Markets

Daily Market Wire 1 August 2018

Lachstock Consulting, August 1, 2018

Higher for grains and oilseeds.

  • CBOT wheat up7.25c to 553.75c,,
  • Kansas wheat up 8.75c to 556.5c,
  • corn up 5c to 372.25c,
  • soybeans up 28.75c to 903.75c,
  • Winnipeg canola up 7$C to 500.8$C, and
  • Matif canola up 6.25€ to 375€.
  • The Dow Jones up 157.10 to 25463.94,
  • Crude Oil down -1.39c to $US68.74 per barrel,
  • AUD up to 0.744c,
  • CAD down to 1.299c, (AUDCAD 0.966) and the
  • EUR down to 1.17c (AUDEUR 0.635).

Wheat

Wheat finished higher, but well off the contract highs to finish the month off. Momentum was strong earlier on with Sep futures up US19c/bu and looking to test the late May highs, however profit taking appeared and things retreated, failing to sustain a close above the mid-June highs. The unwinding of short beans/long wheat positions added to the sell side pressure. Implied volatility in Sep Soft Red Winter (SRW) wheat finished at 36.13pc. Bullish momentum is building, but we need a new set of issues or the appearance of the consumer in order to prompt the next leg up. The global balance sheet suggests that this is just a matter of time. Spring wheat finished 5c/bu higher. Matif wheat finished fractions lower and €3/t off daily highs, with Sep down €0.25/t to €202.25/t. Cash prices in Russia continued to firm with Jan Black Sea wheat trading at US$243/t. The market is looking to the next WASDE report and trying to front run how bigger change the USDA makes to EU production, they are well off the current estimates, so it will be interesting to see what they do with demand as they reduce supply. Regardless of what they do, we are heading towards a historically low stocks-to-use ratio in the major 8 exporters, with ongoing increases in global flat price..

Corn

Corn found support from beans as well as a warmer 8-14 day forecast that could see continues deteriorate, which would force the market to start trading a sub 180bpa yield. The EU/Black Sea situation is getting worse and the market has fallen asleep at the wheel with respect to the tightness of the global balance sheet. There is now a chunky fund short that will run for cover if we start to see any yield issues in the US

Soybeans

Soybeans posted solid gains with China and the US said to be enacting measures to “diffuse” the trade war. Export inspections have proven to us that US soybean demand remains strong despite China, so it appears they will have to make most of the concessions if any sort of compromise is reached. Soymeal was up $7.30/t and soy oil was up 42 points.

Canola

Canola powered ahead in both Europe and Canada as potential trade resolutions and further crop declines in Europe combined with a stronger oilseed complex to see both contracts make sharp gains. Aussie markets were firmer yesterday with a lack of offers in new crop encouraging buyers to push bids higher in an effort to uncover liquidity that they did not find. Canola remains a follower of beans, but the limited price action in Australia suggests it will continue to drift higher until crop production stabilises.

Australia

Aussie markets were stronger yesterday in quiet trade with most of the traders off line at the annual grain conference. The weather remains unfavourable and production ideas continue to decline. East coast prices for wheat, barley and canola were both stronger on old and new crop. Cash prices continue to surprise us given the rate at which they are moving higher, trying to gauge upside is a difficult task, especially with the world demand profile for Aussie grains increasing. With limited old crop reserves to fall back on anything is possible the longer it stays dry.

Source: Lachstock Consulting

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