Markets

Daily market wire 31 July 2017

Lachstock Consulting, July 31, 2017

Overnight markets:

Slight gains for grains and oilseeds.

  • CBOT Wheat up 1.25c to 506c,
  • Kansas wheat up 0.25c to 508.25c,
  • Corn up 0.25c to 388c,
  • Soybean up 6c to 1006c,
  • Winnipeg Canola up 6.10$C to 515.2$C,
  • Matif canola up 4.75€ to 368.25€.
  • The Dow Jones up 33.76 to 21830.31,
  • Crude Oil up 0.75c to 49.79c,
  • AUD up to 0.798c,
  • CAD down to 1.243c, (AUDCAD 0.992)
  • EUR up to 1.175c (AUDEUR 0.679).

Soybeans

Soybeans higher due to August weather uncertainty and some EPA fireworks. Bean oil rallied as a court ruling was made against the EPA, who was attempting to reduce their renewable volume obligations in biofuel demand. The weekly Commitment of Traders (COT) had the fund position square vs. -12.1k last week. With no short in the market, beans probably need more heat and dryness in the August forecast to see a significant rally from here.

Canola

Canola showed strength again as crop ratings continue to decline in Canada. The weekend forecast is hot and dry, with more hot temps expected. This combined with the stronger bean oil complex to keep the bid active.

Corn

Corn close to unchanged in a very quiet session, trading a 4-cent range! Pollination is now completed for corn, with the market now looking to the next price driver. Which is hard to foresee at present, it may move in sympathy of beans and wheat, but until the August USDA report corn is boring, with a heavy global balance sheet and limited export demand. The weekly COT came in at +45.8k vs. +47.2k.

Wheat

Wheat slightly higher in all classes, with spring wheat the leader again. The spring wheat crop tour concluded with a yield below USDA. Though it is almost irrelevant considering an abandonment forecast was not specified. The driver of spring wheat from here will be Canadian weather, where a hot dry 10 day forecast is threatening yield potential. US wheat is becoming cheap vs. competing origins, which means we could see a demand led bid in futures, or we could see the Russian market drop cash prices further, pressuring futures. The weekly COT reported SRW at -31.4k vs. -21.4k, HRW +63.2k vs. +71.3 and spring wheat +6.7k. Given that the wheat market is still collectively long, we will need a significant catalyst to ignite new buying from here.

Australia

The Aussie forecast continues to show promise in the 8 day. Though it has changed a little bit in NSW where the coverage now only hits the South central parts with 15mm. WA forecast now appears to be missing the Northern regions, meaning that Geraldton will remain thirsty. Cash markets are over excited about the weather forecast with new crop trading lower and some calling crop potential 29Mt, which is a little absurd. This week will be telling, if the forecast eventuates, it feels well and truly priced in already. If it doesn’t, then we pop again.

Source: Lachstock Consulting

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