Overnight markets:

Lower for grains and oilseeds as weather challenges fund longs.

• CBOT wheat down 9c to 513.5c,
  
• Kansas wheat down 8.25c to 514.5c,
  
• Corn down 2.75c to 390.75c,
  
• Soybeans down 11.75c to 1002.5c,
  
• Winnipeg canola down 10.4$C to 499.9$C,
  
• Matif canola down 4€ to 361.25€,
  
• Dow Jones down 40.27 to 21539.79,
  
• Crude Oil up 0.599c to $46.37,
  
• AUD up to 0.792c,
  
• CAD down to 1.250c, (AUDCAD 0.990),
  
• EUR down to 1.164c (AUDEUR 0.680).
  

Wheat

Wheat was lower in all classes on the back of improved row-crop weather, and the ongoing long position revealed by the Commitment if Traders report. Implied volume in the Sep Soft Red Winter contract was off again at 24.75 per cent. Spring wheat had a wild session, down 41 cents at one point, before rebounding slightly. Speculative buying in the last four minutes of trade rallied things a further 10 cents to see it close only 15 cents lower. Note that this only took 258 contracts to do so, which is a good representation of why a lot of players don’t trade the Minneapolis Grain Exchange contract. Concerns are mounting for quality and protein in Northern Europe, where wet weather is causing problems. Despite harvest being under way,Russian prices are holding up,  and a sharp decline in cash prices there could be a catalyst to drive futures lower.

Corn

Corn traded lower from the open as better-than-expected weekend rainfall, combined with a cooler, wetter forecast, eased yield concerns. Corn managed to close six cents off its lows as crop-condition speculation mounted. Crop conditions after the close revealed a 2pc decline from last week at 62pc good to excellent. The market was expecting a 63pc number, which might see corn catch a bid on the open. Now that production volatility is decreasing, corn needs a large demand story to rally independently of beans.

Soybeans

Beans markets were under pressure from good moisture over the weekend and a cooler, wetter longer-term forecast. However, prices overcame some of this pressure to finish 12 cents off their lows. Last week’s hot weather did some damage, and the market quickly anticipated lower conditions post close, which helped beans catch a bid. Condition after the close revealed a 4pc drop to 57pc good to excellent. Beans should uncover some demand at these levels, with China back inquiring, and US prices becoming competitive to Brazil.

Barley

The Saudi Government purchased 900,000 metric tonnes of optional-origin feed barley for September-October shipment, with prices ranging from US$199-$213 cost and freight . These values are significantly lower than Australian replacement, but supportive of prices in Europe and the Black Sea. The global barley balance sheet this year will be the tightest its been since 1985, so any demand puts pressure on things. As the season progresses and stocks dwindle, we suspect that the spread between Aussie and EU/Black Sea values will converge as their stocks deplete and consumers realise they need Australia’s exportable surplus.

Canola

Canola was hit hard by an improved weather outlook for most growing regions that took some steam out of the market. With no perceived threat to new-crop production, the bid could not sustain.

Australia

The only relevant major change to the Aussie forecast is some showers for South Australia in the eight-day forecast. There is 15mm forecast for the Eyre Peninsula that, if achieved, would help buy the crop some time before further yield revisions are required. Cash markets were quiet yesterday with the big daily move in futures.

Source: Lachstock Consulting