corn closed basically unchanged in quiet trade ahead of tomorrow’s USDA report. As with soybeans, the market is expecting a reduction in yield compared with the August report; the current estimate is for a drop of 1.3 bushels per acre. With shorts continuing to pile into corn, this could spark a short-term bullish surprise, but corn still has heavy fundamentals longer term.

Soybeans

Soybeans were off slightly, respecting technical resistance in quiet trade ahead of tomorrow’s USDA report. The market is expecting the USDA to announce a yield below their August estimate due to the cool, dry conditions, and expectations this will result in lower pod counts. Combine this with the strength in export demand and we quickly tighten the balance sheet.

Canola

Canola was hit hard again, as the Canadian dollar pushed to highs not seen since May 2015. The price pressure in canola is a timing and order-flow issue. Highly variable yield results are still coming in, and could indicate a lower production figure, but the combination of harvest selling, lower domestic demand due to the higher dollar, and limited nearby export demand is leaving a void which growers are selling into.

Australia

The Aussie forecast is unchanged on yesterday, with Victoria expected to receive some light showers, while the rest of the country remains dry. The cash market remains firm, but the stronger AUD and talk of grain being shipped from Western and South Australia to southern Queensland is preventing another leg-up for now. The damage caused by frosts received over the weekend in northern NSW is yet to be quantified, though it will have had some negative impact on yields.

 Source: Lachstock Consulting

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