Markets

Daily Market Wire 26 June 2018

Lachstock Consulting, June 26, 2018

Lower for grains and oilseeds, with ongoing trade issue destabilising the macro environment encouraging universal risk off behaviour.

  • CBOT wheat down -13.75c to 490.5c,
  • Kansas wheat down -18c to 487.5c,
  • Corn down -7c to 359.5c,
  • Soybean down -20c to 880c,
  • Winnipeg canola down -4.10$C to 523.3$C,
  • Matif canola down -3.25€ to 349.5€.
  • The Dow Jones down -328.09 to 24252.8,
  • Crude Oil down -0.39c to $US68.19 per barrel,
  • AUD down to 0.741c,
  • CAD up to 1.329c, (AUDCAD 0.985)
  • EUR up to 1.170c (AUDEUR 0.633).

Wheat

Wheat lower again with Hard Red Winter (HRW) leading the charge, closing below Soft Red Winter (SRW) values in the nearby contracts.

Implied volatility in Sep SRW went out at 27.8pc.

Despite the macro story, wheat also fell victim to better weather forecasts in Australia, northern Russia and western Ukraine.

In addition the structure revealed by Friday’s Commitment of Traders report did not suggest a large enough reduction in the fund long position, leaving the market vulnerable to the further selling which occurred today.

The global wheat balance sheet is still plagued by production questions marks, but price action is not supportive of loading up, given the macro uncertainty.

Corn

Corn managed its lowest yearly close, as bullish fundamentalists became exhausted and momentum sellers took over.

Export inspections were promising at 1.512 million tonnes.

Crop conditions were down 1pc for the week at 77pc good to excellent.

The analyst Agroconsult revised Brazil’s second crop down to 55Mt.

US weather is not threatening at the moment, as the heat ridge is not as hot as originally expected and is accompanied by moisture.

Soybeans

Beans were hit the hardest, achieving their lowest close since March 2016.

A new export sale of 186,000t was announced to unknown, but supportive fundamentals were not price drivers today.

The latest trade development had China’s central bank reducing the lending requirements for banks in order to boost their economy, whilst the US government had suggested it would impose import restrictions on other countries aside from China with regards to US IP and technology companies. The circus continues.

Soybean conditions were unchanged week on week at 73pc good to excellent.

Soy oil was down 27 points, while soymeal was down US$6.50/t.

Canola

Canola followed beans and vegoils lower in a risk off session that featured a Can$7.50/t range. Canola wasn’t trading much supply or demand today, it was caught up in money flows out of ag, as the market sought shelter in lower risk assets.

Australia

Aussie markets were softer yesterday, thanks to increases in the NNSW and QLD forecast.

After yesterday showing potential of 15-25mm the forecast has now improved further with 50-100mm in the 8-day, with potential to cover most of NNSW and SQLD.

This softened markets on the Darling Downs and in southern states.

Prices in the export zones did not respond in the same fashion, given their need for more rainfall and improving prospects of buying export demand.

Source: Lachstock Consulting

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