Daily market wire 19 September 2017

Lachstock Consulting, September 19, 2017

Overnight markets:

Lower for grains, mixed for oilseeds.

  • CBOT wheat down 5.5c to 443.5c,
  • Kansas wheat down 3.75c to 442.25c,
  • Corn down 3.25c to 351.5c,
  • Soybeans down 1c to 978c,
  • Winnipeg canola up 1$C to 496.7$C,
  • Matif canola up 0.25€ to 367.75€,
  • Dow Jones up 63 to 22331.35,
  • Crude oil up 0.030c to US$49.92,
  • AUD down to 0.796c,
  • CAD up to 1.229c (AUDCAD 0.978),
  • EUR up to 1.195c (AUDEUR 0.665).


Wheat finished on a softer note, failing to break though technical resistance, which again encouraged selling. Soft Red Winter (SRW) wheat has traded in the same daily 10-cent range for four sessions now, failing to close through 450, and failing to break through 440. The market is lacking conviction to one side or the other. Implied volatility in Dec SRW went out at 18.75 per cent. In US new-crop, winter wheat is forecast to be 13pc planted vs. 15pc this time last year. Total weekly exports came in at 464,000 tonnes, which met market expectations, but is 19pc lower than this time last year. Despite the ruble weakening by 0.7pc, Russian cash prices were US$2.50/t higher as logistics continued to firm free-on-board premiums. Egypt’s General Authority for Supply Commodities announced a tender for October delivery; the results will be interesting in light of the appreciation in Russian cash prices.


Corn made a push towards recent highs, but soon failed, with pressure from its heavy global balance sheet combining with weak export sales and outside pressure from wheat, to force a softer close. Export sales came in at 676,000t for the week, similar to last week, but 48pc below the same period last year. The Commitment of Traders position is building, but has a lot more in the tank if it chooses to sell. Catalysts for a turnaround in corn will be demand, if we can find any, or a significant reduction in new-crop production. These do not appear to be realistic nearby threats, which means corn should be led by wheat and beans.


Soybeans traded 5 cents per bushel higher for most of the session before closing near their lows to finished just below unchanged. Soymeal was down $2.90/t and soybean oil was down 16 points. Another announcement of private daily export sales was made, with China taking 261,000t and an unknown destination taking 126,000t. Importers are playing catch-up after a slower start to the year. Export pace compared to this week last year is tracking 22pc ahead. Argentina’s new-crop area is forecast to be 4-7pc lower if current pricing persists throughout the planting window.


Despite a stronger Canadian dollar, canola finished higher, as the harvest pressure felt last week appears to have bought consumptive domestic demand. Technically, the Jan contract looks to be heading to break CAD$500 again, though Canadian seed needs to find nearby export demand to prevent order flow pressure.


The Aussie forecast is similar to yesterday’s; some heavy showers are forecast for southern and central Western Australia, while the rest of the country remains dry. Frosts are forecast tonight for central NSW, which will deplete moisture reserves from an already parched crop. The extent of frost damage from events in southern NSW over the weekend has not yet been realised, though initial reports are concerning, and suggest downside in canola and wheat. If the weather heats up without any rainfall for NSW in the next two weeks, we will have serious downside potential.

Source: Lachstock Consulting


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