Markets

Daily Market Wire 6 August 2018

Lachstock Consulting, August 6, 2018

Mixed for grains and oilseeds.

  • CBOT wheat down 4.25c to 556.25c,
  • Kansas wheat down 2c to 567.25c,
  • Corn up 3c to 369.75c,
  • Soybeans up 3.75c to 886.25c,
  • Winnipeg canola down C$2 to $494,
  • Matif canola down €1.25 to €379.75,
  • Dow Jones up 136.42 to 25462.58,
  • Crude oil up US$0.07 to $68.57 per barrel,
  • AUD up to 0.739c,
  • CAD up to 1.299c (AUDCAD 0.960),
  • EUR up to 1.156c (AUDEUR 0.639).

Wheat

Wheat finished the week on a softer note, posting a solid weekly gain but failing to hold through technical resistance. Traded volumes were almost half of Thursday’s, when the market overreacted to a routine Ukraine announcement. Implied volatility in Sep Soft Red Winter (SRW) wheat futures finished at 34 per cent. Iraq purchased Aussie wheat in its tender, showing a preference over cheaper-origin US wheat. The Commitment of Traders (COT) report had SRW positions up 29,000 to long 53,000 contracts, Hard Red Winter was up 17,700 to long 40,000 contracts, and Minneapolis was up 6500 to make it short 6300 contracts. Matif futures closed the week lower in a low-volume session, finishing down €1.75 per tonne at €211/t. It will be interesting to see how this market opens, given the scorching temperatures that have gone through Europe over the weekend.

Corn

Corn outpaced wheat gaining support from lower US yield potential, and ideas of greater global demand as feed wheat stocks decline. Crop forecaster, Informa, called the US corn yield 176 bushels per acre (bu/ac) and production at 365.6 million tonnes (Mt), compared with USDA’s 361.5Mt. The yield idea which took the market to recent seasonal lows was 180 bu/acre, so this was viewed as supportive for the balance sheet. Corn COT had the funds covering 81,000 contracts,  reducing their short to 63,600 contracts.

Soybeans

China responded to the US government’s intention to increase tariffs by imposing its own tariffs on an additional $60 billion worth of US goods. Soymeal was down US30c/t and soy oil was up 23 points. Informa called US bean yields 50bu/ac and production at 120.9 M, up from USDA’s 117.2Mt.  The COT report saw quiet changes in beans, with funds buying 1800 contracts to leave their position short 91,900 contracts.

Canola

Canola was lower in both European and Canadian contracts. The uncertainty flowing on from the evolving US-China trade dispute is suggesting greater soy imports from the US to Europe, which is creating uncertainty in  rapeseed oil markets. It’s difficult not to see European markets rallying further this week, given the scorching weather that their moisture-stressed crops have endured over the weekend.

Australia

Aussie markets were firmer on Friday in low liquidity, with people still away post the Australian Grains Industry Conference (AGIC). New-crop ASX wheat traded A$4/t higher at $393/t, and track barley followed the higher tone. Old-crop prices were well supported, with consumers stepping in for more cover after being spurred on by the bullish AGIC crowd. The weather outlook continues to support the Bureau of Meteorology’s dry three-month outlook on the east coast, with nothing of significance presenting on the forecast. WA received some promising rainfall, which should alleviate some concerns for southern production regions.

Source: Lachstock Consulting

 

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