Markets

Daily market wire 24 August 2017

Lachstock Consulting, August 24, 2017

Overnight markets:

Lower for grains, higher for oilseeds.

  •  CBOT wheat up 1c to 430c,
  • Kansas wheat down 1.25c to 425.75c,
  • Corn down 4.25c to 355.75c,
  • Soybeans up 0.5c to 938c,
  • Winnipeg canola up 1.00$C to 512.7$C,
  • Matif canola up 2€ to 370.75€,
  • Dow Jones down 87.799 to 21812.09,
  • Crude Oil up 56c to $48.39,
  • AUD down to 0.790c,
  • CAD down to 1.254c (AUDCAD 0.992),
  • EUR up to 1.181c (AUDEUR 0.669).

Wheat

Wheat paused for breath, managing a mildly higher close. The balance sheet still feels heavy, but the market is conscious of overselling things here. Globally, there are still some concerns with Australia and Canada’s uncertainty. Once the size of the Russian crop is factored in, it’s likely we will set a seasonal low. The big influence of global cash prices at the moment is the ruble. A weak ruble will see Russian prices lower, which will affect global values. The ruble is looking technically strong, particularly if it can break nearby resistance, which it is testing. In the US the Hard Red Winter (HRW) price has got to a point where it is displacing corn in the feed ration in some places. With corn at 85 per cent of HRW values, it makes sense. This will reduce the balance sheet and may see some surprises in later USDA reports. It is a good indicator of support, as markets stop falling when they buy demand. From an export point of view, US HRW is competitive; as long as Russian prices stabilise, further downside is limited somewhat.

Corn

Corn continued its decent, forming fresh new lows. The crop tour is revealing better-than-expected yields, making it an obvious sell for fundamental and technical traders. As mentioned in yesterday’s wire, the likely catalyst for strength in corn needs to be a heavily short fund position, combined with some stronger export demand, but prices still have some work to do.

Soybeans

Soybeans finished just above unchanged, after showing strength earlier in the session. The US government announced heavy biofuel import restrictions for Argentinian and Indonesian biodiesel. This encouraged the early rally, providing strength to US vegetable oils, which held their gains into the close. Despite the improved crush margin and potential increase in domestic seed demand, soybeans could not hold on, or push higher. Talk of old-crop Chinese cancellations provided some bearish weight and revisited the idea of congested ports and reduced demand there.

Canola

Canola looked like it was heading to 520 in the Nov contract at one stage yesterday, after surging early on a combination of vegetable-oil strength and speculation on a smaller Canadian crop from Statscan next week. It did manage a higher close, but well off its highs. Early harvest results in Canada are mixed, with central and western areas reporting concerning yield figures, while eastern areas are better than expected.

Australia

The Aussie forecast is still featuring limited moisture for the next eight days, which will create concerns for New South Wales and Queensland crops. Nothing is featuring in the next two days from a frost risk point of view. While cash markets have been falling fast, there appears to be some flat price support building for lower-grade wheat, which indicates that we are buying some demand; whether it is domestic rations switching from barley to wheat, or flat-price container buyers, it appears we have found the low side for now.

Source: Lachstock Consulting

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