Lower for grains and mixed for oilseeds.
Funds were follow-through sellers overnight in wheat. It looked to pose a recovery early on by rising 5 cents, but order flow, export sales and technical selling led it lower. Matif wheat was down €2.75 per tonne to €196.75/t and implied volatility in December Soft Red Winter wheat finished at 23.12 per cent. US wheat sales continue to disappoint potential bulls, with only 387,000t for the week. We are now 20 cents off seasonal lows, with ongoing declines in the global balance sheet. The USDA did not address any relevant issues in wheat, but kicked the can down the road on problems like the Australia crop at 20 million tonnes (Mt) and Russian exports at 35Mt. The problem for bulls is that funds are still long, and could attempt to test these lows if volume outstrips consumer demand. This seems unlikely, but possible. Demand has shown up, with Saudi in for 595,000t over the weekend, and Iraq tendering on the 23 September. Algeria’s tender results saw it price just $3/t under US wheat, which suggests larger demand switches when Black Sea supplies are depleted.
Corn reached new yearly lows, with follow-through selling from the USDA’s monster yield estimate. Export sales were disappointing, with a cancellation of 171,000t in old-crop, netting total weekly figures out at 603,000t. As is the case in beans, it’s hard to see a new bout of incredibly bearish information. So with funds short and the market dubious on the USDA’s yields, it will be interesting to see whether funds continue to pile in, or decide to take profit. A buying catalyst needs to be demand, which we are yet to see.
Beans were lower, with mediocre weekly export sales not encouraging a bid. Sales came in at 693,000t. Soymeal was down $3.50/t and soy oil was down 20 points. Beans are sitting very close to technical lows, but with funds short and a lot of political uncertainty, it’s difficult to see a new major bearish catalyst since the USDA has already provided that with their record yield forecast.
Canola finished lower in Canada, following weakness in vegoils and assessing the threats of reduced crush demand, given increasing bean yields. Europe closed fractions higher in a reasonably quiet session.
Aussie markets are gathering strength on the east coast, despite stronger currency and lower futures. Crop conditions are worsening due to higher temperatures and no moisture. Yield potential is declining and traders are factoring in tighter balance sheets, while grower washouts continue to provide a new-crop bid. Thankfully, Western Australia will provide enough volume to satisfy domestic requirements on the east coast, but we need keep an eye on the Southeast Asian consumer, who will likely see any price dip as a buying opportunity.