Friday’s markets:

Lower across the board for grains and oilseeds, as improved weather combined with a slightly negative USDA report.

• CBOT Wheat down -16c to 537c
• Kansas wheat down -13.5c to 544c
• Corn down -16.25c to 385.5c
• Soybean down -8.5c to 1020.75c
• Winnipeg Canola down -13.2$C to 514$C
• Matif canola down -1.25€ to 374.75€
• Dow Jones up 123.07 to 21532.14
• Crude Oil up 0.42c to 45.46c
• AUD up to 0.767c
• CAD down to 1.274c (AUDCAD 0.978)
• EUR down to 1.141c (AUDEUR 0.672)

Soybeans

Soybeans suffered the least and despite the lower close, they are still sitting on the fence from a technical point of view. The report in beans was slightly bullish US, however the pressure from outside markets was too much. Old crop carryout was 540 kmt below market expectations and 1.08 mmt below the June report estimate. The new crop carryout was 1.2 mmt below the June report. Weather improved with some surprising rainfall in key growing regions. Beans have time on their side for weather and yield, but with a short structural position and the chart at a key technical level, the market wont quickly forget the tighter US balance sheet if we get some weather concerns.

Canola

Canola got punched in the teeth today, though it could have been worst given that the Nov contract was almost $21 lower at one point. A combination of currency, improved weather and outside market weakness were the catalysts. The Canadian dollar was 1.2% stronger and prairie conditions have slightly improved, though not enough to ease all concerns.

Corn

Corn was the anchor which pulled everything down today, as the USDA numbers reminded everyone of what we are trading, a big snd..The weaker close confirms that corn is not in a technical upside break, after failing to close above the key 400 resistance level. The big surprise came in the new crop carryout that came in 3.6 mmt higher than the markets expectations and implies better yield potential than the market has been trading. Despite all of this, we still expect to see some reasonable swings in corn prices in the next 2-3 weeks, given the structural position and key pollination window which we are heading into.

Wheat

Wheat got slammed, though it failed to break through the gap at 526, a close through here would reflect downside momentum, but it’s respecting this level at present, although it should continue to test this. The USDA did reduce their figures, but not to the levels which the markets were expecting. This prompted some position unwinding/profit taking. The US new crop carryout came in at 25.5 mmt, which was above market ideas and not an overly threatening balance sheet.

Australia

Aussie weather forecast features no significant change, Vic and southern WA are getting some light showers, but nothing is falling in the areas in need, which are stacking up now, Central and Northern WA, Western SA and Southern and Northern NSW. We need to see something significant, probably in the next two weeks to prevent national yield revisions. Cash markets are responding accordingly with some very punchy new crop numbers getting around. These basis levels are not going to buy export demand, so either a lot of drought premium is being priced in, or grower liquidity is thin in new crop, so high bids are just good advertising which supports long traders mark to market. The current barley bids on the downs, offer attractive new crop ex farm numbers as far down as SNSW, this is not good for the global balance sheet, which is incredibly tight and needs as much exportable surplus as possible.

Source: Lachstock Consulting