Higher for grains and mixed for oilseeds.
- CBOT Wheat was up 32.5c to 542.75c
- Kansas wheat up 31c to 540.75c
- Corn up 7.25c to 359.25c
- Soybeans up 2.75c to 860.75c
- Winnipeg canola down -0.39$C to 489.5$C
- Matif canola up 5.25€ to 366€
- Dow Jones up 172.16 to 25414.1
- Crude Oil up 0.79c to $US69.32 per barrel
- AUD up to 0.744c
- CAD down to 1.304c, (AUDCAD 0.971)
- EUR up to 1.172c (AUDEUR 0.635)
Soybeans finished fractions higher in a low ranging session that featured some mild short covering. The government intervention in the US has prevented speculative selling in beans and the market is now speculating that Brazil will run out of exports, forcing China to be price takers for US supplies. Trade chatter between China and the US has been quiet, but the US is in negotiations with Europe on a trade deal which could see some more obscure demand pop up. Soymeal was up $1.10 per tonne and soy oil was up 17 points.
Canola sold off in Winnipeg and rallied in Matif. European seed followed strength in cereals brought on by declining hot dry conditions throughout the UK, Southern Europe the Mediterranean, up into the Baltic regions. The strength in Europe is going to open the import margin for Aussie Canola, although the production potential is declining on the east coast in the absence of tangible rainfall.
Corn finished higher, following wheat, but not in the same fashion. Despite a tight global balance sheet and declining conditions in Europe and the Black Sea, US corn is still plagued by ideas of 180+ yields which would require a significant demand effort to chew through. Add the new price support mechanisms in the US that will prevent prompt grower selling and it’s hard to see a fast-evolving balance sheet. This will likely cause further detachment between wheat and corn pricing. In the US, internal basis is rallying as a lack of farmer selling coincides with increased domestic demand interest.
Wheat surged ahead as deteriorating conditions in Australia and Europe made headlines. Matif wheat futures were up 5€ to 200.5€. Implied vol in Sep SRW went out at 35.75%. Strategie grains reduced the EU wheat crop 2.5mmt, putting it at its lowest level since 2012. Quality and yield declines continue in Russia with Black Sea futures finishing at $232.5 FOB for August. The ongoing price increases in Russia is encouraging chatter of a Russian export tax, which will be enacted if their local bread price gets too high. In the US the Wheat Quality Council’s Spring wheat crop tour is showing disappointed yield outcomes on day one with results well below the five-year average, adding further fuel to the declining wheat supply problem. Add the US governments price support initiative and it will be difficult to encourage large waves of farmers selling, which will effectively squeeze the global consumer, given the tightening global balance sheet.
Aussie markets were higher in old and new crop yesterday with new crop wheat hitting the $360 mark. Barley remains strong in new crop and old crop found new support from increased sheep feeding demand. The weather forecast that was promising for parts of NSW and Vic on Monday has disappointed with volumes dissipating. This was part of the catalyst for yesterday’s rally. We are at a point in time now, where price rallies are almost guaranteed every time the forecast shows no moisture for the East Coast. With WA pricing export and import parity, the local and global market has a lot riding on production there.
Source: Lachstock Consulting