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Daily market wire 14 September 2017

by Lachstock Consulting, 14 September 2017

Overnight markets:

Higher for grains and oilseeds.

  • CBOT wheat up 1.25c to 443.25c,
  • Kansas wheat up 2.5c to 444.25c,
  • Corn steady at  351.5c,
  • Soybeans up 10c to 960.5c,
  • Winnipeg canola up 2.5$C to 493.8$C,
  • Matif canola up 2.5€ to 366€,
  • Dow Jones up 39.31 to 22158.18,
  • Crude oil up US$1.11 to $49.34,
  • AUD down to 0.798c,
  • CAD up to 1.218c (AUDCAD 0.972),
  • EUR down to 1.188c (AUDEUR 0.671).

Wheat

Wheat finished with slight gains after forging new weekly and monthly highs early in the session. It essentially ran out of buyers, no thanks to a stronger US dollar, though this price action is looking positive from a technical point of view. A close through these resistance levels would indicate a momentum shift and further upside for wheat. Implied volatility in Dec Soft Red Winter wheat went out at 19.75 per cent. The focus for wheat continues to be production uncertainty in Australia and Argentina. With the exception of Russia and Kazakhstan, all other major wheat exporters have declining year-on-year stocks. Russian cash prices firmed slightly, despite a weaker ruble and the record crop. With the logistical constraints they are facing, it is not expected that free-on-board pricing can fall much from here unless the ruble falls out of bed.

Corn

After showing some early strength generated by Chinese ethanol production increases, and strength in soybeans, corn finished unchanged. However, corn could not sustain the highs, as the market remembered the huge global stock surplus and the low probability for significant demand increases in the near term. New-crop area will eventually become a concern, and a potential catalyst for support but for the moment, corn lacks bullish enthusiasts.

Soybeans

Flood concerns in Brazil and Argentina, combined with ongoing export interest, helped beans put the impact of yesterday’s yield news behind them. Given the dryness experienced in August, the market is not convinced record pod weights are accurate . Mexico purchased 167,3oo tonnes and China is rumoured to have been an active buyer on the price break yesterday. Strength came from meal, which was up $5.20 per tonne; oil was slightly lower.

Canola

Canola closer stronger, following strength in soybeans, and despite a stronger dollar. Chinese buying interest is helping to stem the order-flow issues in Canada, and the market is now thinking further ahead. Australia is set to have its smallest crop since 2010 and the global balance sheet is looking tight enough to ration crush demand at some point to avoid supply shortages.

Australia

Still nothing impressive from a moisture perspective from Australia. There is potential for some isolated frost events, which will sap moisture and damage yields further, in northern NSW on Thursday night. Cash prices continue to strengthen as the market adjusts basis premiums in accordance with revised crop figures. The wheat market is powering ahead faster than barley, which provides an opportunity given that barley’s relative value to wheat is expected to contract and potentially invert next year due to the strong reliance the global balance sheet has on Australian barley.

Source: Lachstock Consulting

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