Markets

Daily Market Wire 6 June, 2018

Lachstock Consulting, June 6, 2018

Higher for grains, mixed for oilseeds.

  • CBOT wheat up 4.75c to 510c,
  • Kansas wheat up 7.5c to 529c,
  • Corn up 3c to 383.75c,
  • Soybeans down 0.5c to 1001.25c,
  • Winnipeg canola unchanged at C$525.3,
  • Matif canola up €1 to €356.5,
  • Dow Jones down 13.70 to 24799.98,
  • Crude oil up US$0.78 to $65.53 per barrel,
  • AUD down to 0.761c,
  • CAD up to 1.296c (AUDCAD 0.987),
  • EUR up to 1.171c (AUDEUR 0.649).

Wheat

Wheat finished in the green, but almost 9 cents off the daily highs, as the market ran out of sellers on technical and seasonal support.

Weather conditions have improved in the United States, and harvest of Hard Red Winter wheat is just around the corner.

Most people feel the overnight sell-off reflects enough for now, given ongoing issues in the Black Sea and uncertainty for Canada and Australia. Implied volatility in July Soft Red Winter wheat went out at 28.75 per cent.

Matif wheat was up €3/t, while Russian fob values were approximately US$2 per tonne higher with offers limited. Dryness in parts of Southern Russia and Ukraine remain an issue for winter wheat production, with the market not responding with more vigour due to mild temperatures there. If things heat up, then we can expect sharp price action. In addition to this, spring wheat in Russia is only 80pc planted, with the window closing fast for soil moisture to dry out. Selling wheat from Russia does not stack up from a risk-reward perspective.

Corn

Corn consolidated some of yesterday’s losses, as global production concerns discourage further selling that was based on positive early US conditions.

The market is discussing a 180-bushel-per-acre corn yield, which is unlikely, given the low probability of perfect weather from now until harvest. US corn has a lot of weather to get through, so we expect to see increases in volatility over the next two months.

Soybeans

Soybeans finished fractions lower, with politics continuing to dictate price action.

The Chinese government has reportedly offered to buy $70 billion worth of US ag and energy products if the US removes $50b in import tariffs. The US government is yet to respond, so it’s more wait and see for now.

Soymeal was down $1.60/t, while soy oil was down 14 points.

Canola

The canola market was quiet today, finishing unchanged in old-crop, and stagnating in line with beans.

Canola has seen beneficial rainfall in parched areas of western Canada, which has prompted heavy price action in the front-end contracts, as growers part with old-crop hedge stock. This is combining with lower-than-expected exports, which have forced new-crop carry-out projections higher.

Australia

Aussie markets were softer yesterday in lighter volume, as a stronger dollar, weaker US futures prices, and improved east-coast weather forecasts discouraged any aggressive buying.

Offers did not chase the market down, which led to a low-liquidity day.

The updated eight-day forecast looks promising for South Australia, Victoria and southern New South Wales. Parts of NSW could potentially get 25-50 millimetres of rain, which would provide welcome relief for planted areas, or encourage growers to sow shorter-season crops.

It will be interesting to see how much old-crop grower selling is noted ahead of this rainfall, given how quiet it has been in the past month.

Source: Lachstock Consulting

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