Markets

Daily Market Wire 16 July 2018

Lachstock Consulting, July 16, 2018
Mixed for grains and oilseeds.
  • CBOT wheat up 11.25c to 512.5c,
  • Kansas wheat up 10.5c to 516.25c,
  • Corn down -4.5c to 354.75c,
  • Soybean down -14.5c to 824.5c,
  • Winnipeg Canola down -7$C to 491.8$C, and
  • Matif canola up 1€ to 359.75€.
  • The Dow Jones up 94.52 to 25019.41,
  • Crude Oil down -0.21c to $US70.79 per barrel,
  • AUD down to 0.741c,
  • CAD up to 1.315c, (AUDCAD 0.975) and the
  • EUR down to 1.168c (AUDEUR 0.634).

Wheat

US winter wheats posted solid gains, but spring wheat finished unchanged with fob premiums declining in the Pacific North West (PNW).

Spring wheat crop expectations in Montana are increasing and the lack of bean exports out of the PNW makes for aggressive spring wheat offers as asset managers chase sales to ensure throughput.

Implied volatility in Sep Soft Red Winter (SRW) wheat finished at 30.5pc.

The Russian Ag Ministry lowered their wheat crop estimates to 64.5 million tonnes (Mt) (USDA, 67Mt). Wheat prices in Russia and the Ukraine have moved up approximately US$10/t in the last three weeks with crop declines limiting aggressive seller activity.

The wheat Commitment of Traders Report (COT) report for SRW increased the short position to -24,700 contracts from -24,400 contracts, while the HRW long increased to +16,200 from +15,300 contracts.

The declining global balance sheet is now obvious to many.

All we need now is the consumer to step up and the rally potential is there.

Corn

Corn was under pressure from near-perfect US weather conditions, further scepticism regarding the USDA’s light US yield forecast and ongoing trade issues.

The global corn supply picture is tightening with China churning through their own reserve stocks.

This should see a heavy reliance on exportable feed grains in the Black Sea, Europe and Australia, but it’s difficult to see US futures following suit due to the ongoing trade issues.

Corn COT report showed the short position increased to  -73,300 contracts from -35,800 contracts last week.

Soybeans

Beans had the post-report jitters as the market re-examined figures and decided it was still a sell.

In addition to this, trade discussions between the US and China appear to be going backwards rather than forwards.

The sessions close reflects the lowest bean price in nine years.

Soymeal was down US$4.90/t, soy oil was down 30 points.

The weekly COT revealed the bean short at -72,400 from -77,800 contracts previously.

Canola

Canola prices were hit hard in Winnipeg, falling 1.56pc as improved crop potential combined with a declining demand picture, prompting too much weight on the offer side of the market, as grower selling increased.

Matif futures were stronger, thanks to ongoing production issues in Europe.

Australia

The Aussie forecast remains dry for NSW, QLD and SA which will should prompt further price support this week.

WA and Vic are scheduled to receive 15-20mm rain with moderate coverage, which will help sustain yield potential there.

Barley prices for new crop were much stronger to finish the week, with increased demand potential and deteriorating local crop conditions encouraging the punch higher.

Liquidity is tight from the grower at the moment and this lower liquidity and bullish balance sheet makes for gappy prices.

Source: Lachstock Consulting

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