Markets

Daily Market Wire 29 June 2018

Lachstock Consulting, June 29, 2018

Lower for grains and oilseeds.

  • CBOT wheat down -5c to 483.5c,
  • Kansas wheat down -6.25c to 472c,
  • Corn down -7.5c to 354.25c,
  • Soybean down -6.25c to 866.75c,
  • Winnipeg Canola down -2.5$C to 510.4$C,
  • Matif canola up 2.75€ to 359.5€.
  • The Dow Jones up 98.45 to 24216.05,
  • Crude Oil up 0.519c to $US73.28 per barrel,
  • AUD up to 0.734c,
  • CAD down to 1.325c, (AUDCAD 0.974)
  • EUR up to 1.156c (AUDEUR 0.635).

Wheat

Wheat followed corn and beans, with Hard Red Winter (HRW) continuing to lead the classes lower. Open interest in HRW has declined significantly this week, which could combine with prospects for HRW demand to encourage new buying.

Implied volatility in Sep Soft Red Winter (SRW) went out at 24.7pc.

Today we received more supportive fundamental news in wheat with EU production forecasts revised lower to 146.4 million tonnes (Mt) (USDA 149.4Mt). The USDA’s last supply and demand report suggested stocks/use ratio in the major 8 exporters at the lowest levels since 07/08, so with ongoing issues in Australia, Europe and the Black Sea this could decline further, which will have to get a price reaction soon enough.

Corn

Corn was hit hard again, with improved US weather encouraging new yearly lows.

Without a US yield problem there is no near-term interest to encourage new buyers, so we continue to grind lower.

Export sales were 1.485Mt vs market ideas of 1.1Mt.

Production declines in Europe pose the next significant threat to the global corn balance sheet, but chart momentum is preventing any focus on this for now.

Soybeans

Soybeans were softer, in a low-ranging session.

Strength in crude oil did not provide any support.

The US weather forecast has improved with hot temperatures slipping off the longer-term forecast, while good rains in Nebraska and Iowa will be beneficial for crop development.

Export sales came in above expectations with 358,000t old crop and 642,000t new crop. Soymeal was down US$1.60 per tonne, while soy oil was unchanged.

Canola

Canola futures were mixed.

Matif rallied with  on-going production concerns in Europe, while Winnipeg fell in line with beans.

The July contract dropped Can$13.30 with one day to go until first notice day, meaning there were more longs in the market than shorts. The fact that the inverse breaks near delivery suggests that it’s more speculative than related to physical export demand.

Australia

Aussie markets were quiet yesterday, after the previous day’s recovery. Rainfall in north western NSW was reasonable with 15-25mm falling with decent coverage.

The question is whether or not this will be enough to turn crop production around and whether it is now too late.

Looking forward the forecast is bare for NSW, Vic and SA.

SA hasn’t been spoken of recently, however conditions are not great there and an average crop this year is crucial given the interstate exports it will be required to fulfil.

Source: Lachstock Consulting

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