Overnight markets:

Lower for grains and oilseeds due to improved moisture forecast for the central and western bean/corn production regions.

• CBOT wheat down 6.75c to 522.5c,
  
• Kansas wheat down 7.5c to 522.75,
  
• Corn down 11.25c to 393.5c,
  
• Soybeans down 4c to 1014.25c,
• Winnipeg canola down 4.59$C to 510.3$C,
  
• Matif canola down 1.75€ to 365.25€,
• Dow Jones down 32.18 to 21579.59,
  
• Crude Oil down 1.23 to $45.69c,
• AUD down to 0.791c,
  
• CAD down to 1.253c, (AUDCAD 0.992),
  
• EUR up to 1.166c (AUDEUR 0.678).
  

Wheat

Winter wheat opened stronger but settled lower, led by weakness in corn and in spring wheat, which fell 12 cents in the Sep contract. The rainfall in the Dakotas is encouraging the unwinding of long Minneapolis Grain Exchange/short Chicago Board of Trade spreads. Volatility in the Sep Soft Red Winter wheat contract slipped back to 27.75 per cent. The Wheat Quality Crop Tour commences this week, and will provide good insights into the state of the spring wheat crop. The Commitment of Traders (COT) report came in at -21,400 vs. -15,700 for SRW, and +71,300 vs. +75,400 for Hard Red Winter wheat, and +7,900 vs. 6,800 for spring wheat. Wheat still has bullish potential, but it’s a slow burn with a long structure, promising EU production feedback, and time value in Australia and Canada.

Corn

Corn gave back its previous session gains as weather improved yield prospects, taking all the perceived pollination risk out of the market. It never really stood a chance with 1-3 inches forecast for Iowa and Northern Illinois. COT had the corn long at +47,200 vs. +49,300 contracts last week.

Soybeans

Given their recent rally was based on the longer-term weather forecast, soybeans held up surprisingly well. The changed forecast put pressure on things immediately, but found buying support on Chinese inquiry, which helped futures to recover somewhat, closing 7 cents off their lows. The large Chinese port stocks from previous imports are drawing down, which is freeing up space for more imports. The COT had the short at -12,100 vs. -24,000 last week.

Canola

Improved prairie weather and a stronger CAD put canola under pressure from the get-go. The jury is still out as to how much recent weather has affected the crop and in what way, with crop estimates varying significantly. Tight old-crop supplies and so much new-crop uncertainty should see whippy price action going forwards.

Australia

The Aussie forecast continues to disappoint everywhere but Victoria. Western Australia is getting some reasonable southern showers, though that area doesn’t need much for now. If the forecast is correct, NSW will not receive any further rainfall for the month of July, which on top of a below-average June, mounts further concerns for this crop. We expect to see basis supported at current levels, though we will need to see further crop revisions before it takes another leg up, given how far over export parity we are.

Source: Lachstock Consulting