Mixed for grains, higher for oilseeds.
- CBOT wheat down -2.75c to 430.5c,
- Kansas wheat down -2c to 426.25c,
- corn up 3c to 349c,
- Soybean up 26.5c to 1002.5c,
- Winnipeg Canola up 3$C to 502.5$C,
- Matif canola up 3€ to 368€.
- The Dow Jones down -31.88 to 22841.01,
- Crude Oil down -0.55c to US$50.74,
- AUD up to 0.782c,
- CAD up to 1.247c, (AUDCAD 0.975)
- EUR down to 1.183c (AUDEUR 0.660).
Wheat received no ammunition from the report, as the USDA raised the global wheat carryout by 5 million tonnes (Mt) to 268.1Mt. Spring wheat suffering the most, down US7 cents/bushel. Implied volatility in Dec SRW went out at 17pc. The USDA updated their Australian production figures down to 21.5Mt, which is too high. They increased production in Canada, Europe, India and Russia, which resulted in the heavier global supplies. We are now US10 cents/bushel off seasonal lows and while this report may encourage selling to test these, its hard to see it breaking, as attention will again turn to lower new crop planting intentions and structure.
Corn found a bid on the back of bean strength, but the USDA report didn’t offer much support from a fundamental perspective. Yields were higher than the markets expectations at 171.8 bu/acre vs. expectations at 169.7 bu/acre. The acreage increases we noted in beans were taken from corn, which softened the stock increase somewhat. They brought corn acres down 0.5 million acres and increased beans 0.7 million acres. End of the day corn still has a very heavy balance sheet and needs to find more demand, but markets attention seems to be on new crop production for now, probably due to the chunky fund short.
Soybeans exploded after the USDA report brought a surprise in the form of lower US bean yields. The market was looking for a 50.5 – 51.5 bu/acre figure from this report, but the USDA came out at 49.5. The lower yields were offset by an increase in harvested area, so the yield story couldn’t realize its full potential. Dry forecasts continue for Northern Brazil where new crop production concerns are mounting.
Canola found support from bean strength in a high volume, high range session. At one point it tested July highs, getting up to Can$506/t, but was unable to maintain this momentum. USDA called new crop canola 1.272Mt vs. 1.4Mt this year. Chinese demand is needed to keep futures supported.
Aussie rainfall featured good falls for parts of Southern QLD and Victoria. The 8 day forecast has improved further with central Victoria and parts of NSW looking at 15-25mm. As previously mentioned, we feel it is too late for rainfall to recover NSW crops, but this could provide positive support for Vic crops, particularly in the Mallee. Cash markets are incredibly weak, with bids very hard to find. We are getting dangerously close to export parity in some markets, so do not expect this to sustain.
Source: Lachstock Consulting
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