Markets

Daily Market Wire 17 July 2018

Lachstock Consulting, July 17, 2018
Mixed for grains higher for oilseeds.
  • CBOT wheat down -8.5c to 504c,
  • Kansas wheat down -7.25c to 509c,
  • Corn up 0.5c to 355.25c,
  • Soybean up 10.75c to 835.25c,
  • Winnipeg Canola up 1.59$C to 493.4$C,
  • Matif canola up 0.25€ to 360€.
  • The Dow Jones up 44.95 to 25064.36,
  • Crude Oil down -3.09c to $US67.92 per barrel,
  • AUD down to 0.741c,
  • CAD down to 1.313c, (AUDCAD 0.974)
  • EUR up to 1.171c (AUDEUR 0.633).

Wheat

Wheat markets were lower as funds unwound long wheat, short bean or corn positions. Implied volatility in Sep Soft Red Winter wheat went out at 29.75pc.

Today’s sell off is out of place and not fundamental, given that we saw further crop declines today in Germany, where one forecaster estimated a 16pc year-on-year reduction.

Saudi Arabia purchased 660,000t of hard wheat for Sep/Oct shipment at an average price of US$267/t cost and freight (C&F). The majority of the supply thought to be based on Baltic replacement.

Corn

Corn finished fractions higher in a stable session that managed to avoid new lows.

US crop conditions dropped 3pc to 72pc good to excellent. This gave those who are short based on the presumption of record yields something to ponder.

Corn was favoured over wheat length today, suggesting some attraction to that spread.

Otherwise there is nothing fresh for corn, we need clarity on US yields and China trade before it can break out of its down turn.

Soybeans

Beans found support from weekly declines in crop conditions, which came as a surprise given that the market has been trading near record yields. This was enough to prompt some short covering.

Conditions dropped 2pc to 69pc good to excellent.

The longer-term forecast remains cool and mild, with a large turnaround required to maintain a rally.

Interestingly the difference between US and Brazilian soybean fob premiums has now blown out to 23pc, which is getting awfully close to the 25pc tariff on US bean imports.

Soymeal was down $2.90/t, while soy oil was down 33 points.

Canola

Canola turned around some of Friday’s losses, following strength in beans. The same fund selling that has affected soybeans has been prevalent in Winnipeg futures, which has been the major driver of the reversal in the Matif/Winnipeg spread.

Australia

Aussie markets were stronger yesterday as winter crop outlook continued to decline.

The forecast refuses to deliver anything tangible to the areas most in need; SA, QLD and NSW.

On top of no moisture, NSW is enduring significant frost events at similar levels to last years. Frost’s contributed to significant moisture loss and yield declines last year and that was on a better moisture base.

Hence consumer pricing in NSW is getting punchier.

Barley is in the same boat, but unfortunately has less liquidity to define itself.

Sellers are scared, and growers aren’t present, so price gaps continue.

Source: Lachstock Consulting

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