Daily market wire 22 May 2017

Lachstock Consulting, May 22, 2017

Overnight markets:

Stronger for grains and oilseeds.

  • CBOT Wheat up 8.75c to 448.5c,
  • Kansas wheat up 11.75c to 455c,
  • Corn up 6c to 379.75c,
  • Soybean up 7.5c to 954.25c,
  • Winnipeg Canola up +1.40$C to 523.2$C,
  • Matif canola up 0.75€ to 360.5€.
  • The Dow Jones up 141.82 to 20804.84,
  • Crude Oil up 0.399c to 50.73c,
  • AUD down to 0.744c,
  • CAD up to 1.351c, (AUDCAD 1.006)
  • EUR down to 1.120c (AUDEUR 0.664).


Wheat was supported by quality and yield concerns from ongoing weather issues in US, plus a weaker USD, which encouraged some shorts to hit the buy button. The forecast remains cold and wet in the US plains which does not offer any respite in the near term. Volatility rallied per cent (pc) on the July contract to 23pc. Some chatter of poor yield and quality in the early harvested Texas crop, helped support things. Ongoing moisture throughout the Hard Red Winter (HRW) wheat belt continues to add to quality concerns. Globally, UK drought concerns could see them as a net importer this year. Chinese growing areas are undergoing record hot temperatures during heading which is not ideal. Latest weekly Commitment of Traders Report (COT) had the wheat increase to -151,400 contracts from -136,800 contracts.


Corn was supported by a weaker USD and nervous shorts. The uncertainty surrounding reseeding potential in the US, caused by damaging weather earlier this month was enough to encourage some short covering. COT was at -218,500 contracts vs. -225,200 last week.


Soybeans found a bid on a strengthening Brazilian Real, which helped to reverse some of last week’s losses from Brazil’s political scandal. The market quickly shifted its focus from macro weakness to unfavorable planting conditions in the US Midwest. The recent sell off has seen US farmer selling evaporate, while Chinese buying has increased. Price action has restricted supply and increased demand, leading futures higher. The COT had the bean short at -58,600 from -59,500 contracts last week.


Canola followed oilseeds higher, with the November contract closing just below $500. Strength in the Canadian dollar limited the rally potential. Concerns over planting pace in Canada have eased somewhat, whilst the current progress is slower than the last two years it is not far off the longer term average.


Forecast in Australia is dry for the next 8 days, while weather last week looks to have been better than expected for central and Northern parts of WA. SA is still looking very dry and in need of rain, particularly in the Western half. Cash markets should be supported in barley with the looming Saudi tender and ongoing Chinese demand. Will be interesting to see how much of the futures move is reflected in wheat pricing today, wheat still feels heavy from a bid perspective, but perhaps the potential global quality issues could see a premium creep in for Aussie APW, which has lacked friends lately.

Source: Lachstock Consulting


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