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Daily market wire 16 July 2017

by Lachstock Consulting, 17 July 2017

Friday’s futures markets closes:

Mixed for grains, stronger for oilseeds.

  • CBOT Wheat down -0.25c to 534.75c,
  • Kansas wheat down -2c to 540c,
  • Corn up 6.5c to 389.5c,
  • Soybean up 14c to 992.75c,
  • Winnipeg Canola up 4.90$C to 511.3$C,
  • Matif canola up 2.5€ to 371€.
  • The Dow Jones up 84.65 to 21637.74,
  • Crude Oil up 0.60c to 46.68c,
  • AUD up to 0.782c,
  • CAD down to 1.264c, (AUDCAD 0.989)
  • EUR up to 1.146c (AUDEUR 0.683).

 

Soybeans

Soybeans bounced off technical support to post a stronger close. Chinese enquiry has continued with the softening prices, with 1.3mmt announced as part of 12.5 mmt MOU between Chinese officials and US. The commitment of traders (COT) report, revealed significant short covering last week, with the position moving from -24k vs. 104.2k last week. This structural change could see renewed selling in beans, unless we get a fundamental surprise from renewed export business or declining crop conditions.

Canola

Canola stronger following strength in beans, whilst revisiting the unsettled issue of prairie weather conditions. A stronger Canadian dollar is still capping rallies, but if conditions in the prairies continue to decline this will be ignored, given the shrinking global balance sheet and tight old cop Canadian supplies.

Corn

Corn stronger, with buying support after Thursday’s sell off. Last week’s weather was better than expected for crops and the market is now viewing things in a more positive light, so after the USDA’s bearish report last week, there is nothing (other than weather) driving corn in the interim. Export demand has been quiet despite the sell off and on top of this, the COT position is now only -24k vs. -104.2k last week. Weather will be the driver from here, but we are running out of other stories for the moment with no structure or export demand. We need to see a big problem to encourage new buying.

Wheat

Wheat was softer, just below unchanged on SRW and HRW, while spring wheat posted a mild recovery, after Canadian conditions raised further concerns for the spring wheat balance sheet. Buyers were not as convincing vs. previous sessions in Spring Wheat, with the Sep contract closing 16 off its highs. The Wheat COT came in at -15.7k vs. -38.5k contracts last week. Wheat is not used to having such a small short position and given that the catalyst for the covering was spring wheat, the more that demand is rationed and this balance sheet is reconciled, the harder it will be too keep the story rolling. There are still plenty of concerns for global wheat with significant revisions possible in the major 8 exporters, but time is on our side and with no structural bid, something major is needed to encourage new highs. That event is probably a huge drought in Australia and Candada, but we are not there yet, and basis will probably do the work there anyway, given where US export values sit.

Australia

Australian weather has no major surprises, the Vic forecast looks to have increased slightly and extended into Eastern SA, which will provide a much-needed drink there. WA forecast confined to southern coastal areas and unlikely to offer much rainfall in the cropping areas. NSW has nothing on the forecast in winter crop areas, and is beginning to look thirsty. Cash markets continue to price in production declines, with resilience shown despite the CBOT fall.

Source: Lachstock Consulting

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