Daily market wire 31 May 2018

Lachstock Consulting, May 31, 2018

Lower for grains and oilseeds.

  • CBOT wheat down 14.5c to 522c,
  • Kansas wheat down 15.75c to 540.75c,
  • Corn down 6.5c to 393.5c,
  • Soybeans down 7.5c to 1023c,
  • Winnipeg canola down C$2.09 to $535.7,
  • Matif canola down €3.5 to €360.75,
  • Dow Jones up 306.32 to 24667.78,
  • Crude oil up US$1.58 to $68.31 per barrel,
  • AUD up to 0.757c,
  • CAD down to 1.287c (AUDCAD 0.975),
  • EUR up to 1.166c (AUDEUR 0.649).


Wheat led the market lower today, with technical selling encouraged by improved US conditions, and a limited focus on issues further abroad. Implied volatility in July Soft Red Winter wheat went out at 29.625 per cent. Barring New South Wales, Australian and Canadian conditions have improved. Russia did not make headlines overnight, although there are no major weather improvements there just yet. Russian prices were slightly lower , and the wheat chart has set itself up for a fall of up to 20 cents before uncovering any support. Given that the range is tightening, Russian weather might prompt some buying before we reach those levels.


Corn saw follow-through selling from ideal planting progress and US conditions, as well as political uncertainty regarding China trade and weakness in wheat. The balance-sheet challenges are still present in corn, and the world market is leaning heavily on US yield. For the moment, there is no urgency for consumptive shorts to cover, which makes for shaky ground for the longs at the top of the range. Yesterday’s rating reflects some of the best starting conditions witnessed in corn over the past 20 years, but it is a rare for ideal starting conditions to correlate to above-average yields.


Beans suffered further selling, with improved planting progress combining with political/macro issues continuing to weigh in. Beans came in at 77pc planted, well ahead of the five-year average. On top of this, US conditions are looking favourable for bean production. Trucker strikes in Brazil are continuing to reduce fob liquidity, which would support for US prices if the political situation wasn’t so unstable. Soymeal was down $3.30 per tonne, while soy oil was up 27 points. Crude oil recovered from its recent losing streak, which provided some of the vegoil support.


Canola was under pressure from a stronger dollar and improved rainfall in the Western parts of Canada. After moving in its own direction yesterday, Canola became a follower of beans again today.


Aussie markets were firmer in eastern states yesterday, despite the weaker futures market. There is limited basis correlation for old crop, given that we are over export parity, and being driven by domestic short covering. Barley prices remain strong, with talk of more export vessels being backed up by increased buying interest. The eight-day forecast is looking promising for Western Australia, with patchy showers in Victoria. Nothing is forecast for NSW, which is the only problem for Australia at present, and a very large one. The large consumptive demand and limited crop potential suggest little to no price reprieve until new-crop production hits the market.

Source: Lachstock Consulting


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