Daily market wire 29 August 2017

Lachstock Consulting, August 29, 2017

Overnight markets:

Lower for grains, mixed for oilseeds.
  • CBOT wheat down -7.25c to 428c,
  • Kansas wheat down -6.75c to 425.5c,
  • Corn down -2.5c to 351c,
  • Soybean down -3.25c to 941.25c,
  • Winnipeg Canola up 1$C to 507.9$C,
  • Matif canola down -1.25€ to 369.25€.
  • The Dow Jones down -5.269 to 21808.4,
  • Crude Oil down -1.09c to 46.77c,
  • AUD up to 0.796c,
  • CAD up to 1.250c, (AUDCAD 0.996)
  • EUR up to 1.197c (AUDEUR 0.664).


Wheat lower across all three classes, as crop potential in Russia and Canada increases. Implied volatility in December Soft Red Winter (SRW) went out at 20.5 per cent (pc). Crop estimates in Russia are now nearing the 85+ million tonnes (Mt) mark, which will exceed their physical storage capacity. While this is burdensome, it doesn’t make a difference to global export flows, with Russia’s execution capacity likely to tap out at 31.5 Mt, nevertheless it forced new lows in the Matif contract. Early Prairie wheat harvest results are coming in better than expected in Canada, which did not help. The market expects Statistics Canada (Statscan) to produce a 26Mt estimate in their report on Thursday. In other news the Ruble managed another higher close, which suggests technical strength and should see a reduction in Russian liquidity if it continues on its trajectory. The impacts of Hurricane Harvey will likely impact the US export pathway considering that 22pc of US wheat exports are done from Galveston, Houston and Belmont.


Corn lower, with limited fundamental information pushing new lows and encouraging chart selling. Farmers are non-existent at these prices, so as previously mentioned corn needs to fall to a point that buys demand, which will likely coincide with funds being heavily oversold.


Soybeans slightly lower in quiet trade, as the market seeks new fundamental drivers. It’s easy to justify a decent move either side of the market in beans at the moment. Meal was 10 cents/tonne higher, while bean oil was just above unchanged. Weekly export sales were 7pc higher than last week, but 22pc below the same time last year, at 716,171t.


Canola managed to stay in the green, with early harvest results reducing crop potential. Volumes were lighter as the trade prepares for Statscan’s global estimate out on Thursday.


Australian weather features 10-15 mm for northern WA, while the rest of the country is relatively dry. Frost is becoming a big concern in NSW, where we saw temps touch -5 degrees in parts of the central west, with more frost potential in the forecast. From a timing perspective, this is not as bad as it could be if we had a similar event in late September, but it does deplete limited moisture reserves and limit upside potential in the crop.

Source: Lachstock Consulting


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