Lower for grains and oilseeds.
- CBOT wheat down -8.25c to 479.5c,
- Kansas wheat down -6.75c to 485.5c,
- Corn down -1.25c to 376.75c,
- Soybeans down -9c to 922.5c,
- Winnipeg canola down -4$C to 479.4$C,
- Matif canola down -2.25€ to 358€,
- Dow Jones down -57.11 to 21410.03,
- Crude Oil up +0.0799c to 42.61c,
- AUD down to 0.755c,
- CAD up to 1.332c (AUDCAD 1.005),
- EUR down to 1.116c (AUDEUR 0.676).
Wheat’s momentum finally slowed down as rainfall in parts of France and the US were enough to exhaust buyers for now. Implied volatility was still strong at 33.5 per cent. The technical picture is still promising, with today’s sell-off being more about consolidation than a large momentum break. Early yields from Kansas are lower than expected for Hard Red Winter and better for Soft Red Winter wheats.
Corn was the best of a bad lot today, falling by only one cent. That 500,000-acre increase in bean area is expected to come from corn, which the market is not surprised by, and it does help the corn balance sheet. The technical picture is looking weak for corn, with charts suggesting a push toward April lows. Corn is now getting a bit of airplay on the global front, with the dry conditions in Europe and Ukraine now leading to production revisions in their supply-and-demand estimates.
Soybeans closed lower again on technical weakness and an improved forecast. The long-term forecasts are suggesting adequate moisture for most areas in the US until the end of July. The market is expecting the USDA to increase soybean area next week by 500,000 acres, which will see additional balance-sheet pressure. Chinese buying interest has not made a significant improvement, but an increase in crush margins is noted; this could spark further import demand.
Canola followed soybeans lower, despite a weaker dollar. The November contract is nearing its recent low which, if broken, could spark further selling pressure.
Although it’s still patchy, there is some reasonable moisture forecast which could bring up to 25mm to central parts of WA. There is still nothing forecast for SA or eastern states. Cash markets are continuing to strengthen as liquidity dries up in WA/SA, leaving exporters active in the Victorian market due to its relatively cheap origination. It is hard to see this falling away too much in the near term, given the trade’s large national exposure to rail and port assets. Financial-year grower selling could stifle this, though it’s unlikely this grain will be in the CBH system; this creates its own set of challenges.
Source: Lachstock Consulting