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Daily Market Wire 20 July 2018

by Lachstock Consulting, 20 July 2018

Higher for grains and oilseeds

  • Chicago wheat up 9.75c to 504.25c
  • Kansas wheat up 8.75c to 496.5c
  • corn up 4c to 351.25c
  • soybeans up 3.75c to 846c
  • Winnipeg canola up 1.40$C to 493.3$C
  • Matif canola was unchanged at 360.5€
  • Dow Jones down -134.79 to 25064.5
  • Crude Oil up 0.67c to $US69.44 per barrel
  • AUD down to 0.735c
  • CAD up to 1.326c (AUDCAD 0.976)
  • EUR up to 1.164c (AUDEUR 0.631).

Soybeans

Soybeans finished with moderate gains, overcoming early pressure in a good show of technical resilience. Trade issues are ongoing with more mud being slung between Chinese and US officials, but other trade negotiations are improving with Mexico making progress on a NAFTA resolution. Export sales came in at 252kmt for old crop and 613.5kmt for new crop, which was above market expectations and helpful to flat price. Soymeal was up 60 cents per tonne and soy oil was down 24 points.

Canola

In Canola, Winnipeg futures found some support from increased Canadian temps that are threatening yields in some regions, as well as mild strength in beans and a softer Canadian dollar. European futures were unchanged in quiet trade.

Corn

Corn showed good gains with strong export sales and capped out US yield estimates encouraging a bid. Today’s close marked the fourth consecutive higher close and broke nearby technical resistance suggesting potential for a surge higher. Export sales were 641kmt in old crop and 774.5kmt in new crop. The market has already overshot corns yield potential for this time of year, so the appearance of increased demand should enable sharp price growth.

Wheat

Wheat finished higher across all three US contracts, with European futures also higher, despite spending most of the session on the defensive. Wheat export sales were slightly below expectations but a surprise purchase by Argentina (which was later reported as an error) prompted a flurry of questions marks and support when originally reported. Matif futures were up 2€ to 188€. Implied vol in Sep SRW finished at 29.25%. The global wheat market has bullish supply prospects and will depend on US exports later in the year, for CBOT bulls it’s all about timing.

Australia

Aussie markets continued to punch higher with new crop wheat and barley on the east coast both $6-10 higher as consumers and trade shorts panic, with crop conditions deteriorating, no grower selling and an increase flow of bad looking crops. The only thing that can turn us around here is rain, which is not appearing. WA remains the cheapest origin grain and what looks to represent a good hedge for east coast consumers given that it’s close to pricing downs execution, whilst also being dangerously close to export parity. We expect to see further strength today, as the lack of volume enables flat price to reset where new shorts want to enter.

Source: Lachstock Consulting

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