Markets

Daily market wire 27 July 2017

Lachstock Consulting, July 27, 2017

Overnight markets:

Stronger for grains and oilseeds.

  • CBOT wheat up 3.75c to 502.75c,
  • Kansas wheat up 3c to 502.5c,
  • Corn up 3.75c to 386c,
  • Soybeans up 7.75c to 993.75c,
  • Winnipeg canola up 7.69$C to 502.7$C,
  • Matif canola up 6€ to 365.25€,
  • Dow Jones up 91.75 to 21705.19,
  • Crude Oil up 81c to $48.7c,
  • AUD up to 0.799c,
  • CAD down to 1.245c, (AUDCAD 0.995),
  • EUR up to 1.173c (AUDEUR 0.681).

Wheat

Winter wheats posted slight gains, while spring wheat was in the double-digit gains at 12 cents. The Wheat Quality Council Tour reported lower-than-expected yields, which encouraged buying. We will get different yields every day as this tour proceeds, so expect some price swings along the way. Global concerns are mounting for high-protein wheat in parts of Germany and Baltic regions, where persistent rainfall is impacting quality. On top of this, Canada is experiencing high temperatures with limited moisture in key wheat-producing areas. Both of these are factors which the high-protein market doesn’t need this year. Volatility in the Sep Soft Red Winter contract was slightly higher at 23.25 per cent.

Corn

Corn closed slightly higher in a relatively quiet session. The weekend weather and improved forecast has prompted timid trading. In the absence of any other fundamental drivers like export demand, the market is awaiting yield confirmation. Unfortunately, this won’t occur until the 12 August USDA report, so corn is likely a follower in the interim.

Soybeans

Soybeans bounced off key resistance levels to finish higher. Soybeans do not require any discounting at the moment, despite the improved forecast. There is still a lot of production volatility to come in August, and US beans are competitive into export homes. They will need to fill the gap at 963 in Nov at some point but for now, August weather will dictate price action.

Canola

Canola recovered some of its recent losses in a very strong session. The prairie weather uncertainty and tight old-crop situation was discounted too far, which prompted the recovery.

Australia

The Aussie forecast is similar in all states except New South Wales, where the rain outlook has gotten bigger in area and volume. The 15-25 millimeters forecast will prevent further yield declines for at least a month, before more rainfall is required. Cash markets reacted accordingly yesterday, with the wheat market all offers and no bids. The market was trading a sub 20 million-tonne crop, so we were due for a correction in order to price any export demand. With that said, the Aussie crop is still not out of the woods, and the rainfall we have received so far only buys time. A lot more rain is needed in central/northern Western Australia as well as western South Australia.

Source: Lachstock Consulting

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