Daily market wire 20 September 2017

Lachstock Consulting September 20, 2017

Overnight markets:

Lower for grains, mixed for oilseeds.

  • CBOT wheat down -0.5c to 443c,
  • Kansas wheat down -0.25c to 442c,
  • corn down -3.25c to 348.25c,
  • Soybean down -2c to 976c,
  • Winnipeg Canola up 2.10$C to 498.8$C,
  • Matif canola down -1.75€ to 366€.
  • The Dow Jones up 39.450 to 22370.8,
  • Crude Oil down -US3.9c to US$49.87,
  • AUD up to 0.800c,
  • CAD up to 1.229c, (AUDCAD 0.984)
  • EUR up to 1.199c (AUDEUR 0.667).


Wheat finished just below unchanged in a whippy session, breaking the trading range of the last 5 sessions to form a new lower low, however it posted an impressive US 8 cents/bushel rally into the close after the GASC results came out. Implied volatility was higher in Dec Soft Red Winter wheat futures going out at 19.75 per cent. The initial driver of the lower move was a Statistics Canada (Statscan) satellite estimate that estimated their wheat crop at 27.13 million tonnes (600,000t higher than USDA). Russian wheat was the successful winner of the Egyptian GASC tender, booking  175,000t of wheat at prices ranging from US$210-$213/t, which is supportive of current cash pricing once additional costs are considered. Global cash values were firmer after the tender announcement. Russian logistics are becoming more problematic with barley and corn competing for export space, with the government announcing rail subsidies to all grains, not just wheat.


Corn finished lower, with nothing new from a fundamental perspective. Concerns for dryness in Brazil and flooding in Argentina are being discounted by the market, given the time value we have, not to mention the old crop we still need to chew through. In China their government auction for state-owned corn saw only 5000t of 231,000t purchased.  Corn will be a follower of wheat and beans until it can create a fundamental story of its own. The likely story could be a significant increase in the Commitment of Traders position, which sparks a short covering rally, given that fundamentals aren’t offering much bullish potential.


Soybeans finished with slight losses. October meal was US$4/t lower, while oil was 33 points higher. US yields continue to present mixed results, raising some doubts about the USDA’s large forecast. Beans have had a good bout of export demand recently, which should see things supported, in combination with South American production concerns, where Brazil is too dry and Argentina too wet.


Canola finished higher in a fairly quiet, low range session. Statscan’s satellite report revealed a crop estimate of 19.7Mt, which is a lot higher than their previous estimate, and slightly above market expectations. The Jan market is poised to test Can$500, a close through there would suggest good support.


Barley markets remain firm, with global values expected to increase on speculation of another Saudi tender announcement this week. With Black Sea fob prices rallying as they have, it’s expected that the trade will reluctantly short the grower, which could see a punchy price increase from the last tender.


The Aussie forecast looks unchanged on yesterday from a moisture perspective, though the WA showers look to be getting bigger with 25-50mm forecast, which should aid yield potential in the southern half of the state. Frost conditions were on the cards again for central NSW, though the damage extent is unclear for the moment. Cash prices continue to show strength on the back of NSW/QLD production woes, the improved moisture for WA could boost yields to offset NSW losses, though this still keeps pressure on prices in the east.

Source: Lachstock Consulting


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