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Daily Market Wire 20 June 2018

by Lachstock Consulting, 20 June 2018

Lower for grains, mixed for oilseeds.

  • CBOT wheat down -12.25c to 477.75c,
  • Kansas wheat down -16.5c to 483c,
  • corn down -2.25c to 353.75c,
  • soybeans down -19.5c to 889c,
  • Winnipeg canola down -1.70$C to 518.3$C, and
  • Matif canola down -1.25€ to 347.5€.
  • The Dow Jones down -287.26 to 24700.21,
  • Crude Oil down -0.789c to $US65.06 per barrel,
  • AUD down to 0.737c,
  • CAD up to 1.328c, (AUDCAD 0.980)
  • EUR down to 1.158c (AUDEUR 0.636).

Wheat

Wheat couldn’t defy outside market pressure, selling off in spite of a tightening global balance sheet.

Spring wheat conditions have improved in the US and winter wheat harvest pace is ahead of schedule, so with limited risk on behaviour the only direction was down.

Implied volatility in Sep Soft Red Winter (SRW) wheat went out at 28.125 per cent.

In Russia, some see heat continuing to build in the southern areas as supportive of prices, while others observe an increasing the crop size, amid reports of better than expected early harvest results, leaning towards lower prices.

Egypt’s GASC purchased 4 Romanian wheat cargoes between US$218/t and $219/t cost and freight (CandF) for August shipment.

Corn

Corn finished with mild losses after trading a 19c/bu range, due to trade issues and improving US crop production potential.

The weekly ratings continue to suggest near perfect crop conditions, which has been the catalyst for the 55c/bu sell-off that we have witnessed.

Politics has played a key part in this sell-off, but for now everyone that has been long is not willing to step in until there is more clarity over trade issues, or a large turn around in US conditions.

Soybeans

Soybeans finished lower today in a wild session that featured a 64c/bu trading range, with prices reaching the lowest level for a front month contract since late 2008.

The catalyst came from further threats by US President Donald Trump to add an additional 10pc import tax on Chinese goods, after China responded with their own set of taxes last Friday.

Rainfall in the US remained promising and supportive of crop production.

Soymeal was down US$1.30/t, while soy oil was down 71 points (2.5pc).

Canola

Canola finished lower, following weakness in beans and vegoils.

Nearby contracts held up better than the deferred as speculation mounts that trade issues could increase nearby demand prospects for Canadian seed.

Australia

In Australia, the forecast remains dry across the nation for the next 8 days.

Concerns are beginning to mount for parts of southern WA and SA, where year-to-date rainfall is too low for average crop production.

Given the dire conditions in NSW, we do not need further problems in SA or WA, as these are the interstate import zones with potential to alleviate pressure on NSW.

The dollar has broken below 0.74, which in combination with the dry outlook, should encourage further strength in cash markets despite the futures market weakness.

Source: Lachstock Consulting

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