Daily market wire 4 August 2017

Lachstock Consulting, August 4, 2017

Overnight markets:

Lower for grains and oilseeds.

  • CBOT wheat down 2.75c to 485c,
  • Kansas wheat down 4.5c to 487.5c,
  • Corn down 1.25c to 377.75c,
  • Soybeans down 16.75c to 954c,
  • Winnipeg canola down 3.5$C to 502.9$C,
  • Matif canola down 2€ to 366€,
  • Dow Jones up 9.859 to 22026.1,
  • Crude Oil down 65c to $48.94c,
  • AUD down to 0.794c,
  • CAD up to 1.258c (AUDCAD 0.999),
  • EUR up to 1.187c (AUDEUR 0.669).


Matif wheat futures broke support to reach new yearly lows, leaving them looking vulnerable from a technical perspective. The big concern here is that Russian wheat is more correlated to Matif than US futures, so a large sell-off here effectively devalues global wheat values, which will push CBOT lower. The three classes of US wheat were all lower, with implied volatility in the Sep Soft Red Winter going out at 23.5 per cent. Weekly export sales were a lot lower than the market expectations at 145,500 vs. ideas of 450,000. Global issues are unchanged: too wet in Northern Europe, and too dry in Canada and Australia.


Corn followed beans lower, moving it dangerously close to the recent lows and technical support. It failed to close lower, given the uncertainty still surrounding yields and the variation in market estimates. Weekly export sales were low at 36,700 old crop and 483,000 new-crop, which was collectively 180,000 lower than market expectations.


Rain forecasts for the Midwest encouraged selling, which enabled beans to fill the gap at 963. On top of this, there were some political issues at play, potentially threatening longer-term demand as China and the US dispute trade issues. The big concern is that China restricts US bean imports, if the trade relationship sours further. Weekly export sales were on track with market expectations, which confirms US beans relative pricing.


Canola closed lower due to a cooler, wetter forecast in the Prairies, a stronger Canadian dollar and outside pressure from the bean market. The canola market is somewhat directionless at the moment as it awaits clarification of EU production and the extent of Canada’s yield damage. As a result futures volumes are low, reflecting an uncertain market.


The Aussie weather forecast has changed significantly, with the large falls forecast for New South Wales now confined to non-growing regions in the south east. Western Australia’s outlook has improved, with the moisture- stressed Northern regions looking to pick up approximately 25mm. Cash markets have been softer this week in quiet trade, but lack of rain for NSW might revive new crop pricing as we progress next week.

Source: Lachstock Consulting


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