Overnight futures markets
Lower for grains, mixed for oilseeds.
- CBOT wheat down 1-9.5c to 489.5c,
- Kansas wheat down -5.5c to 521c,
- Corn down -0.5c to 395.25c,
- Soybean up 0.25c to 1039.5c,
- Winnipeg Canola down -2.70$C to 532.3$C, and
- Matif Canola up 0.5€ to 345.5€,
- The Dow Jones up 238.50 to 24322.34,
- Crude Oil up 0.13c to $US68.18 per barrel,
- AUD down to 0.755c,
- CAD up to 1.287c, (AUDCAD 0.972) and the
- EUR down to 1.210c (AUDEUR 0.623).
Wheat sold off, as the market realised it was rallying on hot air. It’s hard to pinpoint exactly what started Tuesday and Wednesday’s rallies, but the suspicion is anecdotal reports of frost damage in the HRW areas, which prompted short covering ahead of next week’s Wheat Quality Council tour of Kansas. On Wednesday, open interest in SRW and HRW went down a collective 10,700 contracts which implies short covering. This is against the backdrop of improved weather for HRW areas, as well as greater access for spring wheat and corn planting in the northern plains. Export sales in wheat came in better than expectations on old crop, with the market only expecting to see 50kmt and getting 297kmt, new crop sales were slightly above expectations. Russian vales were approximately $1 stronger in old crop and unchanged in new crop.
Corn finished fractions lower, managing to hold most of yesterday’s gains in a low range session. Export sales were disappointing at 687kmt in old crop and -77kmt in new crop (due to cancellations), which was down 36% from last week’s figures. The impact of the softer sales is unknown, but it could be presumed that cheaper US sorghum stranded on a vessel, may have eaten into some corn market share.
Beans fractions higher in quiet trade. Export sales came in at 371kmt in old crop and 167 kmt in new crop, this was well below expectations in old crop, highlighting the trade switches that have occurred as a result of the US/China debacle. There is very little confidence by Chinese importers to buy US soybeans, all they have to do is look at the sorghum importers to see what kind of damage can be done, once cargoes are on the water. In South America, weakness in the local currencies has prompt a large round of farmer selling, which is coinciding nicely with increased demand as China shorts switch elevation from the US. Soymeal was up $2.80 per tonne, while soy oil was up 2 points.
Canola sold off with pressure coming from weakness in the vegoil complex, which put pressure on crush margins. Speculative buyers became less enthusiastic after the July chart failed to maintain momentum and break through recent highs. Statscan out tonight with seeding intentions, which could provide some pressure on Canola, given the large potential there thanks to lower pulse demand.
Aussie cash prices continue to rally, as the weather forecast refuses to offer support for new crop production. Wheat and Canola prices were the leaders yesterday, showing good price increases. Barley has taken a back seat for the moment with bid and offer side volumes hard to define and cross. Sellers see no point to discount it, when its priced under wheat and still looking like seeing some ongoing Chinese demand. But buyers are not willing to engage just yet, given the large amount of flat price work barley has already done this year. Markets in the North continue to rally, with Sorghum prices nearing $360 track, while barley and wheat get dragged along for the ride. Grower selling is limited as moisture supplies are not yet supportive of a large scale new crop plant.
Source: Lachstock Consulting