Markets

Daily market wire 14 August 2017

Lachstock Consulting, August 14, 2017

Overnight markets:

Mixed for grains and higher for oilseeds.

  • CBOT wheat down -1.75c to 467c,
  • Kansas wheat down -6.5c to 469.25c,
  • Corn up 3.75c to 374.75c,
  • Soybean up 4.25c to 938.25c,
  • Winnipeg Canola up 0.80$C to 512$C,
  • Matif canola up 3.25€ to 371.75€.
  • The Dow Jones up 9.06 to 21853.07,
  • Crude Oil up 0.169c to 48.76c,
  • AUD up to 0.789c,
  • CAD down to 1.268c, (AUDCAD 1.001)
  • EUR up to 1.182c (AUDEUR 0.667).

 

Wheat

Wheat was the big loser today, with spring wheat leading the charge, again. The September Minneapolis contract dropped 29 cents/bushel (c/bu), as speculative longs continued to head for the door at the same time. The commencement of spring wheat harvest is seeing some pressure on cash market premiums which is not helping things. Implied volatility in the September Soft Red Winter (SRW) wheat contract went out at 22.25 per cent. In Europe the Matif contract continues to make new lows, as the weight of volume from European and Russian harvests puts pressure on the contract. Russian fundamentals are bearish, but logistics will prevent drastic losses in FOB pricing, unless the grower hits the sell button. This would be hard to foresee given that they have held out until now. Lets hope the Ruble doesn’t have a rapid sell off. The weekly commitment of traders (COT) report had SRW -61,700 contracts this week versus -39,700 contracts last week, Hard Red Winter wheat +56,700 versus +50,700 contracts and Spring wheat +6,200 versus +6,500 contracts.

Corn

Corn tried to claw back some of yesterday’s losses, managing a slightly higher close that settled just below the previous key support in the Dec contract. The technical trend is still bearish, but a close through the 375c/bu level in Dec would suggest limited downside in the near term. On the fundamental side, there is nothing new. The market is comprehending Thursday’s (USDA crop report) yields and will probably need to wait until the Sep USDA report for further clarification. The heavy balance sheet and light demand suggests that the 375c/bu level will now become resistance and we will continue to grind lower. The COT had corn structure -1,500 versus +13,200 contracts last week.

Soybeans

Soybeans posted a minor consolidating rally after Chinese buying helped stem the bleeding in futures. Market watchers are still scratching their heads over Thursday’s yield numbers, given that there is still a lot of weather to overcome before yields can be set. The longer-term forecast is now drier than expected which puts the bean yield in serious doubt. The weekly COT had the bean positions at -27,100 versus -7,500 contracts last week.

Canola

Canola posted a minor rally, basically following the oilseed complex. Despite the crop uncertainty, volume and activity have been fairly light, as the market awaits something more tangible to trade. With the potential small crop in Canada and Australia, combined with strong Chinese oil pricing and potential for Europe quality issues.  Canola has potential to rally independently of bearish outside markets.

Australia

 The Aussie forecast is showing good rainfall for Vic, SA and southern WA, but dry for NSW and QLD, which are both in need of a drink. Last week saw WA receive 25-50 mm across the Northern Wheat belt which will prevent any further downside in the crop there and hopefully support yields for the crops that are still standing. On the east coast, cash markets are relatively quiet in the south, while the northern domestic markets continue to show strength, increasing the drawing arc for southern grains.

Source: Lachstock Consulting

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