Daily Market Wire 21 August 2018

Lachstock Consulting, August 21, 2018

Lower for grains and higher for oilseeds.

  • CBOT wheat was down -18.25c to 542.25c,
  • Kansas wheat down -17.75c to 547.25c,
  • corn down -2.25c to 362c,
  • soybeans up 0.25c to 881.75c,
  • Winnipeg canola up 1$C to 511.9$C,
  • Matif canola up 0.5€ to 384.25€.
  • The Dow Jones up 89.36 to 25758.69,
  • Crude Oil up 0.689c to $US66.6 per barrel,
  • AUD up to 0.733c,
  • CAD down to 1.304c, (AUDCAD 0.957)
  • EUR up to 1.148c (AUDEUR 0.639).


Wheat suffered major losses, giving back most of Friday’s gains as fund selling outweighed the offer side of the market. The net long position in winter wheats is getting close to record highs and funds are wary of this, which encouraged today’s sell off. Implied volatility in Sep Soft Red Winter wheat finished at 25.375pc. The Russian Ag Ministry is meeting this Wednesday to discuss export pace, after local consumers voiced concerns last week. Export pace in Russia is proceeding at around 1 million tonnes (Mt) per week, which should spook the global consumer when this eventually slows. The Russian government is planning to release 1.5Mt of state-owned stocks in an attempt to curb inflation. Matif wheat was down €2.5/t to €209/t and Black Sea futures traded at US$251/t free on board. Production declines are ongoing in Australia and Canada, which will eventually see the global consumer knock on the US’s door, but timing is the issue. Wheat can have a bullish balance sheet, but without fund support whether that be via short covering or speculative buying, it’s difficult for wheat to rush higher.


Corn suffered mild losses thanks to good rainfall across the western corn belt over the weekend. Corn conditions were out after the close revealing a 2pc weekly decline in conditions that came in at 68pc good to excellent. The percentage of dented corn increased this week, from 26pc to 44pc, which compares with a 5-year average of 26pc. In the Ukraine hot and dry conditions are impacting potential corn yields which will have a direct impact on European domestic markets given their heavy dependence on imported corn.


Soybeans finished fractions higher with a disappointing close after being US15c/bu higher thanks to optimism on a US-China trade resolution. However, this optimism was overshadowed by above average early yield reports from the Profarmer crop tour, as well as good rainfall across the Midwest that should further boost yield potential. Conditions after the close revealed a 1pc weekly decline in US conditions which came in at 65pc good to excellent. Soymeal was down $1.90/t and soy oil was up 31 points.


Canola finished with mild gains across both contracts following support from vegoils and a shortage of sellers given the potentially short global balance sheet this year as production in Australia, Canada and Europe slips.


Aussie cash markets were quiet yesterday with the market pausing for breath and awaiting the outcome of the 10-15mm rainfall event forecast for Northern NSW scheduled to commence in 5 days. It’s too late for this to have meaningful impact on winter crop, but it could promote pasture growth which will reduce feedlot margins and slow feed grain demand, as well as also providing a good moisture start for summer crops. This amount is miniscule in the grand scheme of things and plenty more is needed for this situation to have a significant downside influence on price. Frost was an issue over the weekend in parts of WA, with a very cold snap forecast across parts of Vic, NSW and Qld.

Source: Lachstock Consulting


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