Markets

Daily Market Wire 5 June 2018

Lachstock Consulting, June 5, 2018

Lower for grains and oilseeds.

  • CBOT wheat down 18c to 505.25c,
  • Kansas wheat down 19.25c to 521.5c,
  • Corn down 10.75c to 380.75c,
  • Soybeans down 19.5c to 1001.75c,
  • Winnipeg canola down C$5 to $525.3,
  • Matif canola down €3 to €355.5,
  • Dow Jones up 178.48 to 24813.69,
  • Crude oil down US$9.39 to $64.87 per barrel,
  • AUD up to 0.764c,
  • CAD down to 1.293c (AUDCAD 0.988),
  • EUR up to 1.169c (AUDEUR 0.653).

Wheat

Wheat was softer across all three classes. An improved outlook for United States weather, and talk of US wheat imports from Argentina have highlighted how overpriced US wheat is, and prompting renewed selling. Implied volatility in July Soft Red Winter went out at 28 per cent. After the close, winter-wheat conditions came in down 1pc on last week at 37pc good to excellent. No-one has mentioned Russia in the last two sessions, even though its weather doesn’t appear to have improved. Russian fob prices were down $1 per tonne in old-crop, and up $1 in new-crop. Spring wheat areas in Russia are likely to miss their planting window due to excessive moisture, while winter wheat areas are still too dry. There is still decent bullish potential in wheat if Russian production continues to fall, but the focus today was overpriced US wheat. It won’t be long before the market starts looking to the 12 June USDA report, and could see risk appetites turn around. Wheat is now 5 cents above the 50-day moving average, and very close to trend line support, so it will be hard to uncover new selling here.

Corn

Corn gapped lower to reach levels not seen since early April. Fund liquidation was encouraged by improved US weather conditions, uncertainty over US-China trade policy, and US ethanol policy, which prompted significant risk-off behaviour. Corn production in the US has had an ideal start, though we have a lot of weather to get through, and a tighter year-on-year global balance sheet to deal with. After the close, conditions came in down 1pc on last week at 78pc good to excellent.

Soybeans

Beans were under pressure from ongoing trade-war issues, good starting conditions in the US, and outside market weakness. Expectations of a trade resolution over the weekend were met with nothing conclusive. After the close, conditions came in at 75pc good to excellent, which represents a very good start to the US campaign. Soymeal was down $5.30/t, and soyoil was down 26 points.

Canola

Canola futures sold off in line with weakness in beans and vegetable oils. Old-crop liquidation in Canada continues to persist, as improved weather in the prairies inspires further grower confidence in new-crop production.

Australia

Despite a rallying currency, Aussie markets remained strong in old-crop yesterday. New-crop values in the export states softened on the dollar movement, but the east coast remains supported by dryness concerns in New South Wales. The forecast looks positive for Western Australia, while NSW could see 15-25 millimetres in southeastern areas, which will be welcome, but not enough to prompt a significant turnaround. Victoria and South Australia will get a welcome top-up, which should improve grower confidence on residual old-crop supplies. NSW remains the only major concern for new-crop production at this stage, but the downside in that crop could be significant.

Source: Lachstock Consulting

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