Markets

Daily market wire 30 June 2017

Lachstock Consulting, June 30, 2017

Overnight markets:

Stronger for grains and oilseeds, with spring wheat leading the charge.

  • CBOT Wheat up 23c to 496c,
  • Kansas wheat up 19.25c to 499.5c,
  • Corn up 3.25c to 369.5c,
  • Soybean up 1.75c to 920.75c,
  • Winnipeg Canola up 2.29$C to 484.4$C,
  • Matif canola up 1€ to 360€.
  • The Dow Jones down -167.58 to 21287.03,
  • Crude Oil up 0.129c to 44.87c,
  • AUD up to 0.768c,
  • CAD down to 1.30c, (AUDCAD 0.999)
  • EUR up to 1.144c (AUDEUR 0.671)

Soybeans

Soybeans rallied with wheat from the start but couldn’t maintain the strength. Bean production has time on its side, so it’s a little early to hit the panic button. Statscan increased bean acres 300k from the last report, which didn’t help things. Beans have a technical and structural support story, as well as starting to look attractive from a relative value perspective. Export sales were positive at 312.4k vs. expectations of 300.

Canola

Canola was stronger in November, while July exploded over $10 higher, with limited order flow as that contract nears delivery. Statscan reported figures that were not bullish, with acres coming in at 22.8 million vs. market expectations of 22.2. This reflected the first time in history more canola was planted than wheat.The market chose to focus more on yield potential with conditions downgrades in Saskatchewan this week, raising concerns.

Corn

Corn had no story of its own today, buoyed by the strength in wheat, structure and technical support. The weather story has dissipated in corn this week, though it’s expected to heat up mid July. The wheat market is not in a position to lose tonnes to feed consumption, so corn should lag this strength somewhat. However the Northern Plains weather will affect corn yields in part and we have a large short position, which will be getting nervous. South American supplies are the anchor on US corn at present, though grower selling is non-existent. Weekly export sales were lower than expected at 316.2k vs. market ideas of 450k.

Wheat

Spring wheat closed 30 cents higher, although it did trade 10 contracts at the 60-cent limit at one point. Another hot dry forecast for the Northern Plains was the driver, with sep futures up 30 cents before statscan report even surfaced. Statscan had total wheat acres down 800k below last year and 300k below market expectations at 22.4 million. Spring wheat was 900k lower than the April forecast at 15.8 million. Winter wheats followed reluctantly before receiving a nice push from the friendly statscan report and low early yield reports out of Russia. HRW is getting distorted vs. SRW with funds reportedly covering 25-30k shorts in SRW. At some point HRW needs to make a statement given the global protein shortage, but it’s running into issues with low average proteins and structure in SRW. The spring wheat situation in the US and Canada is a bit of a game changer for Global wheat, Russia is still looking good, but it cannot supply the world. The situation refines the focus on new crop issues in Australia, Europe and the Ukraine and makes old crop carryout not as burdensome as it was. USDA report out tomorrow adds further discomfort to shorts in this market.

Australia

Aussie weather forecast is showing bits and pieces with some small showers around the place. But nothing is of substance, in the places we need it. Rain is expected in parts of SA (5-10 ml). WA may get 5-15 ml over the weekend in the Kwinana zone. There was some rainfall received in NWNSW, which may be enough to encourage wheat seeding, though we suspect farmers will want more in early July, which is not on the cards. Cash markets strong, we may expect to see increased wheat demand from India given that they have relaxed their fumigation requirements, though it is more likely they will import cheaper Ukrainian Wheat. Will be interesting to see whether tax selling helps the market find more grain in the next two weeks.

Source: Lachstock Consulting

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