Markets

Daily market wire 17 August 2017

Lachstock Consulting, August 17, 2017

Overnight markets:

Lower for grains, mixed for oilseeds.

  •  CBOT wheat down 9c to 447c,
  • Kansas wheat down 7c to 447c,
  • Corn down 2c to 366.5c,
  • Soybeans up 1c to 925.25c, 
  • Winnipeg canola down C$1.89 to $497.3,
  • Matif canola up 0.25€ to 366.25€
  • Dow Jones up 25.87 to 22024.87,
  • Crude Oil down 76.9c to $46.78c,
  • AUD up to 0.792c,
  • CAD down to 1.262c (AUDCAD 1.00),
  • EUR up to 1.176c (AUDEUR 0.673).

Wheat

Winter wheats copped a pasting, despite strength in spring wheat. Both Soft Red Winter and Hard Red Winter values broke through the lows formed at the end of last year to print new yearly lows. A stronger US dollar, as well as global cash-market pressure, was part of the problem for wheat. Global prices continue to decline as harvest volumes in the Black Sea and Europe drive values lower. The Egyptian wheat tender was overwhelmed by volume offers at discounted pricing. Implied volatility was lower at 20.17 per cent in the Sep contract. Despite the negative production news, wheat is getting to a point where consumer engagement should force a pause for breath. Most of the negative news is priced in, so with the market technically oversold, we might see a short-term correction.

Corn

Corn printed fresh yearly lows on technical selling and an improved US weather forecast. Weekly ethanol production came close to its record weekly production, though the market did not take much notice of this. The December contract is now sitting 7 cents per bushel off support at 358c/bu, which is the previous low reached in September last year. In the absence of any production concerns and limited demand increases, we expect to see corn test these lows.

Soybeans

Soybeans managed to stem the bleeding after yesterday’s sell off, with support from short covering and technical buying. The weather forecast is not suggesting any yield damage, which limits the bid to some extent. The better the weather between now and the September USDA report, the more likely their yield numbers will be left unchanged. Having been through a period of low demand, with speculation on import policy changes, talk of washouts, and oversupply in Chinese ports, the Chinese have reportedly purchased six cargoes of US soybeans. In other news, the US government has deferred a decision on the cancellation of Argentine biofuel until October.

Canola

Canola closed slightly lower in light volume, with pressure coming from a stronger Canadian dollar. The market is scared to make a big move either way at present. Crop forecasts in Canada are highly variable and while the European harvest has put pressure on prices in the near term, the overall balance sheet suggests a price rise is in order for demand to be filled later this year and early next year.

Australia

The Aussie forecast is looking great for Victoria and western South Australia, with 15-25 millimetres in the forecast. The rest of the country remains dry. Queensland and northern NSW have had hot and dry weather, and crops there are in urgent need of moisture. This has encouraged the northern markets to rally to a point where they can now draw grain from the south. This should keep east coast prices supported to some extent in the near term. Otherwise, cash markets have been fairly quiet, with tentative traders not making any big moves.

Source: Lachstock Consulting

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